South Bay Clinic Owner Given 5 Years in Multimillion-Dollar Medi-Cal Fraud

A South Bay medical clinic owner was sentenced Monday to five years in prison for setting up a multimillion-dollar fraud mill that billed the Medi-Cal system for phony or unnecessary medical services.

Annilie Ferrer said in Los Angeles County Superior Court that she and her business partner, Eric Chan, set up one scheme while out on bail on charges of doing the same type of crime.

Officials said the pair submitted $1 million in phony billings after they were arrested on suspicion of operating another clinic through which they defrauded the state of at least $2 million.

In all, Ferrer pleaded no contest and was sentenced on 21 counts of fraud, grand theft and conspiracy for both cases.

“What [Ferrer] learned from the first case was basically to do the paperwork better,” said Deputy Atty. Gen. Malcolm Venolia during sentencing. “It’s not so obviously faked up. . . . The level of duplicity in this case is extremely unusual.”

Chan and his wife Diadema--each out on $250,000 bail--were scheduled to appear for sentencing Monday for the earlier round of fraud charges, but did not show. They had pleaded no contest to 12 fraud charges. A bench warrant was issued for their arrest.

“Last we heard, they were in Taiwan,” said Ferrer’s attorney, Randall Rich. The Chans’ attorneys did not return calls seeking comment.

Investigators seized more than $445,000 from the defendants’ bank accounts, officials said. And on Monday, Ferrer was ordered to pay restitution up to $3 million, then was taken into custody.

Her case comes during a broad government crackdown on fraud that was launched by the FBI and embraced by Gov. Gray Davis. In the year since he took office, the governor has more than doubled the number of auditors and investigators assigned to dig up corruption in the $18-billion-a-year program, which provides medical care to California’s poor.

The initial investigation focused on medical supply businesses in the Los Angeles area, but expanded into dental clinics, medical clinics and blood laboratories. The total fraud uncovered could reach $1 billion, according to FBI estimates.

Most offenders have struck plea bargains with authorities and have ended up with little or no prison time.

That is partially why, some officials surmise, Ferrer and Chan risked continuing the fraud while already facing criminal charges.

“I think until a severe sentence is handed out, these defendants will say: ‘Hey, the sentence will be light. Why not keep stealing?’ ” Venolia told Judge Jacqueline Connor.

The Chans and Ferrer first operated Evergreen Medical Clinic at several locations in the South Bay. After their arrests in April 1998, they opened Del Amo Medical Clinic in Torrance.

Authorities say their case shows how difficult it can be to catch offenders. The defendants were not registered with the state Department of Health Services and used the provider numbers of several physicians to bill Medi-Cal. Thus, it was difficult to connect them to the second clinic, although it was located at one of the addresses used for the first clinic.

It wasn’t until a patient, who had gone to the first clinic, told investigators that he was seeing a new doctor at the same address, that they realized the defendants were double-dipping, according to documents in the case.

The owners had two main schemes of getting the money, according to court documents.

A driver named Tomas Domingo allegedly brought vanloads of elderly Filipino patients to the clinics, court documents said. Scores of unnecessary diagnostic tests, such as pulmonary tests and electrocardiograms, would then be performed on the patients.

The defendants also billed the state using the beneficiary numbers of patients who never visited the clinic. An example is a man identified in court documents as Roosevelt H. In his name, Dr. Herman De Bardlabon billed Medi-Cal $596.20 for services ranging from spirometry to an electrocardiogram.

But Roosevelt H. said he never visited a doctor in Torrance and didn’t recognize De Bardlabon’s name. It was unclear from the documents where the doctor or clinic owners got the man’s Medi-Cal number, but an FBI informant has told The Times the numbers are commonly stolen and then sold on the black market.

De Bardlabon told investigators he was knowingly involved in the scam, according to court documents.