State Launches Sweep of Clinics

Accelerating its probe of Medi-Cal fraud, the state started a door-to-door inspection of doctor clinics throughout Los Angeles on Tuesday, searching for phony operations that collect millions for treatment that is never performed.

Shaken by the ease with which a local television station was able to find and film clinics falsifying bills to the medical poverty program, the California Department of Health dispatched investigative teams to survey 10,000 doctor offices and clinics in the Los Angeles area.

“This is a highly focused effort aimed at rooting out fraud in clinics,” said Alan Cates, chief of the department’s Medi-Cal fraud prevention bureau. “We decided that the only way to really find the fraudsters was to get in and look at every operation.”

In the first hours of the action, a team that examined clinics along Hollywood Boulevard found three of four that may have been fraudulent.

At one facility that billed Medi-Cal for more than $1 million in services in the last six weeks, Cates said, the door was locked and the premises were vacant.

“We talked to the other occupants in the building and asked if any doctors and patients had been visiting that office,” Cates said. “They looked at us like we were crazy. ‘Nobody ever comes in here,’ they said.”

The landlord at another office announced that his tenant had left the night before when word reached him that investigators might survey clinics.

An $18-billion-a-year program that provides medical care for the poor, Medi-Cal has been the focus of a far-flung investigation by federal and state agencies since the FBI discovered rampant fraud in one section--medical supplies. Since then, fraud has been uncovered among laboratories and dental clinics that serve the program.

The FBI estimates that at least $1 billion in Medi-Cal funds has been funneled into fraudulent operations, mostly in the Los Angeles area.

In December, state Atty. Gen. Bill Lockyer announced that his office was preparing criminal cases against a new source of fraud--fake doctor offices that used patients’ files and medical records stolen from hospitals and legitimate physicians to falsify billings to Medi-Cal.

But when KCBS-TV Channel 2 in Los Angeles was able to use undercover cameramen to film clinics preparing phony bills, Cates said, Gov. Gray Davis ordered an all-out effort by the health department to close the fake doctor operations. After the initial visit by the survey team, Cates said, a second investigative team will be called in to conduct a more thorough probe of all the offices that were rated as high fraud risks.

If fraud is uncovered by the second team, it can take several actions, including withholding all pending Medi-Cal payments, suspending the clinic from the program and referring it to the attorney general for criminal action.

Cates said some of the key signs of a fraudulent operation include lack of a business license, the absence of any doctor on the premises and the absence of patient sign-in logs or appointment books for scheduling visits.

Many of the fake offices, he said, do not actually bill the program directly but are used as fronts to attract patients and get their Medi-Cal numbers. The numbers are used by laboratories to charge Medi-Cal for expensive tests and other procedures that were never performed.

The fake doctor offices, Cates said, get a kickback from the laboratories for providing Medi-Cal patient numbers.

In addition to its examination of clinics that are authorized to bill Medi-Cal, Cates said state investigators will be looking for facilities that advertise for Medi-Cal patients but are not part of the program.

“We’re trying to nip this thing in the bud, and the only way to do it is to visit every doctor,” Cates said. “Unless we go door to door, there is no way for the state to know about the clinics that are claiming to be Medi-Cal providers when they are not.”

He hastened to add that, although about 10% of the clinics are believed to be fraudulent, the vast majority are honest and in those facilities investigators plan to conduct their surveys as quickly as possible.

“We know, for example, if we see a lot of babies in a clinic it is probably legitimate because the last thing these pretend doctors want is a baby that might really need attention,” he said.