Owner of Glendale Lab Admits Medicare Fraud

In the second such case this week, a Los Angeles-area business owner has admitted bilking the federal Medicare program of more than $1 million by submitting bills for services never rendered.

Ernesto Penaflorida, 57, owner of a now-defunct Glendale medical laboratory, pleaded guilty Monday before U.S. District Judge Ronald Lew to defrauding Medicare by collecting on claims totaling $1.3 million for blood tests that were not performed.

“This is a fairly significant fraud,” Assistant U.S. Atty. Lee Arian said. “We’ve stepped up looking for and prosecuting the larger cases.”

Fabricated bills submitted in 1997 and 1998 by Penaflorida’s business, Medstat Clinical Laboratory, actually totaled $2.2 million, but Penaflorida received only part because Medicare normally does not fully reimburse claims, Arian said.

Not only were blood tests never conducted, Medstat did not have the equipment or chemical supplies needed for them, authorities said. Tests listed on bills were for iron deficiency, lead poisoning, illegal drug use, chlamydia and tuberculosis. Arian does not believe the public was put at risk.

“These were add-on tests that weren’t really necessary. We believe they were never ordered by the doctors, although Medstat disputes that,” he said.

In an unrelated but similar case, Van Nuys businessman Vasu Deo agreed Monday to plead guilty to cheating the Medicare program of $1.15 million by submitting bills for wheelchairs and other devices that he never delivered or that were medically unnecessary.

Penaflorida, a former Glendale resident extradited from the Philippines last summer, will very likely receive a three-year prison sentence, Arian said.

Penaflorida’s attorney, Richard Steingard, declined to comment on the case.