Two Newport Beach doctors are among six people facing insurance fraud charges in connection with an alleged $22-million urine test billing scheme that authorities say operated through sober-living homes in Orange County until 2014.
Dr. Carlos Montano, 61, of Newport Beach and Dr. Suzie Schuder, 70, of Corona del Mar are accused of writing unnecessary prescriptions for urine drug tests multiple times per week for employees of Compass Rose Recovery homes and affiliated businesses, according to the Orange County district attorney’s office.
Montano is facing a felony count of conspiracy to commit medical insurance fraud, three counts of insurance fraud and possible sentencing enhancements on allegations of property damage over $3.2 million and aggravated white-collar crime over $500,000.
He pleaded not guilty to all charges Monday, according to Orange County Superior Court records. Montano is in Orange County Jail with bail set at $13.15 million. He is due back in court July 27.
Schuder is facing the same charges and a fourth count of insurance fraud, according to court records.
Schuder, who is in Orange County Jail with bail set at $3 million, is expected to be arraigned June 2 in Superior Court.
If convicted, Montano and Schuder could face 16 years and eight months and 17 years and eight months in state prison, respectively.
Prosecutors allege that Pamela Ganong, 61, of La Jolla and Philip Ganong, 63, of Bakersfield, who operated Compass Rose Recovery throughout Southern California with homes in cities including Huntington Beach and Costa Mesa, concocted a scheme to overbill insurance companies for the collection of urine for drug tests.
The Ganongs are each charged with a count of conspiracy to commit medical insurance fraud, 13 counts of insurance fraud and 26 counts of money laundering, with possible sentencing enhancements on allegations of property damage over $3.2 million, money laundering over $2.5 million and aggravated white-collar crime over $500,000. They pleaded not guilty to all charges Monday.
Authorities allege that between 2012 and 2014, the Ganongs fraudulently listed residents and non-residents of sober-living homes as employees of their four businesses — William Mae Co., Compass Rose Recovery, Compass Rose Staffing and Ghostline Labs — and expanded their health insurance policy to cover nearly 100 people, according to the district attorney’s office.
Prosecutors contend the Ganongs started Compass Rose Staffing, a temporary-labor agency, in January 2013 to act as a front for their scheme.
The Ganongs and their son William, 33, of Bakersfield are accused of submitting bills of more than $1 million to Aetna, Anthem, Cigna and UnitedHealthcare for drug testing themselves and other associates.
Pamela Ganong’s sister, Susan Lee Stinson, 63, of Carlsbad, is accused of dropping off paychecks at her sister’s sober-living facilities and sending emails to doctors hired by the Ganongs requesting urine drug test prescriptions.
Prosecutors allege the family switched insurance carriers multiple times to try to avoid being caught.
To further the scheme, prosecutors claim, the Ganongs hired Montano and Schuder, who are accused of writing urine drug prescriptions beginning at three times per week and increasing to seven times per week for most of the couple’s employees.
In exchange for the test orders, the doctors received 20% of the net insurance proceeds from the billing and a per-patient fee of $200, prosecutors say.
According to prosecutors, Ghostline Labs used sober-living home addresses in Costa Mesa as the address for the business. Prosecutors say Ghostline paid Schuder $21,784 for work in 2012 and 2013.