OCDA Charges 12 in Insurance Overbilling Scheme

The Orange County District Attorney's office has arrested and charged 12 defendants, including chiropractors, an attorney, and office employees in an undercover sting operation targeting illegal patient referral and insurance overbilling schemes.

Operation K-Fraud (Knockout Fraudulent Attorneys and Unscrupulous Doctors) was an undercover operation coordinated and conducted by the Orange County District Attorney’s (OCDA) Insurance Fraud Unit and Gatekeepers Insurance Fraud Team (GIFT). GIFT investigates provider professionals suspected of defrauding auto and workers’ compensation insurance companies through undercover operations.

Based on a list compiled by the National Insurance Crime Bureau, the OCDA sent 248 letters to medical providers suspected of engaging in fraudulent practices or billing. The letter explicitly outlined the opportunity for the medical professional to engage in an illegal fee splitting scheme with a fake attorney’s storefront office set up by the OCDA. The scheme involved medical professionals agreeing to pay up to 30 percent of specific patient billings to the OCDA undercover investigators posing as law office administrators in exchange for that patient’s referral. OCDA undercover investigators also posed as “patients” claiming to be suffering from soft tissue damage from car accidents.

Of the 248 letters, 20 individuals responded to inquire about the scheme. Four of the 20 medical professionals did not show up after scheduling a meeting. Six others showed up for a meeting, but after meeting with undercover OCDA investigators, they abandoned the scheme, acknowledging it was illegal. The OCDA did not pursue three of the medical providers for other reasons.

The OCDA has charged 12 defendants in nine criminal cases including eight chiropractors, one attorney, and three administrative staff members. In the storefront operation, the OCDA charged seven chiropractors and one chiropractic administrator/chiropractor’s wife for engaging in an illegal fee splitting scheme. Two of these eight defendants are also charged with billing for more services than rendered.

In addition to the law office storefront undercover investigation, the OCDA also conducted walk-in investigations of chiropractic clinics and law offices, where a chiropractor is accused of making a referral to an attorney and law office administrative staff are accused of making a referral to a chiropractor. In these cases, a chiropractor and an attorney have been charged with overbilling and engaging in an illegal fee splitting kickback schemes in 2005 and 2007.

Additionally, the OCDA has charged one law office administrator, a chiropractor, and his chiropractic administrator with engaging in overbilling and an illegal fee splitting kickback scheme.