Doctor From Cerritos Pleads Guilty in $154 Million Insurance Fraud Scheme

A 65-year-old physician from Cerritos was convicted today for performing unnecessary and dangerous surgeries on healthy patients in a $154-million medical insurance fraud scheme in Orange County and could face up to 18 years in prison at his sentencing, prosecutors said.

Michael Chan pleaded guilty to 40 felony counts related to the insurance fraud, conspiracy, and aiding and abetting the illegal recruiting of patients, according to Orange County prosecutors George McFetridge and William Overtoom.

Chan was one of 19 defendants in the so-called Unity case -- – the largest medical fraud prosecution in the nation. The case stems from doctors and others recruiting patients for unnecessary medical tests to defraud insurance companies. The fraud revolved around the Unity Outpatient Surgery Center in Buena Park, which is now closed.

Orange County Superior Court Judge Thomas Goethals, who offered the plea bargain to Chan today, said the Cerritos resident must serve six months in an Orange County jail,. He will then be brought back to the judge for sentencing, Overtoom said.

The judge indicated today that he may put Chan on probation then, but if the defendant violates any terms of the probation then he could face up to 18 years in prison, Overtoom said. Chan has also been ordered to pay $250,000 up front and will eventually have to make full restitution.

Prosecutors did not object to Goethals' plea deal.

Of the 19 defendants, 13 were indicted on June 13, 2008. The indicted defendants include an attorney, accountant, three doctors and others known as "cappers,'' who helped recruit patients who agreed to be paid to undergo unnecessary medical procedures such as a colonoscopy. The recruitment of patients, or “capping,” is illegal in California. 

In exchange for undergoing surgery, the patients received a cash payment, usually between $300 and $1,000 per surgery, or credit toward a free or discounted cosmetic surgery. 

Case Details of the 19-Person Insurance Fraud Scheme

• Eight defendants remain in the case, and a few more may plead guilty before the case is scheduled to go to trial next month.
• Doctor William Wilson Hampton Jr., 55, of Seal Beach, pleaded guilty May 8, 2009, and was sentenced to 16 years in state prison.
• Sue Nanda, 43, of Costa Mesa, pleaded guilty Feb. 20, 2009, to illegally recruiting patients for the medical procedures and filing false tax returns and was sentenced to 10 years in state prison and ordered to pay more than $500,000 in restitution.
• Maria DeJesus Licea Rosales, 44, pleaded guilty Aug. 7, 2009, to illegally recruiting patients and filing false tax returns and was sentenced to eight years in state prison.
• Henry Truong, 43, Amanda Tran, 52, and Nicholas Vu, 53, have also pleaded guilty to illegally recruiting patients.
• Olga Toscano, 43, Pancha Keophimone, 60, Thuy Huynh, 53, and Ngoc Huynh, 51, face charges of illegally recruiting patients.
• Doctors Chan, Hampton and Mario Rosenberg, 63, were accused of performing a total of 1,037 procedures, often on weekends, according to prosecutors. 
• Chan, who was Unity's medical director and owner, specialized in invasive gynecological procedures, according to prosecutors. He did unnecessary surgeries on 161 patients, prosecutors said.
• Attorney Roy Dickson, 63, was also involved in the scheme with accusations that he helped draw up fraudulent documents to disguise the illegal recruiting of patients. He is also accused of laundering as much as $3 million to keep the surgery center in operation, according to prosecutors.
• Accountant Andrew Harnen, 57, allegedly signed 10 checks to doctors for a total of more than $50,000 and 157 checks to the recruiters for a total of nearly $1 million as part of the Unity scheme, according to prosecutors.
• Administrators Rosalinda Landon, 66, and Dee Francis, 61, also face charges related to the alleged scheme. Administrators Tam Vu Pham, 46, Huong Ngo, 45, and Lan Nguyen, 55, pleaded guilty in connection with the scheme.

City News Service contributed to this report.