Health Care & Reproductive Rights

Brown Subpoenas Health Plans over Claims Denials and Rate Hikes

February 25, 2010
Contact: (916) 210-6000,

Los Angeles—Attorney General Edmund G. Brown Jr., who has an ongoing investigation into possibly illegal practices by some California health insurers, today subpoenaed financial records and other documents from California’s seven largest health insurance companies.

“We have been looking at these companies for a number of months and are very concerned that some of them are unjustly raising premiums and denying payment of legitimate claims,” Brown said. “Not only are the rate increases devastating to Californians strapped by the economy, but in some cases, they are possibly illegal.”

“Our best attorneys are going to get to the bottom of this, and where we find violations of California’s unfair business laws, we intend to stop them,” Brown added.

Brown subpoenaed records from Aetna Health, Anthem Blue Cross, CIGNA, Health Net, Blue Shield of California, Kaiser Permanente and PacifiCare. Today’s subpoenas cover pay-for-service health plans, which are health plans that reimburse doctors and hospitals for services performed instead of a health maintenance organization (HMO) approach. Brown revealed that his office served subpoenas to those same companies last month regarding their managed care plans, known as HMOs.

Brown said the insurance companies have 30 days to hand over their financial and other records.

Brown began an official inquiry last September into HMO practices of reviewing and paying insurance claims submitted by doctors, hospitals and other medical providers. The investigation was prompted by reports that California’s five largest health insurance providers were denying insurance claims at rates of up to 39.6 percent.

Recently, Anthem Blue Cross announced to its members that it planned to hike premium rates by as much as 39 percent. Brown’s investigation will probe whether the other health plans are planning similar rate hikes and will consider whether Anthem’s steep rate increases for individual California consumers are fair under California law.

The investigation will include an examination of how much the plans are spending on health care versus non-healthcare costs such as marketing, administration and profits. The plans have been asked to provide detailed information on how they spend policy-holders’ premiums and how they review claims and decide whether and how much to pay the doctor or hospital for the service.

The investigation also will examine:
• Member and medical provider complaints against the health plans describing payment delays, reduced payments and denials of payment claims, and the health plans responses to those complaints;
• How health plans determine doctor and hospital rankings and whether those rankings mislead customers on quality;
• Whether the health plans intend to raise premiums, and, if so, whether the plans disclosed the amount and frequency of the premium increases at the time of enrollment;
• Whether the health plans offer alternative policies to members when they increase premiums and whether the plans may deny enrollment in the alternative policies based on preexisting conditions.

Brown’s investigation will look for violations of law, including California’s Unfair Competition Law (Business & Professions Code section 17200) and False Advertising Law (Business & Professions Code section 17500.) These laws prohibit “any unlawful, unfair or fraudulent business act or practice” and the use of “false or misleading statements” to the public.

The attorney general is authorized to prosecute violations of the Unfair Competition Law criminally or file a civil law enforcement action to obtain an injunction forcing the company to stop the business practices, restitution of money to affected consumers and civil penalties beyond those available to private parties.

Brown Sends Arsonist to Prison for Attempted Murder of San Diego County Nursing Home Residents

February 8, 2010
Contact: (916) 210-6000,

San Diego—Attorney General Edmund G. Brown Jr. today announced that Mary Louise Wilson, 54, of San Diego, has been sentenced to 19 years and 4 months in prison for attempting to “kill or seriously injure” nursing home residents by setting fires in the homes.

Today’s sentence marks the longest prison term that anyone convicted by the Attorney General’s Office has received in an elder abuse case.

“These fires were no accident. This woman meant to kill or seriously injure dozens of disabled people,” Brown said. “Residents of nursing homes are particularly vulnerable, so today’s sentence is an important victory in our fight against elder abuse in California communities.”

Brown’s Bureau of Medi-Cal Fraud and Elder Abuse (BMFEA) was created in 1978 to uncover Medi-Cal fraud and to combat the abuse and neglect of patients in nursing homes and other long-term care facilities. Since Brown took office, BMFEA has secured 217 criminal convictions and has collected more than $1.1 million in restitution and reimbursement.

In August 2009, Brown’s office, along with the National City Fire Department and the El Cajon Police Department, began an investigation into a series of fires set in nursing homes in the San Diego area.

The first incident occurred in January 2009 at El Dorado Care Center in El Cajon. Wilson, a resident of the facility, had been placed in a room with two other women. Neither of her two roommates was able to get in or out of bed without nursing assistance, and one of the women was attached to an oxygen tank.

In the middle of the night, Wilson set fire to the bed of one of her roommates while she was sleeping. A nurse heard the smoke alarm and used a fire extinguisher to put out the fire before anyone was hurt.

Four months later, Wilson, who was able to manage in a more independent environment, was transferred to Golden Paradise Senior Living, an assisted living center in National City.

Soon after being transferred, Wilson set fires in the second-floor trash chute, the first-floor dumpster and the second-floor library. She also threw burning materials down the trash chute. National City Fire Department firefighters and the building’s sprinkler system put out the fires before anyone was hurt.

Investigators from Brown’s office identified Wilson as a suspect by linking the fires at the two facilities. In October, she was charged with the crimes and pled guilty on January 5, 2010 to:

• Two counts of attempted murder;
• Three counts of arson;
• Two counts of attempted arson;
• One count of assault with a deadly weapon for threatening a resident with a knife; and
• One count of making a criminal threat with a deadly or dangerous weapon.

In addition to today’s court victory, BMFEA has investigated and prosecuted several other notable elder abuse cases in the past year. Late last year in Sacramento, Maria Elna Flora pleaded guilty to 12 counts of grand theft and burglary for stealing $435,100 from retirees to fund a daily gambling habit.

In September 2009, Brown filed charges against Pamela Ott, a Kern Valley Hospital administrator, for allowing staff to forcibly administer psychotropic medications to patients to sedate them for the staff’s convenience. The case is pending in Kern County Superior Court.

Wilson’s booking photo and a copy of the complaint are attached.

Brown Sues Electronic Cigarette Maker for Targeting Minors and Misleading Advertising Claims

January 13, 2010
Contact: (916) 210-6000,

Oakland—Attorney General Edmund G. Brown Jr. today sued Florida-based electronic-cigarette retailer Smoking Everywhere to prevent the company from targeting minors and making “misleading and irresponsible” claims that electronic cigarettes are a safe alternative to smoking.

“Smoking Everywhere launched a misleading and irresponsible advertising campaign targeting minors and claiming that electronic cigarettes do not contain harmful chemicals,” Brown said. “We are asking the Court to take these cigarettes off the market until the company has proven the products are safe.”

Electronic cigarettes, or e-cigarettes, are battery-operated devices with nicotine cartridges designed to look and feel like conventional cigarettes. Instead of actual smoke, e-cigarettes produce a vapor from the nicotine cartridge that is inhaled by the user. Smoking Everywhere, one of the largest e-cigarette retailers in the United States, claims in its advertisements that the e-cigarettes have no carcinogens, no tar, no second-hand smoke, and are therefore safe and healthy.

However, the U.S. Food and Drug Administration (FDA) has determined that electronic cigarettes contain a variety of dangerous chemicals, including nicotine, carcinogens such as nitrosamines and, in at least one case, diethylene glycol, commonly known as antifreeze.

Today’s lawsuit seeks to prevent the company from selling its products until there is evidence to substantiate its claims that they are safe. The lawsuit will also require the products to display the state-mandated Proposition 65 warnings of ingredients known to cause cancer or reproductive harm and seeks to prevent the company from making false and misleading claims and promoting the products to minors.

In one advertisement targeted to minors, Smoking Everywhere featured a video with radio show host Howard Stern claiming, “kids love ‘em.” The products feature flavors that appeal to youth, including strawberry, chocolate, mint, banana and cookies-and-cream.

Other ads claim that electronic cigarettes can help people quit smoking. To be advertised as a smoking-cessation device, a product must be approved by the FDA for that purpose. In fact, none of Smoking Everywhere’s products have been approved by the FDA.

The American Cancer Society, the American Heart Association, the American Lung Association, the Campaign for Tobacco Free Kids and other groups have expressed serious concerns about the safety of electronic cigarettes and urged that they be removed from the market until proof of their safety has been established.

A copy of the complaint is attached.

PDF icon n1845_complaint.pdf497 KB

Brown Settles $21.3 Million Medi-Cal Fraud Suit with Pharmaceutical Giant Schering-Plough

December 17, 2009
Contact: (916) 210-6000,

Sacramento – Attorney General Edmund G. Brown Jr. announced today a $21.3 million settlement with Schering-Plough Corporation, resolving allegations the company “deliberately inflated” the price of Albuterol and other drugs, causing California’s Medicaid (Medi-Cal) program to overpay millions of dollars in pharmacy reimbursement.

Albuterol is a widely prescribed generic drug, delivered through inhalers, nebulizers and masks, and used to treat asthma and other breathing problems.

“With healthcare costs spiraling out of control, it’s unconscionable that a Fortune 500 pharmaceutical company deliberately inflated its drug prices to cheat California’s public healthcare system out of millions of dollars,” said Brown. “This is a company that made more than $12 billion in profits last year, yet still raided the pockets of California taxpayers.”

Today’s settlement stems from a lawsuit filed by a whistleblower against several pharmaceutical companies accused of Medicaid fraud. The case is still proceeding against Dey, Inc., Mylan Pharmaceuticals, Inc., Sandoz, Inc. and their parent companies. Schering-Plough recently merged with Merck, and is now known as Merck & Co.

California’s $21.3 million agreement is one of three settlements negotiated with Schering-Plough, collectively totaling $69 million, over falsely inflated drug prices. The three lawsuits were originally filed by a whistleblower, Ven-A-Care of the Florida Keys, Inc., on behalf of California, Florida and the federal government. Schering-Plough also reached settlements with Florida and the federal government, the latter for approximately $44.5 million.

The settlement resolves allegations that Warrick Pharmaceuticals, a subsidiary of Schering-Plough, deliberately inflated the Average Wholesale Prices (AWPs) it reported to California for Albuterol. Medi-Cal sets the reimbursement rates for pharmacies for many of the drugs dispensed to Medi-Cal patients based on the AWPs reported by drug manufacturers.

California pharmacies dispensed Albuterol to patients and were then reimbursed by Medi-Cal. By reporting falsely inflated AWPs, some drug manufacturers caused Medi-Cal to overpay millions of dollars in pharmacy reimbursement. Medi-Cal is funded on a roughly 50% - 50% basis by the federal government and the State of California.

Reporting fraudulent AWPs is a violation of the California False Claims Act. The Attorney General’s Office investigated the claims, and in 2005, intervened in the lawsuit with its own complaint, currently being litigated in federal court in Boston. The California Department of Health Care Services, which is responsible for administering Medi-Cal, will receive $20.1 million, and the Attorney General’s False Claims Fund will receive just over $1.2 million.

The Attorney General’s False Claims Fund is used for the ongoing investigation and prosecution of false claims, including Medi-Cal fraud claims. Today’s settlement was negotiated by the Attorney General’s Bureau of Medi-Cal Fraud and Elder Abuse. The Bureau of Medi-Cal Fraud and Elder Abuse investigates and prosecutes claims of Medi-Cal civil and criminal fraud, as well as allegations of elder abuse, such as physical assaults or financial theft.

The settlement agreement is attached.

PDF icon Settlement Agreement1.95 MB

Brown Arrests Former Healthcare Clinic Manager for $2.2 Million Medi-Cal Rip-off

October 9, 2009
Contact: (916) 210-6000,

Siskiyou County – Attorney General Edmund G. Brown Jr. announced that he has filed criminal charges against the former manager of a Mount Shasta-based medical clinic who filed “bogus claims” under Medi-Cal for medical services that were never performed.

Denise Fairhurst, 57, of Redding, was arrested Wednesday on five criminal counts of grand theft, insurance fraud and submitting false claims to the government. She is being held in Siskiyou County Jail on $1 million dollar bail. Arraignment is set for today in Siskiyou Superior Court at 3:00 p.m.

“Fairhurst ran a health clinic that was losing money and in danger of closing because of widespread financial mismanagement,” Brown said. “To keep her operation afloat, she submitted bogus claims to Medi-Cal and in the process violated California law.”

Brown’s criminal complaint, filed in Siskiyou Superior Court, contends that between January 2004 and December 2007, Fairhurst, the former manager of Alpine Healthcare Clinic, billed Medi-Cal $2.2 million for services not rendered to beneficiaries to help pay Alpine’s operations and management. In addition, Fairhurst used $33,492 of the funds to pay personal credit card bills.

The clinic’s financial problems stemmed from Fairhurst’s inability to set appropriate compensation rates for employees and physicians. For instance, a member of the maintenance staff was paid $1000 a month to work one hour a week. Other medical clinics in town lost employees to Alpine because they could not compete with its pay structure. The clinic also lost income because of an agreement she made with doctors to provide care to patients when they were admitted to a hospital.

With costs rising, Fairhurst submitted false claims to Medi-Cal. She forged Medi-Cal forms, claiming that patients had received care at the clinic, even though some patients had not been to it in years. It is estimated that two-thirds of the claims she submitted were fraudulent.

The scheme unraveled when a member of the clinic’s board of directors discovered that payment claims had been submitted for patients who had not been seen at the clinic. The board of directors hired an accounting firm to conduct an audit of the clinic’s finances. Fairhurst refused to provide any information to the firm and resigned in June 2008.

The audit uncovered further evidence of Fairhurst’s activities, including the use of a personal credit card that was linked to the clinic’s bank account. The clinic’s board of directors referred its findings to the Attorney General’s Bureau of Medi-Cal Fraud and Elder Abuse for prosecution earlier this year.

If convicted, Fairhurst faces up to five years in prison.

To report fraud or abuse, call the Bureau of Medi-Cal Fraud and Elder Abuse's hotline at (800) 722-0432.

PDF icon n1818_fairhurst.pdf118.31 KB

Brown Unveils Real-Time Statewide Prescription Drug-Monitoring System

September 15, 2009
Contact: (916) 210-6000,

LOS ANGELES – Continuing his effort to curb prescription-drug abuse, Attorney General Edmund G. Brown Jr. today unveiled a new internet-based prescription-monitoring database that provides physicians, pharmacists and law enforcement officers a powerful technology to stop 'drug seekers' from obtaining prescription drugs.

"The recent deaths of Anna Nicole Smith and Michael Jackson have made clear to the whole world just how dangerous prescription drug abuse can be,” said Brown. “Today, my office is inaugurating a high-tech monitoring system that will enable doctors and law enforcement to identify and stop prescription-drug seekers from doctor-shopping and abusing prescription drugs.'

The state's secure database, known as the Controlled Substance Utilization Review and Evaluation System (CURES), contains more than 100 million entries representing controlled substances (Schedule II, III and IV) dispensed in California. Controlled substances are classified under federal guidelines based on potential for abuse and accepted medical use in treatment in the United States and international treaties.

Prescription Drug-Monitoring Database

Today’s launch of the online CURES database is part of Brown’s effort to curb prescription-drug abuse in the state and make it easier for doctors to track their patients’ prescription-drug history. The database gives health professionals (doctors, pharmacists, midwives, and registered nurses), law enforcement agencies and medical profession regulatory boards instant computer access to patients’ controlled-substance records. This replaces the state’s previous system that required mailing or faxing written requests for information. Each year, more than 60,000 such requests are made to the Attorney General’s office.

Each database record contains a patient’s dispensed drug record, including:

• Drug Name
• Date Filled
• Quantity, Strength and Number of Refills
• Pharmacy Name and License Number
• Doctor’s Name and DEA Number
• Prescription Number

Under the new system, a pain-management physician examining a new patient complaining of chronic back pain would be able to instantly look up the patient’s controlled-substance history to determine whether the patient legitimately needs medication or is a “doctor shopper.” “Doctor shoppers” are prescription-drug addicts who visit dozens of doctors to obtain multiple prescriptions for drugs. In the past, the doctor’s request could take several days for a response. Now with CURES instant access, doctors can identify doctor shoppers and other prescription-drug abusers before they write them another prescription. Law enforcement can also flag a person in the database to alert physicians to potential abusers.

Last year, the Attorney General’s office provided more than 64,000 Patient Activity Reports to authorized subscribers.

Growing Problem of Prescription-Drug Abuse

With 7,500 pharmacies and 158,000 prescribers reporting prescription information annually, CURES is the largest online prescription-drug monitoring database in the United States. Its goal is to reduce drug trafficking and abuse of dangerous prescription medications, lower the number of emergency room visits due to prescription-drug overdose and misuse, and reduce the costs to healthcare providers related to prescription-drug abuse.

Prescription-drug abuse costs the state and health insurers millions of dollars each year. The National Survey on Drug Use and Health estimates that 20 to 30 percent of California’s drug abusers primarily use prescription drugs. In addition, a 2005 survey by the Drug Abuse Warning Network estimates that non-medical use of pharmaceuticals accounted for more than 500,000 emergency room visits in California, an enormous drain on the state's healthcare system.

According to the latest Department of Justice 'Drug Trends' report, Valium, Vicodin, and Oxycontin are the most prevalent pharmaceutical drugs obtained fraudulently. Vicodin and Oxycontin are the two most abused pharmaceutical drugs in the United States.

CURES Success Stories

Prescription-drug abuse can have serious consequences for both abusers and the public. Each year, hundreds of people die from prescription-drug overdose in California. Dozens more are injured or killed by prescription-drug abusers who are driving under the influence of medication. The problem is on the rise; recent studies have found that teens are increasingly more likely to have abused prescription drugs than most illicit drugs.

Last year, Brown and the CURES team targeted the top 50 doctor shoppers in the state, who averaged more than 100 doctor and pharmacy visits to collect massive quantities of addictive drugs like Valium, Vicodin, and Oxycontin. The crackdown led to the arrest of dozens of suspects, including Frankie Greer, 53, who visited 183 doctors and 47 pharmacies to feed a prescription-drug habit that included some of the most dangerous painkillers in lethal combinations. In a one-year period, Greer sought out multiple doctors at hospital emergency rooms to prescribe her more than 4,830 hydrocodone tablets, 2,210 oxycodone tablets and 156 Oxycotin pills, along with a variety of additional addictive painkillers.

In May 2009, the CURES team worked with the Ventura County Sheriff’s Office to provide detectives with the prescribing history of Dr. Bernard Bass, a Burbank doctor accused of writing hundreds of fraudulent prescriptions to feed his patients’ drug addictions. Seven of his patients died from prescription-drug overdoses. Following an investigation that included the CURES report of the prescriptions he had written, Dr. Bass faced criminal charges, lost his medical license and surrendered his license to prescribe controlled substances.

CURES can also alert law enforcement and licensed medical professionals to signs of illegal drug diversions. Last fall, Brown’s office teamed up with the Simi Valley Police Department to investigate Ricky Washington, known to police for his violent history, street gang-affiliation and previous drug-trafficking arrests. The 12-month investigation revealed a criminal conspiracy in which Ricky Washington and associates had stolen the identities of eight doctors, which they used to illegally write prescriptions. The drug-trafficking group also stole the identities of dozens of innocent citizens, designating them as 'patients' in order to fill the fraudulent prescriptions. The drug ring obtained more than 11,000 pills of highly addictive drugs like Oxycontin and Vicodin.

For more information on the California Department of Justice Bureau of Narcotic Enforcement and California's current prescription drug monitoring system visit:

For doctors and other authorized healthcare and prescription-drug providers, visit for more information on CURES and how to register.

Brown Files Criminal Charges Against Former Nursing Home Administrator in Kern Valley Elder Abuse Case

September 8, 2009
Contact: (916) 210-6000,

Bakersfield – Attorney General Edmund G. Brown Jr. announced that Kern Valley Hospital administrator Pamela Ott was charged on eight felony counts of elder abuse today for allowing staff to forcibly administer psychotropic medications to patients for their own convenience, rather than for their patients’ therapeutic interests. These actions are alleged to have resulted in the deaths of three nursing home residents.

“As hospital administrator, Pamela Ott, was ultimately responsible for safeguarding the welfare of her patients,” Brown said. “Instead, Ott abdicated her responsibility and allowed the staff of the Kern Valley Hospital to foricibly sedate patients who questioned their care.”

Brown the charges against Ott in Kern County Superior Court. She surrendered herself in court this morning and pled not guilty. She was released on her own recognizance on the condition that she not run a skilled nursing facility. A preliminary hearing is set for November 4, 2009. Today’s charges are in addition to those filed in February 2009 against:

• Gwen Hughes, the former Director of Nursing at the skilled nursing facility of the Kern Valley Healthcare District in Lake Isabella, Kern County on charges of elder abuse and assault with a deadly weapon.

• Debbi Hayes, the former pharmacist at the Valley Healthcare District, on charges of elder abuse and assault with a deadly weapon. On August 14, 2009, Hayes pled no contest to a felony charge of conspiracy to commit an act injurious to public health. She is a cooperating witness for the people.

• Dr. Hoshang Pormir, a staff physician at Kern Valley Healthcare District, who was serving as the medical director of the skilled nursing facility, on charges of elder abuse.

As the Administrator of the Kern Valley Health Care District, Ott hired and supervised Director of Nursing Gwen Hughes.

Upon taking over in September 2006, Hughes ordered that Alzheimer's and other dementia patients be given high doses of psychotropic medications to make them more tranquil and easy to control. She ordered the administration of these medications to patients who argued with her, were noisy, or who were otherwise disruptive. Two patients who resisted were held down and forcibly given injections. Ms. Ott was informed of these actions and allowed them to continue.

Hughes is also alleged to have directed Debbi Hayes, the hospital pharmacist, to fill prescriptions for psychotropic medications. Hayes wrote and filled these prescriptions without first obtaining a doctor's approval.

Dr. Pormir approved these psychotropic medications only some time after they had been administered and without examining the patients first and determining whether these psychotropic medications were medically necessary.

Several of these patients are alleged to have had medical complications as a result of being given these psychotropic medications, including lethargy and the inability to eat or drink properly. It is believed that three patients died and one patient suffered great bodily injury as a result.

The investigation

Kern Valley Healthcare District operates a small community hospital and skilled nursing facility in Lake Isabella. The case came to the attention of authorities in January 2007, when an ombudsman reported to the Bakersfield office of the California Department of Public Health that a patient in the skilled nursing facility had been held down and given an injection of psychotropic medication by force.

The Department of Public Health immediately sent an investigative team with a doctor, a nurse, and a doctor of pharmacology. They determined that 22 patients, including some who were suffering from Alzheimer's at the skilled nursing facility, were being given high doses of psychotropic medication not for therapeutic reasons, but to simply control and quiet them for the convenience of the staff.

The Department of Public Health issued a Certificate of Immediate Jeopardy which resulted in the immediate dismissal of the Ms. Hughes. The matter was then turned over to the California Department of Justice, Bureau of Medi-Cal Fraud and Elder Abuse.

Special Agents from the Bureau of Medi-Cal Fraud and Elder Abuse began a year-long investigation, with the co-operation and assistance of the Department of Public Health and the administration of the Kern Valley Healthcare District.

A search warrant was served on the facility in August 2008, resulting in the seizure of numerous medical files and records.

If convicted, all defendants could face up to 11 years in prison.

The case is being prosecuted by the Attorney General's Bureau of Medi-Cal Fraud and Elder Abuse, with the co-operation and assistance of the Kern County District Attorney's Office.

To view the news releases issued February 2009 about this case, go to

To report elder abuse or Medi-Cal fraud, call the Bureau of Medi-Cal Fraud and Elder Abuse's hotline at (800) 722-0432.

The complaints are attached.

Brown Launches Independent Inquiry into HMOs' Handling of Health Insurance Claims

September 3, 2009
Contact: (916) 210-6000,

Los Angeles – Attorney General Edmund G. Brown Jr. today announced that deputies in his office are launching an independent inquiry into how Health Maintenance Organizations review and pay insurance claims submitted by doctors, hospitals and other medical providers.

This investigation is prompted by reports that California’s five largest health-insurance providers are denying insurance claims at rates of up to 39.6 percent.

“These high denial rates suggest a system that is dysfunctional, and the public is entitled to know whether wrongful business practices are involved,” Brown said.

In the coming days and weeks, deputies will review records and will speak with individuals who have relevant knowledge of the issues raised.

Brown Arrests two Individuals for $678,000 Medicare Rip-off

August 14, 2009
Contact: (916) 210-6000,

Los Angeles – Attorney General Edmund G. Brown Jr. announced that agents from his office late last night arrested two individuals who bilked Medicare out of $678,000 by submitting phony bills for walkers, wheelchairs, diabetic shoes and even body braces and canes, using the proceeds for luxury goods including a gold-colored Hummer H200.

A third suspect remains at large.

“At a time when government needs every dollar it has, these individuals submitted completely false claims for equipment they never purchased,” Brown said. “Such callous disregard for the public interest is intolerable and warrants swift prosecution.”

In April 2009, agents from the Attorney General’s Bureau of Medi-Cal Fraud and the U.S. Department of Health and Human Services launched a joint investigation into dozens of suspicious Medicare claims for durable medical goods.

The four-month investigation found that, beginning in November 2008, the defendants established dummy medical supply companies, obtained stolen social security numbers and physician providers numbers, made counterfeit state IDs, and used the information to submit false claims totaling $678,000 to Medicare.

After receiving payment from Medicare, the defendants deposited the funds into an account at Center Bank in Los Angeles, using them to pay for luxury goods, including the Hummer that Odonnell purchased.

Brown’s office filed charges Tuesday in LA Superior Court and yesterday arrested the following individuals:

• Monica Odonnell, 44, of Canoga Park, on four counts of misapplication of records, and computer access and fraud. She is being held on $15,000 bail in the Los Angeles County Jail. Odonnell is a Department of Motor Vehicles employee.
• Ekaterina Shlykova, 23, of Los Angeles on one count of perjury. She is being held on $25,000 bail in the Los Angeles County Jail.
• A third individual -- Evgeny Lyadov, 32, of Los Angeles -- was charged with 36 counts of grand theft, making fraudulent claims, identity theft, and perjury. Lyadov remains at large. A search of his office uncovered over $170,000 in cash, fraudulent credit cards and duplicate passports.

Medicare schemes are often uncovered when one business submits an unusually large number of claims for the same device or beneficiaries. To evade detection, these defendants sought to give the impression that doctors were ordering medical equipment for different beneficiaries at different stores.

Ultimately, however, the actual Medicare beneficiaries complained that their monthly statements showed that they had received medical equipment from businesses in Los Angeles, when they had not.

Auditors investigated and discovered a large number of claims for the same devices were being made from a company called “North Hollywood Medical Supply” and referred the suspicious activity for prosecution.

"Medicare fraud is an increasingly serious problem that costs taxpayers billions in lost and wasted dollars,' said Sarah J Allen, Special Agent in Charge for the San Francisco Region of the Office of Inspector General for the Department of Health of Human Services. 'Today’s arrests represent one victory in a bigger battle to stop these fraudulent schemes so that Medicare can better serve those who really need and deserve help.'

If convicted, Odonnell and Shlykova could receive up to three years in state prison. Lyadov could face more than 15 years in prison.

To report fraud or abuse, call the Attorney General's Bureau of Medi-Cal Fraud and Elder Abuse at (800) 722-0432.

Copies of the arrest warrants and criminal complaints are available upon request.


Imposter Nurses Used to Inflate Bills for Care to Disabled Medi-Cal Patients, Many of Them Children with Cerebral Palsy and Other Major Disabilities
July 9, 2009
Contact: (916) 210-6000,

Federal and State authorities this morning arrested 20 defendants accused of being part of ring that defrauded Medi-Cal out of nearly $4.6 million by using unlicensed individuals to provide in-home care to scores of disabled patients, many of them children with cerebral palsy or developmental disabilities.

The 20 defendants arrested this morning are among 42 defendants named in a 41-count indictment that was returned by a federal grand jury on June 25. The indictment is part of an investigation called Operation License Integrity, a two-year investigation conducted by the Federal Bureau of Investigation, the U.S. Department of Health and Human Services Office of Inspector General, and the Office of the California Attorney General-Bureau of Medi-Cal Fraud and Elder Abuse. The indictment alleges that the 42 defendants and two others, one of whom has already pleaded guilty to health care fraud charges, conspired to bill Medi-Cal nearly $4.6 million for in-home licensed nursing services that were actually provided by unlicensed individuals.

The organizer of the ring, Priscilla Villabroza, a registered nurse who ran a Santa Fe Springs-based company called Medcare Plus Home Health Providers, pleaded guilty in federal court last year to five counts of health care fraud. According to court documents, Villabroza and others hired individuals to provide care to disabled Medi-Cal patients, many of whom were children and young adults served under a program called Early and Periodic Screening, Diagnosis, and Treatment (EPSDT) Supplemental Services. The indictment alleges that from August 2004 through the end of 2007, Villabroza and others hired unlicensed individuals to provide services to the disabled Medi-Cal patients and billed Medi-Cal as if they were licensed vocational nurses (LVNs). Some of the unlicensed individuals had foreign training, but never passed a nursing exam here. Some of them had no medical training at all.

'Villabroza and her associates concocted a clever rip-off where they hired untrained and unlicensed nurses to provide care to children with serious health conditions,' California Attorney General Edmund G. Brown Jr. said. 'At a time of budgetary crisis, they cheated California's welfare system and pocketed millions of dollars in unauthorized state reimbursements.'

'We believe that this is the largest single case alleging Medi-Cal fraud ever filed in the state,' said United States Attorney Thomas P. O’Brien. 'The nearly four dozen people associated with this fraud ring not only cheated taxpayers, they endangered the lives of young people they promised to protect and care for.'

The unlicensed nurse defendants visited the patients at home and at school and provided nursing services that included administering medications, adjusting ventilators, and feeding through gastronomy tubes. Some parents and patients reported to authorities that the 'nurses' lacked basic skills. In one case, a 'nurse' was unable to replace a tracheotomy tube that had fallen out of a young patient’s neck. In another case, an imposter nurse simply fled a medical situation when she apparently was unable to provide assistance.

Salvador Hernandez, Assistant Director In Charge of the FBI in Los Angeles, stated: 'This case is particularly troubling in that patients received sub-standard care for serious medical conditions when defendants operated without a license and in their own best interest, not their patients’ interests. The FBI and our partners will continue to provide resources to detect and fight health care fraud that affects the stability of government programs and our economy.'
Glenn R. Ferry, Special Agent in Charge for the Los Angeles Region of the Office of Inspector General for the Department of Health of Human Services, commented: 'Today's arrests send a strong message to those who would corruptly take advantage of the Medi-Cal system. Greed, at the expense of our most vulnerable citizens and their quality of care, will not be tolerated. The Office of Inspector General will continue to closely work with our Federal, State and local law enforcement partners to prevent, deter and prosecute health care fraud.'
A key assistant to Villabroza – Susan Bendigo, an RN who ran a Medcare Plus subsidiary – was indicted last year. Bendigo is a fugitive who fled the United States during the investigation into her activities.
Villabroza, Bendigo and supervisors involved in the scheme allegedly directed the unlicensed nurse defendants to lie about their licensing and qualifications by telling the parents or guardians of the disabled Medi-Cal beneficiaries that they were LVNs, according to the indictment. The unlicensed nurse defendants falsely presented themselves as professionals, concealed their unlicensed status from the parents or guardians of the disabled Medi-Cal beneficiaries, and in some cases affirmatively misrepresented themselves as LVNs.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty.
The defendants arrested today are expected to make their initial appearances this afternoon in United States District Court in Los Angeles. The other defendants named in the indictment will be summoned to appear in court for arraignments in the coming weeks.
All of the defendants named in the indictment are charged with conspiracy to commit health care fraud, a felony count that carries a statutory maximum penalty of 10 years in federal prison. All of the defendants are also named in at least one substantive count of health care fraud, a charge that carries a maximum statutory penalty of 10 years in federal prison.
Both the California Department of Registered Nursing, which licenses RNs, and the California Department of Consumer Affairs Bureau of Vocational Nursing, which licenses LVNs, maintain websites where consumers can check the licensing status of any purported professional providing services to them. These can be accessed at
Anyone who suspects Medi-Cal fraud related to the use of unlicensed nurses or any other type of Medi-Cal or Medicare fraud may report their concerns to the U. S. Department of Health and Human Services’ Office of Inspector General hotline at 800-HHS-TIPS (800-477 8477) or the California Department of Justice’s Bureau of Medi-Cal Fraud and Elder Abuse hotline at 800-722-0432 or webpage,