Major fraud probe targets clinics
Fraudulent bills to insurance companies total more than $150 million, prosecutors allege.
Jennifer Milone woke up from shoulder surgery in excruciating pain. Her temperature spiked. Her wound swelled.
After six weeks, she worried she had gangrene and returned to the clinic where she’d had the operation.
A physician assistant told her it looked as if there was still a stitch in her skin.
“Just hang on,” he said. “I’m going to pull.”
She watched as he extracted 24 inches of oozing gauze from her shoulder.
“You idiots!” she screamed. “What did you do?”
Milone gave the account during testimony before a grand jury this year as the Los Angeles County district attorney’s office investigated what prosecutors now call one of the largest insurance fraud schemes in California history. Transcripts of the grand jury testimony were made public Friday.
Milone testified about her experience at a clinic run by Dr. Munir Uwaydah, who prosecutors allege was the mastermind of the suspected scheme.
When she complained about the gauze found in her shoulder, Milone testified, Uwaydah didn’t offer an explanation.
“I’m sorry,” Milone said the doctor told her. “Sometimes things happen.”
Milone said she had never thought she needed surgery, but agreed to the operation after speaking with Uwaydah. The surgery left her with a nickel-size indentation on her shoulder that people often mistake for a gunshot wound, she told grand jurors.
Milone was one of 21 patients who prosecutors say suffered lasting scars or other injuries as a result of surgeries at Uwaydah’s clinics. Prosecutors also allege that a physician assistant who never went to medical school often operated on patients who thought Uwaydah was doing their surgeries.
A former employee of Uwaydah’s testified that the physician assistant, Peter Nelson, did about 100 knee and shoulder surgeries on his own. While Nelson oper--
ated, the former employee said, Uwaydah, 49, sat in his office or paced in the hallway talking on the phone.
An anesthesiologist testified that he watched as Nelson pulled on an operation gown and cut into a man’s back.
“Better stop,” the anesthesiologist, Dr. Edgar Cosme, recalled telling Nelson during the lumbar fusion operation. “You’re not supposed to do the surgery.”
Nelson ignored him, Cosme told grand jurors, and kept operating for 25 minutes before Uwaydah came into the room and finished the surgery.
The patient testified that the March 2005 operation left him with scars on his back and said he was unable to stand for long periods.
“I am worse now,” the patient told grand jurors.
Patient Kimberly Pope, a nurse, testified that her shoulder surgery at Uwaydah’s clinic left her with an ugly, infected 5-inch scar. She collapsed after surgery, she said, onto her just-operated-on shoulder. The staff, she said, rushed her to get dressed.
“Someone needs to check me out,” she told them. “This is not good.”
“You’re fine, you’re fine,” they responded, she said.
Pope called the workers’ compensation insurance company after the surgery, she said, and told it not to pay for the procedure. “It’s a rip-off,” she said. She told grand jurors that she filed a malpractice lawsuit against Uwaydah and soon received a call from Tatiana Torres Arnold, Uwaydah’s personal attorney and one of the 15 defendants in the criminal case, asking about settling Pope’s lawsuit. Pope said she had been out of work and in a lot of pain, and she agreed to a $10,000 offer, which she said she never received.
Deputy Dist. Atty. Dayan Mathai told grand jurors that the alleged scheme was a “case of profit over care” and “organized crime.”
“It became almost an empire,” he said.
The suspected conspirators paid kickbacks to attorneys and middlemen in exchange for illegal patient referrals, prosecutors said. A woman who worked at a marketing firm got $10,000 a month to provide Uwaydah with a certain number of patients, according to prosecutors.
More than $150 million was fraudulently billed to insurance companies, the district attorney’s office alleged, saying those involved hid the money in shell bank accounts. Millions of dollars were transferred to Lebanon and Estonia, according to a bail motion filed by prosecutors Thursday.
The suspected conspirators billed for huge amounts of medication that patients never received, according to grand jury testimony. A State Farm special investigator testified that Uwaydah’s businesses billed $126,000 for 30,000 pills over 14 months for a single patient.
The charges in the case are laid out in two indictments that allege conspiracy, insurance fraud, aggravated mayhem and capping, which entails illegal patient referrals, as well as other crimes. Nelson, Torres Arnold and other defendants who have appeared in court have pleaded not guilty.
The district attorney’s office said last week that Uwaydah had been arrested in Germany. An attorney who previously represented the doctor said Uwaydah was not in custody. There was no public discussion during a bail hearing Friday about the whereabouts of Uwaydah, who did not make an appearance. A district attorney’s spokeswoman declined to comment.
Prosecutors said investigators searched the computer of another defendant, Kelly Soo Park, and found evidence of forged documents in a folder labeled “Pinochio.“Park’s role in the suspected scheme, Mathai told grand jurors, was “essentially tampering with witnesses or attempting to tamper with witnesses by researching their backgrounds.”
Two years ago, Park, 49, was acquitted of murdering 21-year-old Juliana Redding in her Santa Monica home in March 2008. Prosecutors have previously said that Uwaydah gave payments totaling six figures to Park and her family before the slaying and before Park’s arrest on the murder charge.
Uwaydah — who wasn’t charged in Redding’s death and has denied any wrongdoing — fled to Lebanon when he became a person of interest in the murder case, according to the bail motion, which said prosecutors looked into the alleged fraud as a possible motive for the killing.
During Park’s murder trial, a prosecutor told jurors that Redding was killed five days after her father broke off business negotiations with her ex-boyfriend, Uwaydah.
Park cried during much of Friday’s hearing and sometimes smiled at people in the crowd. She has pleaded not guilty.
L.A. County Superior Court Judge Kathleen Kennedy called the allegations in the case “horrible.”
“Unnecessary surgeries by nonsurgeons?” she said. “That’s pretty shocking stuff.”
marisa.gerber @latimes.com Twitter: @marisagerber richard.winton @latimes.com Twitter: @LAcrimes