Houston Brother, Sister Arrested in Multi-Million Dollar Medical Fraud Case

In a joint operation involving the Orange County (California) District Attorney, California Department of Insurance, California Franchise Tax Board, Harris County (Texas) Sheriff, and Harris County District Attorney’s Office, two Houston siblings were arrested Thursday morning on charges that they illegally recruited healthy people from all over the country to receive unnecessary surgeries in exchange for money or low cost cosmetic surgery.

They are accused of helping the Unity Outpatient Surgery Center in Buena Park generate more than $90 million in fraudulent medical billing in just eight months. The recruitment of patients or “capping” is illegal in California. Insurance companies paid Unity more than $14 million during this time period.

Thuy Huynh, 47, was charged with 12 counts each of capping, insurance fraud and grand theft and four counts of tax evasion. Her brother Ngoc (Johnny) Trang Huynh, 46, has been charged with 11 counts each of capping, insurance fraud and grand theft and three counts of tax evasion. Thuy Huynh is being held on $1 million bail and Johnny Huynh is being held on $900,000 bail. They will be extradited to California to face the charges in Orange County after appearing in a Harris County court in the next several days on the extradition issue.

Thuy Huynh is accused of having recruited more than 120 patients from 18 states to undergo unnecessary surgeries for which she received more than $650,000 in commission from Unity. As a result of the surgeries performed on patients she recruited, insurance companies were billed more than $5 million and paid out more than $1.1 million for fraudulent claims. If convicted of all counts, she faces 30 years, 8 months years in state prison.

Johnny Huynh is accused of having recruited more than 80 patients from seven states for which he received more than $450,000. As a result of the surgeries performed on patients he recruited, insurance companies were billed more than $3.8 million and paid out more than $900,000. If convicted of all counts, he faces 28 years, 4 months in state prison.

On Dec. 27, 2005, the clinic administrators Tam Vu Pham, his wife Huong Thien Ngo, and her aunt Lan Thi Ngoc Nguyen pled guilty to multiple counts in the first case filed in this case and have agreed to cooperate in the investigation. The sentencing has been continued.

Pham will receive 13 years in state prison, Ngo will receive a 7-year state prison sentence that will be suspended pending successful completion of 5 years of probation, and Nguyen will receive a 5-year state prison sentence that will be suspended pending successful completion of 5 years of probation. They will be required to pay restitution to all victims in the case.

Five cappers, Maria Rosales, Henry Truong, Olga Toscano, Pancha Keophimphone, and Sue Nanda were also arrested and charged in the case with insurance fraud, grand theft, and capping. They are scheduled to be in Orange County Superior Court on March 29, 2006 for their preliminary hearing. Their involvement is similar to that of the Huynh siblings.

The cappers targeted employees at businesses with PPO insurance because pre-approval from the insurance company would not be a requirement to the surgeries. More than 1,600 employers had employees involved in this scheme. The cappers arranged transportation for the “patients,” scheduled the surgeries and coached them on what to say.

The “patients” would receive either a cash payment, usually between $300 and $1,000 per surgery, or would receive either free or discounted cosmetic surgery. They came from 45 states and the District of Columbia. The most common procedures performed were colonoscopies, EGDs (upper gastro-intestinal procedure), sweaty palms surgery, hemorrhoid surgery, and pain management procedures.

This case is believed to the largest prosecution of its kind in the nation by a District Attorney’s office.