Two Arrested in Ongoing Investigation of Insurance Fraud Linked to $90 Million in Unnecessary Surgeries

As scams go, this one was rather simple: (1) Find a healthy person willing to undergo an unnecessary surgical procedure; (2) reward that person with cash, a paid vacation, or cosmetic surgery; (4) perform the surgery; (5) bill the person’s insurance company; and (6) repeat the process as many times as possible.

The people doing the “recruiting” of patients were called “cappers.” The unneeded surgeries were for relatively minor conditions such as sweaty palms and hemorrhoids. The surgery mill was Unity Outpatient Center in Buena Park, California. The amount of money involved was staggering.

On Thursday, Johnny Ngoc Trang Huynh and Thuy Huynh, a brother and sister team of “cappers” now living in Houston, Texas, were arrested and charged with the rather bizarre crime of recruiting healthy individuals from all over the United States for the medical clinic in Orange County that performed some $90 million in allegedly unnecessary surgeries.

The Huynhs appear to have been quite successful at finding willing recruits in what has become known as the “rent-a-patient” case. In fact, it is alleged that they accounted for about 10% ($9 million) worth of the surgical billing the now defunct Surgery Center churned out.

Once the Huynhs recruited a patient, they would arrange for transportation (often by plane) to Orange County, schedule the surgery, and even give the “patient” a crash course in what to say to their doctors.

The pair has been charged with insurance fraud, grand theft, capping, and tax evasion. They are being held in Texas on high bail ($1 million for Thuy and $900,000 for Johnny) while awaiting extradition to California.

In July 2004, three individuals who operated the clinic were arrested. They have already pleaded guilty. Five others alleged “cappers” who have been arrested have pleaded not guilty.

The Huynhs were apparently very good at what they did. Johnny Huynh made $450,000 over the course of 8 months by enlisting 80 patients in seven states, while sister Thuy made $650,000 recruiting 120 patients in 18 states.

In order to ensure the surgeries would be paid for the scam specifically solicited people whose employers carried health insurance with companies that did not require pre-approval for surgical procedures.

These latest arrests are part of what has been a three-year-long joint investigation by the District Attorney’s office and California state insurance and tax officials that was prompted by complaints from insurance companies and employers that had received unusually large medical bills.

According to prosecutors, more arrests are anticipated as they close in on other individuals involved in the scheme. If convicted, Johnny Huynh could face up to 28 years in prison and his sister could face up to 30 years.

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