Forty-Two Defendants Indicted in $4.6 Million Medi-Cal Fraud Case
Imposter Nurses Used to Inflate Bills for Care to Disabled Medi-Cal Patients, Many of Them Children with Cerebral Palsy and Other Major Disabilities

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.

“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 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.

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.

“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.”

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, stated: “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 http://www2.dca.ca.gov.

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, http://www.dhcs.ca.gov/individuals/Pages/StopMedi-CalFraud.aspx.

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