WASHINGTON – Twelve Blue Cross and Blue Shield Plans have filed a lawsuit against nine southern California-based outpatient surgery clinics, seven medical management companies and 34 individuals alleging a massive fraud scheme in which hundreds of patients from across the country underwent unnecessary and sometimes dangerous surgical procedures that resulted in the submission of tens of millions of dollars in fraudulent medical claims. The lawsuit alleges that the scheme, known as "Rent-a-Patient," has resulted in significant financial losses to insurance companies and employee benefit plans since 1999.
The lawsuit, Blue Cross and Blue Shield of Alabama, et al. v. Unity Outpatient Surgery Center, Inc., et al., was filed in the Federal District Court of Los Angeles. The 12 Blue Plans seek recovery of more than $30 million.
"Schemes like Rent-a-Patient jeopardize the health of consumers and drive up the cost of healthcare for everyone," said Byron Hollis, national anti-fraud director for the Blue Cross and Blue Shield Association (BCBSA). "This suit puts perpetrators on notice that th Blues are serious about ending fraud schemes like this that harm consumers and steal essential dollars from vital healthcare services."
The Rent-a-Patient scheme was allegedly carried out through the use of paid recruiters to enlist "patients" to travel to the California-based surgical centers and undergo needless and sometimes hazardous surgical procedures and treatments. In return, the lawsuit alleges, the patients received cash payments or cosmetic surgery, and the providers submitted fraudulent insurance claims. It is believed to be the first major scam in which clinics and surgeons allegedly paid healthy patients to actually undergo invasive and risky procedures.
The lawsuit alleges that the procedures most often abused by Rent-a-Patient providers were gastrointestinal colonoscopies and endoscopies. The riskiest of the procedures that the providers claimed to have performed was a surgery to correct chronic and profuse sweating of the hands, which involves collapsing a patient’s lung to gain access to the spinal area where the surgeon severs or clamps a nerve that controls perspiration of the hands.
"This filing is a significant milestone in the fight against healthcare fraud," said Thomas Brennan, Jr., chair of the National Health Care Anti-Fraud Association (NHCAA) and director of special investigations for Highmark Blue Cross Blue Shield. "This effort is important to NHCAA’s mission and the success of our nation’s healthcare system."
This action represents a major effort on the part of the independent Blue Plans to pursue fraud schemes. In 2003, Blue Cross and Blue Shield companies collectively saved American consumers $240 million by preventing scams and recovering dollars that would have been lost to fraud. Overall, healthcare fraud costs U.S. consumers $85 billion annually, about 5 percent of the $1.7 trillion spent on healthcare.
"Blue Cross and Blue Shield companies have invested resources to fight healthcare fraud, and we are seeing results," said Hollis. "While our efforts have been successful, fraud remains an enormous threat to our healthcare system. We must continue to work to ensure that consumers’ dollars pay for quality healthcare rather than ending up in the bank accounts of criminals."
The Blue Cross and Blue Shield plaintiffs are represented by the New York law firm of Kornstein Veisz Wexler & Pollard, LLP.

The Blue Plans filing this suit are:
  • Blue Cross and Blue Shield of Alabama
  • Blue Cross and Blue Shield of Massachusetts
  • Blue Cross and Blue Shield of Michigan
  • Blue Cross and Blue Shield of Nebraska
  • Blue Cross and Blue Shield of North Carolina
  • Blue Cross and Blue Shield of Tennessee
  • CareFirst Blue Cross and Blue Shield
  • Empire Blue Cross and Blue Shield
  • Excellus Blue Cross Blue Shield
  • Highmark Blue Cross Blue Shield and Highmark Blue Shield
  • Premera Blue Cross
  • Regence Blue Shield, Regence BlueCross BlueShield of Utah and Oregon, and Regence BlueShield of Idaho
About The Blue Cross and Blue Shield Association:
The Blue Cross and Blue Shield Association is made up of 40 independent, locally operated Blue Cross and Blue Shield companies that collectively provide healthcare coverage for more than 91 million – nearly one-in-three – Americans. For more information on the Blue Cross and Blue Shield Association and its Plans, visit bcbs.com.