Santa Clara Co. prosecutors announce 15 sentenced in $40M health insurance scam
SAN JOSE – Fifteen people accused of running a massive statewide insurance scam that cost their victims about $40 million were sentenced Tuesday in what is regarded as the largest medical fraud case ever prosecuted in Santa Clara County, prosecutors said.
Seven of them were sentenced to felonies while the rest were sentenced to misdemeanors, with punishments including county jail, the Santa Clara County District Attorney's Office said in a statement.
The defendants, mostly from Los Angeles, set up a telemarketing company to push overpriced and unneeded prescriptions and medical devices to thousands of Californians, according to prosecutors. Between 2015 to 2020, the scammers, called "The Care Group", committed fraud on a massive statewide scale by operating an illicit call center, known as Global Marketing, from their Beverly Hills offices on Wilshire Boulevard.
They targeted unsuspecting patients throughout California, including in Santa Clara County, filling and billing thousands of fake prescriptions for items like neck braces and pain creams. Prosecutors said the scheme included purchasing and turning small pharmacies into pain cream and medical device mills that only fulfilled prescriptions signed by doctors who received thousands of dollars in kickbacks.
They would bill insurance companies upwards of $4,000 for medication that could be bought for only a few hundred dollars. The prescribing doctors rarely met with or spoke to the patients, according to the District Attorney's Office.
The scammers would also say they represent fake companies such as the "Physician's Network" or "Doctor's Network."
According to prosecutors, at least five insurance carriers were defrauded of approximately $40 million throughout California, with a loss of approximately $2.3 million occurring in Santa Clara County.
The defendants paid more than $8.3 million in restitution, according to prosecutors, who added that this is the largest lump sum restitution recovery for victims in an insurance fraud case prosecuted by the District Attorney's Office.
"This group used people's pain and illnesses to criminally enrich themselves," District Attorney Jeff Rosen said in a statement. "They tried to hide behind a maze of dozens of shell corporations and straw owners. We found them anyway—and now they will pay back their victims and be held accountable."