MEDICAL DOCTOR CONVICTED AND SENTENCED TO ONE YEAR IN JAIL FOR WRITING UNNECESSARY PRESCRIPTIONS IN $22 MILLION SCAM

FOR IMMEDIATE RELEASE

Case # 17CF1241, 17CF1242, 17CF1243

Date: July 25, 2018

MEDICAL DOCTOR CONVICTED AND SENTENCED TO ONE YEAR IN JAIL FOR WRITING UNNECESSARY PRESCRIPTIONS IN $22 MILLION URINE TEST BILLING SCHEME AT SOBER LIVING HOMES

*Four family members and one additional doctor also charged in billing scheme

SANTA ANA, Calif. – A medical doctor was convicted and sentenced to one year in jail today for prescribing unnecessary prescriptions in a $22 million urine test billing scheme at sober living homes. Four family members and one additional doctor are charged in connection to the urine test billing scheme, which operated through sober living homes the family owned and managed in Southern California.

Defendant

Charges

Sentence

Carlos X. Montano, M.D., 61, Newport Beach

Pleaded guilty today to the following felony counts:

  • (2)   Insurance fraud

 

  • One year in county jail

 

  • Five years of formal probation

 

  • Ordered to pay $57,500 restitution

 

Co-Defendants

Charges

Maximum Sentence

Court Date

Pamela Mae Ganong, 61, La Jolla

 

Philip William Ganong, 63, Bakersfield

 

 

Charged on May 19, 2017, with the following felony counts:

  • Conspiracy to commit medical insurance fraud
  • 13 counts of insurance fraud
  • 26 counts of money laundering

 

Sentencing Enhancements

  • Property damage over $3.2 million
  • Money laundering over $2.5 million
  • Aggravated white collar crime over $500,000
  • Over $100,000 loss

47 years and eight months in state prison

Hearing

 

 

Nov. 13, 2018, 8:30 a.m.

 

 

Department C-55, Central Justice Center, Santa Ana

William Ganong, 33, Bakersfield

 

Charged on May 19, 2017, with the following felony counts:

  • Conspiracy to commit medical insurance fraud
  • 13 counts of insurance fraud

 

Sentencing Enhancements

  • Property damage over $3.2 million
  • Aggravated white collar crime over $500,000
  • Over $100,000 loss

36 years and eight months in state prison

Hearing

 

 

Nov. 13, 2018, 8:30 a.m.

 

 

Department C-55, Central Justice Center, Santa Ana

Susan Lee Stinson, 64, Carlsbad

Charged on May 19, 2017, with one felony count of:

  • Making a fraudulent claim for heath benefits

 

Sentencing Enhancements

  • Aggravated white collar crime over $500,000
  • Property damage over $2.5 million

 

Six years in state prison

Hearing

 

 

Nov. 13, 2018, 8:30 a.m.

 

 

Department C-55, Central Justice Center, Santa Ana

Suzie Schuder, M.D., 70, Corona Del Mar

 

Charged on May 19, 2017, with the following felony counts:

  • Conspiracy to commit medical insurance fraud
  • Four counts of insurance fraud

 

Sentencing Enhancement Allegations

  • Property damage over $3.2 million
  • Aggravated white collar crime over $500,000

17 years and eight months in state prison

Pre-trial hearing

 

 

Nov. 13, 2018, 8:30 a.m.

 

 

Department C-57, Central Justice Center,

Santa Ana

Circumstances of the Case

  • Between January 2008 and December 2016, defendants Pamela and Philip Ganong owned sober living homes in Orange County, Bakersfield, Los Angeles, and San Diego, through their business William Mae Company, which operated as Compass Rose Recovery (Compass).
  • In December 2011, the Ganongs are accused of forming a medical testing lab called Ghostline Labs (Ghostline).
  • Sober living residents at Compass were recruited by other Compass residents through Craigslist and by word of mouth.
  • In 2012, William Mae Company/Compass had 12 employees registered on the company’s payroll and health insurance policy.
  • The Ganongs are accused of fraudulently listing residents and non-residents of Compass as employees and expanding their health insurance policy to cover almost 100 employees.
  • In January 2013, the Ganongs are accused of starting a temporary labor agency, Compass Rose Staffing, enrolling some residents and non-residents on the payroll, and requiring daily or frequent urine drug testing as a term and condition of employment.
  • The Ganongs are accused of starting Compass Rose Staffing as a front to overbill insurance companies for the collection and testing of urine.
  • Between 2012 and 2014, the Ganongs are accused of registering fraudulent employees on all four of their payrolls: William Mae Company, Compass Rose Recovery, Compass Rose Staffing, and Ghostline Labs, and submitting daily or frequent urine drug test samples for each employee under each company’s health insurance plan.
  • The Ganongs are accused of paying minimal compensation to those enrolled as employees, not collecting co-pays or deductibles for the urine tests, and providing free rent as a kickback for submitting the urine samples.
  • Defendant Stinson, Pamela Ganong’s sister, is accused of routinely dropping off paychecks at the Ganong’s sober living facilities, and sending emails to doctors hired by the Ganongs requesting urine drug test prescriptions.
  • Phillip and Pamela Ganong are accused of committing insurance fraud by submitting claims for urine drug testing done by Ghostline for sober living residents and employees of the Ganongs for either services not covered, not rendered, or not medically necessary.
  • The Ganongs are also accused of submitting bills for high complexity urine tests which Ghostline did not possess the proper certification to perform and sending them to another lab for confirmation testing, despite negative preliminary test results.
  • Pamela, Philip, and their son William Ganong are accused of submitting bills in excess of $1 million dollars for drug testing themselves and close associates.
  • The defendants are accused of changing insurance carriers four times to avoid detection, submitting bills to Aetna, Anthem, Cigna, and United Health Care, and continuing to submit bills for urine drug testing themselves.
  • To further the scheme, the Ganongs are accused of hiring two medical doctors, defendants Montano and Schuder. Montano wrote unnecessary urine drug prescriptions starting at three times per week and increasing to seven times per week for most of the Ganongs’ employees. Shuder is also accused of writing unnecessary urine prescriptions as part of the scheme.
  • Montano wrote and Shuder is accused of writing unnecessary urine test orders in exchange for 20 percent of the net insurance proceeds from urine drug testing billing and/or a per-patient fee of $200, in violation of law. Montano knew and Schuder is accused of knowing that Ghostline was owned by the Ganongs, who were not medical providers.
  • Defendant Schuder is accused of acting as the Lab Director for Ghostline before the company existed, using a sober living home addresses in Costa Mesa as Ghostline’s address. She is accused of being paid $21,784 between 2012 and 2013 by Ghostline.
  • In addition, when the Ghostline became the subject of audits with Anthem and Aetna, the Ganongs are accused of changing the company’s name to Brown Laboratories and continuing to bill for fraudulent urine drug testing.
  • The defendants are accused of billing approximately $22 million to the four insurance companies and subsequently collecting $15 million.

The Orange County District Attorney’s Office Bureau of Investigation investigated this case.

Prosecutor: Deputy District Attorney Hope Callahan, Insurance Fraud Unit