The Philadelphia Inquirer

JULY 31, 1996 Wednesday SFCITY EDITION

CHARGES IN SCAMS AGAINST INSURERS< FORTY PEOPLE - DOCTORS, CLAIMS OFFICIALS AND OTHERS - ARE< ACCUSED OF TAKING $1.34 MILLION. PUBLIC AND PRIVATE PLANS WERE HIT. BYLINE: Julia C. Martinez, INQUIRER STAFF WRITER SECTION: CITY & REGION; Pg. B01 LENGTH: 807 words Forty people, including a Merion psychiatrist and officials of health care companies in the Philadelphia area, have been charged with defrauding the Medicare and Medicaid programs and Independence Blue Cross, federal authorities said yesterday. The scheme against Blue Cross - one of five health care scams totaling $1.34 million - was uncovered as a result of a tip from a check-cashing agent in North Philadelphia, authorities said. The agent called Blue Cross to report a suspicious customer who had cashed Blue Cross checks for $5,000 to $6,000 each. The tip led to the indictment of six Blue Cross employees who allegedly conspired with 25 people outside the company to steal more than $560,000 from the insurer from 1991 through 1994. The five scams were outlined in grand-jury indictments and criminal informations made public yesterday by U.S. Attorney Michael R. Stiles, Bob Reutter, head of the Philadelphia office of the FBI, and other federal officials. The charges include mail fraud, conspiracy, obstruction of justice and paying kickbacks. Some of the 40 defendants have been arrested, some have not, and some are cooperating with prosecutors. In one scheme, the owners of two medical testing companies in Philadelphia, Stanley Moldover and Stanley Rothstein, allegedly plotted with a doctor's receptionist, Fayne Lipsitz, to refer the doctor's Medicare patients to their testing facilities for X-rays, ultrasounds and other tests, in exchange for kickbacks of up to $11,000. The receptionist's husband, Jacob Lipsitz, a Philadelphia optometrist, allegedly participated in the kickbacks. Medicare paid out $153,000 for the tests between 1989 and 1994. Moldover, 58, and Rothstein, 62, both of Huntingdon Valley, are also charged with paying kickbacks to a New Jersey doctor, who has not been charged. Another scheme, authorities said, involved Howard H. Wurtzel, a psychiatrist and the president of Life Centers Ltd., which operates eight outpatient clinics in the Philadelphia area under the names Institute for Learning and Norristown Life Center, among others. Wurtzel, 60, of Merion, is charged with bilking Medicaid of $122,000 between 1991 and 1993 by padding bills for therapy never provided. Wurtzel agreed last year to pay the government $500,000 to settle civil claims in connection with the overbilling. Authorities said a tip from an employee of one of Wurtzel's clinics uncovered the swindle. Stanley D. Shore of Blue Bell, Pa., is charged in another case with submitting $192,000 in false claims to Medicaid from 1990 to 1992 while serving as assistant director of Living Free Centers Inc. in Philadelphia, a drug- and alcohol-addiction counseling center. Robert P. Wolk, former owner of Advanced Care Associates of Fort Washington, is charged with conspiracy to obstruct justice for allegedly altering and shredding medical forms in an attempt to hinder a federal investigation of his company. Wolk, 60, of Philadelphia, agreed last month to pay the government $4 million to settle civil claims involving the company's billing practices. He faces up to five years in prison on the criminal charges. In the Blue Cross case, insurance company officials said that even before the tip from the check-cashing store, internal investigations had picked up bogus claims. William Young, manager of special audit services for Independence Blue Cross, said officials heard from the check-cashing agent in late 1993. His suspicions were piqued by the size of the checks - $5,000 to $6,000, Young said. Also, he said, "it was not the first time the gentleman had been there" with checks. Five of the six employees later charged allegedly worked together on one scheme with friends and associates outside the company, Young said, while the sixth employee worked a second swindle on her own. The five employees, all claims examiners at Blue Cross headquarters in Philadelphia, manufactured and processed phony medical claims using the subscriber numbers of friends and associates. They then had checks ranging from $1,500 to $25,000 issued to the friends, who were also charged with fraud. Between 1992 and 1994, the checks added up to more than $500,000. Authorities said the sixth employee, who worked in the direct billing department, created four Blue Cross health care accounts under a fictitious name and credited fictitious payments to those accounts. The amount of her alleged scam was $34,000, they said. Authorities identified the six defendants as: Charles B. Myers, 31, of Bear, Del.; and Valerie White, 31; Howard Coverdale, 28; Glenn L. Berry; Shawne A. Brown, 27; and Zanetta Ruffin, 34, all of Philadelphia. All had been with Blue Cross for less than four years and have been fired, Young said.