Tremendous Medical Insurance Scam

March 18, 2004 -- It's one of the largest medical insurance scams in history, according to the FBI — involving thousands of healthy people across the country.

Recruiters are bringing would-be patients to Southern California, where they are paid to undergo surgeries they don't need in order to cheat insurance companies.

"It's truly a nationwide scam. We have patients who have traveled from 46 of the 50 states to Southern California to have these surgeries," said FBI agent Tim Delaney.

Using hidden cameras, Primetime decided to see how easy it is to get recruited.

Some recruiters reportedly look for patients in nail salons, in the neighborhood south of Los Angeles nicknamed "Little Saigon," and in Houston, Texas.

So Jamie Nguyen, a local ABC producer who speaks Vietnamese, began calling Houston salons asking about cosmetic surgery.

Soon, she was told to show up at one salon. She went with a photographer — wearing hidden cameras.

Insurance for Cosmetic Surgery?

At the salon, Nguyen met with a woman named Kimberly and told her she'd like to get a nose job and surgery to reshape her eyes. Kimberly told her she could get cosmetic surgery via her insurance company, Nguyen said.

On the video from the hidden camera, Kimberly is seen telling Nguyen, "You don't pay your cash money. Now you understand? They take the money from the insurance."

Nguyen says she was incredulous, but didn't say anything at the time. "I've never heard of insurance companies paying for cosmetic surgery," Nguyen told ABCNEWS' John Quinones.

But before she could get her cosmetic surgery, Kimberly asked Nguyen to fly to California for a medical procedure she doesn't need: a colonoscopy.

"But we can't pretend that I got my colonoscopy? We really have to do the colonoscopy?" Nguyen is heard asking on the tape.

Kimberly tells Nguyen she has to have the operation and explains why. "The insurance," says Kimberly. "They send to the insurance. They collect that money from your insurance to, to do your nose, your eye."

In other words, the clinic can charge thousands of dollars for the colonoscopy and that would cover the cost of Nguyen's cosmetic surgery.

On the tape, Kimberly tells Nguyen, "This is really cheating, but we have to cheat 'em good. Not cheating, no good OK?"

And then she tells Nguyen to make up phony symptoms to tell the doctor. She says, "Just lie. You know you lie, it doesn't hurt, right? Because you have insurance going to pay for [it]."

Now Nguyen was on the inside of the scheme. Kimberly called a contact in California, and arranged Nguyen's trip to Los Angeles with another woman named Kim.

Anesthesia for Indigestion

Kim picked up Nguyen and her photographer at the airport. Once again, they were both wearing hidden cameras — but without sound, because California law doesn't allow the recording of private conversations without consent.

In the car, Kim coached Nguyen. Nguyen said Kim told her not to mention cosmetic surgery but to complain about symptoms. "It was almost like a hawk watching me to make sure that I would say the right thing," Nguyen says.

At the doctor's office, Nguyen, 28, talked about indigestion when she eats spicy food and her menstrual cramps. She was given an ultrasound, and after a brief exam, the doctor told her she would need an endoscopy. It's a procedure in which a tube is inserted through the patient's mouth and into the stomach while the patient is under anesthesia.

However, endoscopies are usually recommended for older patients, says Dr. David Puera of the American Gastroenterological Association.

If someone came to him with Nguyen's complaints, he said, that would not, generally speaking, be a reason for an endoscopy in an otherwise young, healthy individual.

"Simply telling her not to eat spicy food that would have been the simplest thing to do," he says.

Nguyen was scheduled to have her procedure the next day. She was prepared for anesthesia then — and she hadn't even met her doctor yet.

She told the staff she was having second thoughts, and needed some fresh air. A nurse gave her oxygen. Finally, she told them she had changed her mind and wouldn't be having the endoscopy after all.

Shameful Work

Primetime showed Puera video of Nguyen being recruited. "It's deplorable behavior," he said. "Unethical, fraudulent, and it's hurting all of us."

Unsurprisingly, not one of the people who arranged Nguyen's trip now wants to talk about it. Kimberly at the Houston salon denies arranging Nguyen's California trip. And Kim, the woman who arranged things in Los Angeles, had little to say as well.

Outside the surgical center where Nguyen was taken, Quinones asked Kim why she was offering people cosmetic surgery.

"I did not offer anything," she replied. She refused to comment further, saying, "No, sir, I'm not a doctor, OK?"