California Doctor Pleads Guilty in Multi-Million Dollar Scheme to Defraud Insurance Companies

SANTA ANA, California – A Rancho Mirage cosmetic surgeon pleaded guilty today in a scheme to defraud health insurance companies by submitting bills for more than $3.4 million for procedures that he claimed were “medically necessary” – but in fact were cosmetic procedures such as “tummy tucks,” “nose jobs” and breast augmentations.

Dr. David M. Morrow, 71, of Rancho Mirage, a cosmetic surgeon and dermatologist who was the owner of the Morrow Institute (TMI) in Rancho Mirage, pleaded guilty today to one count of conspiracy to commit mail fraud.

In a plea agreement filed in United States District Court, Morrow admitted that he participated in a scheme to obtain money from insurance companies by false or fraudulent pretenses, which included submitting altered documents to the insurance companies. Morrow admitted that cosmetic surgeries were billed to insurance companies under the pretense that the procedures were “medically necessary” so that insurers would pay for them.

“Insurance companies provide a valuable service by providing financial support in a time of medical need – they are not designed to dispense cash to unscrupulous medical providers,” said United States Attorney Eileen M. Decker. “Medical professionals who defraud an insurance provider hurt every person who is forced to pay higher premiums.”

Morrow also pleaded guilty today to one count of filing a false tax return for 2008. Today, Morrow admitted that he failed to report to more than $100,000 of income on his 2008 tax return and more than $1.5 million on his 2009 tax return.

“Today’s guilty plea by Dr. Morrow is an important victory for America’s taxpayers who play by the rules and have no tolerance for those who make up their own rules,” stated Anthony J. Orlando, the Acting Special Agent in Charge of IRS Criminal Investigation in Los Angeles. “This investigation and subsequent conviction serve to remind the public that there is no such thing as free money and there are no awards or incentives for creativity when it comes to medical billing and tax fraud.”

Morrow, his wife, and TMI were charged in this case last fall when a federal grand jury returned a 27-count indictment that outlined a scheme in which patients were lured to the Coachella Valley surgery center with promises that cosmetic procedures would be paid for by their union or PPO health insurance plans. The victim health insurance companies included Anthem Blue Cross, Blue Cross/Blue Shield of California, Blue Cross/Blue Shield of Massachusetts, Regional Employer/Employee Partnership for Benefits, formerly known as Riverside Employer/Employee Partnership (REEP), and Cigna.

Morrow pleaded guilty today to a conspiracy count in the indictment that outlined how insured patients were lured to TMI with promises that they could receive free or discounted cosmetic surgeries that would be paid largely or completely by their insurance plans. Morrow and his wife told patients that they could receive the free or discounted cosmetic procedures if they first underwent multiple procedures that could be billed to insurance, according to the indictment.

Defendant/Respondent: Dr. David M. Morrow

Criminal Charges: Conspiracy to Commit Mail Fraud, Filing a False Tax Return

City and State: Rancho Mirage, California

Exact Date: Not specified

Sentence or Outcome: Currently pending

Dollar Amounts: $3.4 million, $100,000, $1.5 million

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