Consumer Health Digest #05-11

Your Weekly Update of News and Reviews
March 15, 2005


Consumer Health Digest is a free weekly e-mail newsletter edited by Stephen Barrett, M.D., and cosponsored by NCAHF and Quackwatch. It summarizes scientific reports; legislative developments; enforcement actions; news reports; Web site evaluations; recommended and nonrecommended books; and other information relevant to consumer protection and consumer decision-making.


Massive "rent-a-patient" scheme uncovered. A two-year investigation by the Orange County District Attorney’s Office and other agencies has led to the filing of criminal charges against Unity Outpatient Surgery Center in Buena Park. In June 2004, Unity Outpatient Surgery Center owners Tam Vu Pham and his wife Hoang Ngo of Fullerton, along with Lan Nguyen of Huntington Beach, were charged with 46 felony counts of conspiracy, grand theft, insurance fraud, capping, and tax evasion. Unity’s owners paid “cappers” to recruit people from 45 states and the District of Columbia. The “cappers” would arrange transportation, schedule the procedures, and instruct the “patients” on what to say. For their role in the scam, the “patients” would receive either a cash payment, between $300 and $1,000, or credit toward inexpensive cosmetic surgery. The “cappers” received a commission for each procedure performed at Unity. The most common procedures were colonoscopies, EGDs (upper gastro-intestinal procedure), sweaty palms surgery, hemorrhoid surgery, and pain management procedures. From August 2002 to April 2003, Unity owners billed insurance companies close to $97 million and collected more than $14 million in fees. The defendants are also accused of not paying taxes by creating a series of shell corporations with different addresses, tax ID’s and phone numbers, which they used to disguise their identities for billing. At least 1600 employers had employees that were involved in the fraud; and more than 5,000 patients are known to have had unnecessary procedures at Unity. [Orange County surgery center owners charged wih paying thousands of healthy patients to undergo unnecessary surgeries and bilking millions by fraud. California Dept. of Insurance news release, July 21, 2004]

Many other clinics and individuals participated in the scheme. On March 10, 2005, Twelve Blue Cross and Blue Shield Plans filed a $30-million lawsuit against nine southern California-based outpatient surgery clinics, seven medical management companies, and 34 individuals. At a press conference announcing the suit, an FBI official said that more arrests are expected and that total billings from all of the fraudulent activity totaled $1.3 billion and resulted in payments totaling $345 million.


Dr. Joseph Mercola gets FDA warning letter. The FDA has ordered Joseph Mercola, D.O., of Schaumburg, Illinois, to stop making illegal therapeutic claims for products sold through his Web site. The warning letter states:

Mercola.com, for which Google retrieves more than 45,000 pages, is one of the Internet's largest and busiest health information sites. Mercola states that his site has 6 million page views a month and that his twice-a-week electronic newsletter has over 300,000 subscribers. Many of his articles make unsubstantiated claims and clash with those of leading medical and public health organizations. For example, he opposes immunization and fluoridation, claims that amalgam fillings are toxic, and makes many unsubstantiated recommendations for dietary supplements. Much of his support comes from chiropractors who promote his newsletter from their Web sites.


Rath Foundation ad criticized. The Advertising Standards Authority of South Africa has ordered the Dr. Rath Foundation Africa to stop advertising that dietary supplements are safer and more effective than chemotherapy against HIV infections. The challenged ad, published in the November 26, 2004 Mail & Guardian,, was headlined "Why should South Africans continue to be poisoned with AZT? THERE’S A NATURAL ANSWER TO AIDS.” The objectionable claims included:

The Foundation's activities promote the ideas and methods of Matthias Rath, M.D., who also claims that conventional cancer therapy has never demonstrated a life-prolonging effect and often accelerates the disease's progress. During the past several years, he and his associated organizations have placed ads praising "natural health" methods in many large newspapers. The British Advertising Standards Authority has criticized two such ads. Quackwatch has additional information about Rath.


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This page was posted on March 15, 2005.