Final Doctor Sentenced in $153 Million Medical Insurance Fraud Scheme

January 29, 2021 Updated: January 29, 2021

SANTA ANA—A 73-year-old physician—the last of 19 defendants in a $154 million medical insurance fraud scheme dating back more than two decades—was sentenced Jan. 29 to three years of formal probation, 1,000 hours of community service and ordered to pay $2.9 million in restitution.

Dr. Mario Rosenberg, was indicted along with a dozen others in 2008. The Beverly Hills resident entered a no contest plea in the case on Jan. 24, 2014. Before the grand jury indictment, six other defendants pleaded guilty in the case stemming from fraud at the Unity Outpatient Surgery Center of Buena Park.

Attorneys have been working since the no contest plea to assess the gastroenterologist’s assets and determine how much he should pay in restitution.

In a rare move, Fourth District Appellate Court Justice Thomas Goethals, who presided over the no contest plea and the trials and plea bargains of the other defendants, returned to Orange County Superior Court to hand down Rosenberg’s punishment.

Since Goethals was appointed to the appellate court, Orange County Superior Court Judge Sheila Hanson has been handling proceedings in Rosenberg’s case, and she will return to doing so as attorneys work out the final details of the defendant’s efforts to make restitution.

So far, the attorneys have identified about $2 million in assets that Rosenberg can use for restitution. Goethals lifted liens on a couple of properties the defendant owns, including his home in Beverly Hills, so that he can draw money out of the equity to pay the whole restitution tab.

The $2.9 million figure was decided on because it was determined that was how much profit Rosenberg made from the scheme.

Rosenberg pleaded no contest to two counts of filing false claims to 16 insurance companies. Goethals handed down a sentence on one of the counts and suspended judgment on the other for another three years while Rosenberg is on probation.

Although Rosenberg did not plead guilty, he did say Friday that he should have known better. Goethals noted that a no contest plea still means the defendant is convicted of the crime.

Goethals recounted how he had outpatient knee replacement a couple of years ago and was astonished when he received bills amounting to $100,000. He used the personal anecdote to explain how he understood that physicians and clinics often overbill to get more from insurance companies.

“Fortunately, I have medical insurance,” so some of the costs were covered, Goethals said. “I think that’s inexplicable how billing works. They bill this extraordinary amount hoping to get a small percentage.”

But, Goethals said, he has never forgotten that in one of the exhibits in Rosenberg’s indictment, it was shown that he billed for 35 hours of medical procedures in a 24-hour period.

“People have been outraged from the beginning” about that, Goethals said, adding, “35 hours in a 24-hour period is pushing the envelope significantly in my view.’”

Goethals, however, noted that Rosenberg never billed for a procedure that was not actually done. Instead, the case involved the recruiting of patients to undergo unnecessary surgeries and other medical procedures.

Goethals reminded Rosenberg of what he said when he took the physician’s no contest plea.

“I remember telling you that although I’m going to accept the no contest plea, I’m basically hearing guilty,” Goethals said.

Goethals said some punishment was warranted as the doctor was living a good life before he got involved in the scheme from 2002 through 2004, but was “motivated by greed” to make more money.

“I think you saw with your Spanish-speaking ability to make more money than you were already making,” Goethals said. “Even you acknowledged that you should have known better.”

The plea deal, however, stipulated that the doctor could avoid time behind bars if he made a certain amount of restitution.

The claimed loss in Rosenberg’s fraudulent billing was estimated to be about $22 million, but it was determined he collected about $2.9 million, Goethals said.

A probation officer’s report on Rosenberg said he was a “well- respected gastroenterologist” before his involvement in the Unity scheme and that he had no prior criminal record.

Goethals was initially going to hand down a sentence that held a required three-year prison sentence over the doctor’s head if he violated probation, but the defendant’s attorney, Jennifer Keller, argued that it would put the doctor’s medical license in jeopardy.

Goethals said he wanted Rosenberg to hold on to his medical license so he could do his community service at a clinic in Beverly Hills, as he has been doing on his own, to assist needy patients.

Still, the way the doctor’s sentence is structured legally, he faces punishment of two, three or five years in prison if he fails to follow the terms of probation. One of those terms is failure to pay restitution, Goethals said.

“I wish you good luck,” Goethals told Rosenberg. “You created this mess yourself. I hope you succeed and I hope to never have to see you again.”

To the attorneys in the case, Goethals said, “This was a 14-year journey we just finished.”