California Attorney Heads For Court In $22M Insurance Fraud Scheme

May 24--Facing multiple counts of insurance fraud, a defiant Philip Ganong on Wednesday denied wrongdoing in the operation of companies he said were set up to help people fighting addiction.

At a press conference held at his downtown Bakersfield office, the veteran attorney said he believes prosecutors will find the companies and the drug testing they billed for were legitimate. He said he's prepared to fight his case in court.

"As you folks probably know about me, I do not shy away from a battle," he said.

Ganong, his wife, Pamela, son William, and three others, including two doctors, have been charged in Orange County in what prosecutors said was a $22 million urine test billing scheme.

Philip Ganong, 63, and Pamela Ganong, 61, owned sober living homes in Orange County, Bakersfield, Los Angeles and San Diego between January 2008 and December 2016 through their business, William Mae Company, which operated as Compass Rose Recovery.

The charges stem from the Ganongs' operation of Compass Rose Recovery, as well as Compass Rose Staffing and a medical testing lab called Ghostline Labs. The companies submitted daily or frequent urine drug test samples for each employee under each company's health insurance plan.

According to prosecutors, the Ganongs fraudulently listed residents and non-residents of Compass as employees and expanded their health insurance policy to cover almost 100 employees. It's alleged Compass Rose Staffing was used as a front to overbill insurance companies for the collection and testing of urine.

In all, prosecutors said, the Ganongs billed insurance companies for $22 million, collecting $15 million.

Ganong said he is unaware of any wrongdoing on the part of his companies. He said they billed on behalf of legitimate employees, all of whom were recovering from addiction and needed testing several times a week to help ensure they stayed off drugs.

Through frequent, in some cases daily, testing, a relapse can be quickly identified and the person helped before the problem becomes worse or the addict tries to share drugs with others in the facility, Ganong said.

He said the companies were set up with the purpose of helping those suffering from "addiction disease" stay clean, develop work skills, earn a part-time wage and have health insurance. Some jobs at Compass involved acting as hall monitors at the sober living homes.

"We helped people get work, reclaim self-esteem and become more independent," Ganong said.

Also charged in the case are Susan Lee Stinson, 63, of Carlsbad, Dr. Carlos X. Montano, 61, of Newport Beach, and Dr. Suzie Schuder, 70, of Corona Del Mar. Stinson is the sister of Pamela Ganong.

It's alleged the doctors wrote unnecessary urine test orders in exchange for 20 percent of the net insurance proceeds from urine drug test billing and a per-patient fee of $200.

Phil and Pamela Ganong face 47 years and eight months in prison if convicted of charges including conspiracy to commit medical insurance fraud, 13 counts of insurance fraud and 26 counts of money laundering.

William Ganong, arrested Tuesday afternoon, faces 36 years and eight months in prison if convicted of conspiracy to commit medical insurance fraud and 13 counts of insurance fraud, prosecutors said. Stinson, charged with conspiracy to commit medical fraud, faces three years in prison if convicted.

Montano and Schuder face 16 years and eight months and 17 years and eight months, respectively, if convicted of the fraud charges against them.

A pre-trial hearing for Phil and Pamela Ganong is set for July 27.

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