California Cosmetic Surgeon Sentenced In Multi-Million Dollar Insurance Fraud

U.S. Attorney's Office

Central District of California

FOR IMMEDIATE RELEASE

Friday, September 29, 2017

Fugitive Coachella Valley Doctor Who Admitted Running Cosmetic Surgery Scam that Took Tens of Millions of Dollars from Insurance Companies Sentenced to 20 Years in Federal Prison

SANTA ANA, California - A Rancho Mirage cosmetic surgeon who has been on the run for four months after pleading guilty in a scheme that duped health insurance companies into paying tens of millions of dollars for cosmetic procedures that were not medically necessary was sentenced in absentia this afternoon to 20 years in federal prison.

Dr. David M. Morrow, 72, a former Rancho Mirage resident whose current whereabouts are unknown, was sentenced this afternoon by United States District Judge Josephine L. Staton.

Judge Staton imposed the sentence after Morrow pleaded guilty last year to conspiracy to commit mail fraud and filing a false tax return.

During today's hearing, Judge Staton noted that Morrow's "greed knew no bounds," and that he showed an "utter disregard for patients' well-being and safety." As part of the sentencing, Judge Staton found that the intended loss from Morrow's scheme was $44,265,211.

"This defendant was a successful doctor who owned a medical clinic and multiple valuable residences, yet he engaged in a scheme designed to steal tens of millions of dollars from insurance companies by tricking them into paying for cosmetic surgery," said Acting United States Attorney Sandra R. Brown. "After admitting guilt, he went on the lam in the hopes of avoiding the punishment that was sure to come. When he is taken into custody - and he will definitely be captured - he will serve the lengthy sentence he deserves as a result of his greed and fraud."

Morrow, a dermatologist-turned-cosmetic-surgeon who was the owner of the Morrow Institute (TMI) in Rancho Mirage, specifically admitted that he submitted millions of dollars in claims for procedures that he certified were "medically necessary" - but in fact were cosmetic procedures such as "tummy tucks," "nose jobs" and breast augmentations. In some cases, according to court documents, patients underwent procedures they did not want in exchange for promises from Morrow that he would perform the cosmetic procedures that they really wanted. In other cases, Morrow performed procedures on certain patients who had not given informed consent, which "has resulted in ongoing medical problems or disfigurement." Evidence presented during today's hearing also showed that Morrow had paid a patient for undergoing surgeries that were billed to insurance. All of the procedures led to fraudulent bills being submitted to insurance companies by Morrow and TMI.

In court papers, prosecutors argued that Morrow's "insurance billing scheme was a completely fraudulent business." Morrow and TMI submitted more than $80 million in claims to insurance companies, which made payments of more than $20 million to Morrow and TMI.

When he pleaded guilty in March 2016, Morrow admitted participating in a health care fraud scheme, which included submitting altered documents to private insurance companies that claimed various procedures were "medically necessary" to induce insurers to pay for them. The guilty pleas followed a grand jury indictment two years ago that alleged Morrow, his wife, and TMI lured patients 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.

To trick insurance companies into paying for the cosmetic procedures, Morrow and others at TMI completely fabricated diagnoses. According to court documents, they also falsified medical records by listing fabricated test results and non-existent symptoms in order to cover up the actual medical procedures being performed. For example, tummy tucks were fraudulently billed as hernia repair or abdominal reconstruction surgeries, rhinoplasties ("nose jobs") were fraudulently billed as deviated septum repair surgeries, and breast lifts and augmentations were fraudulently billed as "tuberous breast deformity."

Morrow also altered existing medical records after-the-fact to conceal that cosmetic surgery had actually been performed. Morrow admitted that on one patient's medical record sent to an insurance company, he changed "Abdominoplasty" (tummy tuck), which was originally written in the procedure section, by covering up the word and handwriting "umbilical & ventral hernias" on top of it.

Morrow also pleaded guilty to filing a false 2008 tax return, admitting 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.

Morrow and his wife are believed to have fled in May 2017. Prior to becoming fugitives, they failed to report to court officials, among other things, the sale of their $9.45 million home in Beverly Hills. Last month, prosecutors filed notice with the court that Morrow had breached his plea agreement by becoming a fugitive.

DOJ - USAOvalley-surgery-center-named-new-indictment-adds-charges-50) against Morrow's wife, Linda Morrow, 65, are currently pending.

The investigation into the Morrows and TMI was conducted by the Federal Bureau of Investigation, IRS - Criminal Investigation, and the California Department of Insurance.

Law enforcement authorities continue to search for the Morrows. Anyone with information about their whereabouts is encouraged to call their local FBI office. The FBI's Los Angeles Field Office can be reached at (310) 477-6565.

The matter is being prosecuted by Assistant United States Attorney Charles E. Pell of the Santa Ana Branch Office

Component(s):

USAO - California, Central (http://www.justice.gov/usao-cdca)

Press Release Number:

17-173

Updated October 2, 2017