Health Care Fraud Blog

LOS ANGELES, CA - January 8, 2010 - The U.S. Attorney’s Office for the Central District of California announced that a former UCLA Healthcare System employee pleaded guilty to four counts of illegally reading private and confidential medical records, mostly from celebrities and other high-profile patients.

Huping Zhou, 48, of Los Angeles, pleaded guilty prior to a trial to four misdemeanor counts of violating the federal privacy provisions of the Health Insurance Portability and Accountability Act (HIPAA). Appearing before United States Magistrate Judge Andrew J. Wistrich, Zhou admitted to knowingly obtaining individually identifiable health information without a valid reason, medical or otherwise. Zhou becomes one of the first people in the nation to be convicted of violating the privacy provisions of HIPAA.

Zhou, who is a licensed cardiothoracic surgeon in China, was employed in 2003 at UCLA as a researcher with the UCLA School of Medicine. On October 29, 2003, Zhou received a notice of intent to dismiss him from UCLA for job performance reasons unrelated to his illegal access of medical records. That night, Zhou, without any legal or medical reason, accessed and read his immediate supervisor’s medical records and those of other co-workers. For the next three weeks, Zhou’s continued his illegal accessing of patient records and expanded his illegal conduct to include confidential health records belonging to various celebrities. According to court documents, Zhou accessed the UCLA patient records system 323 times during the three-week period, with most of the accesses involving well known celebrities.

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In Ft. Lauderdale, U.S. District Court Judge James I. Cohn sentenced Fernando Ferrer Jr. and Isis Machado for conspiracy, identity theft, computer fraud and wrongful disclosure of individually identifiable health information (HIPAA violation) for activities that impacted patients at Cleveland Clinic and Health Management Associates.

Fernando Ferrer, Jr. and Isis Machado were convicted of conspiracy to commit computer fraud, conspiracy to commit identity theft and conspiracy to wrongfully disclose individually identifiable health information, in violation of 18 U.S.C. § 371.

Ferrer was also convicted of a substantive count of fraud in connection with computers in violation of 18 U.S.C. § 1030, a substantive count of violating the Health Insurance Portability and Accountability Act (HIPAA) involving the wrongful disclosure of individually identifiable health information, in violation of 42 U.S.C § 1320d-6(a)(2), and five separate counts of aggravated identity theft, in violation 18 U.S.C. § 1028A.

Ferrer pled not guilty and proceeded to trial. He was convicted by a jury of all 8 counts of the Superseding Indictment. Machado pled guilty to conspiracy and testified at trial against Ferrer.

Machado was employed at the Cleveland Clinic when she and her cousin Ferrer stole the personal information of Cleveland Clinic and MHA patients. That information included, among other things, the patients' names, dates of birth, Social Security numbers, Medicare numbers and addresses.

The patients' information was then used to make fraudulent claims for Medicare reimbursement, allegedly more than $2.5 million on behalf of more than 1,100 victims.

According to government officials, Ferrer advised Machado of an 'opportunity' whereby Machado could sell stolen personal identification information to her co-conspirators. Machado exceeded her authorized access to the Cleveland Clinic's computer system to obtain and print out personal information of Cleveland Clinic and HMA patients. Ferrer paid Machado for the personal information she stole. Ferrer then caused the personal information obtained by Machado to be used to file fraudulent claims for Medicare reimbursement upon the United States.

Ferrer is to serve 7 years, 3 months in prison and three years of supervised release, as well as to pay $2.5 million in restitution.

Machado is to serve 3 years of probation, including six months of home confinement, as well as to pay the same restitution as Ferrer.