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Two Former Executives of Southern California HMO Charged with Fraud
The Mercury News
July 19, 2005
LOS ANGELES - Former top officers of a defunct health management organization were arraigned on charges of siphoning more than $2 million in Medi-Cal reimbursements intended for physicians, officials announced Tuesday.
A June 22 fraud indictment handed up by a San Bernardino County grand jury named Dr. Robert Hugh Cohen, 45, former president and chief executive of Tower Health, and John Morreale, 55, the HMO's former chief financial officer.
"They bilked taxpayers at a time when the state cannot afford to lose a single one of the critical dollars that provide care for kids, seniors and families in need," Attorney General Bill Lockyer said in a statement.
The two Los Angeles residents were arrested July 15 but the indictment was sealed until the former executives were arraigned Monday in San Bernardino County Superior Court. They are scheduled to return to court Aug. 19.
A judge set Cohen's bail at $1 million and Morreale's at $500,000. A jury trial was tentatively set for Sept. 6. If convicted, Cohen could face up to 17 1/2 years in state prison, and Morreale could face more than nine years. Each could also be fined more than $7.2 million.
A telephone message left for a John Morreale in Los Angeles' San Pedro neighborhood was not immediately returned Tuesday. There was no listing for a Dr. Robert Cohen in Los Angeles.
Tower Health, which had 100,000 enrollees, was the largest provider of Medi-Cal services in Riverside and San Bernardino counties. The HMO, which also covered 6,200 people in southern Nevada, filed for bankruptcy in 2001.
It was taken over by the California Department of Managed Health Care.
The attorney general's office alleged that Cohen and Morreale loaned millions of dollars in Tower Health money to other companies owned by Cohen and to his family members, then wrote off the loans. The money included $2 million that was intended to reimburse Medi-Cal service providers in Riverside and San Bernardino counties, authorities said.
Authorities also alleged that Cohen and Morreale falsely reported to state health care officials that the HMO was solvent and paid its health care providers "in a timely manner," the attorney general's office said.
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