Privacy breach in California part of insurance fraud

Authorities accuse a former Cedars-Sinai employee of bilking insurers by using stolen medical identities. He has pleaded not guilty.

By Pamela Lewis Dolan — Posted Jan. 14, 2009

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Just weeks before a strict medical privacy law went into effect in California, another major privacy breach was uncovered at a large medical center there -- one that police say led to theft.

A former billing clerk at Cedars-Sinai Medical Center in Los Angeles was arrested in November 2008 and charged with stealing patient records and using the identities to steal from insurers.

James Allen Wilson, whose job authorized him to access to the hospital's electronic medical record system, allegedly set up a fake lab company then used stolen information from patient files to bill insurers. Investigators say the scheme netted Wilson at least $69,000, an amount expected to grow as the investigation continues.

Jane Robison, spokeswoman for the Los Angeles County District Attorney's office, said an insurer brought the alleged violations to the attention of investigators, who then alerted the hospital.

Investigators visited Wilson's home and found the records of more than 1,000 patients and actual workers' compensation claims, police said. The hospital sent letters to all patients involved alerting them to the scheme and advising them that it did not appear the stolen information was being used for anything besides the insurance fraud.

Wilson was arrested on Nov. 6, 2008, but the investigation continues, Robison said.

He has pleaded not guilty to multiple felony counts of identity theft, insurance fraud, computer access and fraud, perjury and attempted grand theft of personal property.

Cedars-Sinai spokeswoman Simi Singer said the hospital has not released any statements about the incident and will not comment beyond what was reported in the Los Angeles Times on Dec. 23, 2008.

That article said Wilson was employed in the hospital's workers' compensation accounts department from January 2003 until March 2007. He left the hospital for reasons unrelated to the case, the newspaper reported.

The case is the latest in a string of patient privacy violations in California, including a case at the UCLA Medical Center where a former staffer was caught snooping at the files of celebrity patients, including California first lady Maria Shriver, and selling the information to newspapers.

A separate snooping case at Cedars-Sinai involved the leaking of information about the accidental overdose that nearly killed the infant twins of actor Dennis Quaid.

The state passed laws that went into effect on Jan. 1 that significantly increased the fines not only for the illegal use of medical records but also for unauthorized access of records. The law also opened the door for patients to sue physicians and medical facilities for not adequately protecting medical records.

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