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Justice News

Department of Justice
U.S. Attorney’s Office
Central District of California

Friday, March 18, 2016

Coachella Valley Doctor Pleads Guilty in Multi-Million Dollar Scheme that Duped Insurance Companies into Paying for Cosmetic Surgeries

Dr. David Morrow Also Pleads Guilty to Tax Fraud and Admits Failing to Report more than $1.6 in Income to Internal Revenue Service

            SANTA ANA, California – A Rancho Mirage cosmetic surgeon pleaded guilty this morning in a scheme to defraud health insurance companies by submitting bills for more than $3.4 million for procedures that he claimed were “medically necessary” – but in fact were cosmetic procedures such as “tummy tucks,” “nose jobs” and breast augmentations. 

            Dr. David M. Morrow, 71, of Rancho Mirage, a cosmetic surgeon and dermatologist who was the owner of the Morrow Institute (TMI) in Rancho Mirage, pleaded guilty today to one count of conspiracy to commit mail fraud.

            In a plea agreement filed in United States District Court, Morrow admitted that he participated in a scheme to obtain money from insurance companies by false or fraudulent pretenses, which included submitting altered documents to the insurance companies. Morrow admitted that cosmetic surgeries were billed to insurance companies under the pretense that the procedures were “medically necessary” so that insurers would pay for them.

            “Insurance companies provide a valuable service by providing financial support in a time of medical need – they are not designed to dispense cash to unscrupulous medical providers,” said United States Attorney Eileen M. Decker. “Medical professionals who defraud an insurance provider hurt every person who is forced to pay higher premiums.”

            Morrow also pleaded guilty today to one count of filing a false tax return for 2008. Today, Morrow admitted 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.

            “Today’s guilty plea by Dr. Morrow is an important victory for America’s taxpayers who play by the rules and have no tolerance for those who make up their own rules,” stated Anthony J. Orlando, the Acting Special Agent in Charge of IRS Criminal Investigation in Los Angeles. “This investigation and subsequent conviction serve to remind the public that there is no such thing as free money and there are no awards or incentives for creativity when it comes to medical billing and tax fraud.”

            Morrow, his wife, and TMI were charged in this case last fall when a federal grand jury returned a 27-count indictment that outlined a scheme in which patients were lured 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.

            Morrow pleaded guilty today to a conspiracy count in the indictment that outlined how insured patients were lured to TMI with promises that they could receive free or discounted cosmetic surgeries that would be paid largely or completely by their insurance plans. Morrow and his wife told patients that they could receive the free or discounted cosmetic procedures if they first underwent multiple procedures that could be billed to insurance, according to the indictment.

            To trick insurance companies into paying for the cosmetic procedures, Morrow and others at TMI completely fabricated diagnoses – such as a “hernia” – in the patients’ official medical records. According to the indictment, they also fabricated test results and symptoms on medical records to cover up the actual medical procedures being performed – 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.” A document filed as part of Morrow’s plea agreement shows that TMI billed insurance as much as $150,750 for a single cosmetic procedure.

            Morrow altered existing medical records after the fact to conceal that cosmetic surgery had actually been performed. Morrow admitted in the plea agreement and in court today that on one patient’s medical record sent to an insurance company, he covered up the original text of “Abdominoplasty” (tummy tuck) written in the procedure section and handwrote “umbilical & ventral hernias” on top of it.

            “Dr. Morrow enriched himself by cheating policy holders and victim companies whose employees and ability to continue operating were placed in jeopardy as a result of this fraud,” said David Bowdich, the Assistant Director in Charge of the FBI's Los Angeles Field Office. “The FBI devotes many resources to combating health care fraud and seeking justice for victims who can suffer a variety of consequences beyond financial loss.”

            As a result of today’s guilty pleas, Morrow faces a statutory maximum sentence of 20 years of in federal prison for the conspiracy count and three years of imprisonment for filing the false tax return. Morrow is scheduled to be sentenced by United States District Judge Josephine L. Staton on September 23.

            Morrow has also agreed to pay full restitution to the victims.

            Charges against Morrow’s wife, Linda Morrow, 63, are currently pending.

            This investigation into Morrow and TMI was conducted by the Federal Bureau of Investigation, IRS Criminal Investigation, and the California Department of Insurance.

Healthcare Fraud
Updated March 21, 2016