North American Health Insurance Coordinators


In 1994, a federal grand jury indicted Cameron Frye, Ronald King, and Gary Paul Stankowski, on 14 counts of conspiracy, mail fraud, wire fraud, and money laundering. The grand jury charged that the principal business of their company (North American Health Insurance Coordinators) was "the filing of false and fraudulent claims" for health-insurance benefits. According to the indictment, the trio obtained payment of health insurance claims for unorthodox treatments provided at Mexican facilities by pretending that the claims covered conventional therapies administered within the United States. The indictment also alleged that fraudulent claims (a) inflated the fees for services rendered, (b) billed for services never provided, (c) utilized false dates of service, and (d) falsified diagnoses. The FBI estimated that claims submitted by North American had caused insurance companies to pay out more than $43 million during the previous seven years, mostly for treatment at Mexican clinics. The indictment papers identified six such clinics whose services were fraudulently described on claims submitted by North American.

Shortly after the indictment was released, Frye changed the name of his business to Worldwide Health Insurance Coordinators and continued to process claims for "alternative" care. The case was settled in 2000 with a plea bargain under which the company pled guilty to one count of wire fraud and aiding and abetting; the charges against the individuals were dismissed on government motion; and the company was fined $25,000. Frye died on April 4, 2002 at the age of 51.


UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION

UNITED STATES OF AMERICA

v.

CAMERON EDWARD FRYE,
GARY PAUL STANKOWSKI,
and RONALD SMITH KING, JR.

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CRIMINAL NO. H-94-31

 

INDICTMENT

THE GRAND JURY CHARGES THAT:

COUNT ONE
(Conspiracy)

A. Introduction

At all times material to this indictment:

1. North American Health Insurance Coordinators, Inc. (North American) was a corporation established under the laws of Delaware with offices in Houston, and its principal business was the filing of false and fraudulent claims for benefits under policies of health insurance.

2. Defendant CAMERON EDWARD FRYE was the owner and president of North American and controlled and directed its operations.

North American Employees

3. Among the North American employees were: Defendant GARY PAUL STANKOWSKI; Defendant RONALD SMITH KING, Jr.; Nydia Cantu; Blake Manchur; Patrice Manchur; Luis Lopera; Ryne Manahan; Maria Hitt; Marilyn Wallace; Yolanda Frias; and Dixon Sabin.

The Mexican Connection

4. Jimmy Keller, who owned St. Jude's International Clinic, was not licensed to practice medicine.

5. St. Jude's International Clinic was a business located in Tijuana, Mexico, which sold "metabolic treatments" to individuals seeking cures for cancer and other grave illnesses.

6. "California Medical Center" was the name North American employees used in place of st. Jude's International Clinic when filing claims for payment of health insurance benefits on behalf of people seeking reimbursement for the cost of services purchased from St. Jude's International Clinic.

7. Bio Medical Center was a business located in Tijuana, Mexico, owned and operated by Mildred Nelson, which sold the "Hoxsey Therapy" to individuals seeking cures for cancer and other grave illnesses. The Hoxsey therapy was a dietary and herbal therapy developed by Harry Hoxsey; it was not approved by the united states Food and Drug Administration (FDA) to treat cancer or any other illness.

8. Medical Center was the name North American employees used in place of Bio Medical Center when filing claims for payment of health insurance benefits on behalf of people seeking reimbursement for the cost of services purchased from Bio Medical Center.

9. American Metabolics Institute was a business located in San Antonio, Baja California, Mexico, which sold a variety of therapies represented in its literature to assist the process of cleansing the body of toxins and negative energy, replenishing it with vitamins, minerals, enzymes and positive thought for an optimum balance of health.

10. Rosarita Hospital was the name North American employees used for American Metabolics Institute when filing claims for payment of health insurance benefits on behalf of people seeking reimbursement for the cost of services purchased from American Metabolics Institute.

11. American Biologics Mexico, S.A. Hospital was a Hospital located in Tijuana, Mexico, which, in its sales literature, represented itself to be North America's most advanced holistic medical center offering tailor made, individualized, integrated, metabolic and eclectic programs in the management of degenerative conditions.

12. American Biologics Hospital was the name North American employees used for American Biologics Mexico, S.A. Hospital when filing claims for payment of health insurance benefits on behalf of people seeking reimbursement for the cost of services purchased from American Biologics Mexico S.A.

13. The Gerson Therapy Center, also known as Hospital De Baja California, was a business located in Playas de Tijuana, Baja California, Mexico, owned by Charlotte Gerson, which sold the "Gerson Therapy" to individuals seeking cures for cancer and other grave illnesses. The Gerson Therapy was described in its sales literature as an intensive nutrition and detoxification program involving, among other things, thirteen or more freshly pressed raw juices administered at hourly intervals and enhanced elimination to maintain the lowest possible serum level of natural waste and tissue toxins. It was not approved by the FDA to treat cancer or any other illnesses.

14. La Gloria Hospital was the name North American employees used for the Gerson Therapy Center when filing claims for payment of health insurance benefits on behalf of individuals seeking reimbursement of the cost of services purchased at the Gerson Therapy Center.

15. Cydel Hospital, also known as the Manner Clinic, was a business located in Tijuana, Mexico, which sold holistic, metabolic therapies to individuals seeking cures for cancer and other grave illnesses.

Patients of the Mexican Connection

16. Among the patients who travelled to Mexico for treatment as offered by the above-described clinics in Mexico were: Donna Peterson who sought treatment for cancer; Delores Andrews who sought treatment for chronic bronchitis, arthritis and emphysema; Helen DiMarzio who sought treatment for a growth on her nose; Brenda Wright who sought treatment for endometriosis; Chandrika G. Bailey who sought treatment for cancer; Judith Worth who sought spa therapy; Maxine Angell who sought treatment for cancer; Lois Ewalt who sought treatment for cancer; Morris Gisser who sought treatment for cancer; Katie Priester who sought preventive treatment; and Jean Ulrich who sought treatment for cancer.

17. These patients allowed North American to seek reimbursement from their respective insurance companies for the costs of treatment received by them at clinics in Mexico.

Insurance companies sent fraudulent claims by North American

18. Among the insurance companies which were sent fraudulent claims for reimbursement of patients who travelled to Mexico for treatment were: Mid America Mutual Life Insurance Company, the carrier for Donna Peterson; First Farwest Life Insurance Company, the carrier for Delores Andrews; Operating Engineers Health and Wellfare Trust, the carrier for Helen DiMarzio; Blue Cross Blue Shield of Maine, the carrier for Brenda Wright; Blue Cross Blue Shield of South Carolina, the carrier for Chandrika G. Bailey; Blue Cross Blue Shield of Western Pennsylvania, the carrier for Judith Ann Worth; Blue Shield of Idaho, the carrier for Maxine Angell; American Heritage Life Insurance Company, the carrier for Lois Ewalt; Government Employees Hospital Association, the carrier for Morris' Gisser; Blue Cross of California, the claim administrator for Empire Blue Cross Blue Shield, the carrier for Katie Priester; and Blue Cross Blue Shield of National Capital Area, the carrier for Jean Ulrich.

B. The Conspiracy and its Objects

19. From in or about 1985, through in or about the date of this indictment, in the Houston Division of the Southern District of Texas, and elsewhere, the defendants, CAMERON EDWARD FRYE, GARY PAUL STANKOWSKI, and RONALD SMITH KING, Jr., did knowingly combine, conspire, confederate and agree with each other, and with others known and unknown to the grand jury, to commit the following offenses against the united States:

a. to use the United States Mails in execution of a scheme to defraud in violation of Title 18, United States Code, section 1341; and

b. to use interstate wire communication facilities in execution of a scheme to defraud in violation of Title 18, united States Code, section 1343.

C. Manner and Means of the Conspiracy

20. The conspiracy involved an agreement between CAMERON FRYE, GARY STANKOWSKI AND RONALD KING, and subsequent acts to obtain monies and funds from insurance companies, which involved the making of false and fraudulent representations as to medical services provided to their beneficiaries.

D. Overt Acts in Furtherance of the Conspiracy

21. To further the conspiracy and effectuate its purposes, the defendants caused one or more overt acts to be committed:

(1) In or about 1985 CAMERON EDWARD FRYE devised a scheme to obtain payment of claims for health insurance benefits for unorthodox, dubious and questionable treatments provided at clinics and hospitals located in Mexico by deceiving insurance companies into a false belief that the claims covered conventional chemotherapy administered at hospitals located in the United States.

(2) In or about August, 1986, CAMERON EDWARD FRYE wrote a memorandum to all employees at North American instructing them that no claim be filed, without his prior approval, for treatment at certain clinics if the claim exceeded a specified dollar amount.

(3) On or about August 5, 1986, GARY PAUL STANKOWSKI wrote a memorandum to all employees of North American instructing them in how to mislead insurance company representatives if they called with questions regarding claims submitted by North American.

(4) On or about February 23, 1987, CAMERON EDWARD FRYE wrote a letter to Mildred Nelson at Bio Medical Center confirming their agreement that patients calling Bio Medical Center to request information about claims be referred to North American.

(5) On or about July 8, 1988, CAMERON EDWARD FRYE drafted a form letter for use by all employees of North American in appealing claim denials.

(6) On or about September 6, 1988, CAMERON EDWARD FRYE wrote a memorandum to all employees at North American identifying four client facilities as the ones which were actually hospitals, and instructing them in how to respond to insurance companies that refuse to pay claims.

(7) On or about October 31, 1988, RONALD SMITH KING, Jr. wrote a memorandum to all clinic supervisors at North American recommending that they use a charge for "oncology" on claims they file for the stated reason that insurance companies almost always pay the charge.

(8) On or about March 6, 1989, CAMERON EDWARD FRYE wrote a memorandum to all employees at North American providing specific answers to be given to insurance companies questioning the policy of collecting fees for medical records.

(9) On or about August 31, 1989, CAMERON EDWARD FRYE wrote a memorandum to all employees at North American instructing that no single claim over $5,000 be filed without prior approval first being obtained from him or GARY PAUL STANKOWSKI.

(10) On or about November 15, 1989, CAMERON EDWARD FRYE wrote a memorandum to all employees at North American advising of a new policy for remitting payments owed to patients.

(11) On or about June 12, 1990, CAMERON EDWARD FRYE wrote a memorandum to all employees at North American instructing that closed files be brought to him.

(12) On or about June 21, 1990, Blake Manchur and Patrice Manchur wrote a memorandum to all employees of North American telling them to file additional claims for payment of health insurance benefits to recoup fees due North American if and when the pOlicy-holder failed to pay North American's fee for submitting prior claims.

(13) In or about March, 1989, Marilyn Wallace called Donna Peterson, requesting that Ms. Peterson sign a letter to be sent to Mid America Mutual Life Insurance Company which would falsely represent that she received medical treatment in California from H. R. Valenzuela, M.D.

(14) On or about June 27, 1989, Ryne Manahan filed a claim for payment of health insurance benefits with First Farwest Life Insurance Company on behalf of Delores Andrews which was false and fraudulent in that it:

(i. ) claimed reimbursement for an amount in excess of that actually spent by Delores Andrews for treatment at Bio Medical Center;

(ii.) represented that Delores Andrews had been treated by a doctor at a facility in San Ysidro, California, called the Medical Center;

(iii.) represented that Delores Andrews had received treatment for ten consecutive days commencing March 6, 1989;

(iv.) represented that Delores Andrews had received four intravenous chemotherapy treatments each day for the ten days she was represented to have been treated at the Medical Center.

(15) On or about April 5, 1990, North American filed a claim for payment of health insurance benefits with Kirke-Van Orsdel on behalf of Lois Ewalt which was false and fraudulent in that it:

(i. ) claimed reimbursement for an amount in excess of that actually spent by Lois Ewalt for treatment at Hospital de Baja California;

(ii.) represented that Lois Ewalt had been treated at a facility located in the United states called La Gloria Hospital;

(iii.) represented that Lois Ewalt received intravenous chemotherapy treatments which included cyclophosphamide, vincristine and prednisone.

(16) On or about October 30, 1989, Luis Lopera filed a claim for payment of health insurance benefits on behalf of Brenda Wright which was false and fraudulent in that it:

(i.) represented that Brenda wright had been treated by a doctor at a facility in San Ysidro, California, called the Medical Center;

(ii.) represented that Brenda Wright had received treatment at the Medical Center for three consecutive days commencing November 28, 1988; and

(iii. ) represented that Brenda Wright had received four intravenous chemotherapy treatments each day for the three days she was represented to have been treated at the Medical Center.

(17) On or about March 26, 1990, Ryne Manahan wrote a note in the file maintained for Helen DiMarzio's account at North American indicating that Helen DiMarzio had not seen any doctors other than those at Bio Medical Center through March 26, 1990, and that therefore a claim for payment of health insurance benefits could be filed using as many dates as the claim filer desired up to and including March 26, 1990.

(18) On or about July 18, 1989, Maria Hitt filed a claim for payment of health insurance benefits on behalf of Judith Worth with Blue Cross Blue Shield of Western Pennsylvania which was false and fraudulent in that it:

(i.) claimed reimbursement for an amount in excess of that actually spent by Judith Worth for services provided at Rosarita Hospital;

(ii.) described the location at which Judith Worth received services as being a hospital located in San Ysidro, California;

(iii. ) represented that Judith Worth suffered from a uterine hemorrhage for which she received medical treatment which included surgery with anesthesia, a blood transfusion, a biopsy of her uterus and daily intravenous therapy for six consecutive days commencing April 5, 1989.

(19) On or about June 15, 1990, Ryne Manahan filed a claim for payment of health insurance benefits on behalf of Maxine Angell with Blue Shield of Idaho which was false and fraudulent in that it:

(i. ) claimed reimbursement for an amount in excess of that actually spent by Maxine Angell for treatment at American Biologics Hospital;

(ii.) represented that Maxine Angell was treated at American Biologics Hospital for nineteen consecutive days commencing March 9, 1989; and

(iii.) represented that Maxine Angell received intravenous chemotherapy treatment.

(20) On or about April 5, 1990, and June 1, 1990, Yolanda Frias filed claims for payment of health insurance benefits on behalf of Morris Gisser which were false and fraudulent in that they:

(i. ) claimed reimbursement for an amount in excess of that actually spent by Morris Gisser for treatment at Hospital De Baja California;

(ii.) identified the facility at which Morris Gisser received treatment as being La Gloria Hospital; and

(iii. ) represented the principal treatment provided to Morris Gisser as consisting of injection or infusion of cancer chemotherapeutic substance.

(21) On or about September 24, 1988, Nydia Cantu filed a claim for payment of $9,913.21 in health insurance benefits on behalf of Jean Ulrich which was false and fraudulent in that it claimed reimbursement for an amount in excess of the $8,279.10 actually spent by Jean Ulrich for services provided at Cydel Hospital.

(22) On or about February 9, 1989, RONALD SMITH KING, Jr. made a notation in the file maintained by North American for Jean Ulrich instructing that a claim for payment of $8,279.10 be prepared and sent to Jean Ulrich for her use in preparing her federal income taxes.

(23) On or about March 7, 1989, RONALD SMITH KING Jr. wrote a memorandum to all clinic supervisors at North American instructing that all correspondence from Jimmy Riggs at Blue Cross Blue Shield of the National Capital Area be referred to him for review.

(24) On or about August 2, 1990, Dixon Sabin filed a claim for payment of health insurance benefits on behalf of Katie Priester which was false and fraudulent in that it:

(i.) claimed reimbursement for an amount in excess of that actually spent by Katie Priester for services provided to her at Cydel Hospital;

(ii.) represented that Katie Priester suffered from and was treated at Cydel Hospital for Angina Pectoris; and

(iii.) represented that Katie Priester received services at Cydel Hospital which included a stress test, an EKG, a chest X-ray and nuclear medicine.

All in violation of Title 18, United states Code, section 371.

COUNTS TWO THROUGH FIVE
(Mail Fraud)

A. Introduction

22. The allegations set forth in section A of Count One of this Indictment are fully incorporated herein by reference.

B. The Scheme to Defraud

23. From in or about 1985, through in or about the date of this indictment in the Houston Division of the Southern District of Texas, the defendants, CAMERON EDWARD FRYE, GARY PAUL STANKOWSKI, and RONALD SMITH KING, Jr., did knowingly devise and intend to devise a scheme and artifice to defraud providers of health insurance and for obtaining money and property by means of false and fraudulent pretenses, representations and promises, as more fully set forth below.

C. The Manner and Means of the Scheme

24. The manner and means of the scheme is set forth in section C of Count One of this Indictment and is fully incorporated herein by reference.

D. The Execution of the Scheme to Defraud by Use of the Mails

25. On or about the dates set forth below, in the Southern District of Texas, the defendants, CAMERON EDWARD FRYE, GARY PAUL STANKOWSKI, and RONALD SMITH KING, Jr., each aiding and abetting one another and others known and unknown to the grand jury, for the purpose of executing the scheme and artifice to defraud and to obtain money and property by means of false and fraudulent pretenses, representations and promises, and attempting to do so, knowingly caused to be delivered through the United States Mail, according to the directions thereon, from Houston, Texas, in the Southern District of Texas, the items described below:

COUNT
DATE
ADDRESSEE
ITEM
Two
August 19, 1991
Donna Peterson
Donna Letter invoicing Donna Peterson
Three
March 26, 1990
Chandricka G. Bailey
Letter transmitting check
Four
October 30, 1999
Kirke-Van Orsdel
Insurance Benefit Claim for Lois Ewalt
Five
July 18, 1989
Haddon Ulrich
Insurance Benefit Claim for Judith Worth

In violation of Title 18, United States Code, Sections 2 and 1341.

COUNTS SIX THROUGH TWELVE
(Wire Fraud)

A. Introduction

26. The allegations set forth in section A of Count One of this Indictment are fully incorporated herein by reference.

B. The Scheme to Defraud

27. From in or about 1985, through in or about the date of this indictment in the Houston Division of the Southern District of Texas, the defendants, CAMERON EDWARD FRYE, GARY PAUL STANKOWSKI, and RONALD SMITH KING, Jr. did knowingly devise and intend to devise a scheme and artifice to defraud providers of health insurance and for obtaining money and property by means of false and fraudulent pretenses, representations and promises, as more fully set forth below.

C. The Manner and Means of the Scheme

28. The manner and means of the scheme is set forth in section C of Count One of this Indictment and is fully incorporated herein by reference.

D. The Execution of the Scheme to Defraud by Wire

29. On or about the dates set forth below, the defendants, CAMERON EDWARD FRYE, GARY PAUL STANKOWSKI, and RONALD SMITH KING, Jr. each aiding and abetting one another and others known and unknown to the grand jury, for the purpose of executing the scheme and artifice to defraud and to obtain money and property by means of false and fraudulent pretenses, representations and promises, and attempting to do so, knowingly caused to be transmitted in interstate commerce by wire communications facilities from Houston, Texas, in the Southern District of Texas, to the destination described below, certain signs, signals, pictures and sounds which transferred the items as described below:

COUNT
DATE
STATE OF DESTINATION
ITEM TRANSFERRED
Six
June 27, 1989
Oregon
Insurance Benefit Claim
for Delores Andrews
Seven
March 26, 1990
California
Voice Communication from North
American to Helen DeMarzio
Eight
October 30, 1999
Maine
Insurance Benefit Claim
for Brenda Wright
Nine
July 18, 1989
Pennsylvania
Insurance Benefit Claim
for Judith Worth
Ten
June 15, 1990
Idaho
Insurance Benefit Claim
for Maxine Angell
Eleven
March 29, 1990
Florida
Voice Communication from North
American to Amelia Gisser
Twelve
August 2, 1990
California
Insurance Benefit Claim
for Katie Priester

COUNT THIRTEEN
(Laundering of monetary instruments)

On or about the 18th day of December, 1989, in the Houston Division of the Southern District of Texas, the defendant, CAMERON EDWARD FRYE, aided and abetted by others known and unknown to the grand jury, did knowingly conduct and attempt to conduct a financial transaction affecting interstate and foreign commerce, that is the payment, transfer and delivery of $256.91 by North American to Troy Fuller, by check number 11824 drawn on account number 6900030155, the account of North American at Texas Commerce Bank, in Houston, Texas, which transaction involved the proceeds of a specified unlawful activity, that is, wire fraud, in violation of Title 18, United states Code, section 1343, and mail fraud, in violation of Title 18, united states Code, section 1341, with the intent to promote the carrying on of said specified unlawful activity by paying the salary of Troy Fuller, a person employed to assist in the execution of the specified unlawful activity, and that while conducting and attempting to conduct such financial transaction, the defendant knew that the proceeds involved in the financial transaction represented the proceeds of some form of unlawful activity.

In violation of Title 18, United States Code, sections 2 and 1956 (a) (1) (A) (i) .

COUNT FOURTEEN
(Laundering of monetary instruments)

On or about January 12, 1990, in the Houston Division of the Southern District of Texas, CAMERON EDWARD FRYE, aided and abetted by others known and unknown to the grand jury, did knowingly conduct and attempt to conduct a financial transaction affecting interstate and foreign commerce, that is the negotiation of check number 11461 drawn in the amount of $8,516.83 on account number 6900030155, the account of North American at Texas Commerce Bank, in Houston, Texas, which transaction involved the proceeds of a specified unlawful activity, that is, wire fraud, in violation of Title 18, united states Code, section 1343, and mail fraud, in violation of Title 18, united States Code, section 1341, knowing that the transaction was designed in whole or in part to avoid a transaction reporting requirement under State or Federal Law, that is the reporting requirement contained in Title 31, United States Code, section 5313(a), and the regulations issued thereunder, and that while conducting and attempting to conduct such financial transaction, the defendant knew that the proceeds involved in the financial transaction represented the proceeds of some form of unlawful activity.

In violation of Title 18, United states Code, sections 2 and 1956(a) (1) (B) (ii).

A TRUE BILL:

______________________
Foreperson

GAYNELLE GRIFFIN JONES
UNITED STATES ATTORNEY

By: ________________________
George S. Tallichet
Assistant United States Attorney

This page was posted on August 28, 2004.

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