SANTA ANA, California – A former Rancho Mirage resident pleaded guilty this morning to federal charges related to a scheme that fraudulently billed insurance companies tens of millions of dollars for cosmetic surgeries by falsely claiming the procedures were “medically necessary.”
Linda Morrow, 69, who has been in federal custody since July 2019, pleaded guilty to one count of conspiracy to commit health care fraud, admitting that she helped her husband run the fraudulent billing scheme out of The Morrow Institute (TMI) in Rancho Mirage.
Morrow also pleaded guilty to one count of contempt of court for fleeing the United States in 2017 after a federal grand jury indicted her for the health care fraud scheme. Along with her husband, Morrow fled to Israel, which deported her in 2019 after U.S. authorities tracked her down and Israeli authorities determined she had entered that nation on a fraudulent Mexican passport.
Morrow pleaded guilty to the two felony offenses before United States District Judge Josephine L. Staton, who scheduled a sentencing hearing for July 1. At that time, Morrow will face a statutory maximum sentence of 20 years in federal prison.
Morrow’s husband, 77-year-old Dr. David M. Morrow, was extradited by Israel two years ago and is currently serving a 20-year prison sentence. David Morrow pleaded guilty in 2016 and was free on bond awaiting sentencing when the couple fled. Judge Staton imposed the 20-year sentence while the Morrows were living as fugitives, finding that the intended loss from the scheme was more than $44 million.
Linda Morrow, who was the “executive director” of TMI in Rancho Mirage, admitted in court today that she participated in a scheme to defraud health insurance companies by submitting bills for procedures performed at the Morrow Medical Surgery Center that were billed as “medically necessary” – but in fact were cosmetic procedures such as “tummy tucks,” “nose jobs,” breast augmentations and vaginal rejuvenations. Morrow admitted that the scheme attempted to bilk insurance companies out of between $25 million and $65 million.
The victim insurance companies included Aetna, Anthem Blue Cross, Blue Shield of California and Cigna Health Insurance. The scheme also defrauded Staples, Inc. and a self-insured group of public entities that included school districts. To pursue payment for some of the fraudulent surgeries when they were not paid, TMI filed claims of $10,931,237 against the Desert Sands Unified School District; $4,199,862 against the Palm Springs Unified School District; $1,341,519 against the City of Palm Springs; and $256,782 against the California Highway Patrol, according to court documents.
In April 2011, shortly after the FBI and California Department of Insurance executed a search warrant in the investigation, Morrow went to a former employee’s house to confront her on whether she had cooperated with law enforcement, according to the plea agreement.
To defraud the insurance companies into believing that the patients had undergone medically necessary procedures, the Morrows convinced patients to sign “testimonial” letters or declarations that had false statements, according to court documents. In her plea agreement, Morrow admitted that she coached employee patients to draft falsified testimonial letters and declarations.
Morrow also admitted in court today that she fled the United States to avoid prosecution and failed to appear in court as ordered. In addition to helping move $4 million from domestic bank accounts to accounts in Israel, Morrow used a fraudulent Mexican passport to enter Israel and a fraudulent Guatemalan passport while living there. Morrow also admitted that while she was living as a fugitive, she applied for Israeli citizenship using a fraudulent identity.
The FBI, IRS Criminal Investigation and the California Department of Insurance conducted the investigation into the Morrows and TMI. The FBI’s Legal Attachés in Jerusalem, Mexico City, and Guatemala; the Israeli National Police; the United States Marshals Service; the United States Border Patrol’s Northern Border Coordination Center; and the Department of Justice’s Office of International Affairs provided considerable assistance in tracking down and capturing the Morrows.
Assistant United States Attorney Charles E. Pell of the Santa Ana Branch Office is prosecuting this case. Assistant United States Attorney Robert Lester of the Financial Litigation Section of the Civil Division is enforcing restitution orders in this matter.
