Phony labs and medical practices. Out-of-state physicians whose identities were stolen.

That’s how sweeping indictments and state corporate records say 10 individuals – seven of whom live in the Los Angeles area and were quickly arrested Wednesday – bilked the Medicare program out of at least $17 million last year.

Although the amount this ring is accused of stealing from Medicare is relatively modest compared to other cases, officials say their methods represent a stark shift in how such fraud is being perpetrated.

“All of the activity – the businesses and the care rendered – is completely fabricated,” said Thom Mrozek, a spokesman for the U.S Attorney’s office in Los Angeles. Mrozek noted that past Medicare fraud cases typically involve patients hired to receive unnecessary care, or “upcoding” of treatments rendered.

Many of the phony patients were either deceased or had their identities stolen, according to Mrozek. An FBI informant and undercover agent were able to crack the ring, helping the defendants cash checks in the names of the physicians or the bogus businesses.

At least one of the physicians whose identity was stolen suggested that Medicare could have been more diligent in checking his forged application as a provider.

“As a pediatrician, I have maybe one patient out of a thousand who’s in Medicare. It makes you wonder,” said David A. Partrick, M.D., a Colorado practitioner whose name appears on California corporate records as chief executive officer for Hwy Clinical Laboratory Services, a medical group that claims an address in Orange but a San Fernando Valley phone number linked to an anonymous voice mail box.

The indictments, unsealed Wednesday, come just weeks after U.S. Attorney General Eric Holder declared Los Angeles a “hot spot” for Medicare fraud at a special summit (Payers & Providers, Sept. 2). However, officials noted that the investigation began at least two years ago and predates a joint initiative between the Justice Department and the Department of Health and Human Services to crack down on Medicare fraud.

The indictment describes a laundry list of fake or co-opted business incorporated in Southern California, most of which trace back to mail box services in strip malls. Physicians were unknowingly listed as the chief executive officers of the enterprise, their identities used to apply to Medicare as a provider.

Mrozek noted that the defendants were able to obtain the Social Security numbers and birth dates of the physicians in order to bluff Medicare, but was unable to say how.

Although the physician victims were not disclosed in the indictments, Payers & Providers was able to identify not only Dr. Partrick, but Samir N. Tuma, M.D., a Houston nephrologist who practiced in California in the 1970s; David W. Bahler, M.D., an associate professor of pathology at the University of Utah; and Howard B. Gutstein, a Houston anesthesiologist and associate professor at the University of Texas M.D. Anderson Cancer Center.

According to California corporate records, Bahler is listed as the chief executive officer of Sonic Labzone, with corporate offices in Northridge. The address traces back to a post office box in a strip mall. Gutstein is listed as chief executive officer of Stemcyte, Inc. It’s a legitimate laboratory in West Covina, but the mailing address provided traces back to another strip mall post office box in Sherman Oaks. Tuma’s name is connected to an enterprise called S.N. Tuma, Inc. It traces back to the Central California Blood Center in Fresno. The corporation’s listed president, Saydakhmetovich Karayev, was arrested in Panama City, Fla. last month on a suspected immigration violation and is being held without bail, according to records from the Bay County Sheriff’s Office. He was not named in the indictment.

Bahler confirmed having been contacted by the FBI earlier this year, but declined further comment. Tuma and Gutstein did not respond to a request for comment.

The person who Mrozek said was the suspected ringleader of the alleged fraud, 37-year-old Pogos Satamyan of Glendale, identified himself in his Linked In profile as chief operating officer of Seacliff Diagnostics, Inc. of Monterey Park. That enterprise was not mentioned in the indictment.

“I don’t know anything about anything,” said the unidentified person who picked up the phone at the number listed for Seacliff’s corporate headquarters. “I’m the only person here.” An 800 number provided on Seacliff’s website went unanswered.

In addition to being named in illegal activities in Los Angeles, Satamyan was also named in an indictment unsealed in New York Wednesday alleging a $100 million Medicare fraud perpetrated in 25 states. That indictment alleged the defendants are members of an Armenian organized crime ring.

Mrozek said that there was likely some coordination between the New York and L.A. groups, but that both primarily acted on their own.

At last month’s fraud summit, Health and Human Services Secretary Kathleen Sebelius said the Centers for Medicare and Medicaid Services was ratcheting up the application process for would-be providers, including the use of stronger address and identity verification tools.

The changes can’t come sooner for Partrick, who sounded about as pleased as his experience as a young patient coming in for a round of shots.

“It’s not good, and I’m not happy about it,” he said.