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10 Indicted in Ongoing Medicaid Blood Scam

August 5, 1988

NEW YORK (AP) _ A physician and his father ran a scam that bought blood from poor people and AIDS-infected addicts, performed unnecessary tests on it, then charged Medicaid at least $3.6 million for the work, authorities said.

The scheme was ″perhaps the largest and most nefarious fraud ever perpetrated on this country’s health care system: the illegal trafficking in human blood for millions of dollars in profit,″ said Deputy Attorney General Edward J. Kuriansky.

The operation was detailed in an indictment handed up Thursday, naming 10 people and three laboratories.

State Department of Social Services Commissioner Cesar A. Perales said the abuses outlined in the indictment prompted him to suspend total or partial payments to 30 labs and bar at least 35 physicians and 14 labs from the Medicaid program.

Dr. Surinder Singh Panshi, 39, and his father, Gurdial Singh Panshi, 68, ran their operation either by making up addresses of labs or by taking over clinical labs that were approved by Medicaid, Kuriansky said.

They ″established a vast network of associates to procure and supply human blood along with the names and numbers of random Medicaid recipients and doctors,″ he said.

″ ‘Blood collectors’ set up blood-drawing centers in unsupervised and unlicensed offices and tenement apartments and combed ghetto neighborhoods in search of drug users and others willing to sell their blood for cash - usually $10 for every 20 vials of blood.″

Investigators discovered that identical services were sometimes billed by the same lab for the same person on three consecutive days. One patient’s name had been used to generate $50,000 of lab services during a 12-month period.

Among the fictitious addresses used in the scheme were those of a police station, a vacant lot and a funeral home.

Four people, including the son, have been arrested. Five others, including the father, are fugitives, said Kevin Ryan, a spokesman for Kuriansky. The fugitives are thought to have fled to their native Pakistan. The 10th person being sought is not considered a fugitive.

Authorities said there was no indication that any of the blood found its way into the blood supply for transfusions.

Surinder Singh Panshi and Zubair Aziz, 35, of Brooklyn were arraigned Thursday in Queens Supreme Court. Panshi was held in lieu of $350,000 bail and Aziz on $50,000, Ryan said. Two others, Muhammed Usman Irfan, 37, of East Brunswick, N.J., and Zasar Siddique, 34, of Brooklyn, were scheduled for arraignment today.

The indictment said the group and the three labs were paid more than $3.6 million in 1986-88 for testing blood, much of which Kuriansky said was AIDS- infected.

In the 127-count indictment, the defendants were all charged with grand larceny, offering a false instrument for filing, falsifying business records and fourth-degree conspiracy.

The son faces a maximum of 529 years in prison and his father faces 408 years in prison.

In early May, Ryan said, nine other people connected to the group were arrested at illegal blood-drawing centers in three sham clinics and private apartments in the Bronx.

Investigators at the time found 1,100 blood vials with no identifying information, hundreds of empty blood vials and needles, bags of used and unused cotton balls and medical equipment.

In July, a civil suit was filed in state Supreme Court in Queens seeking to recover more than $15 million fraudulently obtained from Medicaid and a Queens judge froze $45 million in assets, Ryan said.

The spokesman added that the $15 million was part of $31.6 million the group billed to Medicaid during a 2 1/2 -year period. For February 1988, the Panshi labs accounted for 20 percent of all Medicaid billings by the state’s nearly 450 labs.

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