BAKERSFIELD, Calif. (KGET) — Veteran Bakersfield attorney Phil Ganong has pleaded no contest in Orange County to multiple counts of fraud filed six years ago in connection with what prosecutors said was a $22 million urine test billing scheme, according to court records.
The Orange County Superior Court website shows Ganong on Monday pleaded no contest to 10 counts of making fraudulent health benefit claims and was sentenced to two years in jail.
The Orange County District Attorney’s Office did not immediately respond to requests for comment.
In 2017, charges were brought against Ganong and others, including his wife and son. Charges were later dismissed against the son, William Ganong, following his death in a house fire. Ganong’s wife, Pamela Ganong, has a competency hearing scheduled this month, court records show.
The initial release from the DA’s office said the Ganongs owned sober living homes in Orange County, Bakersfield, Los Angeles and San Diego between January 2008 and December 2016. They owned those homes through their business, William Mae Company, which operated as Compass Rose Recovery.
By 2012, Compass had 12 employees registered on the company’s payroll and health insurance company. Prosecutors said the Ganongs fraudulently listed residents and non-residents of Compass as employees and expanded their health insurance policy to cover almost 100 employees.
A year later, the Ganongs started a temporary labor agency, Compass Rose Staffing, enrolling sober living residents and non-residents on the payroll and requiring daily or frequent urine drug testing, according to prosecutors. The DA’s office alleged Compass Rose Staffing was used as a front to overbill insurance companies for the collection and testing of urine.
Prosecutors said between 2012 and 2014 the Ganongs fraudulently registered supposed employees on all four of their payrolls: William Mae Company, Compass Rose Recovery, Compass Rose Staffing and a medical testing lab called Ghostline Labs. The companies submitted daily or frequent urine drug test samples for each employee under each company’s health insurance plan.
They changed insurance carriers four times to avoid detection, prosecutors said. A total of $22 million was fraudulently billed to insurance companies, according to the DA’s office, and $15 million was collected.