Scan scam. San Diego, not surprisingly, is in the middle of this one. In 1992, Los Angeles financier Bruce Friedman set up Heart Check America. “We were a regular imaging center. A doctor prescribes a scan, you pay at time of service,” says Friedman.
He sold it in 2009 to investors, particularly the Haddad family of suburban Chicago. David Haddad and his family came out of the resort time-share business. Indeed, the State of Indiana accused the Haddads of deceiving customers, and in 2009, a $470,602 default judgment was entered against the family, according to Pro Publica, which has been instrumental in exposing Heart Check.
After Friedman sold Heart Check, the company opened a San Diego operation. Heart Check changed its business model. Potential customers would be offered a free heart scan. But to get it, they would have to listen to a high-pressure pitch to buy a ten-year contract for $3000 plus an annual payment of $199. Customers could get bone-density, heart, lung, and other kinds of scans on a regular basis. “I voiced my opinion that this was a bad idea,” says Friedman. “Do I know what medical procedures might be appropriate five or ten years down the road? No.” But Haddad was a resort time-share salesman: “If the only tool a guy knows is a hammer, the only solution is ‘Let’s hammer.’”
Pretty soon, customers in the nation’s various Heart Check locations were complaining bitterly. They would pay money up front, go through the process, but not get their scans, or get scans their doctors couldn’t interpret. Karl Thorpe of Fallbrook heard the sales pitch. “I paid $3000. Then I tried to contact them to get a colon check. Nobody was there,” he says.
Last year, the Illinois attorney general filed suit against the company and the Haddads for using unfair and deceptive business practices to sell consumers the ten-year contracts. Colorado assessed the company more than $3 million for unethical practices, and not getting paid, turned the matter over to a collection agency. Nevada shuttered Heart Check locations. A civil suit was filed in Nevada, charging that the company drew up deceptive and illegal contracts in wooing customers. There has been a settlement with a bank that was a party to the contracts. Heart Check is named in the suit but is “insolvent and no longer a going concern,” according to the law firm handling the suit.
Back in 1999, a scanning operation named LifeScore Clinic was launched in San Diego by Dr. Phillip Milgram and another physician. “We had an electron beam scanner,” says Milgram. However, “I lost everything I ever made in life from the business. I got overextended. I had too much debt. People were not paying money. I had to close the business in 2009.”
Milgram graduated from a medical school in Guadalajara. He is in obstetrics and gynecology, and also specializes in laser toenail fungus removal. In 1999, he was disciplined by the California State Medical Board for “negligence; excessive treatment; failure to maintain accurate records, and incompetence,” according to board records. He surrendered his license. Then he lost his license in New York and Nevada because he did not reveal the California action. He got his California license back in 2004.
He claims his license trouble began when “My girlfriend committed suicide and at her funeral somebody wrote me a note” and threatened to “get” him. He blames the California Medical Board’s action on the complaint that person filed, but the charges seem too serious to have been generated by one individual.
Milgram was a clinical instructor at the University of California San Diego Medical Center from 1994 to 1997 but did not have a faculty appointment. “The instructor appointment ended due to lack of participation” by Milgram, and he has nothing to do with the university now, says a spokesperson.
“I have known David Haddad for many years,” admits Milgram. He says he helped with setting up the San Diego Heart Check operation. “They promised me I would be medical director, but I never saw one patient with Heart Check America. They felt they didn’t need a doctor.”
When Milgram’s LifeScore Clinic was in trouble, Dan Gallagher, also from a Chicago suburb, rode into town. “I terminated him after one month,” says Milgram.
Gallagher helped finance scan businesses with names similar to Milgram’s: Life Score Screening and Life Score Management. He says he was more of a passive investor and found out belatedly that David Haddad had been brought in as a consultant. “When I found out David Haddad got in there, I did my due diligence and realized it was a stupid decision.” Haddad and Milgram “stole my employees, stole my workers. They were telling my patients to go to [Milgram’s] LifeScore Clinic. I feel like a fool, like an idiot — I have been used.”
He says he plans to sue Haddad and Milgram. His attorney has written the Haddads, demanding that they cease and desist contacting Gallagher’s vendors.
Gallagher abruptly closed his two operations in San Diego. That left some scars. Yuri Delbruck paid $99 for a scan but never got a report. “The appointment was more like a time-share sales talk meeting, and we were there for three hours,” she complains.
Milgram says Gallagher tried to steal his business while Gallagher says Milgram and Haddad tried to steal his business.
This March, Milgram got financial support from an investor he won’t name and reopened the LifeScore Clinic at 4130 La Jolla Village Drive. He hopes to gain back the money he has lost. He offers low-dose CAT (computerized axial tomography) scans, ultrasound, and other tests, hoping to detect undiagnosed cancer and other tumors, coronary artery disease, stroke risk, plaque, and the like.
Many medical practitioners are skeptical of such tests unless a patient shows signs of needing them. But Milgram rejoins, “The way the medical system works is to wait to act until the patient gets sick.”
Haddad did not respond to phone calls. ■