A federal grand jury yesterday indicted a Washington man on fraud charges in connection with a scheme in which he and at least two other persons allegedly used a computer at Group Hospitalization Inc. to obtain $175,000 in Blue Cross-Blue Shield medical insurance checks based on 79 phony claims for medical benefits, according to the true bill.

In a 13-count indictment returned to U.S. District Court, the grandy jury said that the defendant, Reginald Brice, 30, who once worked in the Group Hospitalization computer code room, and two other persons submitted an additional $38,000 in claims to Blue Cross in another 17 instances. The scheme, which allegedly was carried out last fall, was discovered before those checks were actually issued, the panel said.

Law enforcement officials said yesterday that the health insurance company discovered the alleged fraud in time to stop payment on $80,000 worth of checks which had been deposited in local banks. The rest of the checks were collected from the post office boxes which Brice and others had obtained in order to receive the checks. Officials said all but about $6,500 of the money alleged to have been obtained by fraud was recovered.

According to the indictment, most of the checks allegedly obtained through the scheme with the last name "Gentile." As part of the scheme, officials said, that last name was fed to the computer in order to obtain legitimate policy identification numbers to be used to collect benefits. The name Gentile was used because one of the persons involved in the scheme had false identification cards in that name which could be used to set up bank accounts and post boxes where the isurance checks would be received, one official said.