Medicare fraudsters swindle millions from the feds

Hospitals, doctors, and drug dealers have made Medicare the nation's sweetest crime, but the feds are trying to shutter the door

Medicare fraudsters swindle millions from the feds
Ellen Weinstein

Houston Riverside General Hospital specialized in the kind of medicine its better-heeled brethren did their best to avoid. Like treating the poor, the mentally ill, the drug-addled.

So it's no surprise that the 95-year-old nonprofit — formerly known as Houston Negro Hospital — shared the same broken finances as the people it served. Most patients couldn't pay their own way, leaving Riverside to survive off the rock-bottom reimbursement rates of Medicare and Medicaid.

At one point, it was losing $10,000 a day. That's when executives decided to cauterize the wound with a hot poker of fraud.

Texas U.S. Rep. Sheila Jackson Lee carried water for Medicare swindler Houston Riverside General Hospital
David Ortez
Texas U.S. Rep. Sheila Jackson Lee carried water for Medicare swindler Houston Riverside General Hospital
Florida Gov. Rick Scott was CEO of a hospital company that was nailed with two sets of books. Then he went into politics.
Gage Skidmore
Florida Gov. Rick Scott was CEO of a hospital company that was nailed with two sets of books. Then he went into politics.

In 1996, the state of Texas accused Riverside of padding fees and billing for drug rehabilitation services it never provided. Texas canceled $1 million in contracts and demanded that the hospital repay another $763,000. It also urged the feds to audit Riverside's Medicare and Medicaid payments.

Yet charges of fraud weren't enough for bureaucrats to fully close the spigot. The money continued to flow.

It would take another eight years before the state had finally had enough. In 2004, it moved most of its drug-treatment contracts to more trusted providers, slashing Riverside's funding by 75 percent.

Unfortunately for the taxpayers, CEO Earnest Gibson III had friends in influential places.

Congresswoman Sheila Jackson Lee (D-Texas) demanded an investigation of the cuts, calling on Gov. Rick Perry to restore the money. Perry, who had appointed Gibson to the Board of Regents at Texas Southern University, was happy to oblige.

By the time it was over, Riverside emerged with another $3 million.

It wasn't until 2011 — 15 years after the initial accusations — that law enforcement got serious. That's when the feds nailed administrator Mohammad Khan, who confessed to enriching the hospital through a kickback scheme.

He'd been paying "recruiters" $300 a head to bring Medicare patients to Riverside's six psychiatric clinics. They arrived by the van-load for daily therapy sessions they rarely qualified for or received. Medicare picked up the $116 million tab.

When the scheme was discovered, the Center for Medicaid and Medicare Services (CMS) finally halted the hospital's payments.

But in the eyes of Jackson Lee, a meager $116 million theft was hardly cause to rush to judgment. Her husband, Elwyn Lee, once served on Riverside's board. So the good congresswoman again rode to the hospital's rescue.

"Even if more harmful acts prove to be true," she wrote to CMS, "an entire institution should not be penalized by the acts of one person."

In Riverside's case, that "one person" would abruptly multiply. Kahn ratted out CEO Earnest Gibson III as his co-conspirator. The feds also nabbed Gibson's 35-year-old son, Earnest IV. He ran one of the psychiatric clinics and was charged with billing nearly $700,000 for care that "was not medically necessary and, in some cases, not provided," according to prosecutors.

Investigators discovered that, since 2005, the hospital had been swindling the feds to the tune of $22 million a year. Kahn pleaded guilty. The two Gibsons and five others await trial on charges of fraud, conspiracy, and money laundering.

By this time, Jackson Lee had no choice but to dial down her patron sainthood. She refused to comment for this story.

Yet another member of Congress is happy to talk. Kevin Brady (R-Texas) has been trying to draw attention to health-care fraud in Houston since entering office in 2009. It seems that CMS, the agency charged with protecting Medicare dollars, failed to notice that the city's private ambulance services were robbing it blind.

That year, companies in Harris County, Texas, billed Medicare $62 million for emergency shuttles. By comparison, New York City received $7 million for the same services. Brady's concerns went ignored until 2011, when a Houston Chronicle series dragged the scam into the light.

Think of the Medicare program as a bank that never bothered to buy a safe. Everyone from HMOs to drug dealers has been caught robbing it time and time again, stealing the kind of money that makes the sequester look like pocket change.

While the credit-card industry uses data-mining techniques to flag fraud within minutes, CMS has allowed the most obvious schemes to run for years, rarely the wiser.

"Washington has long bragged that Medicare only has a 2 percent administrative overhead," Brady says. "But with that, we've paid a steep price in far too much fraud."

Given how often such blatant thievery goes undetected, no one's sure how much fraud there really is. Conservative estimates place the bill at $100 billion annually. The more adventurous peg the figure closer to $300 billion — three times what the feds spend on education.

It has left federal health care little more than an unlocked home, where street punks and gangsters, doctors and even states walk right in and help themselves to whatever's inside.


All You Need Is the Government and Your Imagination

The stealing has become so sweet that Medicare fraud threatens to overcome drug dealing as America's favorite quick-riches pastime. Street criminals can easily pull in $25,000 a day without carrying a gun. Throw in modest sentences for getting caught, and it's the criminal equivalent of saccharine.

Take Cuban expat Armando Gonzalez, who served five years for dealing crack. When he got out, he started several outpatient psychiatric clinics in Miami with a scheme similar to Riverside's.

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3 comments
bryanflake1984
bryanflake1984

This is a horrible story.  I need to help my mom find a great assisted living center to get into.  I am super skeptical and worried about any option we make going forward.  Can someone please put my mind at ease?


bryanflake1984|http://www.altaridge.com/

mohanlon3
mohanlon3

Looks like the folks getting medicare are not the ones getting the Free Ride,.

BeenThere
BeenThere

This is the kind of article that made the underground press famous for being a resource for The Truth. When Bachmann was still being taken seriously (among circus clowns and Republicans) as a candidate for President, her regular quoting of Grover Norquist (“I'm not in favor of abolishing the government. I just want to shrink it down to the size where we can drown it in the bathtub.”) spawned a likewise saying about corporations. You know you are living in a crazy place when criminals are exalted as “job creators” and law enforcement has to go underground to get convictions of these vicious monsters before our “representatives” go to work freeing them. We are that crazy place; the United States of America.

The simple solution for all forms of government fraud is to call it what it is, “treason,” and prosecute the perpetrators accordingly. If a few hundred of these Medicare fraud CEOs were executed by firing squad a lot would change quickly. Of course the best thing about executing CEOs is that they are easily replaced, so society would suffer no net loss from their absence.

Imagine a society where the smartest people were hard at work doing something useful. We are not that place, of course, but we could have been. Without the Reagan Revolution that celebrated criminal behavior and “screwing the government for fun and profit” (also known as cheating your neighbors and robbing your community) having made getting filthy rich with criminal behavior, the nation might have become a completely different place in 2013. Instead, the ultimate scammers pick off the best brains in every graduating class, corrupting them, making them useless for real work, and wasting lives and fortune with the protection of an entire political party.

 
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