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

Gonzalez paid assisted-living facilities kickbacks to bus in residents suffering from retardation and dementia. The clinics would then bill Medicare for services the "patients" weren't eligible for or didn't receive.

By the time the feds started sniffing around in 2008, Gonzalez had already made off with $28 million, enough to fund a personal fleet of 17 luxury vehicles.

He closed shop in Miami, only to reopen in North Carolina. When he was finally arrested last year, Gonzalez was planning to expand into Tennessee.

David Feinwachs found that HMOs in Minnesota had turned Medicaid into a cash cow, making it several times more profitable than their private insurance. When he asked for more data, the state blocked him.
David Feinwachs found that HMOs in Minnesota had turned Medicaid into a cash cow, making it several times more profitable than their private insurance. When he asked for more data, the state blocked him.

Then there's Armen Kazarian, kingpin of Los Angeles's Armenian mob. The feds say his gang stole the identities of doctors and patients while setting up fake clinics across the country. They knew nothing of medicine, sending Medicare fake bills that showed eye doctors doing bladder tests, obstetricians testing for skin allergies, and dermatologists billing for heart exams.

Medicare paid out $163 million before Kazarian and 73 henchmen were caught by the FBI. His sentence would prove how little risk there was to such grand aspirations. In February, Kazarian received just three years.

Not all schemes are this flamboyant. Some simply employ sleights of paperwork. A Detroit podiatrist billed Medicare $700,000 for performing toenail removals that amounted to little more than toenail clipping. Two Miami doctors billed back rubs as physical therapy, taking in $57 million.

Some are so brazen that they advertise on TV. Remember those late-night Scooter Store ads, promising to get you a motorized wheelchair "at little or no cost to you"?

In 2007, the San Antonio company agreed to pay $4 million in civil fines and forfeit another $43 million for advertising one scooter but delivering a more expensive model on Medicare's dime.

Executives didn't learn their lesson. The Scooter Store was soon caught again, this time for overcharging Medicare by as much as $87.7 million between 2009 and 2011, according to an audit. But CMS agreed to a spectacularly lenient settlement, allowing the company to repay just a quarter of that figure.

The feds would only get tough after CBS aired an investigation illustrating how the company browbeat doctors into writing unnecessary prescriptions for scooters. They raided Scooter Store headquarters in February. It finally appears the company has been barred from federal health programs.


Fraud Blossoms in the Sunshine and Heat

Warm weather attracts mold, mosquitoes, and retirees with government benefits. So it's no surprise that Miami is the epicenter of health-care fraud.

It's not just the senior population conveniently warehoused in group homes and assisted-living facilities. There are also large immigrant communities that shield their own, and quick access to countries without extradition treaties.

Then there's the culture of fraud that stinks to the very head of Florida government.

During the 1990s, Republican Gov. Rick Scott was CEO of the hospital company Columbia/HCA. As the feds later discovered from the largest fraud case in Medicare history, the company seemed more organized-crime outfit than health-care provider.

Columbia billed for tests that weren't necessary or ordered, submitted false diagnoses to increase reimbursements, paid kickbacks to doctors for patient referrals, and billed for home visits that people didn't qualify for or receive.

The smoking gun was the two sets of books Columbia kept. One detailed all Medicare submittals. The other noted which were fraudulent, allowing Columbia to keep enough reserves to pay penalties should it ever get caught.

A whistleblower estimated that fraud alone accounted for more than one-third of the company's profits.

When the whip came down in 2003, Columbia settled for $2 billion in fines for "systematically defrauding federal health-care programs." Scott claimed ignorance, though it's hard to believe that a self-described hands-on executive wouldn't know where a third of his company's profits came from.

He was eventually fired — but with the velvet landing accorded to disgraced CEOs. Scott walked away with nearly $10 million in severance, stocks worth $300 million, and a $1 million-a-year consulting contract.

Only two lesser executives got jail time. Lead FBI agent Joe Ford would later regret allowing the company to simply pay away its sins: "People need to go to jail."

Still, fraud knows no party, race, or gender. Indeed, the allegations against state Rep. Daphne Campbell's (D-Miami) clan could script a health-fraud installment of The Klumps.

Campbell ran 10 group homes until the state canceled her Medicaid contract in 2006. Four people died in her facilities that year, including one developmentally disabled female patient who had also been raped. Inspectors found rodent feces and general squalor.

Meanwhile, Campbell's ex-con husband, Hubert Campbell, has been accused by two former partners of defrauding the state's Medicaid program.

Not to be eclipsed, their 28-year-old son, Gregory Campbell, is accused of submitting nearly $300,000 in false Medicare billings while operating adult group homes. He's been charged with felony theft, organized fraud, and Medicaid fraud.

But the feds never fully grasped the scope of all this stealing until 2007, when it stumbled upon the novel idea to scrutinize its bills, rather than just paying them.

At the time, the Justice Department was mostly tackling medical-equipment scams involving wheelchairs, hospital beds, respiratory devices, and the like.

These were simply schemes. Providers don't need a license, and lax oversight allows them to pop up overnight, bill Medicare for hundreds of thousands of dollars, then disappear just as quickly — only to reemerge elsewhere under a new name.

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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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