When asked in 1951 why he robbed banks, prolific thief Willie Sutton is said to have replied matter-of-factly, "Because that's where the money is." That's the same philosophy behind Medicare and Medicaid fraud.
The federal budget for the health care entitlements is more than $900 billion this year. There's nothing like that kind of money to bring out the fraudsters. And sweeping anti-fraud provisions in the Affordable Care Act can only do so much to slow them down.
Even before the law was passed in 2010, the Obama administration began cracking down on health care fraud with a series of strike forces set up across the country.
Since the federal crackdown began in 2009, authorities have charged more than 2,500 defendants, recovering $1.9 billion in fraudulent payments last year alone, according to a joint report by the U.S. Justice and Health and Human Services departments.
While $1.9 billion may sound impressive, the Office of Management and Budget estimates Medicare and Medicaid related programs made nearly $89 billion in improper payments last year, largely due to fraud.
Among the early takedowns in the enhanced effort under Obamacare were Irina Shelikhova and her crew at Bay Medical in Brooklyn, New York, a scam operation that recruited patients among her fellow Russian immigrants in exchange for kickbacks.
The patient would walk into the clinic reporting some imaginary ailment, but rather than having to pay the clinic, say, $35 to see the doctor, the clinic would pay the patient $35—a kickback for the ability to bill Medicare under his or her name. It was a small price to pay for Bay Medical, which billed the taxpayers for some $50 million in nonexistent medical procedures between 2005 and 2010. Shelikhova is serving a 15-year prison sentence for money laundering.
The Affordable Care Act includes much tougher sentences for health care fraud, and enhanced screening for doctors and other providers who bill the government programs. It authorizes new technology to help investigators detect fraud, and $350 million in new funding for anti-fraud efforts over the next ten years. Officials say every dollar spent on enforcement yields $6 returned to the taxpayers.
Yet the crime wave continues across the country.
Here are some of the more brazen scams broken up in the past couple of years, according to that DOJ and HHS report.
Ahaoma Ohia, who owned a medical device business with offices in Texas and Louisiana, already had a thriving scam going when Mother Nature and the federal government came together to really move things along.
Taking advantage of relaxed rules designed to help victims of Hurricane Katrina in 2005 and Hurricanes Gustav and Ike in 2008, Ohia's company—All Star Medical—was able to bill the taxpayers hundreds of thousands of dollars for wheelchairs he falsely claimed were destroyed by the storms.
Ohia continued his scam even after the federal crackdown began, submitting hundreds of other fraudulent claims, according to a federal indictment. They include prosthetics and other expensive accessories for amputees, ordered for patients with no amputations. The feds caught on when Ohia repeatedly billed Medicare for arm and leg braces in pairs—left and right—rather than wasting time billing for one brace at a time.
Ohia blamed the mess on "administrative errors," but a federal jury in Baton Rouge didn't buy it. After a four-day trial in 2014, he was convicted on seven fraud counts and ordered to pay $1.2 million in restitution. He is serving a 13-year sentence at a federal prison in Texas.
Pulling off a large scale Medicare fraud requires patience, as well as lots of patients on whose behalf you can bill the government.
For Dr. Kenneth Johnson and his crew at Manor Medical Imaging in Glendale, California, that meant recruiting homeless people on L.A.'s Skid Row, veterans in drug treatment programs, and elderly Vietnamese immigrants, according to a federal indictment. Johnson would write prescriptions for his "patients," and he and his cronies could cash in big time.
"Dr. Johnson essentially sold his prescription pad when he became part of the conspiracy that defrauded the government out of millions of dollars," said United States Attorney Eileen Decker.
The fraud ring was able to obtain more than $9 million in fraudulent payments from Medicare and California's Medicaid program, as well as millions of dollars worth of anti-psychotic drugs that could then be resold on the black market. The feds say the case is the first large-scale bust involving the expensive and potentially dangerous drugs.
A federal jury last year convicted Johnson on four felony counts. He is serving a nine-year prison sentence.
Show Me the Love
Philadelphia is known as the City of Brotherly Love, but Feda Kuran took the concept a little too far.
Her company, Brotherly Love Ambulance, didn't just transport people who were sick or injured. It gave rides to people who were healthy—sometimes in employees' personal vehicles—then sent the bills to Medicare, to the tune of more than $2 million.
The scheme began to unravel when the supposedly incapacitated patients were seen walking from Brotherly Love vehicles. Medicare regulations say that only patients who are bedridden or unable to be transported by other means can get ambulance rides at the taxpayers' expense.
Prosecutors alleged that even after she got caught, Kuran kept the fraud going by trying to obtain Social Security benefits for her son while trying to hide the fact that he also worked at Brotherly Love.
Kuran pleaded guilty to two felony health care charges. She is serving a five-year federal prison sentence.
Diamonds are a Crook's Best Friend
Ripping off the taxpayers through fraudulent Medicare billing can be a lucrative crime, but the tricky part is figuring out how to spend the money without raising suspicion. As a result, many health care fraud schemes are accompanied by sophisticated money laundering operations.
Gregory Sylvestri of Lake Worth, Florida ran a company called Bioscan, which supposedly provided diagnostic services for neurologists, cardiologists, and other specialists in South Florida. But in fact, Sylvestri admitted in 2014 that Bioscan was just a shell company that helped a wide-ranging fraud ring launder more than $2.8 million in fraudulent Medicare reimbursements.
Pleading guilty to a single count of money laundering involving health care fraud proceeds, Sylvestri admitted that he helped doctors bill Medicare for services that were never performed or were not medically necessary. Some of the supposed recipients were already dead.
The operation brought Sylvestri some serious cash, which he too had to launder. He used some of the money to buy a four-carat diamond and platinum engagement ring worth $60,000, which he had to forfeit as part of his plea agreement. He was sentenced last week to two years in prison.
Money laundering was also a key element of the Bay Medical scam, which was especially tough to detect because of Irina Shelikhova and the Russian immigrant community's penchant for dealing in cash.
One of the big breaks in the case would finally come when authorities figured out a way to pit mother against son, and wait for one to sell the other one out.
Indeed, authorities say even now, with all the new enforcement tools under Obamacare, the massive amount of money involved makes their job a cat-and-mouse game. And some of the most effective ways to fight fraud still involve good old-fashioned police work.
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