Blatant Medicare fraud costs taxpayers billions
Officials say outrageous fraud schemes are 'off the charts'
Dec. 10, 2007 : 'Off the charts' Medicare fraud is fraying the country's social safety net for seniors and the disabled. NBC's Mark Potter reports in the first of a two-part series.
Nightly News
NBC News
updated 7:22 p.m. ET, Tues., Dec . 11, 2007
MIAMI, Florida - On an FBI undercover tape, the fraud was plain to see: A patient came to a South Florida AIDS clinic, signed some papers, walked into an office and was handed $150 in cash. She politely thanked the workers and left, her visit to the doctor finished without ever receiving any treatment.
According to records seized by investigators, the office staff (who was assured of the patient's cooperation) used her name to fraudulently bill Medicare for a list of expensive treatment and medications.
Law enforcement officials said it's just one of the many widespread, organized and lucrative schemes to bilk Medicare out of an estimated $60 billion dollars a year ? a staggering cost borne by American taxpayers.
Officials say the array of criminals running these schemes are stealing blatantly from the social safety net that cares for 43 million seniors and the disabled, and along the way are hurting honest patients, physicians and legitimate businesses.
"These people have absolutely nothing to do with health care," said Kirk Ogrosky, a prosecutor with the U.S. Justice Department. "They're thieves that would be committing other types of crimes if they weren't committing Medicare fraud."
Outrageous fraud called "off the charts"
While Medicare fraud is a national scourge, found primarily in large urban areas, federal authorities said the very worst of it these days is in South Florida? particularly in Miami-Dade County.
Most of these schemes, they said, are found in the cities of Miami and Hialeah, where they are often concentrated in parts of the Cuban immigrant community.
After visiting the region, and seeing the extent of the fraud, Michael Leavitt, the U.S. Secretary of Health and Human Services, said, "In a decade and a half of public service, this was the most disheartening, disgusting day I have ever spent. We have to fix this."
To attack the fraud, the Justice Department this year set up a strike force at a remote office park near Miami, and in just six months prosecutors filed 74 cases charging 120 people with allegedly trying to steal $400 million from Medicare.
While officials claimed the concentrated law enforcement efforts led to a $1.4 billion drop in Medicare billing in the area (another clear indication of the phony nature of many of the earlier claims), they said they have still barely scratched the surface of the fraud schemes involving bogus clinics, fake medicines, and illegitimate medical supply companies.
"The problem is far from solved," said Timothy Delaney, a supervisor for the FBI's Miami office. "For every one owner we arrest, another one pops up, maybe even two, tomorrow. It's so lucrative that we have yet to turn the tide."
Illegal billing for non-existent medical equipment
One of the most common schemes is the illicit billing for DME, or durable medical equipment, such as oxygen generators, breathing machines, air mattresses, walkers, orthopedic braces and wheelchairs. This scheme involves billions of dollars a year in illegal claims.
Raul Lopez, the president of the Florida Association of Medical Equipment and Services and the director of a legitimate medical supply company, said the fraud is so widespread it hurts the many valid DME companies, which are struggling to compete.
"We're here providing services to patients that need healthcare services, and as a result of the fraud our industry is suffering enormously," he said.
Unlike real DME companies, which have showrooms, warehouses, public offices, trained staff and professional record-keeping, the fraudulent companies are usually shell companies with shadowy business practices, hidden owners, and tiny, locked offices which are only there to create the illusion of legitimacy. They rarely have any medical products for actual sale or delivery.
"They're lined up in hallways one after the other, office after office with a locked door, no foot traffic, no employees, no medical equipment," said Ogrosky. "We're talking about billing that goes up in the tens of millions of dollars for places that don't exist."
FBI agents looking for suspected front-companies that Medicare records show are actively billing rarely find much to search. "We often don't see places. We find vacant lots, we see mailboxes, we see an office suite shared by 30 companies. We're not finding legitimate companies where we can go in and do a search warrant," said Delaney.
On a recent trip to some shopping centers and office buildings in the Miami area, FBI agents Brian Waterman and Christopher Macrae knocked on the doors of several purported medical supply companies. Most of the offices were locked during business hours, with no signs of any activity. Calls to the offices went unanswered.
Referring to one of the closed offices, Waterman said, "The amount of money in dollars that this company is billing for in the last month are close to a half million dollars. We're just trying to find out what they're billing for and what they're doing."
Across the street, in another small office complex, the agents found another six supposed supply companies that also were locked. "Building's closed, kinda tough to deliver stuff out of here," Macrae noted. "It doesn't surprise us at all. This is typical."
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If you want to get upset about something. Get upset about this.
60 billion stolen and this was back in 2007
