Medicare Fraud Is Sweetest Crime in South Florida

Medicare Fraud Is Sweetest Crime in South Florida
Illustration by Ellen Weinstein

Driving through Hialeah, where strip malls line boulevards like concrete-and-metal kudzu, a federal agent offers a reporter $1 for every strip mall he can spot that doesn't house a medical business.

Let's just say the reporter is still broke.

In this city, streets are a jumble of doctors' offices, physical therapy programs, adult daycares, and mental-health clinics stretching in every direction. Mom-and-pop pharmacies proliferate despite being situated doors down from Walgreens.

Gov. Rick Scott was CEO of a hospital company nailed with two sets of books. Then he went into politics.
Gage Skidmore
Gov. Rick Scott was CEO of a hospital company nailed with two sets of books. Then he went into politics.
Christopher Dennis and Reginald France work out of the Miami-area HEAT task force office.
Liliana Mora
Christopher Dennis and Reginald France work out of the Miami-area HEAT task force office.

Agents say — and prosecutions prove — that something suspicious has been going on. Many of these businesses provide no therapy, unnecessary therapy, or dubious therapy, then turn around and bill federal taxpayers for this "health care" through the Medicare program.

"They bring in these Zumba dancers," the agent cracks. "These young girls are Zumba-dancing away, and these old guys are looking at it, and, yeah, they're getting some kind of therapy."

Medicare fraud threatens to overtake drug dealing as America's favorite get-rich-quick pastime. The stealing has become so sweet that street criminals can easily pull in $25,000 a day without carrying a gun. Because the crime is so widespread, prosecutors don't even bother going after anyone unless they've stolen $500,000 or more. The few who are caught and convicted typically get only modest sentences, making Medicare fraud the criminal equivalent of saccharine.

Think of the Medicare program as a bank that never bothered to buy a safe.

When the program was established in 1965, it was set up to provide medical care to people over age 65 who typically could not afford private insurance. But founders of the program did not anticipate the changes that were to come — population booms, skyrocketing medical costs, prescription drugs, private insurers shunting unhealthy people. Nor did they anticipate the thieves of today.

In the idealistic 1960s, people generally knew their virtuous family doctor, and health-care fraud was such a secondary concern that Medicare fraud wasn't even officially made a crime until 1996. In the intervening decades, things changed.

First, some doctors were loath to accept Medicare patients because they didn't want to wait for the wheels of bureaucracy to churn; it was weeks before they'd receive checks in the mail for services rendered. So Medicare, looking out for its elderly patients, made it easier for them to receive care by approving more providers. The program made it simple for anyone who wanted to open an outpatient clinic or a medical supply company to get a Medicare provider number (technically, a ten-digit National Provider Identifier, or NPI) — the green light to start doing business. With this number, providers could start serving Medicare patients, then submit invoices to and get paid by the government. Many providers — like the ones that sold medical equipment, for instance — didn't need licenses, and there were no education requirements. Medicare started direct-depositing payments in doctors', hospitals', and providers' accounts almost as soon as bills were submitted. Before long, the tables were turned and health-care workers were clamoring to get those Medicare patients in the door — and receive the steady payments. Uncle Sam's checks never bounced.

Medicare's good intentions were exploited in a multitude of ways by a wide array of thieves, as detailed in this article. Because Medicare has traditionally paid invoices first and pursued criminals only after time-consuming audits ("pay and chase," insiders call it), the U.S. Treasury has bled like a hemophiliac — and South Florida is the gaping wound. In the past 20 years, everyone from HMOs to drug dealers has been caught robbing the program time and time again, stealing the kind of money that makes the sequester look like pocket change.

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.

Though the government is finally making inroads into stopping this fraud with special teams of investigators and prosecutors, the federal agent driving through Hialeah says he's been working on health-care fraud for ten years — and he's sure he'll be working on it for ten more.

Warm weather attracts mold, mosquitoes, and retirees with government benefits. With the senior population conveniently warehoused in group homes and assisted-living facilities, it's no surprise that South Florida is the epicenter of health-care fraud. The examples are legion.

Let's start with Cuban expat Armando Gonzalez, who served five years for dealing crack. When he got out, he applied for and received a Medicare provider number and — ka-ching! — opened several outpatient psychiatric clinics in Miami.

Gonzalez teamed up with assisted-living facilities full of residents suffering from retardation and dementia. In exchange for kickbacks, operators of these facilities would bus in all their patients; Gonzalez would collect each of their individual Medicare card numbers and bill Medicare for services the "patients" weren't eligible for or never received.

By the time the feds started sniffing around in 2008, Gonzalez had 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. He pleaded guilty in December.

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My Voice Nation Help

This well written article should have beeen published in JAMA and New Engand Journal of Medicine ..

dr. jaya


Well considering that Rick Scott made millions off this should be telling.


Does it surprise anyone that a state that elected a man who made his millions by defrauding Medicare has an increasing problem with medicare fraud? It is high time the people of Florida extruded their crania from their recta and got rid of Gov. Voldemort! Over and over again the voters make the illogical, thoughtless and intelligence-denying choices. 


riverrat69 topcommenter

Medicare fraud might be sweet in south FloriDUH, but it buys you the governors seat in Tallahassee.


Chris mentions the congressional hearings where Congressman Burgess talks about his credit card and Chick-Fil-A.  At 1:01:28 of the same hearings, Congressman Shimkus holds up a card, that runs through the credit card networks, that would prevent much of that fraud.  I am the guy who invented it, and John Shimkus is holding up a card I gave him to demonstrate that not only is this possible, it works today.  We have proven it. 

frankd4 topcommenter

"That's the bread and butter of the fraudster — the fact he can pay somebody to participate in the scheme," says Dennis. "If you have a willing participant, you then eliminate the ability to tie the fraud to you. That person is going to lie for you because they conspired with you."

in the olde dayz a gangster took the newbie with him and at the right time handed the newbie the GUN to do the hit........................voila the newbie was now a co-conspirator

so today the co-conspirator simply has to take money to collude, and collusion is the one thing an auditor cannot design an accounting system to prevent

if these clowns weren't so greedy these overbilling frauds could go on endlessly

frankd4 topcommenter

don't just take ONE geographic area since any medical facility anywhere can simply CODE reimburseable medicare and medicaid medical proceedures to maximize revenue generated

the typical geographic area only need those who qualify for such coverage and who can produce a valid social security number = period

i can predict that every second hobo at a random bus station would be a potential profit center - i withnessed one old dude at BCT central terminal went from a walker ($300) every three weeks to a fully equiped wheelchair ($16,875) which he even had pin-striped; otherwise this miscreant didn't have two nickles to rub together

i saw it start myself a dozen or so years ago at assisted-living facilities whereas the home would profit from commissionable sales of goods and services to the qualifying residents who knew nothing of how things were being paid

finally MAIN street has a scam equal to WALL street, in scope and magnitude, which will eclipse even the mortgage meltdown, and certainly reach beyond our governors office, when fully exposed, as to who all the players really are


Hialeah is third world territory and not part of the United States.