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Medicare Fraud Is Sweetest Crime in South Florida

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The sad thing about Medicare fraud is that it ends up hurting the people it was initially meant to protect — society's weakest. It also taints the people standing up for them.

Because it treated Texas' poorest citizens — its mentally ill, its drug-addled — Houston Riverside General Hospital, a 95-year-old nonprofit formerly known as Houston Negro Hospital, was at one point losing $10,000 a day. That's when executives decided to cauterize the wound with a hot poker of fraud.

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 $763,000 more. 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.

Congresswoman Sheila Jackson Lee tried to look like a hero as she cried to restore the money for the poor. Gov. Rick Perry obliged with another $3 million.

It wasn't until 2011 — 15 years after the initial accusations — that law enforcement got serious, prompting an administrator, Mohammad Khan, to confess 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. Only when this scheme was discovered did the CMS finally halt the hospital's payments.

Good congresswoman Jackson Lee 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. Khan 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. Khan pleaded guilty. The two Gibsons and five others await trial on charges of fraud, conspiracy, and money laundering.

Jackson Lee refused to comment for this article.


Housed in a featureless building north of Miami, the HEAT Task Force is a government anomaly: It actually turns a profit.

For every dollar it spends investigating, it uncovers another $8 in fraud. Most agents work out on the street, assigned to about a dozen cases each.

In 2007, the government finally grasped the scope of all the stealing and got serious about trying to stop it. The Department of Justice launched Medicare Fraud Strike Forces in Miami and Los Angeles. Those were supplemented with HEAT teams (HEAT is short for the windy governmentese of Health Care Fraud Prevention and Enforcement Action Team) in 2009. This group — an interagency initiative combining members of the Justice Department and Health and Human Services — has branches in nine cities where the stealing is most prolific, such as Los Angeles, Houston, New York, Dallas, and Baton Rouge. Agents and prosecutors work in small, aggressive teams, combining data analysis with traditional detective work.

Since 2007, prosecutors have charged 1,480 defendants with $4.8 billion in fraud. More than half of those indictments came out of the unit in Miami, a city that Special Agent in Charge Christopher Dennis calls "the crown jewel of Medicare fraud." Miami was the MIT of health-care schemes, the nation's unofficial laboratory for ripping off the government. "A lot of the schemes are typically started here — vetted, proven here — and farmed out to other parts of the country," Dennis said.

At first, the Justice Department mostly tackled companies that sold medical equipment — scams involving wheelchairs, hospital beds, respiratory devices, and the like. Lax oversight allowed these businesses 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. Often, perpetrators had fled the country with the stolen funds before indictments could come down.

Hank Walther was a federal prosecutor who led the feds' Medicare Fraud Task Force. He feels they were allowing their adversaries to run scot-free.

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Chris Parker
Contact: Chris Parker