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Medicare Fraud Is Sweetest Crime in South Florida

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"My 4-year-old kid could prosecute these cases," he says of the equipment rackets. "They're really easy, and there are plenty of them. A lot of this other stuff — home health, the ambulatory cases, even the mental-health cases — each time we got into those new areas, there was a constant refrain from law enforcement and the U.S. Attorney's Office saying, 'This is too complicated.' "

The feds started teaming prosecutors with detectives in the same approach used to break down organized crime. They began to hunt providers, whose fraud ran to the tens of millions compared with the $1 million to $2 million paydays from equipment scams.

"When you look per capita, Miami has more people in community mental-health centers than New York and Los Angeles combined," says Walther. "Then you look at the profile of people going in there, and they don't really fit people that need these services."

In 2010, Walther helped take down American Therapeutic, the highest-billing mental-health center in the country. The company was cycling addicts, alcoholics, and Alzheimer's patients through its six clinics. Patients' diagnoses were changed so they would qualify for expensive group therapy. In the end, owner Lawrence Duran received an unheard-of 50 years, a sign that judges were finally acknowledging the magnitude of these swindles.

"It's like Whac-A-Mole," says Walther. "You knock one down, but now there's a bigger one somewhere else, and it's different. But once you figure it out, it rains on the back end with bad guys and money."

HEAT Agent Reginald France, a first-generation Haitian-American built like a linebacker, was out at 3 a.m. recently raiding a medical office. His motivation comes from the guile of these crimes.

"You have some of the smartest people in law enforcement working here," he says. "In a lot of ways, that drives us, because we want you to understand you can't pull the wool over our eyes."

Elderly Medicare recipients are crucial to the schemes. Instead of stealing patients' Medicare numbers, which are needed to submit invoices to Medicare, frauds pay the elderly in kickbacks. Recruiters typically pay beneficiaries a combination of cigarettes, booze, pills, and money. Cash payments can reach $2,000 quarterly. All recipients have to do is sign sheets confirming that care was received.

For the patient, it's a low-risk play. Nobody wants to put an 80-year-old meemaw in front of a jury. Prosecutors wouldn't recoup much even if they did. And since by law Medicare can't be revoked, there's little downside to bartering your number away for a carton of Kools.

"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."


"All of these prosecutions are great," says Louis Saccoccio, CEO of the National Health Care Anti-Fraud Association. "We have strike forces, but the prosecutions just tell you we have a big problem, because that means the money's already out the door. So the focus now is starting to shift to prevention."

President Obama has expanded the task forces and made fighting fraud a pillar of the Affordable Care Act, otherwise known as Obamacare. CMS was given greater discretion in suspending payments and screening providers before they entered the system. Penalties and prison time were also increased.

But excuse congressman Michael Burgess' skepticism. The Tea Party Republican from Texas has heard such talk before.

The former gynecologist is willing to concede that progress has been made. Yet the sheer size of the task makes crime-fighting difficult. Every day, Medicare contractors process 4.5 million claims. Even Republicans admit that CMS is undermanned and forced to rely on contractors, whose ferreting out of fraud is inconsistent at best.

"There was a famous case here in Dallas where a Nigerian woman had been busted," Burgess says. "As she was going off to jail, it was discovered that she had several other provider numbers. They discovered that she was receiving checks at the same post office box. It never occurred to anyone that, 'Hey, anything that goes to P.O. Box 9058, that's a red flag.' We were probably paying for her defense."

In New York, centers for people with mental issues were charging the feds $5,000 per day per patient. Arizona, by comparison, charges $200 a day. The reimbursements were based on a changing formula that CMS kept approving even as payments skyrocketed. New York's estimated overcharges: $15 billion. Even though CMS discovered the state's gouging, six years later, it's still negotiating a remedy. CMS now plans to let New York phase out its overbilling, essentially allowing the state to steal a little less each month. (CMS officials declined to be interviewed for this article.)

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Chris Parker
Contact: Chris Parker