Rx for Plunder

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Some people in the medical field say Medicare is a Kafkaesque employer, a huge bureaucracy with no human face and often no clear answers. Bernard Graves' lawyer, Lilly Sanchez, says: "Medicare regulations can be extremely confusing. You can call the hotline and things aren't clearly explained — whether something's a proper cost or not, whether you can make a profit or not." Consulting businesses have sprung up to advise providers on how to tailor their billing so that most claims get paid. For providers dependent upon Medicare for income, the cherished goal is to stave off audits and keep the money flowing.

To get paid, Oakland would pass information on to its biller, Michael Evans. He would submit the required information, like diagnosis codes and procedure codes, to the "fiscal intermediary" — a company called First Coast Service Options. (Medicare doesn't accept claims and pay bills directly; it contracts with intermediaries like First Coast to handle such tasks.)

Under normal circumstances, money is moved quickly and bills are paid automatically. It's in the intermediary's interest to keep things going smoothly — and maintain its lucrative contract with Medicare. However, should the intermediary notice something funny — a spike in billing for a certain item, for example, or extraordinarily high costs — the intermediary conducts an audit, the Medicare money gets put on hold, and the whole machine powers down.

There were indeed times that Oakland was put on review. During these periods, Medicare funds would be shut off for months while administrators scrambled to get papers in order. Therapists were laid off, and Zimmer would quit. Harrell would then work solely at Basic Medical Supply, Althea's other company, and Leder would sell items on eBay to get by. When the facility was cleared, the machine powered back up, and staff members got re-hired.

Office workers would later testify that Althea called her own mother "Yvonne" and that Yvonne was not allowed in Althea's office. Multiple staff members told the FBI that they suspected the three administrators were related but that "family relationships at Oakland were secret."

When times were flush, various witnesses said, Althea and Bernard bought sports memorabilia at auctions. They took a furniture-buying trip to North Carolina. They started work on their nearly $2 million mansion in Davie. In 1996, Oakland's first year of operation, Bernard Graves made $99,784, Althea $40,707. By 1998, the salaries had jumped: Bernard was making $132,392, Althea $115,969. Zimmer says Bernard traded in his Ford Explorer for a black Mercedes with chrome rims. He joked that Bernard wore "so much gold he was going to get his ass arrested." With his nice clothes, his cool demeanor, and his hair in a braid, the administrator came off to some as a player. He bore a striking resemblance to the central character in the movie Pootie Tang.

When things were going well, they were going well for everyone. Leder lived comfortably on his $60,000-a-year salary, Harrell, the assistant, was paid $18,648 — and $73,000 two years later. Various reports put Yvonne Howell's earnings between $60,000 and $150,000.

And so it went, until a couple of anonymous tips came along.

Forging signatures and fudging paperwork — that's one way to defraud Medicare. There are a thousand variations on the theme.

Cesar Arias drives through Miami, gesturing toward glittery condominiums transforming the skyline. "Did you ever notice there's never a recession here?" he asks. In his eyes, Medicare money powers the entire South Florida economy. "It's bigger than tourism." Arias declines to give a hard number, but published estimates vary from $2 billion to $33 billion in suspected Medicare fraud each year.

Arias, a registered pharmacist turned private investigator (his company, Stonecold Investigations, works for pharmaceutical companies to investigate potential fraud), contends that a Medicare provider number is the "golden ticket" to riches. High school dropouts can get one. There's no need for medical experience or even a college degree. No criminal-background checks are performed (though applicants are required to disclose criminal histories when they apply). There's no bonding requirement. Applicants don't even have to speak English.

These days, the biggest scams are happening through durable medical equipment providers, authorities say. Criminals with provider numbers charge Medicare for wheelchairs, prosthetic arms, and oxygen concentrators that they never actually buy or deliver to patients. Another popular scheme is HIV infusion clinics: Providers bill Medicare for the cost of doling out expensive medicines and drips — but what they really give patients is a cheap concoction of vitamins.

Don't even get Arias started on counterfeit medicine — how wholesalers slap fake labels on boxes of fake pharmaceuticals and — you guessed it — bill Medicare. The profit margin there, Arias says, "is better than printing money." He points to the case of Julio Cruz, who pleaded guilty to conspiring to sell $12.8 million worth of fake Lipitor, a cholesterol-reducing medication.

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Deirdra Funcheon