Organized Medicare Fraud

A wide organized Medicare fraud was apprehended in the United States which was perpetrated by a network of organized gangsters and their associates who used shadow health care clinics across the US and identity theft to steal from the Medicare system which has allowed its vulnerabilities to be explored and abused over and over. Although this is reportedly the largest Medicare fraud, there have been many other Medicare fraud cases detected and reported in the past. In this organized Medicare fraud case, the criminals billed Medicare with over $150 million of fake claims out of which over $35 million was paid out by Medicare.

This organized medical fraud was so wide that it involved many people and was spread across many cities in the United States. About 73 people were arrested and charged with many offenses including racketeering, conspiracy, bank fraud, money laundering and identity theft. The scheme involved over 100 nonexistent clinics which used stolen doctor and Medicare member identities to submit fake claims for non-rendered services. Although I think some doctors and patients may also be involved in this criminal act.

The fraud scheme was sophisticated in terms of its vast operations across the United States, number of stolen identities and submitted claims, yet this supposedly organized Medicare fraud was somewhat operating carelessly which must have been a no brainer for Medicare to detect earlier. The operation was managed carelessly given the nature of the submitted claims. For example, the fake paperwork submitted for reimbursement showed eye doctors doing bladder tests; ear, nose and throat specialists performing pregnancy ultrasounds; obstetricians testing for skin allergies; and dermatologists billing for heart exams according to the reports.

This careless Medicare fraud case raises many questions given the fraud dollars involved. First, due to the fact that Medicare auditors and investigators did not detect these sloppy frauds sooner and before giving away millions of dollars, how many more ongoing and organized Medicare fraud cases exist today which have not been detected yet? This of course would be my biggest question for this case. Second, why did Medicare not randomly and directly verify with the doctors and patients whose identities were stolen and used to commit this fraud? This certainly would have indicated a potential fraud in process when doctors and patients deny the medical transactions. And third, why did no one look into the nature of services supposedly rendered by unqualified doctors? This would have also raised some eyebrows. My guess is that the Medicare fraud detection system is probably either outdated or not properly used. For example, the Medicare fraud system can be configured to analyze the millions of claims received for processing to detect red flags such a new clinic submitting higher rate of claims when compared to similar clinics in the same region.

It’s very sad to see that fraud of this scale is still going on when we know that the fraud signs were all over the case and could have been used to detect fraud with some processing due diligence before payments were paid out. We all know that fake claims are often submitted by some doctors, and sometimes with the collaboration of their patients in exchange for extra cash. Therefore, doctor and patient complicity consideration should not be left out in this case either.

I think we are just scratching the surface of this case. More arrests will be made and others will be hiding while the investigation continues. Like I said, I won't be surprised if some doctors and patients are involved in this case and voluntarily participated with the organized criminals out of greed.

Resource issues might also be a problem for Medicare and cause for the lack of proper due diligence. Someone at Medicare should do a cost vs. benefit analysis to see if the cost of employing more qualified auditors and investigators or deploying more advanced and sophisticated fraud detection systems is less than the cost of our taxpayer fraud losses or rather give away to a group of gangsters, and if it is, then they must make some adjustments to limit financial waste.

Read about the State Department's passport privacy violation case after reading about this organized Medicare fraud case.

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