Authorities crack down on Medicare, Medicaid fraud

By Dianna Hunt

FORT WORTH, Texas, Nov. 8, 2009 (McClatchy-Tribune News Service delivered by Newstex) -- When federal agents arrived, the scooter was still covered in plastic.

It should have been a fancy $5,000 power wheelchair for someone who needed it. That's what Medicare paid for.

Instead, the little red scooter was delivered to an unsuspecting patient who didn't need it, through the work of a North Texas medical supplier who eventually pleaded guilty with five others in a $2 million fraud scheme.

"It all boils down to somebody getting something for nothing," said Mike Fields, special agent in charge of the Dallas Regional Office of the Health and Human Services Department's office of inspector general.

"It's amazing how quickly these schemes spread."

The conviction in the scooter case, which stretched from North Texas to Houston and Tennessee, was among about 300 in cases that led to the recovery of nearly $1 billion in fiscal 2009 under the Health Care Fraud Prevention and Enforcement Action Teams, known as HEAT. It's part of a nationwide crackdown on Medicare and Medicaid fraud that experts say costs taxpayers as much as $60 billion a year.

This problem has drawn increased interest as the debate on overhauling health care rages in Congress, which wants to cover some of the costs with savings from Medicare and Medicaid. And the problem appears to be growing: Recent cases show a new sophistication among the scam artists, and authorities say organized crime and street gangs are becoming involved.

"It obviously is something that's huge," said Bill Mateja, a Dallas attorney who was special counsel on health care fraud in the Justice Department. "Anytime you dole out billions of dollars in a federal program, there's going to be fraud and abuse that takes place."

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The evidence lists for local fraud cases read like a Medicare supply and service list.

In addition to payment for unnecessary wheelchairs and scooters, cases have involved expensive trips in ambulances for patients who could drive themselves to treatment, home-health nurses who never showed up, over-the-counter medical supplies sold as high-tech specialty kits, and kickbacks to those who stole patient identities or agreed to sign paperwork deeming the equipment a medical necessity.

The local task force, based in Dallas, is working with strike forces set up in targeted locations nationwide, including one in Houston, and with the Texas attorney general's office.

"They're preying upon the elderly and our vulnerable citizens," said Assistant U.S. Attorney Sean McKenna, who handles civil fraud cases from the Dallas office. "They're stealing money they're not entitled to."

Assistant U.S. Attorney Katherine Miller, who handles criminal cases from the Dallas office, said most of the scam artists are using the proceeds to line their own pockets.

In the scooter case, prosecutors say Walter Sanders of Mesquite, owner of Waltco Medical Equipment and Supplies, paid his ex-wife to provide him with Medicare patient identification that she obtained from a Tennessee hospital where she worked in the emergency room.

Sanders then sold the information to medical equipment suppliers in North Texas and Houston, and soon after, patients in Tennessee began receiving scooters or wheelchairs they hadn't ordered from medical suppliers in Texas. Some received nothing, but Medicare was billed as if they had.



"A lot of them went to the hospital with something like a nosebleed, and the next week they had a scooter in the front yard," said Jack Geren, a case agent with the Health and Human Services Department in Dallas.

Recipients who asked questions were told, "Hey, Medicare's handing these out," Geren said.

He said that like many other recipients, the man who received the red scooter didn't know he'd been involved in a fraud.

"A lot of times they want the scooter," he said. "They think it will be sporty to use to go to the grocery store, but for the most part, they weren't being used."



In all, more than 200 fraudulent claims were submitted to Medicare under the scheme, federal officials said.

Sanders eventually pleaded guilty to one count of paying illegal kickbacks and was ordered to pay $804,344 in restitution to Medicare. He is to begin serving a five-year federal prison sentence this month. His ex-wife, Geneva Sanders, was also convicted and ordered to pay $132,955 in restitution. She was sentenced to 16 months in prison.

Four suppliers who used patient identities obtained by Walter Sanders to make false claims also pleaded guilty in Tennessee and in North and East Texas.



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It was even better than a taxi.

Patients at local dialysis clinics were told they could get free door-to-door transportation for treatments by signing up with a local ambulance service _ with Medicare picking up the tab, according to federal officials.

The problem, investigators said, is that the patients could drive themselves or otherwise get to treatment and didn't need to sit in the captain's chairs that had been set up in the back of an ambulance.

The cost to Medicare was about $500 per patient per trip, or about $550,000 paid out on $1.5 million in bills submitted over three years, according to federal records.

In an investigation called Operation Easy Rider, federal agents moved in to stop the free ride. Three North Texas men were charged in a 15-count federal indictment in June that accused them of misrepresenting patients' conditions so the patients would qualify for ambulance service.

Those charged include Muhammed Nasiri Usman of Arlington, David McNac of Dallas and Shaun Outen of Aubrey. Each is charged with one count of conspiracy to commit health care fraud and multiple counts of fraud for falsely billing Medicare, Texas Medicaid and private insurers. Usman is also charged with money laundering.

He owned Royal Ambulance Services and First Choice EMS, and had hired McNac and Outen as top managers for the companies, according to the government.

They are set for trial before U.S. District Judge Jorge A. Solis in Dallas on Dec. 7. Their attorneys either declined to comment or did not respond to a request for comment.



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Irene Anderson hit a $2.2 million bonanza with Medicare.

Anderson, of Wylie, near Dallas, set up a company, AG Total Care Home Health, to provide home health care services and obtained clearance to submit claims to Medicare.

Three years later, she set up another company, New Dimension, using a phony name with a phony Social Security card and driver's license and again received permission to receive Medicare payments. She was setting up a third company when federal agents moved in.

Federal officials say Anderson received $1.1 million in Medicare payments to AG Total Care for home health visits that were never provided or were unnecessary and an additional $1.1 million in fraudulent Medicare payments to New Dimension.

"The FBI will not tolerate any healthcare providers that attempt to manipulate the Medicare program to fill their coffers at the taxpayers' expense," Robert E. Casey Jr., the FBI's special agent in charge in Dallas, said in a written statement.

Anderson, a nurse from Nigeria, pleaded guilty to one count of mail fraud. She was sentenced in February to 46 months in federal prison and ordered to pay restitution of $2.2 million and to forfeit a Hummer, another vehicle and $8,500 cash that was found in her vehicle when she was arrested.



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The Texas attorney general's office has also joined the hunt, setting up a task force to investigate fraud against Medicaid, which is handled by the state and its contractors.

In the past year, the state has participated in more than $1 billion in settlements with large pharmaceutical companies Pfizer (NYSE:PFE) , Eli Lilly & Co. (NYSE:LLY) , and Bristol-Myers Squibb Co. (NYSE:BMY PR) (NYSE:BMY) over improper marketing of drugs paid for by Medicaid. The settlements have brought about $100 million to Texas, some of which was shared with whistleblowers in the cases, according to Abbott's office.

"To ensure that Medicaid _ and therefore the taxpayers _ receives the lowest possible price for pharmaceuticals and other healthcare products, state and federal law requires drug manufacturers to report market prices to the Medicaid program," Attorney General Greg Abbott said in a written statement to the Fort Worth Star-Telegram.

"Considering the fact that healthcare expenditures account for such a large portion of the budget, we are committed to ensuring that vendors are accurately reporting prices and not overcharging the taxpayers for their products. We will continue pursuing the waste, fraud and abuse in the Medicaid program," the statement said.

Over the past seven years, since Abbott took office, more than $375 million has been recovered for the state and federal governments through civil and criminal cases, according to his office.

The pharmaceutical cases were part of settlements reached through a coalition of state attorneys general and the Justice Department.

In the Pfizer case, announced in September, investigators concluded that the company unlawfully marketed several drugs for "off-label" uses, for which they were not approved, according to Abbott's office.

The investigation also found that Pfizer provided financial incentives to physicians who wrote off-label prescriptions, which Medicaid paid for. Pfizer agreed to pay more than $1 billion, including about $55 million to Texas.

The state also reached a $30 million settlement of a civil case against Eli Lilly and recovered $15.7 million from Bristol-Myers.



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The federal government says it is stepping up investigations of Medicare fraud. The Obama administration announced in May that it was adding millions of dollars and federal agents to the effort, and last month, the Health and Human Services Department urged seniors and Medicare beneficiaries to watch their billing statements closely to be sure their identity hadn't been used improperly.

"When criminals steal from Medicare, they are stealing from all of us," Health and Human Services Secretary Kathleen Sebelius said in a written statement announcing the new efforts.

The Houston Strike Force, meanwhile, and others across the nation continue to unveil cases, including one in July in which 32 doctors and health care executives in Houston, New York, Boston and Louisiana were accused of fraudulently billing Medicare for more than $16 million.

Those cases involved the use of false billing for so-called arthritis kits, a compilation of orthotic braces that are purportedly used to treat arthritis and related conditions; power wheelchairs; and supplies for tube-feeding, or enteral feeding.

Prosecutors say the crimes are becoming more elaborate and are involving professional scam artists using kickbacks, stolen identities, aggressive sales tactics and manipulative billing.

A case filed recently in South Florida included the indictment of 11 members of New York's Bonanno crime family, and a case filed in Los Angeles included alleged involvement by street gangs.

"They're becoming much more effective," said McKenna, of the Dallas office. "Because of the potential payoff and the alleged ease with which you can make claims, you're really seeing fraudsters and career criminals."

Walter Sanders' company, meanwhile, has taken on a new name, Waltco MedShop International.

Although no one was at the small storefront in Mesquite on recent visits, the company is advertising on the Internet and featuring a "Liquidation Sale" of such equipment as manual wheelchairs, walkers and crutches. It is also advertising the sale of flu vaccine to doctors' offices and other providers.

Neither company, however, is eligible to receive Medicare benefits.

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SPOTTING FRAUD

The Health and Human Services Department offers these tips for spotting fraud:

_A charge for a service or equipment you never received.

_Someone offers to provide a service or equipment you haven't requested.

_Someone uses another person's Medicare card to get medical care, supplies or equipment.

_Someone bills Medicare for home medical equipment after it was returned.

_A company offers a Medicare drug plan that hasn't been approved by the government.

_A company uses false information to mislead you into signing up for services.

_Reporting fraud Contact the office of inspector general at Health and Human Services at 800-447-8477 or HHSTips@oig.hhs.gov. Rewards of up to $1,000 may be paid in certain cases.

Source: U.S. Department of Health and Human Services

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