Since 2007, the strike forces have indicted nearly 300 defendants who allegedly stole $680 million, according to the U.S. Department of Justice. Sentences range from two to 15 years, with one doctor receiving 30.

Half of those defendants were arrested in Miami—the Medicare fraud capital of the nation. Schemes hatched there are perfected, then exported to other parts of the country.

“We know the fraud is viral and spreading to other communities,” says Kirk Ogrosky, deputy chief of the Justice Department’s criminal fraud section, who coordinates the strike forces.

Take the case of the two Miami men who allegedly set up a chain of about 40 clinics—with names like Fast Cure Company—in Florida and then four other states. Prosecutors contend the two men ran a ring that bilked Medicare out of $100 million for therapies—never administered­—for cancer, HIV and other illnesses. Investigators found some of the “clinics” were empty storefronts with hand-lettered signs; others were post office boxes.

Scammers obtain Medicare numbers by buying or stealing them from doctors, clinics or patients. Ogrosky says that once a “professional” patient sells his Medicare number, it can be reused again and again—or sold to others cheating the system.

Just one Medicare number—in the wrong hands—tricked Medicare into paying more than $1.1 million for phantom treatments. Alexander McCray of Miami paid for his crack cocaine habit by helping dozens of clinic operators file false claims for phony HIV infusion treatments billed in his name.

Hardened criminals

Medicare is now a magnet for miscreants, including not only dishonest doctors and white-collar crooks, but hard cases like Guillermo Denis Gonzalez, a convicted murderer. He bought a Medicare-licensed medical equipment company and submitted more than $500,000 in phony claims—two years after walking out of prison.

He pleaded guilty to defrauding Medicare in August but still faces murder charges. Florida investigators say that after an argument, he killed and dismembered an acquaintance. The victim’s body parts were found in six black garbage bags in three different dumpsters around the Miami area.

Calculating an exact national figure on the costs of Medicare fraud—estimates of losses range from $11 billion by the Centers for Medicare & Medicaid Services to $60 billion by industry experts—is difficult.

Criminals intent on stealing as much as they can as fast as they can “have a relatively easy time breaking through all the industry’s defenses,” Malcolm Sparrow, a one-time fraud investigator and now a professor at Harvard’s Kennedy School of Government, told a Senate committee in May.

He said that if the crooks learn to submit their bills correctly, then for the most part their bogus claims “will be paid in full and on time, without a hiccup, by a computer, and with no human involvement at all.”

Why is Medicare so vulnerable to crooks? The entitlement program is based on an honor system that many experts say is broken.

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