How Medicare Became a Thieves' Bazaar

In Dallas and across the country, hospitals, doctors and dealers have made Medicare the nation’s sweetest crime. The feds are now trying to shutter the door.

Gonzalez closed shop in Miami, only to reopen in North Carolina. When he was finally arrested last year, he was planning to expand into Tennessee.

Then there's Armen Kazarian, kingpin of Los Angeles' Armenian mob. The feds say his gang stole the identities of doctors and patients while setting up fake clinics across the country. They knew nothing of medicine, sending Medicare fake bills that showed eye doctors doing bladder tests, obstetricians testing for skin allergies and dermatologists billing for heart exams.

Medicare paid out $163 million before Kazarian and 73 henchmen were caught by the FBI. His sentence would prove how little risk there was to such grand aspirations. In February, Kazarian received just three years.

David Feinwachs found that HMOs in Minnesota had turned Medicaid into a cash cow, making it several times more profitable than their private insurance. When he asked for more data, the state blocked him.
David Feinwachs
David Feinwachs found that HMOs in Minnesota had turned Medicaid into a cash cow, making it several times more profitable than their private insurance. When he asked for more data, the state blocked him.
U.S. Rep Michele Bachmann (R-Minnesota): "How do we know that other state, private and personal interests are not being funded through the federal Medicaid program? The answer is, we don't."
Gage Skidmore
U.S. Rep Michele Bachmann (R-Minnesota): "How do we know that other state, private and personal interests are not being funded through the federal Medicaid program? The answer is, we don't."

Not all schemes are this flamboyant. Some simply employ sleights of paperwork. A Detroit podiatrist billed Medicare $700,000 for performing toenail removals that amounted to little more than toenail clipping. Two Miami doctors billed back rubs as physical therapy, taking in $57 million.

Some are so brazen that they advertise on TV. Remember those late-night Scooter Store ads, promising to get you a motorized wheelchair "at little or no cost to you"? In 2007, the San Antonio company agreed to pay $4 million in civil fines and forfeit another $43 million for advertising one scooter but delivering a more expensive model on Medicare's dime.

Executives didn't learn their lesson. The Scooter Store was soon caught again, this time for overcharging Medicare by as much as $87.7 million between 2009 and 2011, according to an audit. But CMS agreed to a spectacularly lenient settlement, allowing the company to repay just a quarter of that figure.

The feds would only get tough after CBS aired an investigation illustrating how the company browbeat doctors into writing unnecessary prescriptions for scooters. They raided Scooter Store headquarters in February. It finally appears the company has been barred from federal health programs.

Fraud Blossoms in the Sunshine and Heat

Warm weather attracts mold, mosquitoes and retirees with government benefits. So it's no surprise that Miami is the epicenter of health-care fraud.

It's not just the senior population conveniently warehoused in group homes and assisted-living facilities. There are also large immigrant communities that shield their own, and quick access to countries without extradition treaties.

Then there's the culture of fraud that stinks to the very head of Florida government.

During the 1990s, Republican governor Rick Scott was CEO of the hospital company Columbia/HCA. As the feds later discovered from the largest fraud case in Medicare history, the company seemed more organized-crime outfit than health-care provider.

Columbia billed for tests that weren't necessary or ordered, submitted false diagnoses to increase reimbursements, paid kickbacks to doctors for patient referrals and billed for home visits that people didn't qualify for or receive.

The smoking gun was the two sets of books Columbia kept. One detailed all Medicare submittals. The other noted which were fraudulent, allowing Columbia to keep enough reserves to pay penalties should it ever get caught. A whistleblower estimated that fraud alone accounted for more than one-third of the company's profits.

When the whip came down in 2003, Columbia settled for $2 billion in fines for "systematically defrauding federal health-care programs." Scott claimed ignorance, though it's hard to believe that a self-described hands-on executive wouldn't know where a third of his company's profits came from. He was eventually fired — but with the velvet landing accorded to disgraced CEOs.

Scott walked away with nearly $10 million in severance, stocks worth $300 million, and a $1 million-a-year consulting contract. Only two lesser executives got jail time. Lead FBI agent Joe Ford would later regret allowing the company to simply pay away its sins: "People need to go to jail."

Still, fraud knows no party, race or gender. Indeed, the allegations against Florida state Representative Daphne Campbell's clan could script a health-fraud installment of The Klumps.

Campbell, a Democrat, ran 10 group homes until the state canceled her Medicaid contract in 2006. Four people died in her facilities that year, including one developmentally disabled female patient who had also been raped. Inspectors found rodent feces and general squalor.

Meanwhile, Campbell's ex-con husband, Hubert Campbell, has been accused by two former partners of defrauding the state's Medicaid program.

Not to be eclipsed, their 28-year-old son, Gregory Campbell, is accused of submitting nearly $300,000 in false Medicare billings while operating adult group homes. He's been charged with felony theft, organized fraud and Medicaid fraud.

But the feds never fully grasped the scope of all this stealing until 2007, when the government stumbled upon the novel idea to scrutinize its bills, rather than just paying them.

At the time, the Justice Department was mostly tackling medical-equipment scams involving wheelchairs, hospital beds, respiratory devices and the like. These were simply schemes. Providers don't need a license, and lax oversight allows them to pop up overnight, bill Medicare for hundreds of thousands of dollars, then disappear just as quickly — only to re-emerge elsewhere under a new name.

Hank Walther was a federal prosecutor at the time, soon to lead the feds' Medicare Fraud Task Force. He feels they were allowing their adversaries to run scot-free.

"My four-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.'"

« Previous Page
Next Page »
My Voice Nation Help

Medicare and all that crap is the current slavery for those who receive it. The dems use it for political reason no matter the cost to tax payers. The US is going to sink cause of them.


this country makes me fucking physically ill...knocking over a liquor store and stealing $400 bucks will get you a longer term in jail then stealing 73 million dollars from taxpayers...possessing marijuana which harms no one will get you a longer term...unless you happen to be rich or influential this country will fuck you up the ass continually and never stop the raping


Many believe there are patients who scam Medicare/Medicaid.  But, the real culprits tend to get away with fraud.  Sometimes, they are arrested and incarcerated; however, before cuts are made to this program, the FBI needs to weed out those who are abusing the system, the physicians. 


I can't help but see a distinct connection between the conservative movement's obsession with "smaller government" and abuse like this.  When you shrink federal regulatory agencies to the point they're practically defunded, guess what?  Many regulatory agencies simply do not possess the manpower to protect the American people from fraud.  This was obvious during the 2008 downturn when the SEC was so out-gunned that even if they could have brought financial fraudsters to trial, the government is likely to face odds of 20:1 in terms of lawyers and the money to pay for them.  And while Medicare itself recognizes this problem, well, there's nothing to say about this but...

...your tax cuts at work, people. 


This goes way back to Senator Frist and other godly Republicans.

They give out 5-10 grand to some political clown and then they own them

Sure you will have "water carrier" democrats but that aint where the big moneys at

"HCA also admitted fraudulently billing Medicare and other health programs by inflating the seriousness of diagnoses and to giving doctors partnerships in company hospitals as a kickback for the doctors referring patients to HCA. They filed false cost reports, fraudulently billing Medicare for home health care workers, and paid kickbacks in the sale of home health agencies and to doctors to refer patients. In addition, they gave doctors "loans" never intended to be repaid, free rent, free office furniture, and free drugs from hospital pharmacies"

It should be noted the Frists , Pere & Fils kept their heads because they found a fall guy to blame.

They bought out all these old inner city charity hospitals barely getting by and turned them into cash cows

Republicans commit respectable sins

The godly Frists are billionaires by the way


There are several problems:  the DOJ-state AG  has no political will to go after the big hospital chains or other big time offenders, many of whom are prominent in their communities-Parkland -UTSW THR etc and also have staff and administraion who are political donors, and or tout their "role" as erstwhile "safety nets for the poor."  These less than sterlling big hospital chains are also slated to enjoy special  immune status under the ACA ACO program which will put them beyond the reach of Anti-Trust scrutiny- soon -2014. The HHS is an IT nightmare with outdated computer banks and staffers who are poorly/inadequately trained (not very competent).  The individual docs in the community who are honest are under constant threat of "reign of terror" from low yielding "RACS" audits of simple mistakes with HUGE potential penalties because they are easy targets.  Good article... the big fish will continue to swim away under our current system of "justice".  I applaud you for naming names however.


Maybe you should read the article.  The largest offenders are not physicians, --some even  appear to be third party administrators of the programs themselves, put in place by the govt. administrators... If you paid the physicians 0, the program would still lose money through fraud. FYI


You ARE paying more taxes under PPACA.(device taxes, higher insurance premiums real estate taxes etc.)  The problem  simply is that the HHS-CMS is ill euipt or inept at dealing with losses from fraud even under the current system.  Imagine what will happen when there  are more enrollees.  The problem is not one of government" sizing"-- it is one of  administrative competence.  The current CMS structure is too complex  and outdated to administrate efficiently but, unfortunately for the tax payer, the administrative costs continue to rise, while payments to the providers (i.e. those actually  doing the work) continue to shrink (see the David Feinwachs entry-above). The providers get 20% of the total availabe funds.  If you gave the providers 0%, you would still lose money through fraud and incompetence. Sibelius is a former Gov of a mid sized state and doesn't know any more about the technical requirements of administrtion of HHS than  the gov of this state--she is a politician.


There are as we speak "formes fruste" of "Fristian" kickback activity going on at large non for profit hospital chains organizing ACO's to "better serve the public" These are simply vehicles to rip off the public under the guise of healthcare "reform".  The scam artists are always ahead of the government and sometimes operate under  govt. sponsorship.