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.

The office went from seeing 40 patients a day to as many as 250. Over two years, Linares prescribed 5 million doses of narcotics. Traffic grew so heavy that he hired a parking lot attendant. Workers got bonuses when the patient count topped 200 in a day.

The cost to Medicare: $5.7 million.

Linares rarely examined his patients. One undercover cop didn't see the doctor until his 10th visit, and only then via a television monitor. Linares' workers simply gathered patients' information and had them sign blank forms that would be filled in later. Then a guy who used to work at Lowe's would hand out the scrips.

Florida Governor Rick Scott was CEO of a hospital company that was nailed  with two sets of books. Then he went into politics.
Gage Skidmore
Florida Governor Rick Scott was CEO of a hospital company that was nailed with two sets of books. Then he went into politics.
Texas U.S. Rep. Sheila Jackson Lee carried water for Medicare swindler Houston Riverside General Hospital.
David Ortez
Texas U.S. Rep. Sheila Jackson Lee carried water for Medicare swindler Houston Riverside General Hospital.

When the clinic was raided in 2011, police seized $214,000 in cash, a yacht and the 55-year-old doctor's fleet, which included a Ferrari Spider and a Bentley Continental.

Linares was charged with unlawful distribution of prescription drugs and Medicare fraud. He has pleaded not guilty and is awaiting trial.

Perhaps due to his nationwide reputation, the doctor's scam was short-lived. But a more durable fraud thrives a half-hour north, in Detroit's Cass Corridor. Amid this stretch of poverty and ruin emblematic of the city's decay lies a peculiar oasis agents call "The Beach."

It's situated near several shelters, which provide a steady flow of beneficiaries. Recruiters drink beer and sit on beach chairs — hence the name — wrangling people into vans that shuttle "patients" to doctors, home-health agencies and mental-health clinics.

The doctors are the stars of this operation. They not only bill Medicare and Medicaid, but use the power of prescriptions as currency to pay accomplices. It's a multi-ring circus with the doctor at its center, kickbacks flowing in all directions to pharmacies, patients and recruiters.

"A recruiter will identify a physician and work out a deal, saying, 'I'll bring you so many patients, and the recruiter will pay a physician $10,000 to $15,000 to write scrips like crazy, pad after pad for a week," says one Detroit HEAT agent.

"When you have a dirty doctor writing 500 scrips for Oxycontin a month, you have to have a pharmacy that is going to fill them. If a pharmacy sees a Dr. ABC's scrip 500 times a month, they will call and ask, 'What's up, doc?' The recruiter plays a role here, too, and says, 'I'm taking care of the pharmacy.'"

The scheme's even spawned sub-specialties, such as "quality assurance" experts. They're typically former doctors from overseas who read through patient charts to flag anything that might prevent Medicare from paying.

And since fraudsters realize that red flags rise when there's a billing spike from one company, they'll incorporate seven or eight to spread the grift. Some even launch check-cashing businesses to launder their money.

"Now we're seeing people who aren't doctors open these clinics and hire other dirty real doctors to 'work' in the clinic," says the Detroit agent. "Almost every day there's a new thing."

The Bureaucracy That Didn't Work (Until Just Recently)

Much of the ease with which the treasury is raided can be blamed on CMS, which bleeds like a hemophiliac, thanks to a strategy known as pay-and-chase. Since its inception, Medicare has operated with a "pay claims, ask questions later" ethos.

This might have been appropriate in the idealistic '60s, when the program was formed and doctors served as its virtuous gatekeepers. Fraud was such a secondary concern that it wasn't even officially made a crime until 1996.

But that carcass is so inviting today that prosecutors have adopted an unofficial threshold: People need to steal at least $500,000 before they're charged.

"All of these prosecutions are great," says Louis Saccoccio, CEO of the National Health Care Anti-Fraud Association. "We have strike forces, but the prosecutions just tell you we have a big problem because that means the money's already out the door. So the focus now is starting to shift to prevention."

Enforcement started to pick up during the second term of George W. Bush, then accelerated under Obama, who expanded the task forces and made fraud-fighting a pillar of the Affordable Care Act, otherwise known as Obamacare. CMS was given greater discretion in suspending payments and screening providers before they entered the system. Penalties and prison time were also increased.

But excuse North Texas congressman Michael Burgess' skepticism. The Denton County Republican has heard such talk before.

The former gynecologist is willing to concede that progress has been made. Yet the sheer size of the task makes crime fighting difficult. Every day, Medicare contractors process 4.5 million claims. Even Republicans admit that CMS is undermanned and forced to rely on contractors, whose ferreting of fraud is inconsistent at best.

"There was a famous case here in Dallas where a Nigerian woman had been busted," Burgess says. "As she was going off to jail, it was discovered that she had several other provider numbers. They discovered that she was receiving checks at the same post office box. It never occurred to anyone that, 'Hey anything that goes to P.O. Box 9058, that's a red flag.' We were probably paying for her defense."

This slack oversight allows for glaring aberrations. In one instance, Texas' Medicaid dental program spent more on braces than the rest of the country's programs combined. But CMS only learned of it when WFAA reporter Byron Harris broke the story in Dallas.

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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.