When federal agent Jason Meadows interviewed the elderly resident at the Primrose Oaks senior living center in Oak Cliff, the man presented him with a business card for Universal Health.
"Here's your crook," the man told Meadows, according to a recently unsealed affidavit filed in federal court. The name on the business card was Ignatius Chuka Ogba, a 45-year-old Frisco resident otherwise known as "Chuck."
Ogba allegedly told the man that he could make anywhere from $50 to a few hundred dollars for each resident he referred who obtained a "free" wheelchair through Universal Health. Though Primrose Oaks manager Detria Keeling turned down Ogba's offer of $1,000 per referral, others, including a minister and his wife, went along, according to the affidavit.
Sometimes a woman came to pick up willing residents. Other seniors lined up for a bus to take them to the Wynnewood Shopping Center, where Dr. Lloyd McGriff examined them.
Though virtually none of the Primrose Oaks residents met the requirements for the benefit, McGriff allegedly wrote a "certificate of medical necessity" and a prescription for them to receive "K-11" wheelchairs. Universal Health took the seniors' Medicare information and billed the government for up to $9,000 per wheelchair.
Designed for people with limited upper body strength, the K-11 is a high-tech wonder driven by a joystick, small and sophisticated enough to maneuver indoors. Medicare pays for 80 percent of the cost, with the patient or private insurance picking up the rest. Medicare pays an average of $5,200 per wheelchair, but add-on accessories can bring the total up to $10,000, making it one of the most expensive items for which Medicare will reimburse.
In the mid- to late '90s, technological advancements made power wheelchairs usable in the home, as required by Medicare to qualify for the reimbursement. That plus the aging population contributed to a 450 percent increase in spending on wheelchairs over the past four years. Reimbursements in Texas jumped from $34.7 million in 1999 to more than $170 million in the first nine months of 2003. But a huge portion of that increase was outright fraud, federal officials claim.
From May 2002--when Ogba set up his company in a strip shopping center on C.F. Hawn Freeway and obtained a Medicare "supplier number"--to an early-morning raid in February, Universal Health billed Medicare $7,041,500 for hundreds of patients in nine states. Recruiters scoured senior centers, malls, nursing homes, any place catering to seniors, for "patients." Before Medicare stopped payments, Ogba's company had received more than $3 million.
But few of the patients at Primrose Oaks ever received a K-11, authorities say. Some received a much cheaper scooter, which they didn't really need.
The alleged scam came to an abrupt end at 7 a.m. February 5. That's when 137 federal agents simultaneously descended on 15 locations around Dallas, pulling Ogba, McGriff and nine others from their beds.
Those arrested on February 5 had billed Medicare for more than $36 million, with $15 million paid out. Though it's unclear from court documents how--or if--they were related, most of the companies involved were set up in the summer or fall of 2001. According to court documents, several allegedly were in cahoots with individuals in Houston and East Texas. And some Dallas busineses operated out of different suites in the same strip center at 5415 Maple Ave.
Multiple suppliers working out of the same address should have triggered some suspicion, says Eric Sokol, director of the Power Mobility Coalition, which represents manufacturers and suppliers of equipment for the disabled. Government billing contractors are required by law to perform unannounced site visits before awarding new suppliers billing numbers.
"These syndicates were allowed to run unfettered," Sokol says. "These guys found the soft underbelly of the Medicare program and were able to exploit it."
Sokol says that members of his coalition notified the Center for Medicare and Medicaid Services (CMS) last April about large spikes in wheelchair sales in Texas, but the government didn't react until September. That's when CMS put into place a 10-point "Operation Wheeler Dealer" program to prevent fraud.
In November, seven Houston-area doctors and suppliers were indicted for wheelchair fraud.
"They would go to nursing homes, assisted living facilities or malls and induce seniors to ride with them on the bus to see the doctor," Sokol says. "Sometimes they'd give them a free lunch or $100. Even if someone said he didn't need a wheelchair, they'd say, 'Medicare is about to pull this benefit. You should get it now.' These fly-by-night guys would get paid, and the patients would get nothing or a scooter that cost much less. Not only was it ripping off the government, it was ripping off the patients. They might have gotten a free lunch, but they have lost their ability to get a wheelchair in the future if they need it."
Timothy Menke, special agent in charge at the inspector general's office with Health and Human Services, coordinated the Dallas investigation. It included the FBI, the criminal investigation division of the IRS, the Postal Inspection Service, Immigration Customs Enforcement and local police.
Menke denies that the government dragged its feet when notified of the fraud.
"When we found out about it, we reacted immediately," says Menke, who came to Dallas last year as SAC. "This was very egregious and blatant, so I made a priority to focus on this. This particular operation took four months. That is moving very quickly." He points out that 91 of the 400 federal agents with HHS nationwide worked on the Dallas investigation, which is continuing.
Manufacturers and suppliers of wheelchairs are experiencing cash flow problems as a result of the investigations, Sokol says. Approvals of power wheelchairs in Dallas have been all but shut down by Medicare since news of the scandal first broke in the Houston Chronicle last August.
The stringent new rules outlined by Operation Wheeler Dealer are ruining business for legitimate providers, Sokol says. And the new rules were put into place without any input from the affected consumers. "We are being punished," he says, "for something we notified CMS about."
In recent months, The Scooter Store has been forced to lay off 200 of its 1,500 employees, says Margaret McGuckin, executive vice president for marketing. The largest provider of power wheelchairs in the country, The Scooter Store is based in New Braunfels and has 60 locations around the country; there are three outlets and a distribution system in the Dallas area.
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"The layoffs are directly related to Medicare's current interpretation of medical necessity guidelines," McGuckin says. "Anybody who can take more than one step will be denied a wheelchair under these new rules. The real tragedy is that people with real medical necessity are going to be denied the ability to live with dignity in their homes. They will be forced into nursing homes or assisted living centers. As taxpayers, that costs us much more than a wheelchair."
McGuckin blames the fraud on CMS and its lack of internal controls. The Scooter Store works with more than 100,000 physicians across the country. Each doctor on average prescribes fewer than 10 power wheelchairs a year, she says.
"In Houston and Dallas, several doctors were prescribing hundreds of wheelchairs per year," McGuckin says, "and CMS did nothing for months. This could have been avoided if CMS had good internal controls."
Menke warns consumers to be wary about giving out their Medicare or Medicaid information, which could be used for other forms of fraud, such as identity theft. "If someone is being promised a free TV or other enticements to fork over their Medicare card," Menke says, "it should raise some red flags."