Medicare Fraud and the Criminality of Doctors

Once upon a time, when top U.S. law enforcement leaders announced a sweep of arrests, it was typically mafia leaders or drug kingpins who were being led away it handcuffs. Now it is more likely to be doctors and healthcare providers. That was the case today, when U.S. Attorney General Eric Holder announced charges against 111 defendents in nine cities on charges of defrauding Medicare of $225 million through false billing -- the "largest federal healthcare fraud takedown in our nation's history," as Holder described it.

Those charged included numerous doctors and nurses, as well as healthcare executives. In New York, for example, charges were filed against Dr. Boris Sachakov "in connection with an approximately $22.5 million scheme to defraud Medicare and private insurance carriers by submitting false and fraudulent claims for purported proctology services," according to U.S. officials. Another doctor busted in New York for medicare fraud was a podiatrist who named Leonard Langman who tried to bilk the government for $250,000. In Miami, the sting snared 30 people, including three doctors. 

Others charged in Miami included healthcare executives and marketers Lawrence S. Duran, Marianella Valera, Judith Negron, Sandra Jimenez, Hilario Morris, Joseph Valdes, and Margarita Acevedo, who were involved in two companies, ATC and Medlink, that allegedly engaged incheating and kickback schemes. As reported here,

According to court documents, the defendants participated in a scheme to defraud Medicare by submitting false claims for mental health services administered at ATC facilities that were medically unnecessary or not provided at all.  The indictment alleges that various defendants paid kickbacks to patient brokers and owners and operators of halfway houses and assisted living facilities (ALFs), in exchange for delivering patients to ATC facilities.  Various defendants are charged with participating in an extensive and complicated money laundering scheme related to the cash for kickback payments.

Federal authorities have come to see the healthcare industry as among the most corrupt sectors of the U.S. economy and estimates of losses to Medicare and Medicaid fraud run into the tens of billions. The corruption runs deep and keeps appearing in new areas of healthcare. As U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida stated,

“Health care fraud has evolved from DME fraud, to infusion fraud, to home health care fraud, and now, as this case shows, to community mental health treatment fraud. Worse yet, health care fraud has come to permeate every level of the health care industry, from the owners and managers of dirty clinics, to complicit doctors, program directors, therapists, marketers, and patient recruiters.

It is hard to speculate about the motives of the doctors involved, or the other well-educated professionals who orchestrate these schemes. These are people who already have much more opportunity and income than most Americans, and now face jail time on felony charges. Yet as I argued in The Cheating Culture, the criminality of doctors may not be so surprising after all. Many people enter this profession hoping for significant financial rewards, only to find that their pay doesn't exactly buy an opulent lifestyle and that their days entail much drudgery in dealing with insurers. When the chance of easy money comes along, quite a few doctors it seems are ready to pounce.