Thieves' Bazaar: Medicare Fraud

Hospitals, doctors and dealers have made Medicare the nation's sweetest crime. The feds are now trying to shutter the door.

It pans the surrounding strip mall, parking lots filled with license plates from Kentucky, Tennessee and even Florida. That's how far people were willing to drive for a Las Vegas Cocktail.

The cocktail mixes Xanax, Soma and Vicodin for a powerful opiate high. Monroe was its unofficial retailer. It was led by Oscar Linares, a doctor from the Dominican Republic who also worked at the University of Toledo Medical Center. Sometime in 2008, he started leading a double life.

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.

Sheila Jackson Lee: Texas U.S. Rep. Sheila Jackson Lee carried water for Medicare swindler Houston Riverside General Hospital.
photo by David Ortez
Sheila Jackson Lee: Texas U.S. Rep. Sheila Jackson Lee carried water for Medicare swindler Houston Riverside General Hospital.
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.
courtesy 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.

The cost to Medicare: $5.7 million.

Linares rarely examined his patients. One undercover cop didn't see the doctor until his tenth visit, and only then via a television monitor. Linares's 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.

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 Congressman Michael Burgess's skepticism. The Tea Party Republican from Texas 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."

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Rick Perry and Sheila Jackson Lee working togetha mayne.


great article. govt never ceases to amaze me.


Find the blog "Dentist the Menace" and you'll find stuff about Medicaid fraud from corporate dentists. There are dentists who are told by the companies to perform operations on healthy teeth on Medicaid children, as found when a Washington DC TV firm investigated Small Smiles - it probably still happens today right here in Houston


Sonja Schoenwald and her cronies are well-experienced in these kinds of matters. Check up wherever she has worked and is working now, in both North and South Carolina. Check court records for her around 1993 on in Durham, NC. 

Sincerely, CatherineTodd

Thomas9 1 Like

This shows how our government is so lacked on major multi-million dollar business crimes.  As long as you are a white collar criminal and whatever you are doing does not get major media exposure, you are good. You will not be held accountable for your actions, fines will be minor a best and jail time? forget it, you keep all the money you stole and are allowed to continue to the same time of crime or indulge in others. That is what the US government 'encourages'.  They only go after the blue collar criminal because they are easier and obvious to prosecute. No one in this country, especially the US government will hold themselves accountable for their actions. That includes the lack of action. By the govt. basically slapping people on the wrist to these types of billion dollar crimes, they are encouraging it. Nothing will change until the people take action and 'force' their state and national reps to act. Problem is most of the people across the country don't care, are too lazy and will not do anything about it (i.e. holding themselves accountable for what they should do, act!).

saffie6813 1 Like

There is a couple of BILLION in fraud mentioned in just this one article.  Multiply that out everywhere.  If Medicare would just put a billion dollars into the budget for fraud investigation and put these people in jail the plan would be solvent forever.  But even arrest does not deter these crooks because they never see a day in jail and they get to keep most of the money they have stolen.  

One a personal note, I once saw someone at the nursing home measuring everyone for "diabetic shoes"  for which I found they were charging Medicare $420 for each pair.   They looked like sneakers from Walmart to me.  

Unfortunately, we have seen these type of articles before and nothing is ever done.


Iffen The Press wants a comment from the loquacious Sistuh Stealing, all they needs is to roll up wid a camera.  She glad to shoot her mouth offen then.

Thieving_n_Thuggin 1 Like

It don't be thieving in Sister Stealah Jackson Flea's eyes, it be reparations.

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