94 Arrested in Medicare Scams Worth $251 Million

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94 Arrested in Medicare Scams Worth $251 Million

MIAMI (CBS/AP) Federal authorities arrested 94 people in five states Friday for allegedly taking part in various scams to defraud Medicare. The arrests have been touted as "the largest Medicare fraud bust in history."

Authorities took down suspects in Miami, New York City, Detroit, Houston and Baton Rouge, who are accused of billing Medicare for unwarranted equipment, and for physical therapy and other treatments that patients never received.

How much did these alleged scams total?

$251 million.

But according to Federal authorities, the staggering $251 million is a mere fraction of an estimated $60 billion to $90 billion in Medicare fraud that gets added on to taxpayers' bill each year.

Authorities say that one scam alone racked up $72 million at Bay Medical in Brooklyn, where clinic owners allegedly submitted erroneous physical therapy claims for elderly Russian immigrants.

Patients, including undercover agents, were allegedly given $50 to $100 each visit in exchange for using their Medicare numbers - and bonuses were even allegedly given for enlisting new patients. According to authorities, wiretaps collected hundreds of "kickback payments" dispersed in a backroom by a man who reportedly did nothing all day but pay the "patients."

The so-called "kickback" room had a Soviet-era propaganda poster on the wall, showing a woman with a finger to her lips and two warnings in Russian: "Don't Gossip" and "Be on the lookout: In these days, the walls talk."

Medicare's long-time method involved paying providers before claims were investigated.

Under President Obama's Affordable Care Act, federal officials have the authority to cease payment of a provider if fraudulent activities are suspected.

In another case in Brooklyn, authorities indicted six patients who allegedly sold their Medicare numbers to various clinics. Records indicate that 3,744 claims were submitted on behalf of Valentina Mushinskaya, 82, over the past six years.

Thirty-three suspects were indicted and charged with swindling Medicare out of roughly $140 million in several scams in the Miami area. According to officials, Miami is a hub for Medicare fraud, accumulating approximately $3 billion each year.

In Miami, Daniel R. Levinson, the inspector general of HHS, which manages Medicare, said the arrests, "illustrate how health care fraud schemes can replicate virally and migrate rapidly across communities."

The HHS and the Department of Justice have created a joint effort that allows law enforcement officials to inspect Medicare claims in real time and identify suspicious patterns as they are happening.

The results seem to be paying off; in 2008 total claims in Miami declined by $1.6 billion.