KHN Morning Briefing

Summaries of health policy coverage from major news organizations.

‘Largest Medicare Fraud Scheme’ Busted

The Los Angeles Times: More than two dozen Los Angeles-area residents were arrested Wednesday "for their alleged roles in a nationwide scheme to bilk Medicare out of more than $160 million. The investigation, dubbed Diagnosis Dollars, resulted in the arrests of 52 people across the U.S. in what authorities described as 'the largest Medicare fraud scheme ever perpetrated by a single criminal enterprise.'" FBI, IRS and local law enforcement authorities linked the defendants to the organized crime group Mirzoyan-Terdjanian, and said they allegedly "stole doctors' identities ... used the information to enroll the phantom physicians as providers in Medicare ... and set up bogus offices and, using stolen beneficiary information, began billing for procedures that never occurred" (Glover, 10/14).

The Wall Street Journal: "Members of the group, based in New York and Los Angeles, were taken into custody as part of a nationwide Medicare fraud sweep that resulted in charges in California, Ohio, New Mexico and Georgia." Authorities say participants submitted "more than $100 million in concocted bills" to Medicare "at least as early as 2006, though they obtained only $35.7 million in improper payments." Many of the 118 nonexistent clinics they are charged with setting up were nothing more than a post office box (Rothfeld, 10/14).

The New York Times: "Charges included racketeering, health care fraud, identity theft, money laundering and bank fraud. ... Most of the fake claims were traditional. The hard-to-believe exams like the dermatologist's heart test were the exception, and raised flags at Medicare. But often, the claim had already been paid." The defendants took advantage of a system that is inherently vulnerable due to its emphasis on timely payments, said Preet Bharara, the U.S. attorney in Manhattan (Wilson and Rashbaum, 10/13).

The New York Post: "The size and sophistication of the coast-to-coast scheme -- which generated more than $160 million in bogus bills -- 'puts the traditional Mafia to shame,'" Bharara said. The Post adds that those charged "in New York include reputed crime boss Armen Kazarian, who holds the title of 'vor,' which authorities said is similar to a Mafia godfather" (Golding, 10/14).
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