Healthcare Fraud and Abuse

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Health Care Management Cluster
14 November 2011
Research Paper
U.S. Health Care and Compliance
A System Challenged By Schemes, Scams, Fraud, and Abuse

“Laws are made to restrain and punish the wicked; the wise and good do not need them as a guide, but only as a shield against rapine and oppression; they can live civilly and orderly, though there were no law in the world.” John Milton (1608-1674)

On August 31, 2010, in Los Angeles, California, the former chief executive officer of City of Angels Medical Center was sentenced to 24 months in prison for paying illegal kickbacks for referrals of patients who were recruited in downtown’s “Skid Row” district. The physician was also ordered to pay more than $4.1 million in restitution to the Medicare and Medi-Cal programs. He pleaded guilty in December 2008 to defrauding Medicare and Medi-Cal by recruiting homeless persons from the Skid Row and providing them with unnecessary health services (Examples of 1). On September 21, 2011, David J. Easton, of Everly, Iowa, was sentenced to 42 months in prison, two years of supervised release and ordered to pay $165,170 in restitution to Medicaid and $35,616 in restitution to Coventry Health Care. Easton pleaded guilty on September 17, 2010, to health care fraud, money laundering, and aggravated identity theft charges. According to his plea agreement, Easton owned and operated Medicap pharmacy in Spencer, Iowa. He admitted that, from about 2003 to 2006, he defrauded Medicaid and Coventry Health Care out of more than $200,000 by submitting false claims for prescriptions. He used the identities and identification numbers of Medicaid patients when he submitted false prescription claims to the Medicaid program. Easton used some of the proceeds of his schemes to purchase a Cadillac Escalade (Examples of 1). A New Orleans-based orthopedic surgeon was sentenced to one year of home confinement and ordered to pay $750,000 in restitution for defrauding the federal workers' compensation program (Kurtz 1). Jorge J. Dieppa, MD, a general practitioner, along with about 24 other suspects in Florida, was charged with healthcare fraud as a part of a federal crackdown that charged 94 people in five cities with plotting to defraud Medicare of $251 million (Kurtz 1). Two Brooklyn men opened First Century Medical Supply, Inc., located in Oklahoma City, to engage in the business of selling power wheelchairs and wheelchair accessories to Medicare beneficiaries. Evidence at trial showed that from 2007 through 2009 the business obtained identification numbers and personal information from Medicare beneficiaries and used that information to submit claims to Medicare for power wheelchairs and wheelchair accessories. Evidence also showed that the defendants billed Medicare for some beneficiaries who did not receive a power wheelchair at all, some who received a less expensive motorized scooter, and for others who did not have a medical need for a wheelchair or did not even request a wheelchair. In all, the evidence showed that through First Century the defendants submitted over $1.1 million in fraudulent claims to Medicare. This case became known as the million dollar wheel chair case (New York Men 1). The United States health care system is the most regulated and costly health care system in the world. Current statistics reveal the United States leads the world in the cost of health care but sadly, ranks 37th out of 191 countries in performance (World Health Organization Assesses 1). The U.S. spends a tremendous amount of resources on health care, creating a virtual gold mine for the criminal element that seeks an easy opportunity to defraud. Expenditures in the United States on health care surpassed $2.3 trillion in 2008, more than three times the $714 billion spent in 1990, and over eight times the $253 billion spent in 1980. Stemming this growth has become a major policy priority, as the government, employers, and...
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