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Busting Medicare Fraud

Criminals Bilk Medicare of Billions Each Year

medicare fraud mug shots

WANTED: They stole billions from Medicare — and they're still at large.

En español | Editor's Note: Even with a fresh new emphasis on investigations and prosecutions, crooks continue to bilk Medicare out of billions of dollars a year—some with frauds breathtaking in their scope and audacity.
Last month, in the largest Medicare fraud bust in history, federal agents indicted 94 people in five cities on charges of submitting more than $251 million in false claims. Those indicted included doctors, nurses and owners and executives of health care companies.

“These criminals have siphoned resources from the most vulnerable among us, “ U.S. Attorney General Eric Holder said at a news conference in Miami after the big takedown. “Their actions have also helped to drive up health care costs nationwide.”

The new health care law passed last spring is adding $350 million over the next 10 years to step up the fight against these thieves and scammers, who can use one stolen or purchased Medicare number to bill Medicare for millions of dollars of services never performed—from home health care to physical therapy—and devices never needed or delivered—from wheelchairs to prosthetic legs.  

Just this week officials in Miami said that Medicare even paid for penis pumps to treat erectile dysfunction—in women.

The new law also helps investigators: For the first time the government will have the authority to stop paying a health care provider that they suspect is cheating the system.

“We’re putting would-be criminals on notice. Health care fraud is no longer a safe bet,” Holder said.

But some critics contend the funds provided in the Affordable Care Act aren’t enough to combat criminals that who have found devious ways to outwit the system for years. Referring to the two men arrested last week for the alleged penis pump scam, Pulitzer Prize winning reporter Jay Weaver wrote in the Miami Herald: “The criminal case highlights, yet again, Medicare's chronic problem of paying bills quickly without first verifying them—a glaring flaw that has undermined the taxpayer-funded system during the past decade.”

Three bills in Congress aimed at combating Medicare fraud would strengthen penalties, give law enforcement officials quicker access to Medicare claims information and put more stringent reviews on claims.

Who are these criminals and how do they work? And what do they do with the taxpayer money they steal? For an astonishing inside look at fraud so lucrative that drug dealers are deserting cocaine for Medicare, read the award-winning Bulletin piece by Weaver below.


They indulge their wildest whims—a private helicopter, Lamborghini sports cars, thoroughbred horses, even a “Pirates of the Caribbean” water theme park. For the schemers and scammers, Medicare fraud is one crime that does pay—and pay and pay.

The Benitez brothers of Miami—Carlos, Luis and Jose—can vouch for that, federal prosecutors say. The brothers, who operated fake storefront clinics there, were indicted last year on fraud charges after allegedly collecting $84 million from Medicare for phony medical treatments. They spent their Medicare millions on the helicopter, the horses, a rental car agency and tourist hotels—all items the government is now trying to seize and reclaim for taxpayers.

Medicare frauds are often inelegant—but they’re outrageously lucrative and relatively low-risk. So lucrative, and so low-risk, the FBI reports, that a number of cocaine dealers in Florida and California have switched from illicit drugs to Medicare fraud.

Medicare loses billions of dollars to fraud each year. “Those billions of dollars,” said Eric Holder, U.S. attorney general, “represent health care dollars” that could be spent on medicine or care or hospital visits, “but instead are wasted on greed.”

Yet Congress has denied Medicare the money officials say it needs to truly police itself. Four years ago, as fraud began spinning out of control, lawmakers ignored Medicare’s request for $300 million to fight these crimes—even though the agency’s Office of Inspector General says that every dollar spent protecting the program returns $17.

Now, with Congress and the Obama administration hoping to help finance health care reform with $500 billion in savings wrung from Medicare over the next 10 years, cracking down on fraud is a fresh priority. And it shows. Just this year, anti-fraud efforts have seen a marked increase in money and agents.

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