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Medicare Strike Force Focuses on Fraudsters

Multiagency team leads the fight against health care crooks

Diane Vu, with the Office of Inspector General for HHS in Los Angeles

SAM COMEN

Diane Vu, with the Office of Inspector General for HHS in Los Angeles, helps lead federal efforts against Medicare fraud in that city.

A decade ago, several federal agencies created the Medicare Fraud Strike Force as a main weapon against fraud. Since then it has charged more than 3,500 people with ripping off Medicare for more than $12.5 billion as of early 2017 and recovered $2.52 billion of that money. 

Here you’ll meet strike force members such as David Ceron of the Office of Inspector General for the U.S. Department of Health and Human Services (HHS), who alerts regional offices about crime trends, and Amber Kilpatrick, an agent in Miami who helps build cases. In Los Angeles, Diane Vu uses software to spot fraud, and on the East Coast, an undercover agent, “Randall,” busts cheats.

How effective has the strike force been? Opinions vary. “We believe our conviction rate has a significant deterrent effect,” says Joe Beemsterboer, chief of the Justice Department’s health care fraud unit. Nick Oberheiden, a Dallas fraud defense attorney, says, “If there was no heavy enforcement, it would be completely Wild West.” But, he says, “The magnitude of the problem is just too big to be captured by a few hundred convictions a year.” 

Here are some facts about the strike force.

  • There are nine strike force teams, based in fraud hot spots — Miami, Los Angeles, Detroit,  southern Texas, New York City, southern Louisiana, Chicago, Dallas and Tampa, Fla.
  • Each team is made up of agents, investigators, prosecutors, auditors and others.
  • Officials in Washington oversee the strike force and coordinate with regional teams.

Sifting data for clues 

Inside the billions of bits of data that accompany Medicare claims each year are small anomalies that suggest to experienced investigators that a fraud has been committed. New high-tech tools are now improving the odds of finding those clues. The federal government has introduced software called One PI, which facilitates the review of all information related to Medicare claims. 

The new technology helps analysts spot red flags, such as a person in hospice care being charged for a hospital visit, older people making visits to doctors 40 miles away, or someone being treated for five days in the hospital for a broken arm. And if agents know a common scam is to bill for a specific, expensive procedure, they can run a search using the insurance code for that procedure to identify outliers. When they see a doctor billing for two dozen at a time, they know they are on to something.

Over the past two years, the government has added about 70 investigative analysts nationwide to use these systems. The increased technological muscle and added manpower promise a game-changing evolution in the fight against fraud, says Vu, the assistant special agent who helps lead federal efforts against Medicare fraud in Los Angeles. “We’ve always had a lot of access to claim data,” she says. “Now we have new tools, along with the investigative analysts who can run the data to see trends and narrow them down by zip code, or look at the big picture nationwide. It allows us to work smarter.”

Those clues point agents to where they should focus their time to build prosecutions. “Data is great, but we still need to talk to witnesses,” Vu says. “We need people to testify to what happened.”

Agent Ceron

Stephen Voss

Field Agent David Ceron

Strike force in action

The case: Agent David Ceron vs. Hollywood Pavilion 

The crime: using fake patients to rake in cash

Hollywood Pavilion sounds like the type of medical facility that gives top-quality care to the stars. But the South Florida psychiatric hospital proved to be quite the opposite.

Miami-based agents investigating Medicare fraud heard of suspicious practices of recruiting patients there, and so, under the lead of field agent David Ceron, they started investigating. Hospital employees confirmed that things weren’t as they should be. 

In the coming months, Ceron and his team did more interviews and research, and a picture of a shocking scam began to emerge. The hospital was paying recruiters — some on a monthly retainer and some of them convicted felons — to scare up patients. Many of them were drug addicts who were not in need of psychiatric services but were looking for cash or substance-abuse treatment. Some were bused in from as far away as Maryland and Louisiana. They were coached to say they were depressed or suicidal. Often, they ended up locked in the facility for weeks until their Medicare benefits ran out, at which time they were discharged to live on the streets.

Why? To generate copious bogus Medicare claims to enrich the hospital’s owners. With growing evidence in hand, the squad obtained warrants to search the email account and computer of the hospital’s CEO, Karen Kallen-Zury.

That turned up enough hard evidence — including falsified documents and incriminating emails — to convict Kallen-Zury. The crime: bilking Medicare out of almost $40 million over nine years. One prosecutor later referred to the hospital as a “brothel of fraud.” Kallen-Zury was sentenced to 25 years in prison and ordered, with coconspirators, to return more than $39 million. Several others in on the scam, including some doctors, were also convicted.

Ceron now holds a key job in the Office of Inspector General for the U.S. Department of Health and Human Services in Washington. But he is still angered by ongoing Medicare fraud in South Florida, where he was raised. “They’re committing fraud in my hometown,” he says. “Miami should have a better name than that.”

AGENT KILPATRICK

Stephen Voss

Special Agent Amber Kilpatrick

The case: Agent Amber Kilpatrick vs. Elbeblawy 

The crime: seven years of false billing

The convicted health care thief wanted to cut a deal. So he offered details on an entirely separate crime he knew about: Three health care companies were billing Medicare for bogus services. As it turned out, the tip — along with information from others — led Special Agent Amber Kilpatrick and fellow officers with the Miami Medicare Fraud Strike Force to one of the biggest busts in its history.

The three companies identified by the informant were supposed to serve Medicare beneficiaries in their homes. But the snitch said investigators would find a much different story if they dug deep enough.   

Kilpatrick and her colleagues began piecing together a profile of the facilities. They found former patients and interviewed them about their care. Then they carefully checked those accounts of what had actually happened against the Medicare filings of the businesses, keeping a close record of discrepancies. They also documented those who didn’t get visited but still showed up on Medicare billing statements as having received care. Slowly, a portrait of a criminal conspiracy began to emerge. Investigators were able to show that some Medicare beneficiaries were given expensive treatments that they didn’t need. In other cases, Medicare was billed for services that didn’t happen at all. 

And as more people were interviewed and more data were sifted, it became clear that there was another layer to the fraud. Officers learned that recruiters were being paid to direct people who didn’t need care to the facilities. Doctors were being given kickbacks to route people to the bogus companies.

The three home health care services had something, or someone, in common: a man named Khaled Elbeblawy. He owned two of them: Healthy Choice Home Services and JEM Home Health Care. And he managed the third company, Willsand Home Health Agency.

The probe by the federal agents eventually showed that the scam had been going on for seven years, from 2006 to 2013. During that time, Medicare had been bilked out of $40 million in care that was either not delivered or unnecessary.

When agents confronted Elbeblawy, he initially agreed to cooperate. He even helped prosecutors compile a series of recordings with doctors while they were discussing kickbacks. Then he changed his mind and took the case to trial, representing himself after firing his defense attorney. That proved a disastrous strategy. The evidence compiled by Kilpatrick and others was overwhelming. 

On Aug. 30, 2016, Elbeblawy was sentenced to 20 years in prison and ordered to repay Medicare $36.4 million. The information he provided helped bring about the conviction of physicians who received kickbacks for referring patients to the home health care companies.

The case provided the kind of complex mental challenge that keeps Kilpatrick excited about the job. “Each investigation is kind of like putting the pieces of a puzzle together,” she says. That includes time on stakeouts and chasing down witnesses. “You can’t do this job from a desk.” But she admits it is difficult for the strike force to stem the rampant abuse. “Sometimes it’s hard to stop because the money goes out so quickly,” she says. “By the time we realize what’s going on, the money is gone.” 

Stephen Voss

“Randall” is a special agent with the Office of Inspector General at HHS.

The case: "Randall" vs. the Recruiters 

The crime: Paying the needy to cheat health care 

Life in a Washington, D.C., homeless shelter is grim under the best of circumstances. For a federal undercover agent looking to expose a network of recruiters — who solicit personal Medicare and Medicaid information from shelter residents to create phony medical bills — it presents unique challenges.

“Randall,” a pseudonym for a special agent with the Office of Inspector General at HHS who still must protect his true identity, thoroughly prepared for his undercover role. He grew his hair out, let stubble cover his face and did not bathe for several days. But it was the mental preparation that proved key. He drew on time spent growing up in an African American neighborhood in D.C. He modeled himself on kids he knew who had lived close to the edge. That helped give him credibility inside the shelter. “I had to be able to establish rapport with these guys, talk the talk of street guys, gain their trust,” he says. He memorized details of a fake identity — name, Social Security number, address and date of birth. He visualized himself in tough situations and worked out how to conduct himself. 

Once he was fully prepared, Randall approached one of Washington’s large shelters for the homeless. It smelled of urine, filthy clothes and body odor. Men shuffled outside the entrance, drinking and smoking. The mentally ill talked to themselves. Randall let it be known that he was looking to make money. Within minutes, a recruiter approached him.

The scheme he was looking to expose is simple, but it results in annual losses to Medicare and Medicaid that amount to hundreds of millions or even billions of dollars in fraud. Recruiters enlist fake patients to get approved for services by doctors who may or may not be in on the scheme. The phony patient is paid a small amount to sign off on falsified documents showing expensive care that had never been delivered. The homeless person may also sign off on time sheets for phantom visits from health care aides to nonexistent residences. 

Homeless shelters are fertile ground for recruiters involved in this type of fraud. The one who approached Randall was running a Medicaid scam. Randall was quickly taken into the scam, though it wasn’t always easy. One time in the car with a recruiter, the man suddenly asked, “Are you a cop?” Randall’s heart stopped. Had he messed up? Carelessly slipped out of character? “No way,” he said. “I hate the cops, man.” The recruiter laughed. Randall could breathe again. 

After nearly a year undercover, his investigation, which included secret audio and videotape of his transactions, yielded enough evidence to convict 19 recruiters and health care aides of fraud. When this sort of case goes to trial, that is often where the crooks finally learn Randall’s true identity. 

“Guys wilt when they see the undercover agent in the courtroom,” says Randall’s supervisor in the Office of Inspector General.

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