Home News Stories 2004 July 10 Indicted on Medicare Fraud Scheme

10 Indicted on Medicare Fraud Scheme

Protecting Patients from Health Care Fraudsters
10 Indicted on Medicare Fraud Scheme

07/26/04

"Whoever talks here may put me behind bars, but when I get out, that person will no longer be here on this earth."

One of 10 individuals indicted by federal authorities last month in Puerto Rico as part of a major health-care fraud scheme uttered this phrase to intimidate workers at a San Juan durable medical equipment company under federal investigation, according to the recent indictment. But threats like that didn't stop investigators from uncovering the truth.

What was the scheme? Owners of Melendez Medical Equipment (MME) paid independent sales representatives (who of course were "off the books") a nice kickback to push Medicare-covered equipment on unsuspecting victims. The company then submitted Medicare claims for the wheelchairs with fraudulent physician signatures to collect large reimbursements.

Why motorized wheelchairs? Because big profits make the motorized wheelchair a high fraud item. Companies like MME who buy in bulk can make thousands of dollars in profit on the chairs in Medicare reimbursement. The more chairs they sell, the more money they make.

How did they find customers? Illegally, of course. The reps would buy confidential patient information from medical facilities, then literally show up at a patient's doorstep claiming their equipment would help the person's medical condition. And a number of doctors, including one with a suspended medical license, reportedly received kickbacks for either referring patients to the reps, or for unlawfully signing a certificate of medical necessity after patients' primary physicians refused to sign one.

Who alerted the feds? An on-the-ball CMS (Centers for Medicare and Medicaid Services) contractor, Palmetto GBA, charged with overseeing Medicare durable medical equipment claims discovered that MME had jumped from 1882nd to 358th place nationwide in motorized wheelchair billings within four short monthsand had become the top supplier in Puerto Rico in the process. Definitely a red flag.

The FBI, along with its fellow law enforcement partnersthe Health and Human Services Office of the Inspector General (HHS-OIG) and the U.S. Postal Inspection Servicewas soon on the case to get to the bottom of this fraud. So far, the two MME owner/operators, along with eight former MME independent sales reps have been indicted on multiple counts related to this Medicare kickback scheme. And CMS has suspended Medicare reimbursements to MME.

How prevalent is this fraud? Government health programs, like Medicare and Medicaid, are a favorite of health care scammers and account for some 44 percent of all health care fraud. Losses total more than $100 billion annually.

How can the public help? If you have any information relating to health care fraud, contact your local FBI Office.