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Scams Cost LI Millions Every Years - Cost Taxpayers, Raise Health Care Costs

New Scam Involves Using Social Security Numbers of Dead People to File Bogus Claims -- NY Taxpayers Lose Millions Because of Medicaid Fraud

New Legislation Would Significantly Increase Resources to Track, Arrest, and Convict Fraudsters, Close ID Theft Loopholes, Beef Up Sentencing Requirements

In the wake of a new major Medicaid fraud bust in Nassau County and New York City, U.S. Senator Charles E. Schumer, joined by Nassau County District Attorney Kathleen Rice, today announced that he is backing new comprehensive health care fraud legislation that will dramatically ramp up efforts to track, arrest, and convict Medicaid and Medicare scam artists that cost New York State taxpayers billions every year and raise health care costs for the entire country. Schumer said that he will push this plan as part of comprehensive health care reform legislation now being considered in the Senate saying that cracking down on fraud is essential to cutting health care costs for federal, state, and local governments.  Schumer today announced he is backing legislation authored by Senator Ted Kaufman (DDE), a member of the Committee, called the Health Care Fraud Enforcement Act of 2009 which would dramatically increase funding to hire new fraud investigators and beef up penalties for convicted scam artists.


"People stealing from Medicare and Medicaid are taking money straight out of the pockets of Long Island taxpayers," said Schumer.  "Equipping federal prosecutors with the resources they need to track down and persecute these people is important to reigning in health care costs.  This is just another step Washington should take to make sure Americans on Main Street can afford high quality health insurance and eliminate waste from our system."


Nassau County District Attorney Kathleen Rice recently announced ten arrests for Medicaid fraud, including two married couples charged with stealing more than $128,000 in Medicaid benefits combined. One couple, Danial and Mojgan Kidanian, claimed income of only a few hundred dollars a week from working at a local discount store. In reality, they owned the store, the building, several rental apartments, a $625,000 home, and had deposited more than $1 million into their bank accounts over a fiveyear period.


Similarly, the other couple, Rabi and Siona Kamel, concealed income from a business they owned and the ownership and sale of a second home. The couple, claiming income of only $31,000 per year, was actually earning as much as $147,000 annually.


Late last week, various branches of New York City law enforcement announced they had busted nineteen Medicaid cheats including some with luxury cars and milliondollar homes - for significant Medicaid fraud. The various schemes entailed writing up phony claims through front companies in order to collect insurance benefits meant for the poor, authorities said Thursday.


Socalled "Operation Free Ride" included a Hamptons homeowner who claimed to get by on $5,000 a year, an artist who cried poverty despite owning two $1 million Manhattan apartments and a New Jersey woman who claimed she lived in her Manhattan nail salon.


"When thieves are stealing billions of dollars out of the pockets of honest taxpayers, it is our responsibility as elected officials to give law enforcement the most effective tools possible," DA Rice said. "This common sense legislation puts fraudsters on notice: you will be found, prosecuted, and you will pay back every nickel you stole from the people of New York."


Schumer and Rice made their announcement today in front of Doctor's Immediate Care, a medical office convicted of fraud by the District Attorney for billing Medicare out of $73,280.00 for services not covered by the program.


During the period of May 2, 2003 through October 24, 2006, Susan Wang, the wife and office manager of Dr. Shih Wang, intentionally billed the Medicare program for Osteopathic Manipulative Treatments ("OMT") and office visits for 89 patients that actually received acupuncture, a medical service specifically not covered by Medicare.  Medicare paid $73,280.00 for the aforementioned services.  Susan Wang made the decision to bill Medicare for OMT and office visits because Medicare does not cover acupuncture.  Gang Shi, a Licensed Acupuncturist employed by Dr. Wang, actually preformed the acupuncture procedures at issue in this case.  Shi did not bill Medicare for the services he provided.  He provided his acupuncture treatment records to Susan Wang, who processed the billing.


In 2008, the NYMFCU obtained 257 settlements or court orders requiring the payment of $263.5 million: $259.6 million in civil damages and almost $3.9 million in criminal restitution, exceeding the $59.3 million achieved in 2006 and $113.8 million in 2007.  The Unit collected a total of $256.2 million in both civil and criminal recoveries.


According to recent reports, the U.S. loses at least $60 billion to healthcare fraud every year, and some estimates put the cost as high as 10% of the nation's total healthcare spending, which exceeds $2 trillion. Medicare, the federal insurance program for the elderly and disabled, and Medicaid, the federalstate program for the poor, are especially susceptible. Medicare currently has the resources to review only 3% of claims.  Medicare has reported that it improperly paid more than $10 billion in claims in the fiscal year that ended Sept. 30, 2008.


The new scam Schumer highlighted involves using social security numbers of recently deceased Medicare beneficiaries to file new claims even though the recipient died. Auditors found a whopping 417 dead people still on the rolls, the state Office of Medicaid Inspector General said Friday in its annual report on Medicaid fraud, waste and abuse.  Another 912 prison inmates were still collecting although they're supposed to be cut off.


The top accused suspect thus far is Echo Pharmacy, in Miller Place, LI, and its owner Bryan McCutcheon, according to an ongoing probe conducted by New York Medicaid Inspector General James Sheehan's office. McCutcheon allegedly filed claims for 46 prescriptions on behalf of 17 dead patients from 2003 to 2005. Many of these patients had lived at a nearby nursing home where McCutcheon was previously employed, state investigators said.


The Schumer backed legislation beefs up sentencing guidelines for healthcare fraud offenses with substantial losses, updates  the definition of "healthcare fraud offense" in the federal criminal code so that violations of the anti kickback statute, the FDCA, and certain provisions of ERISA make things like criminal forfeiture easier to get, and gives administrative subpoena power to DOJ (meaning they don't have to go through a grand jury) to investigate civil rights violations at places like nursing homes. As the law currently stands, DOJ either has to have a grand jury investigation going on or has to rely on local officials to compel cooperation.  The legislation also does the following:


·         Sentencing increases:  The bill directs the Sentencing Commission to increase the guidelines range for health care fraud offenses and clarifies that the full potential scope of the fraud should be considered at sentencing.


·         Redefining "health care fraud offense":  The bill includes all health care crimes within the definition of "health care fraud offense," regardless of where they are codified.  (ERISA, drug marketing, and kickback crimes are currently not included)  This change will make available to law enforcement the full range of antifraud tools, including criminal forfeiture and obstruction penalties, to combat these offenses.


·         Improving whistleblower claims: kickbacks lead to unnecessary and risky medical care and pervert the doctorpatient relationship.  This bill clarifies that all payments made pursuant to illegal kickbacks are false for purposes of the False Claims Act.


·         Creating a commonsense mental state requirement for health care fraud offenses: some courts have held that defendants must be aware that their conduct violates a specific provision of criminal law in order to be held accountable. This bill restores the original intent of Congress that a person is guilty of a health care offense if he knowingly does what the law forbids.


·         Increasing funding:  Money spent on health care fraud prevention and enforcement is returned manifold through costs savings and civil and criminal recoveries.  This bill authorizes a modest, yet significant, increase in federal antifraud spending of $20,000,000 per year through 2016.


In the wake of the financial crisis earlier this year, Sen. Kaufman introduced similar legislation to strengthen tools and increase resources available to federal prosecutors to find, prosecute and jail those who committed financial fraud. The Fraud Enforcement and Recovery Act, introduced with Sens. Leahy and Chuck Grassley (RIA), was signed into law.