U.S. Markets closed

This Mysterious Fraud Is Exploiting Your Grandmother

Cynthia Measom

The National Health Care Anti-Fraud Association estimated that tens of billions of dollars per year are lost to healthcare fraud, including Medicare fraud. Many of these losses can be attributed to the fact that Medicare is required to pay medical claims quickly. As a result, claims are often paid long before they can be flagged for potential fraud, which means that these monetary losses can easily occur.

But this type of healthcare fraud isn’t a victimless crime. Instead, it often preys upon the disabled and elderly, making them unwitting victims of large criminal schemes. Read on to learn about one recent scam that caused over $1.2 billion in Medicare losses.

About the Scam Targeting the Elderly

The scam was based on durable medical equipment (DME) companies paying illegal kickbacks and bribes in exchange for referrals of Medicare beneficiaries. Authorities describe this scam, which involved telemedicine, as one of the largest healthcare frauds they’ve ever investigated. The scam targeted hundreds of thousands of elderly or disabled patients and involved call centers in other countries.

How Medical Professionals and Others Took Advantage Of Patients

Medical professionals, DME companies and others worked together to take advantage of unsuspecting disabled and elderly Medicare beneficiaries. First, telemarketing companies would contact the victims offering them free or low-cost orthopedic braces for conditions such as back, shoulder, wrist or knee ailments.

Medicare recipients would be transferred to fraudulent call centers in the Philippines and Latin America to have their Medicare coverage verified. Then, the beneficiaries would be transferred to telemedicine companies for brief doctor consultations.

Following the consultations, doctors would sign prescriptions for orthopedic braces — even if patients didn’t need them. Sometimes, doctors signed several orders for braces for the same patient.

The call centers were responsible for collecting the prescriptions and selling them to DME companies involved in the scam. The DME companies would then ship the braces to the patients and bill Medicare fraudulently.

This Scam Has Cost at Least $1.2 Billion

You might wonder how $1.2 billion in losses could be accumulated when only 24 individuals were indicted. The 24 individuals indicted in the scam submitted or assisted in submitting various false claims to Medicare that often totaled up to millions over several years.

To give an idea of the type of money involved, the U.S. Department of Justice officials reported that DME companies would receive $500 to $900 for each brace from Medicare, which they could use to pay kickbacks totaling almost $300 per brace.

What Defendants Were Doing With the Money

The money gained from the scam was allegedly laundered through various international shell corporations. The money was used by the defendants to purchase items such as high-end real estate, foreign cars and yachts in the U.S. and other countries, according to the DOJ.

How the Scam Was Discovered

Information about the scam surfaced in the summer of 2018 when beneficiaries started calling the Medicare fraud hotline to complain about their experiences. Based on these complaints, federal agents launched an investigation, exposing the giant healthcare fraud scheme. This led to 80 search warrants in 17 federal districts.

Arrests Made in This Medicare Scam

Charges were filed against the 24 defendants as a result of the investigation, which was led by both the FBI and the U.S. Department of Health and Human Services Office of the Inspector General. Defendants included three medical professionals, dozens of owners of DME companies and employees of five telemedicine companies, including top-ranking executives. Here is a look at some of the cases.

Case No. 1: WIllie McNeal IV

Willie McNeal IV of Florida, owner and CEO of two telemedicine companies, was indicted for paying healthcare providers to prescribe medical braces for Medicare recipients with no regard as to whether the braces were medically necessary. In exchange for ordering the braces, McNeal allegedly received illegal kickbacks, according to the U.S. Department of Justice.

Court documents stated if McNeal is convicted, he would have to forfeit profits gained from the kickbacks he received and any property that was purchased with the illegal funds. The court documents list 10 properties in Florida owned by McNeal that are subject to forfeiture.

Case No. 2: Andrew Chmiel

In another case, Andrew Chmiel of South Carolina, who owned various medical equipment companies, allegedly billed Medicare more than $200 million for medically unnecessary equipment related to the scam. As part of the scam, two drop-shipping companies Chmiel owned were used to ship low-cost, low-quality Chinese-made products to Medicare patients, according to court documents. If convicted, Chmiel must forfeit three properties, six cars and almost two dozen bank accounts.

Case No. 3: Roderic Bain

Roderic Bain of Savannah, Georgia, used his position as an owner and operator of various DME companies to submit fraudulent Medicare claims worth almost $10 million, according to the U.S. Attorney’s Office, Southern District of Georgia. Bain oversaw a network that paid kickbacks for information on Medicare patients that he used to bill Medicare for medically unnecessary equipment, including back and knee braces. He was sentenced to three years in prison.

Case No. 4: Christopher O'Hara

Christopher O’Hara of Kingsbury, Texas, who owns telemedicine companies, was indicted for paying kickbacks and bribes to medical doctors in exchange for fraudulent prescriptions written for Medicare beneficiaries. O’Hara allegedly used the prescriptions to make Medicare claims in the amount of $40 million — of which $20 million had already been paid at the time of the indictment, according to court documents.

Case No 5: Randy Swackhammer

Randy Swackhammer, M.D. of Goldsboro, North Carolina, was indicted for allegedly signing medically unnecessary prescriptions for orthotics braces that were provided to him by telemedicine companies. Swackhammer reportedly only briefly consulted with Medicare patients by phone and had no prior doctor-patient relationship with them. Swackhammer and others assisted in and submitted false Medicare claims totaling over $5 million, according to court documents.

Case No. 6: Joseph DeCorso, M.D.

Another medical doctor, Joseph DeCorso of Toms River, New Jersey, was indicted for his role in a $13 million conspiracy to commit healthcare fraud. While working for different telemedicine companies, DeCorso allegedly signed medically unnecessary orders for back, shoulder, knee and wrist braces for Medicare beneficiaries, often without even consulting with the patients, according to the indictment.

Case No. 7: Darin Flashberg and Najib Jabbour

Flashberg and Jabbour of San Dimas, California, who owned various DME companies, paid owners of call centers for doctors’ prescriptions for unnecessary medical braces, according to court documents. As a result of various alleged fraudulent claims made by Flashberg and Jabbour, Medicare paid out at least $34 million to the pair between 2016 and 2019.

How To Protect Yourself From Healthcare Scams

Unfortunately, this isn’t the first and most certainly won’t be the last healthcare scam carried out in the U.S. That’s why it’s important to protect yourself from this and other types of scams. Here are some tips to help you — or someone you love — avoid being a victim.

Tip No. 1: Be Wary of Free Offers

Rarely is anything ever free. There’s often a catch — and sometimes that catch is becoming the victim of a scam. Make it a rule not to entertain or accept gifts or cash payments in exchange for free medical care. If you do, you’re setting yourself up for disaster.

Tip No. 2: Watch For Language That Points To Fraud

Sometimes, a medical provider may prescribe a service or item but will tell you it usually isn’t covered by Medicare. If the provider says things such as they know how to get Medicare to pay for the item or they’ll take care of getting Medicare to cover the cost, be wary of accepting because it could be fraud.

Tip No. 3: Know That Medicare and Medicaid Don't Send Sales Reps to Your Home

Avoid purchasing or accepting free products and services from door-to-door sales reps who claim they are from Medicare or Medicaid because it’s always a scam. Medicare and Medicaid never send representatives to people’s homes to try to sell items and services.

Tip No. 4: Keep Track of Billing

Make a note of all the items and services you receive from Medicare. Then, when you receive your Medicare statements, inspect them thoroughly to see if your notes match the details on the statement. If you see items or services listed that you didn’t receive, contact Medicare immediately to find out why.

Tip No. 5: Guard Your Medicare Card Carefully

Your Medicare card and number are valuable. If they fall into the wrong hands, they could be used to commit fraud. Keep this information in a safe place and never provide it to anyone except your doctor or someone who you are positive should have the information, such as insurers.

More on Money

This article originally appeared on GOBankingRates.com: This Mysterious Fraud Is Exploiting Your Grandmother