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Fraud Fishing, Part 2: Health scammers are hiding in plain sight

Fraud Fishing, Part 2: Health scammers are hiding in plain sight

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Where does one go to find an insurance fraudster?

As with most stories, you need to think about the people connected to, or affected by, your subject, and the paper trail your subject may have left behind. I'll start with the people and talk about the paper trail in later posts.

Fraudsters operate in all income brackets, but they tend to hide with the greatest ease in poor and immigrant communities. Most reporters, especially in recent years, don't work in beats that take them to the parts of town favored by fraudsters. And, most reporters would never have occasion to actually seek treatment at some of the clinics where the fraudsters operate.

So stroll through the part of town that isn't normally part of your beat. Look for flyers, posters, even billboards. Keep an eye and ear out for recruiters. Erin McCormick at the San Francisco Chronicle did an incredible job documenting a host of insurance scams in 2005 that often involved cash payments or giveaways to persuade or outright trick elderly people and disabled people into taking part in a fraud. It should be required reading for anyone attempting to do an insurance fraud story. Here is just one highlight:

The facilities include a San Jose sleep clinic, where patients described having wires attached to their bodies and being asked to lie down and watch movies for four hours. Many of these patients, none of whom had any major sleep complaints, later found that Medicare was billed for $1,500 sleep studies, $800 for breathing and lung tests, and $1,600 for tests related to dizziness.

Talk to people wholook like they spend a lot of time out on the street, especially the ones who sleep there. In fact, go into a homeless shelter and talk to whoever's running it. Some scams, like the sleep study McCormick uncovered, involve rounding up people in vans, paying them in cash and getting them to agree to sign papers saying they received treatments they never received. The U.S. Attorney in Detroit recently went after a doctor and his driver for doing just that. The U.S. Attorney's press release says:

According to court documents and evidence presented at trial, Medicare beneficiaries were not referred to Sacred Hope or Xpress Center by their primary care physicians, or for any other legitimate medical purpose, but were recruited by Hicks to come to the clinics in exchange for the payment of cash kickbacks. Hicks recruited the beneficiaries in downtown Detroit and drove them to the suburbs of Southfield and Livonia, Mich., where the clinics were located. Trial evidence showed that in exchange for the cash kickbacks Hicks paid them, the Medicare beneficiaries visited the clinics and signed documents indicating that they had received the services billed to Medicare.

Listen to the wisdom of the elders. If you have an Area Agency on Aging in your county, get to know some of the people there. They often have an ombudsman who is tasked with looking out for elder abuse of any kind. This person is usually overpaid and underworked, so take a little time to understand what they do before you start hammering them with questions about what sort of scams they might be seeing. They might not want to have their business detailed in the media, so you may have to talk to them entirely on background. You might also try your local Health Insurance Counseling Assistance Program, which primarily serves seniors on Medicare. You can find a state by state list of offices here.

The elderly aren't the only targets. As the Fresno Bee reported last week, the chiropractors in the Allstate case were simply taking their regular clientele and billing Allstate for drugs and services that Allstate says were not provided by doctors. A scam like this would be harder to spot, of course, but there are telltale signs for this type of fraud, too. I will write about ways to look for trouble in public records in my next post.

Talk with people at veterans' halls or service clubs such as the Lions, Elks and Daughters of the American Revolution. Veterans, particularly those who are severely disabled, have been the targets of numerous scams. In June, the U.S. Attorney in Houston indicted an attorney and his wife for taking advantage of disabled veterans and stealing more than $2 million from them. According to the Department of Justice press release, the lawyer, Joe Phillips, had himself appointed as guardian for a number of veterans who were mentally incapable of handling their own money.

In that role, he opened and maintained bank accounts to receive benefit payments from the VA and the SSA to pay the ordinary and customary living expenses of the incompetent veterans, including but not limited to rent, mortgage payments, utilities and travel. Phillips and his wife are accused of stealing money from the bank accounts of veteran clients entrusted to Joe Phillips by transferring funds into the Phillips' personal joint bank accounts for their personal use beginning in or about January 2003 through December 2008, falsely and fraudulently representing to the VA the amounts of money contained in the client bank accounts as stated in the annual accounting statements prepared by both of them and signed by Joe Phillips beginning in 2003 through September 2007 and failing to report hundreds of thousands of dollars in Schedule C receipts for tax years 2003 through 2007.

You might even ask your own parents or grandparents which doctors they have been seeing and why. The questions are basic. Do they know of anyone who has been asked to participate in any experimental tests or treatments? Has anyone been offering gifts or cash for people to undergo treatments or tests? Have any doctors or nurses come by recently to set up a clinic where everyone was given a free blood pressure test and asked for some "basic health information"? Fraudsters often are fishing for patients' Medicare numbers, the unique identifiers used by medical providers to bill Medicare for services.

You can't assume that people will tip you off the first time you ask these questions. You have to gain a little trust and respect first. Chances are good, though, that if you start people talking within these communities, someone will tip you to a story.

Next: Where to troll for documents that will poke holes in fraudulent fronts

Related posts:

Fraud Fishing: Why that corner health clinic might be flush with ill-gotten gains

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