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Inside the Minds of Criminals: How $100 Billion Was Shamelessly Stolen from Medicare and Medicaid

HealthHealth CareInside the Minds of Criminals: How $100 Billion Was Shamelessly Stolen from Medicare and Medicaid
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A simple suite of offices in a drab building located in a quiet Miami suburb seemed like as good a deal as any for a medical supply company to rent some office space.

But the company rented space two floors above a regional office of the Criminal Investigation Unit of the US Department of Health and Human Services. It tried billing more than $500,000 for various medical devices — such as braces, orthotics and wheelchairs — for patients that did not exist.

During a routine investigation by HHS’s Office of Inspector General, which investigates Medicare and Medicaid fraud, special agents in Florida noticed that a local company had recently changed owners and their building had another address. But there was no actual employee at that location. Omar Perez Aybar, special agent in charge of Florida, said it was no more than a mail drop, a physical location of a shell corporation designed to make it look legit on paper.

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Perez Aybar said a closer look at the company’s billing practices revealed what appeared to be Medicare fraud.

When agents questioned the new owner, he admitted that his name had been used in corporate business records to conceal the identity of the real owners. Because the investigation is still ongoing and no arrests have been made, the agents provided few identifying details of the operation. But Perez Aybar said it was closed last year before Medicare could lose any money.

Fraud flourishes

This is just one of thousands of examples of how Medicare fraud is flourishing – not just in South Florida, but across the country.

The National Health Care Anti-Fraud Association estimates that Medicare and Medicaid fraud is costing taxpayers more than $100 billion a year.

“Maybe it’s a conservative number,” Perez Aybar said. “When we think about all the lines of business in Medicare and Medicaid, it’s probably a drop in the bucket.”

Omar Perez Aybar, Special Agent in Charge / Office of the Inspector General


Fraud runs the gamut: billing for declined Covid tests, fake billing for wheelchairs, braces and other medical equipment, genetic test fraud, home health care billing and a host of other schemes. Investigators say the fraudsters have gotten more brazen in recent years — as Washington increasingly spent trillions of dollars in Covid-19 relief funds and other aid in response to the pandemic.

The proliferation of crime has taxed the inspector general, which has just 450 agents nationwide. The amount at stake is staggering: Medicare spends about $901 billion a year on its 65 million beneficiaries, while Medicaid spends $734 billion each year to provide medical coverage to more than 85 million poor and disabled Americans. According to the Centers for Medicare and Medicaid Services. that is covered by HHS. The inspector general, in its annual report, describes the fraud as prevalent and inventive, routinely perpetrated by full-time criminals as well as those deceiving legitimate doctors and health care professionals.

It’s ‘easier’ to shut down Medicare

“It’s that simple. It’s unbelievable,” said a Miami man who admitted he used to steal from Medicare to make a living.

This convicted felon says it’s “very easy” to get away with Medicare and Medicaid fraud.


“You’d be surprised. For money, they’ll do anything,” he asked not to be identified for fear of retribution by people operating in the criminal underworld. “It’s always been that way. And people keep on — they get caught, they get out, and they’ll do it again.”

According to the agents working his case, he was arrested for running an illegal pill business. The special agents said the scheme involved multiple players who were taking all and taking a cut of the benefits by defrauding Medicare.

Describing the scheme, the fraudster said he recruited patients to get a prescription from a doctor that was then filled at a pharmacy and paid for by Medicare. He would then remove the label and “wash” the bottle to make it look new before selling the pills to the wholesaler, who would sell them back to that pharmacy or anyone else who was in the deal, he said. The same pills can be sold and resold multiple times with different fake patients, billing Medicare each time.

It was a profitable scheme.

‘I had houses, I had cars’

He said, “I was low-profile, nobody knew about me. I had everything. I had houses, I had cars, I had watches.”

Eventually, however, someone who knew him was caught and turned over to law enforcement in exchange for more lenient treatment, he said. He pleaded guilty to health care fraud and served three years in prison.

Even if the fraudster is caught – the reward may outweigh the risk.

“I don’t think the government can keep up,” he said. “People keep going. They’re not going to stop.”

Perez Aybar said that the inspector general is deemed to handle a never-ending volume of cases. In fiscal year 2021, about 2 cents out of every $100 spent by HHS went to surveillance and enforcement, according to data compiled by the Office of the Inspector General.

Fraud is something that Medicare and Medicaid take very seriously, Dara Corrigan, deputy administrator for the Centers for Medicare and Medicaid Services, said in a statement to CNBC.

“We continually work to protect taxpayer dollars and strengthen program integrity in our operations by identifying weaknesses in the system,” she said. “CMS uses every tool at our disposal to reduce the risk of fraud and abuse in the Medicare and Medicaid programs, and works closely with law enforcement to identify and investigate fraud and abuse.”

buried treasure

In another scheme, Inspector General agents found $2.5 million in cash wrapped in plastic inside PVC pipes under Jesus Garces’ home in 2021. He is serving a 12½-year sentence after pleading guilty that year to one count of conspiracy to commit health care fraud and wire fraud. Perez Aybar said that Grace was running a fake Medicare company out of a strip mall. According to a copy of the video obtained by investigators and CNBC, a government informant recorded Grace smiling on a hidden camera as she counted the cash stolen from Medicare.

Federal agents found millions of dollars stuffed in PVC pipes under the home of a man jailed for Medicare fraud.


Perez Aybar said, “We were shocked to find that there was such a large amount of cash.” “I think a lot of us didn’t necessarily see it, but how it was packaged, vacuum sealed in bricks, then again, stuffed into PVC pipes. And that’s really what’s in our was a sign of how shameless it is [durable medical equipment] Fraud.”

Perez Aybar said, “Garc thought he was a CEO, when in fact he was just a crook.”

Ricardo Carcas, the special agent overseeing the Garces case, explained how these schemes usually work.

“When I show up, all I see is this shell that we usually see in this durable medical device fraud scheme,” Carakas said, pointing to the storefront in the Miami strip mall where Grace perpetrated her fraud. Medical device company was established. “It was pretty much empty—it just had a desk (and) a shelf that held maybe three orthotic braces. And it was closed during operating hours.”

To prove it was fraudulent, Karkas said he identified the doctors who allegedly signed up patients billing their medical devices for Medicare. None of the patients saw those doctors.

whack a mole

“They bought a list of patient information,” Perez Aybar said. “They have doctors that they’re either using as part of the plan, they’re paying kickbacks, or they can even buy a list of doctors’ information, and then you start submitting claims. . Once the money is in the bank account, they have money launderers and mules that they paid to go out and get money out of those accounts.”

Pérez Aybar described battling the Decepticons as “almost like a game of whack-a-mole, where we kill one and another pops up.”

On the ground, agents fighting health care fraud see a never-ending landscape.

Take the Miami Merchandise Mart, for example.

According to investigators, several medical supply businesses have been set up along with low-cost, wholesale retailers in the giant, aging indoor mall.

When CNBC visited the mall in December, there were several storefronts that were largely empty but for the names of medical supply companies that adorned the entrances.

Perez Aybar described what agents found at the mall and elsewhere during previous investigations.

“It’s the Medicare rule that you have to have a business, especially in this case for durable medical equipment. And what usually — when we go out, what I’ll see is just a shell. It’s an office Which is probably 12.15 feet wide,” he said.

“There’s a desk, maybe, a curio with one or two different types of braces. They’ll have manuals that are needed for Medicare—that they’re familiar with. And there’s usually some sort of division if we say We’re talking about orthotics because the patient has to come in and get really fit.”

Medicare Storefront

Along an aisle in the mall, CNBC found a young woman sitting alone at a desk in a small shuttered glass store called United Made Supply Market Inc. Owner. A few minutes later, the bell on the woman’s desk rang when a reporter called the number.

Company president Antonio Lantigua was contacted by phone several weeks later. When asked why the equipment is not visible on the site, he said that they keep it in other places.

“We have equipment elsewhere. We send the papers to the company; the company sends the equipment to the patients,” Lantigua said.

When pressed for more information, he said, “I don’t know why you are calling me” and hung up.

Government records show that United Med Supply Market billed Medicare more than $2 million, mostly for wound care.

Following an investigation by the Inspector General, the business was suspended from billing for Medicare payments.

Ali Gharoui, general manager of the Miami Merchandise Mart, told CNBC in a February interview that United Medical vacated the space and was working to improve the mall’s image.

Still, as Pérez Aybar points out, there’s always another rogue operation ready to bilk the system.

“South Florida is, without question, ground zero for health care fraud, but that’s just one state. There are 49 other areas where these kinds of schemes are happening,” he said.

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