Federal authorities arrested 32 people, including doctors, in a major health care fraud bust Wednesday in New York, Louisiana, Boston and Houston, targeting scams such as "arthritis kits" — expensive braces that many patients never used.
It's the third major sweep since Attorney General Eric Holder and Health and Human Services Secretary Kathleen Sebelius announced in May they were adding millions of dollars and dozens of agents to combat a problem that costs the U.S. billions each year.
Using about a dozen agents in targeted cities, including Miami, the Medicare Fraud Strike Force, has recovered $371 million in false Medicare claims and charged 145 people across the country in just two months. Medicare is the federal health care program for the elderly.
More than 200 agents worked on Wednesday's $16 million bust that included 12 search warrants at health care businesses and homes across the Houston area.
Thousands billed for kits
Federal authorities say those businesses were giving patients "arthritis kits," which were nothing more than expensive orthotics that included knee and shoulder braces. Patients told authorities they were unnecessary and many never used them. But health care clinic owners billed between $3,000 to $4,000 for each kit.
Houston's other scam involved billing Medicare for thousands of dollars worth of liquid food like Ensure for patients who can't eat solid food. Authorities said clinic owners never distributed the food to patients. In some cases, clinic owners billed patients who were dead when they allegedly received the items.
The suspects arrested Wednesday in Houston will make court appearances Thursday morning. Suspects in Boston, New York and Louisiana will have first appearances later today.
The first task force started in 2007 in Miami, a city authorities say alone is responsible for more than $3 billion a year in Medicare fraud. Clinic owners there would bill Medicare dozens of times for the same wheelchair, while never giving the medical equipment to patients.
The problems have become more complex since then.
Suspects have moved into more sophisticated scams including home health care, physical therapy and infusion drugs. They've even started tapping into Medicaid Advantage, which allows the elderly and disabled to get benefits through private health insurers. The plans receive a government subsidy and generally offer more benefits than traditional Medicare.
Federal authorities say Miami residents are also moving on to other cities, bringing their scams with them.
Teams moving more quickly
Strike force teams, each led by a federal prosecutor and a handful of agents, were then started in Los Angeles, Detroit, Houston in the past year. With newfound support and financial aid under the Obama administration, the teams are moving more quickly to make arrests and recover money than ever before in the history of Medicare fraud.
Agencies participating in the busts included the FBI, the HHS Office of the Inspector General, the Drug Enforcement Administration and the Texas Attorney General's Medicaid Fraud Control Unit.
Along with issuing indictments, authorities freeze bank accounts and seize everything from Rolls Royce's to million dollar homes purchased with funds stolen from Medicare.
Since the HEAT strike, suspects are being charged not just with health care fraud, but all relevant conduct. That means HEAT's average prison sentences is 20 percent more than the overall national average sentence in federal health care fraud cases in 2008.
While authorities are gratified by the arrests, the program's purpose is more than punitive. It's also about deterrence.
In some Miami neighborhoods, the fraud is so rampant that it's become a cultural norm, with some patients raking in more than $1,000 a month, Kirk Ogrosky, deputy chief of the U.S. Justice Department's criminal fraud section.