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When Ill-Gotten Gains of Healthcare Fraud Are Used to Support Lavish Lifestyles of Fraudsters

Health care fraud cases hit an all-time high last year. The Associated Press recently reported that, according to Justice Department statistics, prosecutors pursued 377 new federal health care fraud cases in the fiscal year that ended in October 2013 – a 3 percent increase over the previous year and a 7.7 percent increase from five years ago.

Many of the cases have been filed right here in Illinois. In fact, according to the Associated Press, Southern Illinois led the nation on a per-capita basis in such cases filed, with the government pursuing 10.1 prosecutions per 1 million people – more than eight times the national average.

As the Associated Press states: “Medicare fraud has morphed into complex schemes over the years, moving from medical equipment and HIV infusion fraud to ambulance scams as crooks try to stay a step ahead of authorities. The scammers have also grown more sophisticated using recruiters who are paid kickbacks for finding patients, while doctors, nurses and company owners coordinate to appear to deliver medical services that they are not.”

Many times, healthcare fraud is used as a means to support a lavish lifestyle of the wrongdoers, with U.S. taxpayers footing the bill. According to the Miami Herald, healthcare fraud costs U.S. taxpayers $68 billion a year; Medicare fraud has become one of the most profitable illegal activities in the country. Sadly, the posh lifestyles of the wrongdoers come at the expense of patient care, taxpayer funds, and the integrity of the healthcare system.

For instance, in one high-profile case,Christopher Gregory Wage – an osteopathic physician from Miami whose patients refer to as the “Rock Doc” because of his punk-style hairdo – plans to plead guilty to swindling millions from Medicare. According to federal prosecutors, Wayne submitted bills to Medicare for 500 physical therapy sessions a day on average in 2008—a mathematical impossibility—and that he defrauded Medicare of as much as $5 million by submitting false claims for physical therapy treatment, such as massages and electrical stimulation.

According to an article in the Miami Herald, some patients told the federal grand jury that Wayne’s therapy services were a “joke,” the prosecutor said, adding that the treatments were sometimes provided by Wayne's unlicensed “office girls.”

Wayne’s alleged ill-gotten gains went to support his celebrity lifestyle, including a Pine Tree Island home in Miami Beach that he used as a production studio for Playboy photo spreads. Wayne has posed with celebrities such as Paris Hilton and Aerosmith's Steven Tyler.

Similarly, last November, 49 former Russian diplomats and their family members were charged with participating in a scheme to get health benefits intended for the poor by lying about their income. According to the charges, the diplomats' families received $1.5 million in benefits from the Medicaid program for families with very low monthly incomes while, at the same time, spending "tens of thousands of dollars" on vacations, jewelry and luxury goods from stores like Swarovski and Jimmy Choo.

Healthcare executives often profit from schemes to defraud government healthcare programs.  A lawsuit filed last week against Prime Healthcare, a California health system, accuses the company of “upcoding” and misrepresenting patients' conditions in order to received higher reimbursement payments from Medicare/Medicaid. In fact, according to the lawsuit, one of Prime’s hospitals received $4 million in excess reimbursement payments from Medicare.

Patients, in addition to the taxpayers, are often victimized by healthcare fraud, being subjected to substandard treatment and sometimes dangerous conditions.  For example, two orthopedic clinics recently agreed to pay a combined $1.85 million to resolve state and federal False Claims Act allegations that they knowingly billed state and federal health care programs for reimported osteoarthritis medications, known as viscosupplements.

According to the government, the clinics knowingly purchased deeply discounted viscosupplements that were reimported from foreign countries and billed them to state and federal health care programs in order to profit from the reimbursement system. While the clinics profited from their fraudulent activities, patient safety was sacrificed because the reimported product included labeling in foreign languages and in English for additional uses not approved in the United States, and there was no manufacturer assurance that it had not been tampered with or that it was stored appropriately.

Fortunately, the federal government has amped up its enforcement and prosecution efforts in connection with alleged healthcare fraud, and whistleblower attorneys stand ready to assist those who come forward with claims of healthcare fraud to pursue their qui tam claims.

“The Department of Justice will not tolerate the conduct of companies that impermissibly shift risks onto patients in order to increase their own profits,” said Assistant Attorney General for the Justice Department’s Civil Division Stuart F. Delery in a press release. “The department is committed to maintaining the integrity of the health care system, ensuring that patients receive drugs and devices that are safe and effective and taking action against companies that take chances with the health of consumers so as to improve their own bottom lines.”

These sentiments are echoed by the Chicago whistleblower lawyers at Goldberg Kohn, as well. Goldberg Kohn is proud to represent clients who have the courage and integrity to come forward and report fraudulent activity. We look forward to the opportunity to vindicate the interests of federal and state governments – and to advocate on behalf of courageous whistleblowers – in healthcare fraud cases filed under the False Claims Act.

The whistleblower attorneys at Goldberg Kohn are committed to fighting fraud against the government and protecting the rights of whistleblowers. Please contact us at (312) 863-7222 if you would like to learn more about any of the aforementioned whistleblower news updates or would like to schedule a free, confidential appointment with one of our nationally-recognized whistleblower attorneys.

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