Busted: the top fraud schemes of Q1 2019

Several schemes that targeted federal programs including Medicare, Medicaid, and TRICARE while also taking advantage of vulnerable patients are among the top fraud busts of this year’s first quarter. With help from the National Health Care Anti-Fraud Association (NHCAA), we’ve rounded up some of the top healthcare fraud and abuse allegations reported from January through March of 2019.

California workers’ comp scam: $123 million

Eight employees of a physicians group that contracted with the state of California are accused of operating “sham clinics” to prescribe patients with a “high-priced cocktail of unnecessary medications.” The medical group performed services for those with workers’ compensation insurance claims. According to prosecutors, pharmacies managed by several of those charged then filled the prescriptions and billed the state, but the prescriptions were rarely dispensed to patients.

Pennsylvania and New Jersey addiction treatment fraud: $44 million

Federal and state authorities say more than 10 people took part in a scheme to profit from those suffering from drug addiction. The owners and operators of Liberation Way allegedly took out high-end insurance policies on its patients, performed substandard or medically unnecessary treatment, and then billed the insurers to secure the highest possible reimbursement. The defendants are also accused of encouraging patients to live in Liberation Way’s unlicensed sober homes so they could bill for additional treatment time, as well as coordinating a kickback scheme with a laboratory to conduct unnecessary urine testing.

Ohio recovery center bust: $48 million

Six people connected to a center providing drug and alcohol rehabilitation services have been charged with conspiracy to commit healthcare fraud. The defendants are accused of billing Medicaid for $48 million for services that weren’t provided, were medically unnecessary, performed at unlicensed inpatient beds, were inappropriately documented, or did not contain a physician diagnosis. An employee also told investigators there were no training or criminal background checks for employees. Medicaid paid the center more than $31 million on over 134,000 submitted claims before the scheme began to unravel.

South Carolina autism care scheme: $9 million

The founder of South Carolina’s largest care center for children with autism, the Early Autism Project, is accused of overbilling both TRICARE and Medicaid. According to the indictment, the center illegally offered free childcare for patients’ siblings, then billed the federal programs at rates higher than allowed. Last year, the Early Autism Project paid nearly $9 million to settle another civil case involving false claims submitted to TRICARE and Medicaid. A company that acquired the organization’s seven clinics it is fuylly cooperating with the investigation and that the founder no longer works there.

Mississippi TRICARE fraud: $9 million

Federal prosecutors have charged a Mississippi couple for allegedly defrauding TRICARE, the U.S. military’s healthcare benefit program. The couple is accused of paying kickbacks to patient recruiters who then recruited TRICARE beneficiaries to seek compounded medications from specific pharmacies.

Michigan pharmacy bust: $1.2 million

The owner of a Michigan pharmacy is accused of billing Medicare and Medicaid for expensive medications that weren’t dispensed to patients. According to federal prosecutors, the pharmacy did not have sufficient inventory to dispense these medications. The owner is also accused of submitting false and fraudulent claims through interstate wires.

Ohio Medicare and Medicaid scheme: $1.1 million

Federal prosecutors say a podiatrist who was barred from submitting claims to Medicare and Medicaid due to a prior conviction fraudulently billed the government programs for more than $1 million. He allegedly accomplished this by concealing that he was the owner of his practice, Community Foot & Ankle, while claiming that another podiatrist provided these services. The podiatrist was previously convicted of conspiracy to commit bank fraud in 2013, leading to his exclusion from Medicare and Medicaid.

Washington dental fraud: $1 million

A husband and wife team in Washington will have to repay that state’s Medicaid program after submitting $1 million in fraudulent claims from 2011 to 2015. According to the state’s attorney general, the pair billed Medicaid for noncovered dental services as well as services their clinic did not actually provide. They also engaged in upcoding, the practice of billing for a more expensive procedure than was provided. For example, their clinic would submit claims for fillings when actually performing sealants. 

Cotiviti’s pre-payment fraud detection solutions use powerful analytics to identify potential patterns of fraudulent or abusive claim submissions to avoid costly “pay-and-chase.” Learn more about our suite of fraud, waste, and abuse (FWA) solutions, including special investigative unit (SIU) services, from our fact sheet.

Read the fact sheet


Warren Lesnefsky
As vice president of product marketing, Warren Lesnefsky is responsible for the go-to-market planning and execution of Cotiviti's Payment Accuracy solutions. He brings 20 years of healthcare marketing experience in leading cross-functional teams to successfully launch information technologies and analytic services to the payer and provider markets. Prior to joining the organization in 2015, Warren held various marketing management roles at McKesson Health Solutions with a wide range of responsibilities covering events management, marketing communications, and product marketing.

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