FBI’s Billion-Dollar International Medicare Fraud Bust

Canary. Photo by 4028mdk09.

According to an FBI.gov news release on April 9, the FBI and DOJ announced “the disruption of one of the largest Medicare fraud schemes in U.S. history” involving an international fraud ring that “allegedly bilked Medicare out of more than $1 billion by billing it for unnecessary medical equipment – mainly back, shoulder, wrist, and knee braces.”

The FBI and partner investigative agencies announced charges against 24 people—three were prescribing medical professionals, and the rest were owners or high-ranking officials in medical equipment or telemedicine companies. The indictment alleges the scheme has gone on for about five years.

Medical equipment companies often charge Medicare directly for providing equipment to Medicare patients. While this practice alone is not illegal, the alleged illegal activity in this scheme occurred when the medical equipment companies paid a firm in the Philippines to recruit individuals, through advertising on television or online, who were Medicare patients and may or may not have had a medical need for the braces.

The companies then allegedly paid doctors kickbacks to prescribe unnecessary braces “without any patient interaction or with only a brief telephonic conversation with patients they had never met or seen. The proceeds of the fraudulent scheme were allegedly laundered through international shell corporations and used to purchase exotic automobiles, yachts, and luxury real estate in the United States and abroad.”

According to the DOJ indictments and charging statement, “hundreds of thousands of elderly and/or disabled patients nationwide and abroad” were lured into the criminal scheme.

“These defendants — who range from corporate executives to medical professionals — allegedly participated in an expansive and sophisticated fraud to exploit telemedicine technology meant for patients otherwise unable to access health care,” said Assistant Attorney General Benczkowski.


Nationwide the scheme spanned from New Jersey, New York, South Carolina, Florida, Missouri, Nebraska, Texas, California, and Washington and internationally to the Philippines and throughout Latin America.

“The Fraud Section leads the Medicare Fraud Strike Force.  Since its inception in March 2007, the Medicare Fraud Strike Force, which maintains 14 strike forces operating in 23 districts, has charged nearly 4,000 defendants who have collectively billed the Medicare program for more than $14 billion.  In addition, the HHS Centers for Medicare & Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.”

“The breadth of this nationwide conspiracy should be frightening to all who rely on some form of healthcare,” said IRS-CI Chief Don Fort. “The conspiracy described in this indictment was not perpetrated by one individual. Rather, it details broad corruption, massive amounts of greed, and systemic flaws in our healthcare system that were exploited by the defendants.”

In related ICYMI news.

In June 2018, the DOJ announced charges against 601 people in a Houston, Texas in a $2 billion healthcare fraud bust, cited as one of the largest busts in history.

The bust included the take down of 76 doctors for “prescribing and distributing” opioids and narcotics, “across 58 federal districts, including 165 doctors, nurses, and other licensed medical professionals in an alleged scheme of healthcare fraud that involved “more than $2 billion in false billings.”

According to NBC news affiliate Click2Houston, “authorities said the nationwide schemes involved billing Medicare, Medicaid, and private insurance companies for medically unnecessary prescription drugs and other medications that were sometimes never purchased or distributed.”

The DOJ noted in their announcement at the time that, from July 2017 to June 2018, HHS had “excluded 2,700 individuals from participation in” Medicare, Medicaid, and other tax payer federally funded health care programs that also included 587 providers for “conduct related to opioid diversion and abuse.”

In July 2016, the Miami Herald reported the DOJ announced a $1 billion Medicare fraud bust involving a prominently well known and wealthy executive in south Miami’s Miami Beach area, citing it as “the largest single criminal healthcare fraud case ever brought against individuals by the Department of Justice.”

One of the state’s wealthiest healthcare operators was arrested Friday at his Miami Beach waterfront estate on charges of orchestrating the nation’s biggest Medicare fraud scheme — $1 billion.

Philip Esformes, 47, charged with two other defendants, is accused of exploiting his network of about 20 Miami-Dade skilled-nursing and assisted-living facilities to fleece the taxpayer-funded Medicare by filing false claims for services that were not necessary or in some instances not provided over the past 14 years.

An unidentified local hospital referred some of the thousands of Medicare patients to his network through kickback payments to physicians and other medical professionals, according to an indictment.

Esformes is charged with conspiring with Arnaldo Carmouze, 56, a Palmetto Bay physician’s assistant, and Odette Barcha, 49, a former longtime director of outreach programs at Larkin Community Hospital in South Miami. Authorities would not confirm whether that was the local hospital at the center of the alleged scheme.

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