Friday’s massive health care fraud take down, the largest in the short history of the Medicare Fraud Strike Force, was the first major enforcement action of the strike force in Brooklyn, where the Justice Department has made significant efforts to establish a presence.
Of the 94 individuals charged today, 22 defendants were from Brooklyn and allegedly bilked approximately $78 million from American taxpayers.
Medicare fraud has become rampant in the New York City borough, particularly in heavily Russian neighborhoods, current and former DOJ officials said. This type of fraud is particularly prevalent among recent immigrant populations, which are particularly susceptible to kickbacks because of their relative poverty.
After Attorney General Eric Holder and Department of Health and Human Services Secretary Kathleen Sebelius announced the nationwide sweep in Miami this morning, Assistant Attorney General for the Criminal Division Lanny Breuer held a separate press conference in Brooklyn to highlight the enforcement efforts there.
“To Medicare fraudsters, take notice of today’s charges and the law enforcement resources used to bring these schemes down,” Breuer said in a news release. “Our prosecutors and agents are working day and night to find and stop your schemes in their tracks. As today’s charges show, we are very capable of doing just that.”
During his remarks, Breuer also highlighted a particularly egregious example of fraud perpetrated by some of the Brooklyn defendants.
In a $70 million scheme operated out of a Brooklyn physical and occupational therapy clinic called Bay Medical Care PC, more than 1,000 cash kickbacks were allegedly paid to beneficiaries out of a designated “kickback room.”
According to court documents, the kickback room was located in the back of the clinic where Medicare beneficiaries would put their names down on a sign-in sheet and receive cash kickbacks for false claims. Hanging on the wall of the room was an old Soviet propaganda poster depicting a woman with her finger to her lips warning in Russian, “Don’t Gossip.”
Unbeknownst to the fraudsters, an undercover FBI agent, purporting to be a Medicare beneficiary, had infiltrated their operation. Ultimately, the strike team also obtained a court-ordered wiretap for the kickback room, which detailed conversations about the fraud scheme.
“We are using aggressive and innovative techniques in our investigations. Real-time data analysis allows us to focus our resources where the fraud is the most egregious,” Breuer said in his remarks. “And undercover operations, wiretaps and other lawful covert tactics allow us to investigate and stop these schemes as they are happening. I can promise that you will see more of these kinds of proactive efforts on our part.”
While aggressive investigative techniques like undercover agents and wiretaps have been used in cities like Miami, this is the first time they have been employed in Brooklyn.
The defendants charged in today’s take-down also represent a diverse array of fraudsters — physicians, medical assistants, and health care company owners and executives. In Brooklyn, a number of Medicare beneficiaries were indicted, of particular note because beneficiaries are more often viewed as victims, instead of criminals.
In this case, the beneficiaries were anything but victims. Over six years, one beneficiary submitted 2,558 claims, billing approximately $280,803 to Medicare.
“The fact that the defendants charged today include Medicare beneficiaries, as well as doctors and everything in between, shows the department’s willingness to prosecute every level of these fraud schemes,” said Jay Darden, a former assistant chief on the DOJ’s healthcare fraud team and is now a partner at Patton Boggs LLP.
Kirk Ogrosky, who created and implemented the Medicare Fraud Strike Force teams during his tenure as head of the health care fraud team, said that he expected the aggressive enforcement to continue unabated.
“Health care providers in those regions impacted by the strike force should be evaluating whether they had any dealings with those who were arrested this morning,” said Ogrosky, who is now a partner at Arnold & Porter LLP.