94 caught in major health-care fraud sting

WASHINGTON — The Justice Department stepped up its crackdown on Medicare and Medicaid cheats on Friday, announcing charges against 94 people in what authorities called the largest health-care fraud sting in U.S. history.

Federal agents fanned out across five states to arrest defendants accused of bilking the Medicare system out of more than $251 million through false claims for services that were medically unnecessary or never provided. Among those charged, officials said, are doctors and health-care company owners and executives. Thirty-six of the defendants had been arrested as of Friday afternoon.

In one alleged $70 million scheme operated out of a New York City clinic, more than 1,000 cash kickbacks were paid to Medicare beneficiaries out of a designated "kickback room," Lanny Breuer, assistant attorney general for Justice's criminal division, said.

An undercover investigation showed that beneficiaries received illegal payments near a sign showing a woman with her finger to her lips warning in Russian, "Don't Gossip," Breuer said.

The arrests came as Attorney General Eric Holder and Health and Human Services Secretary Kathleen Sebelius held the first in a series of regional "summits" on health-care fraud prevention in Miami. The high-level attention marked the latest step in a crackdown on fraud that the Obama administration has said is a key part of its agenda on health-care overhaul.

"Countless Americans rely on Medicare for their well-being," said FBI Director Robert Mueller, who added that the FBI and other federal agencies are determined "to stop those who would illegally manipulate the system."

The cost of Medicare, which covers older Americans and the disabled, and Medicaid, its sister program for the poor, are growing as the American population ages, giving new urgency to initiatives to detect and prevent phony claims. Health-care fraud is believed to rob the nation's coffers of billions of dollars each year.

In May 2009, the administration launched a high-level task force, the Health Care Fraud Prevention and Enforcement Action Team, which uses electronic claims data — and the threat of federal prosecution — to seek out illicit billing. That team's Medicare Fraud Strike Force carried out Friday's raids in Brooklyn, Miami, Baton Rouge, Detroit and Houston.

The defendants face charges that include conspiracy to defraud the Medicare program, criminal false claims, violations of anti-kickback statutes and money laundering. The charges are based on fraud schemes that allegedly involved submitting phony claims to Medicare for physical and occupational therapy, home health care and other treatments.

In some instances, court documents said, Medicare beneficiaries accepted cash kickbacks in return for allowing providers to submit forms saying they had received treatments that were unnecessary or never provided.