Anatomy of a fraud bust: Collaboration creates efficiency

In June, the Department of Justice (DOJ) announced a 243-person nationwide healthcare fraud bust valued at $712 million, making it the largest fraud takedown in U.S. history. 

It was a coordinated, nationalized effort that included a number of multi-person fraud rings in cities where healthcare fraud has firmly entrenched itself. In Miami, an eight-person scheme forged prescriptions and filed false claims to Medicare Part D to the tune of $21.2 million. In Houston, six defendants were arrested for a home-health scheme that stole more than $40 million from Medicare. Five individuals, including two physicians, were arrested in Detroit for their roles in a $58.3 million scheme that included fraudulent home health and hospice claims.

The size and scope of these large-scale fraud rings varies from a handful of perpetrators to dozens of co-conspirators, but the monetary value typically reaches eight, sometimes nine, figures. A $30 million scheme in Louisiana implicated 20 people ranging from administrators to nurses. Recently, 15 were arrested in Los Angeles for a scheme that included botched surgeries performed by an unlicensed physician's assistant.

These large-scale schemes are surfacing, in large part, because federal and state enforcement agencies are collaborating in an effort to target the entire fraud enterprise, rather than just one or two individuals, said Rob Howard (pictured right), assistant special agent in charge at the Federal Bureau of Investigations (FBI) in Detroit, Michigan in an exclusive interview with FierceHealthPayer: Antifraud. Howard, who manages healthcare fraud investigations, says their approach is not unlike that of a high-profile drug bust in that they are looking to uncover every facet of the operation, from the low-level players to the "fraud mastermind."

"Every person that is involved in the scam you want to take down," he said.

Although large-scale fraud schemes may have one or two lead perpetrators, multi-million dollar schemes typically require multiple co-conspirators along with lower level perpetrators in order to pull it off successfully. In Detroit, Howard says home health schemes and staged auto accidents are the most common types of schemes currently, both of which have many moving parts.

Staged accidents could include 8-10 people, Howard said, including someone to provide a fake police report, an attorney to represent that person, and a physician that will evaluate the person for a non-existent injury. Other schemes, like pharmacy fraud, usually involve at least one physician to write fake prescriptions, a pharmacist and multiple co-conspirators that will sell pills on the streets.

"You need various levels of people," Howard said. "One person can't do everything in healthcare fraud."

Piecing the puzzle together

The FBI unit in Detroit is one of nine areas of the country that is part of a Medicare Fraud Strike Force team. Since the program was established in 2007, strike force teams across the country have charged more than 2,300 defendants in fraud schemes worth more than $7 billion.

Strike force teams coordinate federal, state, and local agencies in parts of the country that are identified as hotspots for healthcare fraud. Prosecutors and law enforcement officials within the strike force teams are tasked with identifying "the most egregious violators by using real-time data to find fraud as it is happening," Peter Carr, a spokesman for the DOJ, told FHPAF in an email. Enforcement teams continue monitoring trends within the region and refocus efforts to other areas of healthcare "based on where we perceive the enforcement can provide the greatest deterrence value."

Even with additional resources, enforcement agencies within the strike force teams rely on three traditional methods of uncovering fraud schemes: whistleblowers, data analytics, and informants.

"There is no one that is greater than the other; we get [tips] from all of those [sources]," Howard said.

Once investigators are tipped off to scheme, they begin combing through claims looking for outliers. From there, they can identify patients to interview and start chipping away at other conspirators that may be involved in the scheme. In some cases, they get help from other physicians that have already been implicated in similar schemes, and may have information on doctors in the same field or locale.

"It's not rocket science," Howard said. "Fraud is investigated pretty much the same whether it's Medicare fraud or anything else."

Dig deep enough, however, and certain cases reveal themselves to be outlandish. For example, in July, Detroit oncologist Farid Fata was sentenced to 45 years in prison for overprescribing chemotherapy treatments, sometimes treating patients that never actually had cancer in the first place. That case was discovered though a whistleblower within Fata's office. The oncologist had successfully hidden his scheme from his co-workers for years, but once someone tipped off the strike force team and unpacking the case was "very easy," Howard said.

"We matched what he was doing with the patient and then talked to the patient," he said. "It was a lot of hard work and lot of paper to go through, but it was very easy scheme to detect."

Fraud teams create efficiency

Although Detroit's Medicare Fraud Strike Force team relies on tried and true investigative techniques, the collaboration between federal, state and local authorities has led to greater speed and efficiency when it comes to identifying, investigating and prosecuting fraudsters.

Prior to the strike force, a large-scale fraud scheme would take approximately 18 to 24 months to investigate, Howard said. In Detroit, that time frame has been whittled down to 4 to 6 months.

"We got better at going out and finding what the scheme was quickly, finding the documents you needed and the witnesses you needed to identify the fraud and subjects involved in the fraud, and then immediately getting them into court," he said.

That efficiency has made an impact in a region that is still faces an uphill battle because of it's growing elderly population. Barbara McQuade U.S. Attorney for the Eastern District of Michigan, previously said that home health fraud has declined in Detroit thanks to strike force efforts and a moratorium on new home health agencies. Medicare spending on home health services has dropped from $745 million in 2010 to $565 million in 2013.

Howard estimated that in terms of dollars, Medicare fraud has dropped 30 percent across the state since 2010 thanks to the efforts and resources behind the strike force initiatives.

"It proves that we do make an impact when we make these high-profile arrests," he said. "Other doctors see that when you do this, we will catch you."

With the DOJ looking to double its healthcare fraud enforcement budget, along with memos from the White House budget director calling for a "more aggressive" approach to improper medical payments, these types of large-scale fraud busts will likely continue. That money will provide needed support to investigations that are already "resource intensive," Howard said, and will allow authorities to focus on the largest, most pervasive fraud schemes.

"We only have so many resources to throw at the problem, so you've got to quickly figure out which ones are the biggest and the best and the ones that will make the biggest impact," he said. 

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