New cases show why Obama healthcare reform must tackle fraud

New cases involving Medicare fraud are a good example of what’s wrong with government funded healthcare. As President Barack Obama ramped up his strategy to reform or remake American healthcare—it’s not clear what the Democratic Congress is really trying to do—fraud in existing government programs continues on a grand scale. Medicare and Medicaid fraud aren’t topics for breathless anchors to explore on newscasts and magazine style programs. But the level of fraud costs both taxpayers and patients in the long run. Two cases in Florida and another in Houston are small examples of failure in overseeing entitlement programs that in the long run could bankrupt our country.

Yet few politicians ever bring the subject up unless a constituent asks about it in a townhall.

In Miami defendant Reinaldo Guerra pled guilty to one count of conspiracy to commit Medicare fraud and one count of Medicare fraud. An FBI release said the fraud involved durable medical equipment—walkers, wheelchairs and hospital beds are a few of the items classified as DME. Guerra owned and operated eleven (11) corporations that purported to supply DME to Medicare beneficiaries pursuant to physicians’ prescriptions or written orders, using straw or nominee owners to disguise his control over the companies. He submitted approximately $123 million in fraudulent claims to Medicare for DME that had not been prescribed or ordered by a physician nor delivered to a Medicare beneficiary. Based on those claims, Medicare paid the DME companies approximately $35 million.

Also in Miami defendant Adonis Ortiz was found guilty of health care fraud and conspiracy to commit health care fraud. Ortiz controlled and operated Daky Medical Supply, Corp. (“Daky Medical”), located in Miami, FL. Daky Medical purportedly provided durable medical equipment to Medicare beneficiaries. From April 2003 through March 2004, Ortiz was the President, Vice President, Secretary, Treasurer, and Registered Agent of Daky Medical, and caused the submission of $6,180,030 in false claims to Medicare for DME items and services that were not prescribed by doctors or provided as claimed. For example, seven doctors whose names appeared on various prescriptions and billing records submitted to Medicare testified that they had not provided or signed the prescriptions. In addition, many of the fraudulent claims submitted by Daky Medical involved persons who had died before the date of the alleged service.

An FBI release also said evidence admitted at trial also revealed defendant Ortiz’s ownership role in a second durable medical equipment company, Reny Medical Equipment & Supply Inc. ( “Reny Medical”), also located in Miami. From February 2004 through July 2004, defendant Ortiz caused Reny to submit approximately $6,944,980 in fraudulent claims to Medicare for DME items and services that were not prescribed by doctors or provided as claimed. Medicare paid Reny Medical approximately $2,796,316 on these claims.

In Houston a federal grand jury has returned a superseding indictment adding 35 more counts to the previously returned 29-count indictment against Dr. Arun Sharma and his wife, Dr. Kiran Sharma, M.D.
The Sharmas were accused of conspiracy to defraud Medicare/Medicaid and private health care providers of more than $31 million by falsely claiming to have administered facet joint injections and blocks to patients and routinely prescribing excessive amounts of hydrocodone, Soma and Xanax to patients that were not for a legitimate medical purpose in exchange for cash payments.

If convicted, the Sharmas would give a whole new meaning to redistribution of wealth. The FBI said, “Additionally, the forfeiture notice provision of the original indictment has been expanded to include the following assets which the government intends to forfeit as proceeds/property derived from their alleged illegal activity: 12 pieces of real estate including the defendants’ Kemah residence and both of their clinics, 32 investment accounts, 23 bank accounts and the $1.5 million in cash seized from the defendants’ home and safe deposit boxes for a total of $31 million.”

In a nutshell, Congress and our president owe the American people accountability with taxpayer money. When the president talks about cutting expenses, he can start with addressing fraud.

The federal government can’t deliver accountability on healthcare expenditures, pushing more and more investigative work to agencies like the FBI. These three cases are a drop in a big fraud bucket. Reform—real reform, not hundreds of pages of bureaucratic regulations—should start with fraud.


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