Biggest Medicare Fraud Scam Ever Busted

Authorities busted a ring of reputed Armenian gangsters who they allege perpetrated the most ginormous Medicare fraud of all time, racking up $163 million in fake claims.

The criminals allegedly set up more 118 “phantom” clinics and used stolen identities of doctors and patients to fraudulently bill Medicare for over $163 million. The addresses were just rented mailboxes.

The gang is also suspected of hiring strippers to file fake car-insurance claims.

To report Medicare fraud, you can file a report with the Office of the Inspector General.

Phone: 1-800-HHS-TIPS (1-800-447-8477)
Fax: 1-800-223-2164

Office of the Inspector General
HHS TIPS Hotline
P.O. Box 23489
Washington, DC 20026

Armenian gangsters charged in $160M Medicare scam [New York Post]


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  1. leprechaunshawn says:

    What? Medicare got busted?

  2. TuxthePenguin says:

    Just judging from the size and scope of this fraud… how long was this going on? Seriously, the linked article doesn’t say how long they were defrauding Medicare? 118 fraudulent clinics… wow.

    Just a question – how come this wasn’t caught at… say… 15 clinics? I know when you’re setting up to bill BCBS, they send someone to your office to make sure you’re legit. Or at least they did 10 years ago when I still helped manage practices… I guess Medicare doesn’t do this? Because sending someone out to the address and seeing it was a PO Box… that should have raised red flags so fast they broke the sound barrier.

    • comatose says:

      This goes on all the time. There was a 20/20 or 60 minutes report about Medicare fraud in Miami. It was on this same level, but there were many players. It’s hard for them to keep up and obviously something has to be done or we’ll bankrupt the system sooner than later.

      • TuxthePenguin says:

        Then again back to my second question… why don’t these massive frauds occur against BCBS/United/Premera? How much would it cost to send someone to each clinic? You could pay them double minimum wage plus travel expenses and have that be all they do. And you would have killed this fraud from the very beginning.

        My thought – people who develop frauds like this look for the weak link… and compared to the commercial insurers (and BCBS), MediCare was the low-hanging fruit.

    • keepher says:

      In the past ten years many govt agencies were gutted as being superfluous and costing the tax payer too much. OSHA is another example.

    • ARP says:

      All government programs have to balance the the waste/fraud v. the costs of enforcement. If the prevention effforts are greater than the savings, they’re you’re losing money. That’s why I’m skeptical of some politicians claims that we can simply remove fraud from our system and that will save us billions.

      In this case though, I think you’re right, I don’t think it would cost too much to send someone to the facility to confirm they’re a real clinic/Dr’s office.

    • common_sense84 says:

      I’d say just come out and say it. Nothing was regulated under the Bush administration.

      All of this shit that is blowing up or being caught is all crap that Bush allowed to happen with his anti regulation policies.

      • Cheap Sniveler: Sponsored by JustAnswer.comâ„¢ says:

        Bush. Clinton. Bush 1, They ALL were on the De-Regulation bandwagon.

        Too bad all of it just happened to blow up on THIS administration.

        • TuxthePenguin says:

          Do you even realize the absurdity of what you’re implying? That we need a government regulator to watch over a government program? If that’s the case, maybe we need to have a government regulator to watch lower government regulators…

          • Gramin says:

            Um… have you ever heard of the GAO (Government Accountability Office)? It is the investigative arm of Congress and you do not want them up in your shit. They are good at what they do and can cause entire institutions to tremble (read: for-profit education).

            • TuxthePenguin says:

              The best man at my wedding works for the GAO. But they are not “regulators” like you think they are. Their job is more analogous to the auditors that public companies must hire to audit their books before reporting.

              • Gramin says:

                Oh they do much more than “audit books.” For example, they launched an investigation into the for-profit education sector and discovered several instances of fraud. Recruiters at several schools were instructing students (undercorver GAO investigators) to lie on their FAFSA forms in an attempt to maximize federal aid.

        • Loias supports harsher punishments against corporations says:

          Amen, the general public is so stupid that they blame the current administration for something that took decades. Or maybe it’s just the vocal minority.

      • Loias supports harsher punishments against corporations says:

        Hate to say it, but deregulation has been occuring over decades, over both party reigns. I read some great articles and listened to interviews on experts discussing the gradual decline of bank regulations that got us here.

        I don’t think politics kills America, I think lobbyists do. I was sad that soft money contribution reform hit the wayside as the economy crumbled.

        • Powerlurker says:

          Lobbyists only have the power they do because the electorate allows them to. Democracy doesn’t give us the government we want, it gives us the government we deserve.

      • TuxthePenguin says:

        LOL. Sorry, I had to laugh at that. You really think this is solely a problem that is due to Bush? How many presidents have been in power since Medicare was started?

        Medicare fraud isn’t a new thing. Politicians have been touting bills and promises to “cut the fraud from Medicare” for as long as I can remember. Yet they never do…

  3. mandy_Reeves says:

    I read that as American gangsters

  4. PupJet says:

    “Authorities busted a ring of reputed Armenian gangsters who they allege perpetrated the most ginormous Medicare fraud of all time, racking up $163 million in fake claims.”

    Gee, how the rest of the world is able to rip the American populace off for X number of years and NOT get caught. Either they’re extremely smart, or we’re very stupid…oh wait, look at all the ingrates we have in office running this country. *Sigh* Can we just get rid of those old farts an elect a new house, senate, etc…?

    • SkokieGuy says:

      So the current government IS busting Medicare fraud and you want them thrown out?

      Awesome idea, let’s get rid of people doing exactly what they should be doing – finding fraud and corruption.

      • Loias supports harsher punishments against corporations says:

        Best counterargument ever. Logic success!

        Also, Congress itsself doesn’t investigate this. They have their own goons : – )

      • TuxthePenguin says:

        Actually, I have a sneaky feeling that this was busted not from the work of the Medicare or the FBI (they would have said so in the article… they aren’t shy about bragging) but rather from someone within the organization that got cut out of the gravy train…

      • apd09 says:

        it’s like the people in prison, and both legal residents and illegal immigrants, who along with their 6 year old children who were each claiming a new house credit of 7,000 on their taxes. Some of the illegal families were pocketing 20,000+ in cash. It may take a little while to review the tax claims, but eventually they were caught. I am happy that these types of scams are caught and now it is just a matter of hopefully getting the money back somehow.

  5. Blueskylaw says:

    Medicare fraud is obviously investigated by the Securities and Exchange Commission.

  6. Cheap Sniveler: Sponsored by JustAnswer.comâ„¢ says:

    Big clues that a fraud is happening?

    “118 “phantom” clinics “
    “The addresses were just rented mailboxes.”
    “$163 million”
    “The gang is also suspected of hiring strippers to file fake car-insurance claims.”

    yea.. and medicare just pays anybody who says so. I think Medicare needs to be taken to task on this, more so than the gangs who took advantage of Medicare’s lack of attention.

    not surprised though. I know people on “disabilities” who are totally playing the system and will continue to get away with it. If I report them? I can’t prove it, They have found a doctor willing to say whatever they want, and they won’t investigate.

  7. Jack Straw from Wichita says:

    so medicare will fight its customers every step of the way about covering certain things and they’ll let this kind of cash flow out the door like nothing happened

  8. Loias supports harsher punishments against corporations says:

    Anyone know if the budget for Medicare is also the budget for Medicare enforcement? If so, this could explain why enforcement is lacking.

  9. daveinva says:

    There wouldn’t be any Medicare fraud if there wasn’t any Medicare. Just sayin’.

    I’m only half-joking… the more services and favors dispensed by a large bureaucracy, the more complex that bureaucracy and the regulations it operates under, the greater the opportunities for mischief and gamesmanship. I know the politically polite answer on Consumerist is always “More regulation!” but one should ask whether any system so complex as to require that significant a burden of oversight and regulation is a *desirable* system.

    Whether its our infinitely malleable tax code, our onerous small business regulations, our arcane financial markets, or our byzantine healthcare system, I remain unconvinced that the first answer, let alone the IDEAL answer, is increasing the regulatory burden. As in engineering, a well-designed system is a functional system– the more kluges, loopholes and workarounds incorporated in these systems, again, the more opportunities for criminals and rent-seeking politicians (perhaps I repeat myself ;-) to exploit those systems, defeating the purpose of those regulations in the first place.

    Few seem to grasp that the *illusion* of regulation is worse than having no regulations at all. With the latter, you at least appreciate the risks– with the former, you safely assume that the doors are locked and the windows shut when that may not be the case at all.

    • JulesNoctambule says:

      And hey, we could cut down on internet fraud by getting rid of computers, too! Because that’s the way to solve a problem, right?

      • El Soze says:

        Even though medicare being a problem was mentioned, it was not the topic at hand. The topic was regulation, and the arguments posted are valid.

    • DeepHurting says:

      I agree with your well-stated points, but unless you have some sort of magical giant red reset button, these ideas are very pie-in-the-sky and won’t help our current situation.

    • ARP says:

      I agree and the solutions are easy:

      1) We can go with UHC and reduce claims fraud since there is no middle man.
      2) On financial markets we can require certain levels of reserves for every security, loan, commodity, pencil, etc. and not allow “too big to fail”
      3) On taxes, a progressive tax code with zero deductions, credits, etc. Capital gains are regular income for tax purposes (with a single exception for buying homes). Stock options are taxed at their actual value when granted, no tax when sold. Business pay a low income tax (e.g. 5%) on all revenue- no deductions credits, write offs, etc.

      There are risks inherent in all these solutions, but we end up creating loopholes, fraud, confusion, and other issues trying to create the perfect set of incentives, when you should just accept them as a cost of simplicity (and that cost of simplicity is greater than the value of tinkering).

      We can easily re-engineer all these systems to be less complex. The problem is that these won’t benefit the rich and powerful, so R’s fight them. D’s push back (or fight for their own pet exceptions) and what you get is a set of regulations that aren’t particularly effective and overly complicated.

  10. mitchki says:

    From what I understand, the watchdog function for Medicare was systematically deprived of resources over a period of decades. So this was a “cost savings” when the people who investigate fraud were let go.

    If there’s nobody to investigate, then the fraud can proceed undetected. Nobody’s going to investigate Medicare fraud on a volunteer basis.

    • TuxthePenguin says:

      Actually, I bet if you allowed accounting firms to advertise that they were working with their state Medicare office to look for fraud, you’d have plenty volunteer…

    • Elvisisdead says:

      You are not correct. Yes, funding isn’t what it should be, but it wasn’t and isn’t being systematically decreased.

  11. dush says:

    Too bad the govt doesn’t have better standards and safeguards about who to send money to in the first place. Then there wouldn’t be so much fraud to investigate at all.

  12. peebozi says:

    I hope we can now end medicare, welfare, foreign aid, wars, etc.

  13. bizeesheri says:

    My mother reported some bad items on a bill that medicare paid… they did nothing.

  14. waltcoleman says:

    What? Gov’t run healthcare is subject to massive fraud with taxpayers footing the bill? Shock! I’m sure Obamacare will fix that…

  15. FrugalFreak says:

    And yet legitimate claims go unpaid like lab tests.

  16. MC777 says:

    This was not the only time this was going on for a long time here are the links

    and would you please investigate more

    Glendale is a cess-pool with crimes from identity theft , car theft, date rape,
    when individuals charged with a crime they just go back to Armenia

    ask Glendale police and it will snow ball

    you remember Armenian consul General in Los Angeles was selling fake documents to criminal Armenians to stay in US price $35.000 what hapaned with that?
    here is the ABC News Clip,_Calif._KABC_NEWS/

  17. econobiker says:

    Why was this so easy to do?