Phone scams, email and snail mail scams, and even door-to-door scams, they’re everywhere these days, people trying to make a quick buck, that is. And it costs taxpayers, insurance companies, the government. It takes a toll on consumers’ trust and confidence, too.

Health insurance, Medicare and Medicaid fraud cases have been in the news for decades. And while it’s nothing new, the amount of the money paid in phony medical insurance fraud has been increasing consistently.

Take a look at some of the costliest, creepiest and even dangerous-to-the-public-health insurance fraudcases.

(Related on ThinkAdvisor: 12 Worst Financial Advisors in America: 2014)

15) A small role could have a big price, but Hollywood won’t come calling: $20

What would you do for $20? A young lady decided that she could be the driver to pick up prescription drugs at a pharmacy, after her two co-conspirators had placed the order using phony prescriptions.

The local authorities working this case were able to catch the woman red-handed as she left the pharmacy. She was charged in December 2006, pleaded guilty in May 2007 and then failed to appear for sentencing that same month. She remained a fugitive until May 2010. The judge in this matter sentenced her to serve 68 days in jail. Sadly, Hollywood execs thought this script was too “bland” for a movie deal.

Source: Blue Cross Blue Shield of Michigan

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14) ‘Til fake marriage do us part: $169,000

Some people like to throw big weddings and post pictures of the great day everywhere. Others prefer to run away and get hitched. That’s exactly what an attorney in Michigan said he did; he added his then girlfriend as his “wife” to his health insurance list of dependents back in 2001. But it wasn’t until eight years later, when his senior partner decided to change health insurance companies, the truth was revealed: they were not married. The scam caused a loss of more than $169,000 to Blue Cross Blue Shield of Michigan. The attorney was charged with a felony of larceny by false pretenses, which carries a penalty of 15 years in prison. We’re not sure how his “wife” took the news.

Source: Blue Cross Blue Shield of Michigan

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13) The “ghost” doctor: $900,000

From 2004 to 2008, a doctor decided that his untrained office staff would treat patients. He was able to receive $900,000 in fraudulent reimbursements for the services performed by unqualified, unaccredited office staff.

The Centers for Medicare and Medicaid Services audited a random sample of the bills the doctor submitted to insurance companies; 90 percent of those bills should have been denied payment because they were not performed by the doctor.

The doctor pleaded guilty to health care fraud and could serve up to 10 years in prison and pay a $250,000 fine.

Source: Blue Cross Blue Shield of Michigan

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12) Two states, $2 million at stake

Both Michigan and Texas arrested six people who defrauded health insurers of $2.1 million in 2010. The scam consisted of billing workers for services that were never rendered at a Texas manufacturing facility. The services were being billed by a chiropractor and occupational therapist offices.

In the end, the owner of the physical therapy clinic, two employees, the chiropractor and the occupational therapist had submitted claims for more than $4 million to health insurance companies. All of the fraudsters and the liaison at the manufacturing facility who “recruited” workers to bill the untendered services face up to 10 years in prison, after being convicted on all counts.

Source: Blue Cross Blue Shield of Michigan

 
 

11) This one actually made it to CNBC’s “American Greed” TV show: $2 million

In 2010, an episode of “American Greed” on CNBC profiled Dr. Robert Stokes, a former East Grand Rapids, Mich. dermatologist, who is now serving 10.5 years in a federal prison. He was convicted of health care fraud in 2007 after bilking insurers of nearly $2 million.

Prosecutors and witnesses say Stokes also performed unnecessary and disfiguring procedures on patients and reused surgical equipment in violation of medical rules. Here’s a trailer from the show.

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10) Even the nation’s capital is not safe from fraudsters: $75 million

Back in February 2014, 25 people were charged by Federal authorities in Washington D.C. for a large scheme to obtain millions of dollars in fraudulent Medicaid payments. The scheme involved phony claims for home care services. Authorities said that fraudsters were paying kickbacks to beneficiaries to manufacture false claims for nonexistent services, according to a report on CBS news.

One of the people charged was the owner of a home care agency in Maryland who had lost her nursing license and was ineligible to receive Medicaid payments. The report says that Florence Bikundi, the owner of the fraudulent agency, was able to bill the city for $75 million in Medicaid payments.

“Among the property seized from her were millions of dollars from 46 bank accounts, a 7,300-square-foot home valued at $927,000 and five luxury vehicles,” the report said.

Source: CBS

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9) Prescription drug cartel in a church

An abnormally high number of accidental deaths from the misuse of prescription drugs in Michigan compelled authorities to conduct an investigation. They found that five doctors were illegally prescribing and distributing prescription drugs. One of the doctors was giving drugs to individuals who agreed to join the church that sponsored his free clinic, and asked church members to bring him their leftover drugs for redistribution. 

The investigation also revealed that they were billing the health insurance company for the office visits used to illegally prescribe the drugs, and that patient records were falsified to justify the prescriptions. 

All five physicians were charged with varying counts of distribution of controlled substances, health care fraud and the entry of false information into a medical record by a health care provider. Convictions were obtained as a result of plea bargains from all five physicians.

Source: Blue Cross Blue Shield of Michigan

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8) Chiropractor conman takes advantage of senior citizens by selling them his self-designed back braces: $1.6 million

“Does your back hurt? How about if you twist like a pretzel? Then you might need this cardboard backed, duct-taped back brace. Get it now for the low introductory offer price of $1,300 today only!”

That’s how we imagine this scam went down in Indiana.

According to the report, the chiropractor would visit senior citizen complexes to promote his self-designed back brace. Once people were convinced they needed the back brace, he would falsify medical information, then charge insurance carriers more than $1,300 per brace — the brace was actually worth less than $100.

But it gets worse. Testimony at the trial showed that the chiropractor used under-age children to distribute flyers about his back braces at senior citizen complexes. Food and beverages would entice senior citizens to talk with him about his back brace. Testimony also showed that many recipients of the braces had no medical necessity and some were not of sound mind, the report says.

The chiropractor billed more than $1.5 million in fraudulent claims to Medicaid, Medicare and other insurance carriers. In the end, he was charged with 34 felony counts of health care fraud and money laundering, was found guilty on all charges and was sentenced to 12.5 years in federal prison. He was also ordered to pay restitution in the amount of $1,580,581.

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7) “Free” massage coupons distributed at a local casino

An office manager for a physical therapist frequented a casino to gamble and, while she was there, she’d hand out coupons good for free 30-minute massages at the clinic she managed.

When the recipients of these coupons arrived for their “free” massages, the clinic would take their health insurance information. Then, they would bill the insurance companies for physical therapy services that weren’t given, the report says.  

The result: the health insurance payments to the struggling facility increased almost 400 percent. The health insurance company audited the clinic and discovered an error rate of 93 percent.

The scam went on until the office manager, who had had an intimate relationship with the physical therapist, told her new love interest of the fraud. It was her new love interest, also a patient of the clinic, who tipped off the authorities. The case has been forwarded to Federal authorities for prosecutorial review.

Source: Blue Cross Blue Shield of Michigan

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6) Get free mani-pedis and massages for $2,000: $7 million   

In what has been termed as the biggest insurance fraud in Santa Clara, Calif., the owners of a local spa thought it would be great to offer free mani-pedis and massages to customers who would “turn a blind eye” when they billed their insurance companies for “chiropractic services.”

The Mercury News reported on this case in May 2014 and said that four people were arrested at the San Jose Chiro clinic. According to the story, authorities began an investigation of San Jose Chiro at the end of 2012, which they dubbed “Operation Nail Polish,” after receiving a tip. An investigator from the Santa Clara County District Attorney’s Office visited the spa eight times and received eight free manicures and pedicures. Her insurance company was billed $2,000 — or $250 per visit — at least five times as much as nail care typically costs even when it is legitimately billed.

Source: Mercury News

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5) Jurors convict four in $154 million fraud for performing unnecessary surgeries

Back in 2012, in California, four people were convicted of crimes relating to a $154 million medical fraud scheme in which hundreds of healthy patients underwent unnecessary surgeries so fraudsters could collect insurance company money.

According to an article that was published here at LifeHealthPro.com, the four played roles in recruiting more than 250 healthy patients to undergo sometimes dangerous surgeries. A total of 13 people had been indicted by a grand jury and six others pleaded guilty prior to indictment.

Source: Associated Press

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4) Unnecessary chemo to overbill patients: $225 million

An oncologist in Detroit, who ran a cancer treatment clinic with seven locations around that city, was providing Medicare and private insurance patients with unnecessary cancer treatments, including chemotherapy and other infusion therapies. Between August 2007 and July 2013, the oncologist submitted roughly $225 million in claims to Medicare, according to the news report. The oncologist will be sentenced Feb. 23, 2015, and faces up to 175 years in prison.

Source: Bloomberg BNA

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3) The “Unity” case, performing surgeries on patients who didn’t need them: $154 million

Back in 2009, this was the “largest medical insurance fraud case in the nation,” according to an entry in the State of California’s Franchise Tax Board. The case, also known as the Unity Outpatient Surgery Center (Unity) scheme, consisted of billing fraud of $154 million to medical insurance companies.

The schemers recruited 2,841 healthy people from all over the country to receive unnecessary surgeries in exchange for money or low cost cosmetic surgery. The recruitment of patients, or “capping,” is illegal in California.

There were a total of 19 people who were charged in the Unity case and some sentenced. The primary perpetrator was sentenced to 12 years in state prison.

Source: State of California’s Franchise Tax Board

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2) Clinics and corporations health insurance fraud ring: $279 million

The New York Times reported on this fraud case in 2012 and found that “Brighton Beach has one of the highest rates of health care fraud in the nation.

“In fact, an analysis of data from the Centers for Medicare and Medicaid Services shows that more health care providers in the Brighton Beach ZIP code are currently barred from the programs for malfeasance than in almost any other ZIP code in the United States. (The top spot is in southern Florida, with its high proportion of older residents),” says the news report.

Like many other health insurance fraud cases, the scheme involved doctors who sought reimbursement for many excessive and unnecessary medical treatments. The plot was so complex, the report says, that it had to set up three separate billing processing companies just to handle the paperwork.

The members of the dubbed “fraud ring” were charged with conspiring to steal $279 million, although the total loss to the private insurance companies was listed at $113 million.

Source: The New York Times

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1) A $430 million Medicare fraud crackdown across the nation

Seven cities (Baton Rouge, Chicago, Dallas, Houston, Los Angeles, Miami and New York) and 91 people were charged by Federal officials in October 2012 for false billing schemes that totaled $430 million in Medicare fraud.

The news report from the Medical Daily is extensive and describes each of the cases and indictments: more than $230 million in home health care fraud, $100 million in mental health care fraud and $49 million in ambulance transportation frauds. Among the people charged were doctors, nurses and health care administrators for selling medically unnecessary equipment, sending thousands of false claims for services to recipients in nursing homes who were long dead, billing for 33,000 prescriptions allotted to 2,000 patients (or nearly 17 prescriptions per patient) between 2006 and 2011, and a hospital assistant administrator who was caught paying kickbacks such as cigarettes, coupons and food given to Medicare recipients, who would watch television or play games rather than receiving the services that were charged to Medicare.

But it doesn’t end there. An ambulance company in Los Angeles defrauded Medicare of $49.2 million. This was the largest ever prosecuted by the Medicare Fraud Strike Force. The court documents say that they billed Medicare for ambulance rides that were medically unnecessary.

And in Miami, a psychiatric hospital gave kickbacks in cash to the owners of assisted living facilities in order to obtain more patients. The psychiatric hospital then billed Medicare over $67 million, either for patients that they had never had or for services that they had never performed.

Meanwhile, in the Big Apple, the office manager of a Queens medical center and the owner of a service that provides ambulettes, which are transportation to mentally or physically impaired people, charged Medicare $3 million. They reportedly said that they gave physical therapy and diagnostic exams to beneficiaries who were paid in kickbacks to use their services.

Source: Medical Daily

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