Whistleblower Opportunities Abound – Medicaid Fraud At All Time High

by Brian Mahany

With all the press and media attention on big whistleblower case these days, one would think that fraud would soon go the way of smallpox, it would be eradicated. Unfortunately, as long as greed continues in our society, so will fraud. A couple weeks ago, Congress’ House Committee on Oversight and Government Reform issued a stinging report on New York’s Medicaid program. The report, called “Billions of Federal Tax Dollars Misspent on New York’s Medicaid Program”, identified the primary cause as increased and rampant fraud and waste.

Some may be wondering what New York has to do with the 94% of Americans who don’t live there. The answer is simple; Medicaid is a federal program funded with federal tax dollars. We all pay for it no matter where we live in the U.S.

The average Medicaid spending in the U.S. is $1500 per person according to the Congressional study. The average in New York is a staggering $2700! Does that mean people in New York are twice as unhealthy? Of course not. But it does mean fraud is off the charts and increasing.

Want some examples? According to one House member, the non-for-profit Young Adult Institute receives almost all it funding from Medicaid. The company pays several senior executives over $1 million per year and uses Medicaid money to lease luxury cars and pay private school tuition for the children of some executives.

In one recent federal False Claims Act case, a physician whistleblower came forward and reported mismanagement in New York City’s Human Resource Administration that allowed federally funded personal care services for those who didn’t qualify. U.S. Attorney Preet Bahara intervened in that case and ultimately recovered $70 million for taxpayers.

If you think this is just about money, you are wrong. The New York Times did an in depth review of New York’s Medicaid program and found widespread patient abuse within institutions providing services for the developmentally disabled. Said the Times story, “[T]he institutions are hardly a model: Those who run them have tolerated physical and psychological abuse, knowingly hired unqualified workers, ignored complaints by whistle-blowers and failed to credibly investigate cases of abuse and neglect, according to a review by The New York Times of thousands of state records and court documents, along with interviews of current and former employees.”

in other words, even though these institutions are receiving far more money per patient than the national average, the quality of care is abysmal. (The title of the New York Times series was “Abused and Used.”)

It’s hard to simply blame corrupt health care providers for the rampant fraud. Last year New York’s Senate Majority Leader Pedro Espada was indicted for allegedly stealing federal Medicaid monies. Espada ran a nonprofit health care organization in the Bronx. Prosecutors say he diverted monies meant for poor residents unable to afford medical care and used the money to live a luxurious lifestyle.

Espada pleaded guilty in October to two misdemeanor counts of theft of public monies and failure to file a tax return. On Wednesday, the U.S. Probation Office issued a sentencing recommendation which unfortunately is sealed. Sentencing is scheduled for June this year.

While the House Committee report contained the usual calls for more oversight, we feel that two of the best ways to curb fraud is to strengthen existing whistleblower legislation — including the anti-retaliation provisions — and to limit the amount of compensation that executives of agencies or companies that receive a substantial portion of their funding from tax dollars.