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December 22nd, 2011 
FAKE NEWS for the Zionist agenda Devaney, who is also the inspector general for the Department of the Interior, says the board’s analysis of the 26 Medicare providers led investigators to another 15 Medicare entities associated with those providers. He believes the findings could prompt a “serious criminal investigation.”
The Miami Medicare providers, he said, “have the distinct look of the kinds of scams we’ve seen before.” The results of the board’s analysis were sent to the inspector general of the Department of Health and Human Services for further investigation, Devaney said.
‘Whack-a-mole’
Federal prosecutors struggled for years to spot, let alone stop, Huarte’s shell game. They describe his operation as “remarkable for its geographic breadth, organization, sophistication, and size.” From 2005 until early 2009, Huarte and at least seven co-conspirators operated at least 35 fake Medicare clinics in Florida, Georgia, Louisiana, North Carolina and South Carolina, court records show.
During that time, his scams operated “virtually uninterrupted,” according to a September 2009 superseding indictment and other court records filed in U.S. District Court in Florida.
They billed Medicare for more than $100 million and received at least $34 million in payments for non-existent HIV and AIDS treatments and varicose vein care and pain management therapy that never occurred.
The key: Huarte stayed steps ahead of authorities by setting up new companies before the government could sniff out the fraud from his old ones, court records show.
“It was like whack-a-mole for a time,” says Alanna Lavelle, a director of investigations for Medicare contractor WellPoint Inc., who chased the case against Huarte for more than a year. “It became frustrating.”
It began like this: In 2005, Huarte and his co-conspirators formed or acquired control of six medical clinics in Florida, each with its own office. Patients were then recruited and paid kickbacks to periodically appear at the clinics or allow use of their Medicare numbers, according to a plea agreement signed by Huarte in October 2009. The clinics were shams – patients weren’t receiving legitimate treatment there. Later, when authorities caught on, Huarte created shell companies consisting of entirely fictional clinics — those that corresponded with mailbox stores, for instance.
Most of the clinics purported to treat HIV and AIDS patients. Bills submitted for expensive injections of drugs such as Infliximab and Rituxan, which fight immune system deficiencies, cost Medicare as much as $7,800 per dose, according to the indictment.
To disguise Huarte’s role, “straw owners” were paid as much as $200,000 to put their names on Florida incorporation records and bank accounts. In return, some straw owners agreed to “flee to Cuba to avoid law enforcement detection or capture,” according to the indictment.
For instance, Madelin Machado is listed as president of Zigma Medical Care, the fake Miami clinic that collected $4.5 million from Medicare. In January 2008, after authorities figured out the scam, Machado was indicted for healthcare fraud in Florida. She subsequently disappeared, although she’s still listed as Zigma’s president in state records.
Huarte’s cover-ups proved successful for years, even as he secretly directed his fake companies, authorities say. He later replaced Zigma and the other Florida clinics with shell clinics in Atlanta such as New Age Family Institute and Elusive Quality, according to federal court records. Although each was registered in state incorporation records, neither the Centers for Medicare and Medicaid (CMS) nor state officials checked the validity of the corporate documents, a review that may have uncovered the fraud.
CMS, which runs Medicare, says it doesn’t have the resources to analyze incorporation records for each of its 1.5 million providers and suppliers. Those records are separately maintained by each state.
Almost all of Huarte’s corporate data proved a lie. The purported representative of New Age Family Institute was a deaf retiree whose identity had been stolen, an FBI affidavit said.
Medicare claims filed by each of the fake clinics were accompanied by all the right doctor, patient and treatment codes, say law enforcement officials and fraud investigators.
But New Age Family Institute was purportedly located in Atlanta at 205 South 49th St., according to state incorporation records. A Google Maps search shows that address doesn’t exist. Elusive Quality’s address – 925B Peachtree Street N.E., Suite 131 – was actually a UPS store in Atlanta’s Midtown district.
Some of the people listed as officers in incorporation papers say they didn’t know their names had been used until contacted for this article.
One, Jimmie Dominic Dancer, is an instructor at the Emory University School of Medicine in Atlanta. State incorporation records name him as the chief executive and chief financial officer of S.T.R. of Georgia, a purported HIV and AIDS clinic in Atlanta that was part of the Huarte fraud network.
Dancer says he was surprised to learn that his name was listed in state records. A specialist in internal medicine, he says he has not practiced medicine since 2002. “I’ve never been a CEO or CFO,” he said. “I’ve never heard of S.T.R. of Georgia.”
The big con
For much of 2008, Huarte continued his use of shell companies outside of Florida. From February to December 2008, he and co-conspirators formed at least 29 new sham Medicare clinics in Georgia, North Carolina, South Carolina and Louisiana, according to state incorporation records.
Authorities say Huarte bought lists of real Medicare beneficiaries from a Medicare contractor and from employees of a company that administered benefits. Then he submitted claims in the beneficiaries’ names.
But instead of billing Medicare directly as he had done initially, Huarte changed his approach, court records show. He began charging Medicare Advantage Plans, a program administered by private health insurers such as WellPoint and UnitedHealthcare Group, according to the indictment and a July 2009 motion to revoke bond.
A break came in early 2008, when a Medicare beneficiary complained to WellPoint that his Medicare benefits statement was wrong. It listed him as having received HIV treatments from a Huarte sham clinic called BIBB Group Services — but he didn’t have HIV and he’d never received any such care.
WellPoint fraud investigator Lavelle says her team began to review the claims and the incorporation records for other clinics in Georgia.
Reuters also reviewed records and found that BIBB Group’s purported home in the central Georgia town of Warner Robins — 1000 Martha Street, Suite F — is an abandoned building behind a $59-a-night motel.
Despite efforts to stop him, Huarte and his cohorts adapted.
Using stolen patient information, they called WellPoint’s customer service line. They pretended to be the patients, Lavelle says, and asked to change the patients’ billing addresses to post office boxes. That way, the patients themselves wouldn’t receive benefits letters and the fraud might remain undetected, she says.
For the next 15 months, WellPoint denied claims and stopped payment on checks worth $34 million that were sent to Huarte clinics.
After BIBB Group claims were blocked, new ones flowed in from new shell clinics. They first came from First Choice Group Services, Lavelle says. When those were stopped, new bills for HIV and AIDS treatments came from Strong Hope Co., In Excess LLC and More Than Ready Co. LLC. Each of those firms was formed in August 2008, according to Georgia state records.
“We saw more unusually named clinics pop up,” Lavelle says. “We actually thought they were playing with us.”
The addresses for Strong Hope, In Excess, More Than Ready and four other shell clinics also tracked to UPS stores. They billed Medicare for $15.1 million in false medical services and received $4.2 million in payments, according to court records.
Huarte’s four-year Medicare fraud spree was finally ended in 2009. That’s when federal investigators in Florida identified co-conspirators who ran Miami check-cashing businesses that turned the Medicare checks into cash. Early that year, the check-cashers agreed to secretly wear recording devices that caught Huarte and others talking about the scam.
In October 2009, Huarte, the master of the Medicare shell game, pleaded guilty to healthcare and mail fraud. He was sentenced to 22 years in a federal prison in Pennsylvania and ordered to repay $18.3 million.
Although WellPoint had blocked millions in payments, Huarte’s fake clinics outside Florida had still received more than $12 million from almost a dozen private insurers, according to Huarte’s plea agreement. In total, his fraud garnered at least $34 million from Medicare.
At a sentencing hearing in January 2010, former prosecutor Stumphauzer told the judge why he felt Huarte deserved a lengthy prison term for his shell-driven scam.
“I think what really troubles me most is their innovation,” he said, according to a court transcript.
“Every time Medicare gets close, every time Medicare clamps off one path, it never occurs to them to stop stealing. They just evolve the scheme and steal some more.”
Funding the fraud fight
CMS says it has been handcuffed in combating shell companies that posed as legitimate providers because it lacked the resources to extensively review the backgrounds and addresses of providers. Less than 5 percent of all payments were subjected to audits.
That led to a system in which Medicare cut checks and asked questions later. Analysts and law enforcement officials call it “pay and chase.”
Until recently, Congress offered little funding to help Medicare prevent abuses. But the healthcare reform law passed in March 2010 allocates $350 million over the next 10 years to fight fraud in Medicare and Medicaid, its sister program for the poor. The law also imposes stiffer sentences for the scam artists.
CMS is installing new fraud-fighting computer analytics to check the backgrounds of doctors and providers to ensure, for example, that Medicare ID numbers aren’t being stolen. The programs may help connect the people to the corporations they’re running about 75 percent of the time, says Peter Budetti, deputy administrator and director of program integrity at CMS.
Beginning in January, the locations of providers also will be checked by “geo-spatial mapping,” Budetti says.
In the aftermath of the Huarte case, CMS and private contractors launched a comparison of UPS store addresses and Medicare provider locations. Investigators visited 823 locations and found that 185 providers — 22 percent — listed a UPS store as the practice location on their Medicare enrolment application. CMS says 134 providers have had their license revoked or deactivated.
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Methodology
To examine how often shell companies were used in Medicare fraud schemes, Reuters obtained a list of some 300 closed criminal cases brought by federal Medicare fraud task forces in eight states since March 2007.
Reuters then scrutinized federal court records using Pacer, a publicly available court docket system. Open case files for fraud rings indicted by the task forces also were examined.
The federal indictments rarely make specific reference to shell companies. So Reuters looked for descriptions of false corporate entities that posed as legitimate Medicare providers or for sham companies pretending to be billing firms. Reuters also looked for firms that paid kickbacks to doctors and patients, or that laundered stolen Medicare funds.
Reporting By Brian Grow.
New providers also will be subject to automated enrolment screening. Their names will be checked against databases that include the federal government’s banned contractor lists, state and federal criminal dockets, and state licensing records.
But how much shell-perpetrated fraud these steps will eliminate remains unclear. The dragnet, for instance, might prompt criminals to simply create new shell companies — entities with no prior histories that wouldn’t register on any government watch list.
Nor do the steps address the fundamental loophole. Although the new screening system will have access to state incorporation records, CMS acknowledges it will still struggle to pierce the shell-company veil because states don’t collect information on the real owners when corporations are formed or sold.
“We want to catch this stuff when it’s at the $30,000 level instead of the $10 million level before anyone notices,” Budetti says.
“With the shell companies, these people just keep trying over and over again.”
Additional reporting by Kelly Carr; editing by Blake Morrison and Michael Williams.
Copyright 2011 Thomson Reuters. Click for restrictions.
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