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busted: top fraud and abuse busts of summer

October 05, 2017

From California to New York, fraud and abuse took no vacation over late spring and summer this year. The National Health Care Anti-Fraud Association has collected some of the top healthcare fraud busts from May to September 2017, representing schemes in home healthcare, pill mills, sober homes, and many more. Here’s our round-up of the top 10.

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Nationwide drug and treatment bust: $1.3 billion

As we highlighted back in July, Medicare Strike Force announced its largest-ever bust, charging 412 doctors, nurses, and other medical professionals. The Justice Department says they billed Medicaid, Medicare, and TRICARE (the U.S. military’s health insurance plan) for unnecessary drugs and treatments that they frequently did not provide to patients. In addition, more than 120 of those charged are accused of illegally prescribing and distributing opioids and other dangerous drugs.

Utah and Tennessee compounded drug scheme: $67 million 

Prescriptions for compounded drugs are at the center of an alleged scheme to fraudulently bill TRICARE. According to the Defense Criminal Investigative Service, a small Utah pharmacy filled a skyrocketing number of compounded prescriptions for TRICARE patients in 2015, written by emergency room physicians based in Tennessee, seeking more than $67 million in reimbursement. When TRICARE began to deny payment for non-FDA approved compound ingredients, the pharmacy’s claims dropped off sharply.

Florida mental health scheme: $63 million

Federal prosecutors say a Miami man took kickbacks from a mental health treatment center in exchange for referring Medicare beneficiaries to the facility. According to the U.S. Attorney for the Southern District of Florida, Samuel Konell knew that the beneficiaries he referred to the Greater Miami Behavioral Healthcare Center “did not need, qualify for nor receive such treatment.” His actions allegedly led to more than $63 million in false and fraudulent claims being submitted to Medicare.

Florida sober home fraud: $58 million 

Employees split urine samples to double-bill for drug testing at a sober home and addiction treatment center in Florida, according to the FBI. The facilities purportedly billed insurance companies $58 million while paying kickbacks to recruit patients, billing for services they didn’t provide, and administering unnecessary treatments. Non-licensed employees also allegedly performed treatments that licensed professionals later signed off on using back-dated documents.

New York pill mill: $40 million 

The DEA says a New York City doctor sold $40 million worth of opioids and other drugs, including oxycodone and Xanax, to Staten Island residents without conducting an examination. In exchange, Dr. David Taylor is accused of taking money and goods such as alcohol. The federal agency says Taylor’s actions enabled addiction and overdoses.

California fraud conspiracy: $40 million 

Prosecutors say a Beverley Hills couple orchestrated a $40 million insurance scheme, paying doctors and pharmacists to prescribe unnecessary treatment and testing to defraud workers’ compensation programs. A Santa Rosa orthopedic surgeon is among the physicians facing charges, accused of accepting more than $300,000 in illegal kickbacks from Christopher and Tanya Moreland King. Among other charges, Dr. Eric Schmidt allegedly prescribed urine tests for workers’ comp patients while referring the results to a lab the Kings operated.

New York Medicaid fraud: $15 million 

The New York attorney general charges that Hin Wong of NY Pharmacy used Medicaid as “a personal piggy bank,” paying kickbacks to patients while billing Medicaid for fraudulent HIV medications. Wong is accused of billing Medicaid and other health plans for more than $15 million in medications while actually purchasing only a fraction of those drugs.

Alabama drug scheme: $13 million 

A sales representative for an Alabama pharmacy allegedly conspired with other employees to generate fraudulent, high-reimbursement prescriptions. Federal prosecutors accuse Robin Lowry of Global Compounding Pharmacy of specifically targeting products covered by Blue Cross Blue Shield of Alabama, the pharmacy’s employee insurance provider. The pharmacy also purportedly directed its own employees to obtain medically unnecessary prescriptions for its own products, such as a topical skin cream, while waiving co-pays.

Tennessee injection fraud: $7 million 

The Tennessee attorney general is suing a chain of pain management clinics over “a fraudulent scheme that involved regularly subjecting patients to unnecessary medical procedures.” MedManagement allegedly submitted $7 million in fraudulent claims to TennCare, the state’s Medicaid program, while giving patients as many as 50 superficial back injections per visit.

Wyoming Medicaid fraud: $6.8 million 

A Wyoming psychologist stands accused of submitting claims for “inappropriate and baseless mental health diagnoses” to the state’s Medicaid program totaling $6.8 million. Gibson Condie allegedly also overbilled the program, billed for services that weren’t provided, and submitted claims for services Medicaid doesn’t cover.


While those who seek to commit healthcare fraud and abuse are continually adapting, as you’ve just read, Verscend helps payers get ahead of constantly evolving healthcare fraud practices by delivering turnkey allegations to health plans. Get the facts about our Fraud Detection solution.

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As director of product marketing, Warren Lesnefsky is responsible for the go-to-market planning and execution of Verscend’s Payment Accuracy solutions. He brings nearly 20 years of healthcare marketing experience in leading cross-functional teams to successfully launch information technologies and analytic services to the payer and provider markets. Prior to joining Verscend in 2015, Warren held various marketing management roles at McKesson Health Solutions with a wide range of responsibilities covering events management, marketing communications, and product marketing. He holds a BA in Marketing from the University of Northern Colorado.

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