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Busted: The top healthcare fraud schemes of Q3 2021


Busted: The top healthcare fraud schemes of Q3 2021

Nefarious actions to defraud public and private healthcare payers continued in the third quarter of 2021, comprising drug testing schemes, kickbacks, money laundering, and more. With help from the National Health Care Anti-Fraud Association (NHCAA), we gathered the most outrageous cases of alleged fraud, waste, and abuse (FWA) from July through September 2021.

After-school drug test scheme: $1.4 billion

A Georgia man and co-conspirators face charges for conspiracy to commit Medicaid fraud and money laundering. The group allegedly paid recruiters to sign up children for an after-school program and then unnecessarily required the children to be drug tested. Through connections with a local laboratory, the group supposedly received kickbacks once Medicaid reimbursed the lab. Further, the conspirators reportedly used medical information obtained from the drug testing lab to submit additional fraudulent reimbursement claims. 

Kickbacks for false acupuncture and physical therapy: $20 million

In a group effort, two acupuncturists, six physical therapists, and one cashier in New York allegedly operated a healthcare fraud scheme. The group was accused of paying cash kickbacks to patients who were beneficiaries of Medicare and other insurance providers and then billed the programs for acupuncture and physical therapy services that were never provided or medically unnecessary. The scheme amassed a total of $20 million in payments from Medicare and other healthcare providers. 

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Illegal opioid distribution: $5.1 million

A Louisiana doctor was charged with four counts of unlawfully distributing and dispensing controlled substances and one count of conspiracy to commit healthcare fraud. Using his position as owner and operator of a medical clinic, the doctor is accused of illegally distributing more than 1.2 million doses of Schedule II controlled substances and submitting fraudulent claims to Medicaid, Medicare, and other healthcare payers. The doctor is further accused of using health insurance benefits to defraud healthcare benefit programs $5.1 million. 

NFL retiree benefits scheme: $2.5 million

Three former National Football League (NFL) players pleaded guilty to their roles in a scheme to defraud a healthcare benefit program created for retired players. In total, the football players received $2.5 million in false claims for medical equipment they never obtained.

Medicare billing fraud, mail fraud, and money laundering: $2.3 million

Law enforcement officers arrested a nurse practitioner for fraudulently billing for services he did not provide, mail fraud, and money laundering. As part of the scheme, he supposedly waived co-pays for patients in hopes that they would not report the fraudulent billing to Medicare. In total, the nurse was arrested for illegally billing and receiving more than $2.3 million from commercial health insurers and Medicare. 

Unnecessary genetic tests and kickbacks: $1.3 million

A physician and his wife have been indicted on various charges for soliciting and collecting kickbacks and bribes. Prosecutors say that together they fraudulently gathered samples from Medicare patients and sent the samples in for unnecessary genetic tests. Over the course of their scheme, the couple allegedly billed Medicare for more than $1.3 million dollars for the needless tests. Additionally, they allegedly received a $5,000 kickback for every test submitted. 

Billing for nonexistent optometry services: $1 million

A federal grand jury indicted an optometrist for fraudulently billing Medicare more than $1 million for services she did not provide to patients. As a result, the optometrist could face 10 years in prison and a $250,000 fine. 

Illegally distributing prescription medications: $356,000

A doctor was arrested and charged with healthcare fraud and controlled substances offenses for illegally distributing prescription medication. The doctor was accused of distributing prescriptions such as Xanax and Adderall with little to no medical examination in exchange for cash payments. Many patients relied on Medicaid to pay for the prescriptions. 

Controlled substances and false claims

A psychiatrist was indicted on a total of eight counts of “unlawful distribution of controlled substances and two counts of healthcare fraud.” He’s accused of prescribing controlled substances to people who did not legitimately need the drugs. In addition to issuing unnecessary prescriptions, the psychiatrist has been indicted for submitting false claims to insurance companies in an attempt to receive greater reimbursement. 

Illegal remunerations and fraudulent hospice programs

The owner of a nursing home, her nephew, and a nursing home employee were charged with 14 counts of healthcare fraud and one count of conspiracy to commit healthcare fraud. The nursing home owner was also charged with 11 counts of illegal remunerations regarding a federal healthcare program and one count of conspiracy for illegal remunerations regarding a federal healthcare program. The scheme consisted of seeking out those living in senior assisted facilities and enrolling them into unneeded hospice programs. In order to enroll these recipients, the group allegedly falsified documents, signatures, and claims. Further, they are accused of receiving kickbacks for each client referral to the program. 

Amid constantly evolving schemes, healthcare payers need to combat FWA by combining prepay efforts with postpay insights. Watch our recent webinar to learn how to thoughtfully combine postpay results with prepay claim-by-claim review and FWA pattern recognition.

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About the Author

As vice president of fraud, waste, and abuse (FWA), Erin is responsible for the oversight and strategic direction of Cotiviti’s FWA solution suite. In her role, Erin has been integral in the development of Cotiviti’s FWA solutions over the past eight years. Serving as the company’s primary subject matter expert in investigations and FWA for compliance, client training, sales, and marketing activities, she regularly represents the company at industry conferences such as the National Health Care Anti-Fraud Association’s (NHCAA) Annual Training Conference (ATC).

Profile Photo of Erin Rutzler