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Justice: Hospitals Recruit Homeless for Medical Fraud, Insurer Overcharges $320 Million

The Department of Justice announced two settlements in which a local medical provider and an insurer allegedly defrauded Medicare and Medi-Cal of more than $336 million.

ORANGE COUNTY, CA — Two Southern California medical and health plan providers agreed to pay a record sum of money to settle allegations of wrongdoing, the Department of Justice announced Thursday.

Los Angeles-based Pacific Health Corporation, which owns Newport Specialty Hospital and Anaheim General Hospital, agreed to a $16.5 million fine to settle allegations that its hospitals hired people to recruit the homeless from Skid Row for unnecessary medical procedures that could be charged to the government under Medicare and Medi-Cal.

Also on Thursday, SCAN Health Plan, which is based in Long Beach and provides health plans to patients from all over the region, agreed to pay a record $320 million to the state and federal governments to resolve allegations that it received overpayments from Medi-Cal. According to the Department of Justice, SCAN inflated costs and took advantage of calculating errors that enabled the company to charge Medi-Cal higher rates than the medical services warranted, racking up about $320 million in overcharges. The settlement is the largest recovery ever obtained from a single Medi-Cal provider, according to the justice department.

“This massive settlement demonstrates the commitment of the United States Justice Department to eradicate fraud, waste, and abuse in this nation’s public health care programs,” said United States Attorney André Birotte Jr. “We want the entire health care industry to know that we will use every tool at our disposal to ensure that the taxpayers are getting what they pay for when they finance public health programs.”

Skid Row Kickback Scheme

The two Orange County hospitals were part of the criminal probe in which investigators believe the corporation paid more than $2.3 million in kickbacks to marketers to recruit patients who were admitted to the hospitals for in-patient care, whether they needed it or not. The scheme bilked the government out of $16 million in improper payments to the hospitals, allege investigators.

The Pacific Health Corporation and its subsidiaries also face criminal prosecution for the homeless patient kickback scheme, according to the Department of Justice. But if the company abides by the deferred prosecution agreement announced Thursday, the charges will be dismissed in six years.

“Hospitals colluding with marketers to fatten profits through illegal referrals for costly and sometimes needless medical services are pocketing millions of taxpayer dollars,” said Glenn R. Ferry, Special Agent in Charge for the Los Angeles Region of the Office of Inspector General of the U.S. Department of Health and Human Services. “Our agents are monitoring such schemes, and those entering into similar sham contracts should expect investigation and prosecution.”

dennis f August 27, 2012 at 11:39 am
I would like to point out something about this case. The hospitals and doctors for years have said that medicare does not pay them enough for their services to be profitable.I would like for them or someone to expain to me how they can pay recruiters to find these "patients" to perform these procedures on. I would have to assume that medicare payments are really a big profit maker for the medical providers in spite of what they say. Why else would they be doing this scheme?
Joker Joe August 27, 2012 at 11:43 am
Kathi
You are right on....Obama has circumvented congress on at least 3 occasions. Congress may as well be dissolved or at least stay home and get their pay checks because Obama rules the monarchy with an iron hand while his subjects gasp in awe and admiration!
Joker Joe August 27, 2012 at 11:48 am
Why doesn't congress have Obama Care????
Joker Joe August 27, 2012 at 12:19 pm
Wallst/
When Obama is covered under Obamcare then it will be good....
Tom Soriano August 27, 2012 at 12:25 pm
I wish that I could agree with you, especially since I would like to avoid having to vote for Romney but, I can't. If Obama is elected for a second term, I and many others believe that it will be the end of the American way life as we know it. Based upon his record and actions, I don't believe that Obama is acting in the best interests of Americans. The problem, as I see it, is that we are "selling" the presidency to the highest bidder rather than electing the most qualified candidates. Also, despite everything that I've read and heard, I still question Obama's motives....
Tom Soriano August 27, 2012 at 12:46 pm
Let's face it, our government is corrupt (Democrat or Republican) and companies know it. So, they think that they can get away with cheating, as well. Is Romney better than Obama, hell no! But, at this day and time, people are more afraid of Obama than they are of Romney. It's like jumping out of the frying pan and into the oven if you ask me! When are Americans going to put a stop to selling the presidency and demand that a ceiling be put on how much a candidate can spend on their campaign?
Joker Joe August 27, 2012 at 12:54 pm
Tom Soriano
It is time for HOPE & CHANGE.
george brutko August 27, 2012 at 01:07 pm
they should be fining these companies 10x what they are stealing. that might make them think twice about taking it in the first place.
to Suzanne Michael... our country has to sets or rules. one set for the rich and one for the rest of us. if you are rich and/or famous, you get a little slap on the wrist. for the rest of us who are not rich and/or famous, we go to prison.
Shripathi Kamath August 27, 2012 at 01:20 pm
"Shripathi Kamath, I guess you didn't read my comment very well."
Guess again. "Finding other alternatives to jail or prison for non-violent offenders that will provide restitution & deterrent should work better all the way around." Yes, consider how the death penalty has deterred murder, jail time has deterred theft, alternatives to jail time (such as living in their own luxury apartments) will deter fraud. "And ye shall eat the flesh of your sons, and the flesh of your daughters shall ye eat"--Leviticus 26:29
Shripathi Kamath August 27, 2012 at 01:29 pm
Yes, unlike the financial sector. Which has not been regulated by the government since the late nineties (mostly), and there has been no such thing as a fraud.
Yet, the SEC continues to make very similar deals: large fines on corporations, no admission of guilt. Maybe if there were more judges (unelected officials) doing a conscientious job: http://onforb.es/v8q51m Maybe it is not the fault of the ones catching these fraudulent activities once in a while. Maybe it is that of the fraudsters.
Shripathi Kamath August 27, 2012 at 01:43 pm
"They have been rewarded for theft instead of punished. Ask the question to yourself. Why?"
Over-regulation? Obamacare? Socialized medicine? Unelected officials telling private corporations (corporations are people, except when it comes to prison time) what to do? Too many government employees collecting fat pensions? The Fast and Furious program? Or is it simply because we elect people who cite one or more of the above as a reason, convince their minions that it is the case, or elect people who look the other way because they'll be criticized for not chanting the above? The problem is that corporations have realized how to win this game. Grow big enough that a large portion of the population is reliant on you for their existence. After that, you can basically do anything, and the cheaply bought politicians will do your bidding. You are too big to fail. Witness the tongue bath the Senate gave Jamie Dixon after he lost 2 or 7 billion. The problem is not that politicians are being bought, it is that they are being bought so cheaply. 750 million (if it is Obama) or 1.2 billion (if it is Romney) will buy you the presidency. Vote for someone else. In a decade, if a Gary Johnson (or whoever is Gary then) gets 14% of the vote against the 48% and 35% of the leading parties, then it'd cost them more, and perhaps they'll co-opt such issues instead of ignoring them.
Panglonymous August 27, 2012 at 01:57 pm
If you want to pull the major party that is the closest to the way you're thinking to what you're thinking, you must show them that you're capable of not voting for them.
If you don't show them you're capable of not voting for them, they don't have to listen to you, I promise you that. I worked within the Democratic Party, I didn't listen, or have to listen, to anything on the left, while I was working in the Democratic Party because the left had nowhere to go. Lawrence O'Donnell Political Analyst http://www.youtube.com/watch?v=B37zCueHfFM
Shripathi Kamath August 27, 2012 at 01:59 pm
"Let's face it, our government is corrupt (Democrat or Republican) and companies know it. So, they think that they can get away with cheating, as well. Is Romney better than Obama, hell no! But, at this day and time, people are more afraid of Obama than they are of Romney."
Odd way of saying ROMNEY RYAN 2012, in response to an article that highlights the Obama Justice Dept. actually catching an unlucky corporation in a fraudulent activity. "When are Americans going to put a stop to selling the presidency and demand that a ceiling be put on how much a candidate can spend on their campaign?" Me? Probably never. I'd prefer that Americans are educated enough that they learn to ignore a barrage of ads instead of feeling afraid that having a large number of those ads will fool them into voting for the wrong guy. Besides, it is a greater win for all us Americans if we make candidates spend large amounts of money and they still lose. That will be the easiest way to achieve what you want. There is NO way that any ceiling will be placed on spending. The ones spending the money have enough of it to let some legislators decide it.
Shripathi Kamath August 27, 2012 at 02:32 pm
Right on, Brother Pan!
I cannot fathom how those against wars, Gitmo, Patriot Act, Bush tax cuts, bombing of seventeen different countries, for gay rights, for single payer, against marauding big businesses, etc. vote for Democrats. There is this pervasive "lesser of the two evils" that scares people into voting for Obama, but that is a tacit admission that they are both evil. I certainly cannot understand that in a non-swing state like ours. Obama will win California. He knows, Romney knows it, and that is the reason neither of them will visit here except to collect campaign contribs. Obama 61, McCain 37. In 2012, it might be Obama 57, Romney 41. I just want it to be Obama 48, Romney 37, Gary Johnson 14. In a decade. Besides, Gary Johnson *is* the right candidate, and not a gimmick like Perot. (unless he screws it up completely by picking Wayne Root again as VEEP or something) I know because I tried this completely accurate software: http://www.isidewith.com/ and it told me that I should vote for Gary Johnson. Software like this is never wrong. But I still checked with what Gary has been saying.
MFriedrich August 27, 2012 at 04:45 pm
Hospitals have been releasing patients who are barely ambulatory back into the streets for years. This is not a new practice, but it's one of the criticized points of the investigation. Hospitals do this because they're work is "done" with that patient. They're not equipped or commissioned to do any more. Hospitals often issue free taxi vouchers to take the homeless (and even mentally-ill) patient anywhere they want to go after treatment. If that's Toys R Us, well then guess what? Toys R Us it is. So perhaps the fact that they "send" them to Union Mission could be viewed as a compassionate move instead of disdainful. The real shame is that unfortunately there's very little meat on the bone in terms of US/state service organizations and programs that effectively fill in the gaps between the hospital visit and the street. Taxpayers are getting ripped off here, no doubt, but they also don't want to be taxed any more to help homeless people and other "freeloaders" who can't get it together. Also, faith-based churches and similar orgs are often poorly staffed and equipped to do all this work: get people clean, clothed, fed, into drug-rehab, and educated to improve personnel health and find employment. They'll typically offer the first 3 and then want to pray the rest of the mental-illness, drug or sex addiction away with you.
Kathi August 27, 2012 at 06:53 pm
Well, I earlier posted a comment in which I questioned whether in fact all those services that Pacific fraudulently billed for had actually been done. They did at least some of them, but maybe they didn't do all of them. Or maybe some procedures are profitable & others are losses? The latter seems to be likely.
& actually these I think were Medicaid payments which are reportedly really low--lower than Medicare I think. Of course another issue w insurance is how hard it is to collect & how long it takes. I think that is part of the problem w some of the programs like Medi-Cal especially.
Joker Joe August 27, 2012 at 07:02 pm
A consumer recession?
If consumer households were considered businesses, that would be negative annual growth of 1.5 percent, which would constitute a deep and prolonged recession. “This latest report continues our efforts to help chronicle one important dimension of the economic hardships now being experienced by a large number of American households,” said Gordon Green of Sentier Research. “In many ways, median household income provides a measure of the net effect of economic activity on the middle class and how well they are able to buy food, housing, and other necessities every month, especially now during this unprecedented period of economic stagnation.” Drilling deeper into the numbers, Sentier reports almost every consumer subgroup is worse off now than it was three years ago. For households made up of consumers between 25 and 34 years old, income declined by 8.9 percent. Among households in which the householder has some college but no degree, real median annual income declined by 9.3 percent. For households headed by a self-employed person, income declined 9.4 percent. Among households with a householder between 55 and 64 years old, income fell 9.7 percent. 4 more years..... 4more years...... 4more years.
Kathi August 27, 2012 at 07:04 pm
Well, not sure of the exact reporting requirements, but public companies are required to file financial info that is pretty detailed & probably includes losses, although it may not get down to just what caused it. But I think they do have so show profits & losses & there are specific reports that are required by the SEC I think it is & I think those are public. But still, probably a lot can get lost in that.
Kathi August 27, 2012 at 07:12 pm
Shripathi Kamath, well actually the financial sector is highly regulated. I am in financial services & we have to jump through various hoops.
& after the big crisis w mortgages & the way they were packed & resold & all that garbage, they introduced even more regulations. But the question is are they just regulating or are they targeting the regulations to where the problems actually are. From what I have seen of the recent regulations on lending, they now require everyone that is doing loans to have an individual license. That is both federal & state & there are required courses for each so in CA it ends up costing in the neighborhood of $500. The brokers wanted to knock those operating w branch licenses out of business to lessen the competition & they succeeded. Our co previously had branch licensing & we rescued many people from those bad loans that were unsustainable. But since this was only part of what we did & loan biz had gone down, many of us weren't willing to spend the $ to get licensed. Then the co got out of the loan biz. So what was supposed to be helpful to consumers removed a lot of people from the biz who were actually helping consumers. It seems that Dems like to regulate without making sure that they are using the least intrusive way to accomplish the goal. But having lots of forms to fill out may make them feel like they have done something without really having done so. Too many regulations that are not smart regulations,
Kathi August 27, 2012 at 07:24 pm
Well, I think a lot of it is not a particular party but rather once a govt bureaucracy gets going it self perpetuates & grows bloated & tends to become ineffective. & the more agencies that are created--even though they have a good sounding purpose, they just tend to go that way. & they always seem to grow bloated & suck up more tax $ & become less effective.
Lots of politicians say they will make govt more efficient & they may mean well but its tough to control. A few skilled people may be able to find the right people to tackle the inefficiency & waste & actually reduce it. I saw Poizner make change in the CA dept of Ins, moving more licensing things to online--including ins licenses now being downloaded from a secure website rather than the fancy printed ones w gold trim having to be mailed. & at a time when CA govt was raising fees where ever they could, ins licenses actually went down twice. Obama doesn't seem to have much interest in this. Romney, with his business experience might be able to make some dents in all the bloated & ineffective bureaucratic messes we have. One thing would be to reduce duplicative agencies & consolidate them w out sacrificing effective programs. Obamacare adds lots more govt agencies with lots more employees getting fat paychecks but I doubt that it will really improve medical coverage or care--just make it more costly--contrary to what it was claimed to do. some of the problem comes from too many complicated regulations.
Kathi August 27, 2012 at 07:35 pm
& you are basing this on what? This was about Medi-cal payment fraud--not private insurance as far as the Pacific case was concerned.
The SCAN issue was a lot less blatant in that it was accounting errors in their favor or accounting misstatements. SCAN is a Medicare Advantage plan w plans in many counties of CA. None of this in the article is from what you mention. Also not clear what kind of policy you are referring to--health insurance? While its possible that this may happen sometimes, when an insurance policy is applied for, the ins co has requirements which include medical history & usually physician statements. That would tend to rule out fraudulent policies although some probably get through. But again, that is NOT the issue of concern here.
Shripathi Kamath August 27, 2012 at 07:54 pm
"Shripathi Kamath, well actually the financial sector is highly regulated. I am in financial services & we have to jump through various hoops."
I am not impressed that 13 trillion were lost in the MBS disaster, and not one person was prosecuted. Or how you being in financial services managed to rate Lehman Bros. with AAA rating a fortnight before it went bust. "It seems that Dems like to regulate without making sure that they are using the least intrusive way to accomplish the goal. But having lots of forms to fill out may make them feel like they have done something without really having done so." Yes, better to do it like Paulson, a two page self-attested form by a bank to collect your two billion. Like I said, it is over-regulation that is forcing corporations like PHC to commit fraud. If it were unregulated, paradise. Like it was in 2008.
Kathi August 27, 2012 at 09:39 pm
OK, let me clarify. The financial services industry is highly regulated. But obviously not all the regulations are targeted where they will actually do what they are supposed to.
& part of the problem seems to be too many regulations that just make things more complicated & invite ways to get around them, rather then concentrating on effective regulations. When we used to take a loan application, the regulatory forms were longer than the actual application was. So I think we need to have someone go through & get rid of a lot of the regulations that are just ones that make those who want to feel like they are cracking down on bad stuff, feel good, & instead see how we can reduce ineffective regulations that are just a paperwork burden & instead have regulations that actually help deter bad stuff. & w a plethora of regulations that clutter up the regulatory environment I suspect it actually inhibits focusing on needed effective regulations. So big difference between having regulations & having effective ones. Get rid of the ineffective ones & leave or add ones that will actually work. & if they streamlined regulations & got rid of "make work" regulations the cost of doing business likely would go down & enforcement should be easier without all the unnecessary clutter. btw, I'm not part of wall street high finance, but rather main street basic personal finance for the middle class. & it was the fancy "sophisticated" stuff that got us in trouble.
Kathi August 27, 2012 at 09:55 pm
Governments have a lot of regulations. Some of them good ones & probably many of them really just picky or confusing or not effective. Complying w regulations costs businesses, including health care providers & health care insurance providers money & the more regulations there are, the more it costs to comply w them.
Unfortunately it seems that some see a problem & want to feel that they are dealing w it so they create more regulations & sometimes it seems that it is done, more to show that they are doing something, than because the new regulations will actually address the problems. & w more regulations it gets harder to keep track of them both for businesses & regulators. So its possible that part of the problems, especially the ones SCAN is accused of relate to having a lot of complicated rules to follow so that the essence maybe gets lost. & it seems that probably new regulators, rather than getting rid of older, outdated regulations, usually just add more on top of them further complicating things. Which raises costs on businesses & regulators & maybe obscures the main things. So it would seem to me that regulations should be examined to get rid of confusing & duplicated or contradictory regulations as well as ones that really aren't helpful--getting them out of the way, so that focus could be on the needed, effective regulations & not distracted by unnecessary ones. That would probably save some trees as well.
tiny August 27, 2012 at 09:56 pm
Kathi yes, what you say makes sense. All these feel-good measures to make some politician feel impt, but don't amt to much, and put burdens on reasonable people while evading the necessary issues, is weak.
Shripathi Kamath August 27, 2012 at 09:58 pm
"I'm not part of wall street high finance, but rather main street basic personal finance for the middle class"
Ah, that explains it.
Shripathi Kamath August 27, 2012 at 10:06 pm
Yes, we should do good thing and not do bad things, instead of doing bad things and not doing good things. Buy low sell high instead of buying high and selling low.
Also no bad regulations. Only good regulations. Because bad regulations are bad. Good regulation will prevent fraud, but not too much. Just enough. No unnecessary ones. Only those which are necessary. "Therefore I will wail and howl, I will go stripped and naked: I will make a wailing like the dragons, and mourning as the owls."--Micah 1:8
tiny August 27, 2012 at 11:07 pm
www.youtube.com/watch?v=-YYR8PFSMuc
Joker Joe August 28, 2012 at 11:11 am
Kathi
And who pays for the regulations when they are put into effect?
Kathi August 28, 2012 at 02:09 pm
btw, Obamacare is NOT a single payer system--not yet anyway, although if they try to save $ by squeezing the insurance co's by mandating additional coverage, but prohibiting from charging more to pay for their additional costs, they may put the insurance co's out of biz & millions of people would lose their jobs & income.
Obamacare still has private insurance co's. Single payer is just that--no private insurance co's & govt does it all. You like the DMV & PO? There will be similar problems w more govt involvement. Medi-Cal doesn't have a very good reputation for providing quality medical care. Many dr's won't take Medi-Cal patients. Its apparently worse in more rural areas where they are less drs & providers to choose from. & of course Canada has that & people wait extremely long times for even life saving care & a lot of them come to the US for things like hip replacement surgery--if they can afford it--so they can get it done without waiting many months. & I've read in the news about some real neglect in Britain's system. Our system isn't perfect & GOP has submitted quite a few bills to fix things that weren't even considered by Dems--fixes that didn't throw the baby out w the bathwater!

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angienmaddie June 16, 2013 at 07:22 am
Are you kidding? Every heard of Freedom of speech? There should be more like him. This country isRead More going to hell in a handbag quite fast. We are ruining this country for our children and leaving the biggest mess ever... Kudos to Snowden..... You gave up everything to be honest and tell it like it is!!!
Joker Joe June 18, 2013 at 12:46 pm
This man has a rare quality, courage. Unlike the fool in office and his minions. If you thinkRead More the Constitution is a joke, you see him as bad. If you want to be spied on by your own government, Snowden is bad. Courage is missing in the states. The military have it but not the majority of our mediocre citizens.