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Russian-led scammers bought out legitimate U.S. medical companies, stole the identities of more than one million Americans and submitted $10.6 billion in bogus claims under their names, federal authorities revealed Monday in announcing what they called the largest medical fraud takedown in American history.
Medicare managed to stop most of the payments, but the scammers still walked away with nearly $1 billion in fraudulent payments from Medicare and so-called “Medigap” insurers, prosecutors charged in an indictment handed up in federal court in New York.
The Russia-based operation also used temporary visitors and illegal immigrants in the U.S. to open accounts at American banks to help move the money without triggering anti-laundering controls, then funneled the money to accounts in places like China, Pakistan and Israel.
Authorities dubbed that takedown “Operation Gold Rush,” but said it was just one part of a broader campaign against medical fraud that the Justice Department said netted 324 defendants in total, and included more than $14.6 billion in bogus claims and $2.9 billion in actual fraudulent payouts.
Of the 324 people charged, 25 were doctors and dozens more had other medical licenses.
“These criminals didn’t just steal someone else’s money. They stole from you,” said Matthew Galeotti, head of the Justice Department’s criminal division.
Officials said the defendants include both domestic and foreign operators, and while most of those involved were in it for pure greed, some raised national security “concerns.”
The officials declined to elaborate, but experts tied some Russian and Chinese fraudsters during the pandemic to government-backed operations that plowed the money into nefarious anti-U.S. operations.
The Russian-led operation was the most brazen.
Authorities said it took control of more than 30 U.S. durable medical equipment firms that had the ability to bill for claims. It then used the stolen identities to submit claims for things such as glucose monitors and urinary catheters that were not actually needed nor wanted by the individuals.
More than 400,000 Americans had reported odd notifications of equipment requests submitted in their names, authorities said.
All told, 19 people were charged in Operation Gold Rush, and 12 have been arrested, including four nabbed in Estonia. Seven others were arrested in the U.S., either at an airport or as they made their way to the U.S.-Mexico border, hoping to escape federal agents closing in.
In another scam, 49 people were charged with submitting about $1.2 billion in fraudulent claims from telemedicine and genetic testing.
Dozens of medical professionals have also been charged with illegally diverting prescription opioids. In one Texas pharmacy, for example, prosecutors said five people were charged with distributing more than 3 million opioid pills to street-level dealers.
Six fraud cases were brought in Washington, five of them against employees of Metro, including one train operator. Authorities said they combined to steal hundreds of thousands of dollars in bogus health claims.
In Atlanta, five people were charged with attempting to manipulate prices and deliver skin grafts to people who didn’t actually need them. The FBI said that scam totaled $760 million.
In addition to Medicare, authorities said scammers targeted Tricare, the military’s health program; Medicaid, the federal-state medical program for the poor; food stamps, workers’ compensation and the big three pandemic relief programs for small businesses and the unemployed.
The Justice Department said it went after some companies for civil damages. That included a number of transportation companies accused of overbilling the feds for Medicaid transport services.
Three Florida residents were charged with operating six plastic surgery clinics, then stealing their patients’ information to submit bogus claims.
Officials said Medicare and Medicaid were obvious targets because of the amount of money available — $1.7 billion annually.
“It’s a big target,” said Dr. Mehmet Oz, head of the Centers for Medicare & Medicaid Services.
He said the key is to stop payments before they go out the door. Once the money is gone, “it’s already offshore, somewhere in some foreign country’s vaults.”
“Foreign leaders are rejoicing in the fact that they took advantage of the American people,” he said.
He said it’s not just fraud, but money being misspent. He said as much as 25% of CMS’s spending is wasteful.
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