Medical Fraud Booming, Fbi Director Testifies


Medical fraud has become so profitable that organized crime is moving into the business, and even drug dealers are abandoning narcotics for medical scams, FBI Director Louis Freeh said Tuesday.

“Profits are staggering” and the chance of being caught is “minimal,” Freeh said.

Freeh testified before a Senate committee examining health care fraud, which costs an estimated $30 to $100 billion a year - 3 percent to 10 percent of the country’s health care costs.

Other witnesses, including health industry and insurance experts, outlined various types of fraud to the Senate Special Committee on Aging, including schemes that involve billing for “phantom” care that was never given, kickbacks to doctors, doublebilling, fake auto-accident ploys and “pill mills” - clinics that improperly issue controlled drugs, such as Valium, to addicts.

“In South Florida and Southern California, we have seen cocaine distributors switch from drug dealing to health-care fraud schemes. The reason - the risks of being caught and imprisoned are less,” Freeh said.

Sen. William Cohen, R-Maine, who chairs the committee, said one case involved ABC Home Health Services Inc. of Georgia, which allegedly charged $16,000 in alcoholic beverages to Medicare, along with $3,200 in golf shop expenses and about $85,000 in gourmet popcorn.

A statement by the Association of American Physicians and Surgeons Inc., quoted a thief who said he robbed banks because “that’s where the money is.” Huge health care programs are now “the functional equivalent of banks,” said the association.

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