Carnival of Fraud

Step right up and be astounded by Miami's bizarre side show of Medicare and Medicaid scammers! After all, you're paying for it!

THE RECEPTIONIST
The receptionist did not look happy. Her mascara was streaked from tears, her dress rumpled to the hem, and her eyebrows, once slender brown lines, were now hoisted into apprehensive question marks. The frosted glass window behind which she generally sat, protected from the world, was flung open and she could see into the waiting room, where a trio of men in suits were murmuring to one another in English.

A half-hour earlier everything had been fine. It was just another March morning at the Gables Trauma Center, a diagnostic clinic tucked away in an office complex near the intersection of Calle Ocho and SW 40th Avenue.

Then a sweet little lady had walked in and asked for Dr. Mario Fonseca, which made sense -- it was his name, after all, that adorned the golden nameplate on the front door. But before the receptionist could explain that the doctor wasn't exactly available, the men with badges came barreling through the door. "We're from the state Department of Business and Professional Regulation," one declared. "This is an emergency inspection."

The agents fanned out through the clinic, then moved the employees into separate rooms and engaged in a game called Where's the doctor?

"Where's the doctor?" they asked.
The workers didn't know what to say. One ventured that the doctor was "out." Another explained that he was in Peru. A third merely shrugged. The truth of the matter was that Dr. Mario Fonseca was at the federal prison camp in Pensacola serving 21 months for medical fraud. The agents knew that. They'd been tipped off by a rental-car claims adjuster who had done a little background research about Gables Trauma after receiving medical reports from the clinic regarding two victims of an auto accident she suspected had been staged. The reports were signed by Fonseca.

What the agents actually wanted to know was this: Who examined patients at Gables Trauma? Their chief suspect turned out to be a short fellow with a gold watch and a snazzy blue suit. He identified himself as Enildo Marrero and insisted he was merely a quality-assurance worker who checked medical charts. The agents found this curious, inasmuch as his office contained an examining table.

An agent named Luis Collado plopped down at the receptionist's desk and used her phone to call another doctor whose name appeared in the clinic's records. The discussion was not encouraging. "What I'm trying to tell you is that Mr. Marrero is not a doctor," Collado emphasized. "He is not licensed to perform the activities you're telling me you saw him perform. I think you should find another place of business to operate."

The receptionist, eavesdropping from a nearby chair, bit her lip. Out in the hallway, one of the clinic's medical assistants hovered near the elevators in an apparent effort to divert any patients planning to visit the clinic. Both women looked terrified.

Collado and his cohorts, however, seemed almost bored. They appeared to regard the entire affair as no big deal, business as usual, just another day in the Medical Fraud Capital of the World.

Which it pretty much was.
There are hundreds of clinics like Gables Trauma in Dade. All you need is an occupational license in hand and a doctor's license on the wall, and you can start ringing up revenues to your heart's delight. And it doesn't matter if the doctor is dead, or in prison, because there's no real monitoring. DBPR agents occasionally muster the manpower for a raid, but unless they catch you engaged in a major medical fraud, there is little they can do besides open an investigation.

Which is precisely what happened on that March morning at the Gables Trauma Center. No arrests were made, no citations issued. The agents simply filled out some forms, confiscated a couple of boxes of business cards, and ripped the golden nameplate off the door with a loud thwap. Then, much to the receptionist's relief, they departed.

"We might as well open our own clinic with all this stuff," Collado mused, holding aloft the nameplate.

"Why not?" a colleague answered. "I'll bet the money beats state pay." Everyone laughed merrily and tromped off to lunch.

As of last week, the Gables Trauma Center was still in business. The woman who answers the phone there recalls the DBPR's visit a few months back. But she doesn't sound too concerned.

"That was just a routine inspection," she assures. "There is no problem here. No problem at all."

PSSST! HEY MAN, WANNA SCORE SOME MEDICARE?
When it comes to committing health-care fraud, that sentiment about sums up the mindset that now pervades South Florida.

Just as the drug trade defined the region's criminal underside during the go-go Eighties, fleecing health insurers is the creme de la scam of the Nineties. In March of this year, FBI director Louis Freeh marched onto Capitol Hill to announce that medical fraud is the fastest growing criminal enterprise in America, with an annual take of $44 billion. It's gotten so bad, Freeh told aghast congressmen, that certain street gangs in South Florida have abandoned cocaine sales for Medicare rip-offs.

While the specter of street-corner crack boyz dealing Medicare cards may seem just a tad on the panicky side, medical fraud plainly has been anointed an official CRISIS, and, as with any CRISIS, there is political hay to be made by playing it to the hilt. Thus, while Senate subcommittees cluck and national TV magazines broadcast local atrocities to the rest of the country, state and federal authorities are engaged in a mad dash to beef up enforcement.

U.S. Attorney Kendall Coffey, who has doubled the manpower devoted to prosecuting medical fraud here, calls it "a two-billion-dollar-a-year problem in South Florida." If he's right -- and nobody knows, really -- that would mean that our little peninsula accounts for nearly five percent of the entire nation's loss.

Most of that moolah comes from you, the taxpayer. That's because the primary target of fraud is the federal Medicare program, which administers health care to the elderly, and Medicaid, a state-run program to provide care to the indigent that is jointly funded by the state and feds.

One General Accounting Office study projects that, at the current rate, the Medicare system will be bankrupt by 2010.

How did this happen?
KEEP THE DOCTORS HAPPY
It all started so earnestly. The idea, knocked around first by Harry Truman, was to provide a national health insurance program. Sound familiar? Well, it didn't go over too well back then, either. The proposal was soon scaled back to include only the elderly (Medicare) and the needy (Medicaid). Eligible patients would be treated by approved providers, who in turn would be reimbursed by the government.

Lyndon Johnson, taking his cue from John Kennedy, made the passage of the Meds his top priority. Exactly 30 years ago this July he signed the bills into law. He did so, however, over fierce opposition from the American Medical Association, which went so far as to mount a public ad campaign against the proposal. Fearing the Meds would lead to a system of socialized medicine, many doctors boycotted the new legislation.

This was a problem. The fledgling programs were desperately dependent on the cooperation of doctors and other health-care providers. After all, if no one agreed to treat Medicare and Medicaid patients, the whole scheme would be useless.

Thus arose an unhealthy dynamic. Administrators designed a system that stressed the interests of health-care providers above all else. They made it remarkably easy to become a provider, and they guaranteed speedy reimbursement of all claims. It was a system founded on trust. The idea that doctors might defraud the system never really occurred to anyone, though it did seem disturbing that some raised their fees for treatment of the elderly as much as 300 percent upon the passage of the Medicare bill.

Initial forms of fraud were strictly nickel-and-dime. Billing for a medical exam that was really just a visit. Ordering an unnecessary diagnostic test or two. But in the past decade professional fraudsters have stepped in, often with the cooperation of unscrupulous M.D.'s. Today the General Accounting Office estimates that more than twenty percent of all Medicare claims in South Florida are bogus, a figure federal prosecutors say may be too low.

"If we stopped medical fraud tomorrow, the whole city would shut down," says one state agent, only half-jokingly.

Why has South Florida become the mecca of medical fraud? The answer seems to be a collision of factors.

First and foremost, there is a tremendous base of recipients here, i.e., old and/or poor people. Many are immigrants who don't speak English, have no idea how the Meds work, and thus are easily exploited. The ignorance on the part of health-care providers themselves seems a bit more willful. "Some of these people honestly think the U.S. government is in the business of printing money," says one FBI agent. "You can try to explain that they're breaking the law. But until you arrest them they just keep operating."

A culture of carpetbaggers, South Florida has long been attractive to grifters. Folks down this way seem refreshingly open to new business ventures and loath to question pedigrees or ethics. There is also easy access to offshore companies, foreign bank accounts, and, should it become necessary, an escape route.

To truly appreciate the CRISIS, though, it is best to deal in specifics. Thus, without further throat clearing, we present a few of the entrepreneurs who have made South Florida the carnival of fraud it is.

DR. IMO
Dr. Imo was a skinny man who wore a lab coat and tennis shoes and spoke righteously about the need to provide AIDS education to the disenfranchised. As a measure of his devotion, he was fond of distributing to residents of Liberty City and Little Haiti coupons that could be redeemed for condoms at his NW 79th Street health-care facility, which was called International Humanity. He also carried business cards that read "Dr. Imo John Akpaeti, M.D."

Dr. Imo wasn't a licensed doctor. He claimed to have earned that distinction in his native Nigeria, but as far as the State of Florida was concerned, he was just an X-ray technician. Still, he was an energetic fellow with a silver tongue, and his unorthodox approach to AIDS education quickly won favor with the state Department of Health and Rehabilitative Services (HRS), which gave his clinic more than $70,000 in grants in 1988. AIDS prevention was only a sideline for Dr. Imo, though. His specialty was home health care.

Home health care came into vogue a few years ago as a way of shortening hospital stays by having visiting nurses tend to patients at home. Home health was supposed to save the system money; instead, it created another ride in the carnival of fraud. All it required was a registered nurse, a procedures manual, a central location, and the names and billing numbers of patients. An industrious man like Dr. Imo had no problem earning admission. From March 1989 through June 1990, companies he owned and/or operated charged Medicaid more than one million dollars.

As is so often the case with health-care fraud, detection was more the result of dumb luck than diligence.

Throughout the late Eighties, a Medicaid fraud unit investigator named Nestor Abuan had busted a string of home-health companies owned by a Nigerian couple named Patrick and Ino Inwang. In April 1990, an elderly woman who had served as a witness in the Inwang cases called Abuan. Her complaint this time was about Dr. Imo.

Records reflected that Dr. Imo was seeing many of the same patients the Inwangs did. He was billing Medicaid for up to three home visits a day, seven days a week. Many of his patients did not need the services; others never received them. A few were dead.

The authorities shut down Dr. Imo's local operations, but the wheels of justice were slow in turning. By the time he was indicted in late 1992, Dr. Imo had broadened his business horizons by opening a home health-care service in Louisville and attempting to start another in New Jersey. While awaiting trial in Miami, he was charged with fraud in Kentucky.

Dr. Imo was indignant to the end. In court he railed against his racist accusers and blamed his employees for the fraud. He wrote endless screeds to Judge Shelby Highsmith. He was found guilty on all 40 counts in his indictment, and Highsmith sentenced him to 71 months in prison last February. He's doing time in Fort Dix, New Jersey. Reportedly, the ABC news magazine 20/20 is interested in documenting the saga.

THE LAND OF MILK AND MONEY
Francisco Leyva was an unemployed trucker without a lot of options when he met Frank Morfa. He had helped move some furniture for Morfa to earn a few bucks and he could see the prosperous businessman was the sort whose phone number he should keep handy. A couple of months later, in early 1990, Leyva called to see if Morfa might have a job available. "Just your luck," Morfa said.

The job consisted of overseeing a Hialeah warehouse full of canned milk products. Leyva also supervised a small fleet of drivers whose job it was to deliver the cans to elderly people all over Dade. The milk came in three flavors -- chocolate, strawberry, and vanilla -- and it was full of vitamins.

Leyva didn't understand much about the business, but he could see it was lucrative. Morfa and his various relatives were forever opening new companies and adding clients to his delivery list. Leyva even managed to get his wife and two stepsons hired to help. Sometimes the old people complained because they wanted strawberry rather than chocolate milk, or because they'd had enough milk and wanted delivery stopped. But just as often, they would invite him inside for some fried chicken and beer. Every two weeks Leyva got paid $500. He thought it was a pretty good job.

One day Leyva was helping to move some files into the warehouse when he happened to notice that one bore his mother's name. Inside was a typed form with his mother's name and address and a description of her physical condition. It listed her as weighing 106 pounds and suffering from "organic brain syndrome." His mother actually weighed more than 200 pounds, and her mind was so sharp that Leyva liked to joke that she could recite the last 600 episodes of her favorite telenovela. Leyva checked some more files of old people he knew from his deliveries and found the same sort of erroneous information.

Leyva had always suspected there was something fishy about the operation. Why, after all, would the government pay to have milk delivered to old people who were often perfectly healthy? An old woman he knew from his routes had said something about an investigator coming by to ask her questions. Not long after, Leyva was on the phone with the agent.

The call wound up being the key to unraveling one of the largest and most sophisticated Medicare frauds ever perpetrated. The infamous Morfa milk case cost the Medicare system an estimated $14 million. Before it was over, Morfa and ten other defendants, many of them his relatives, pleaded guilty. Another four were found guilty after a lengthy trial this past June.

The scheme was founded on an irresistible pitch to senior citizens: free milk from the government. All the viejitos had to do was hand over their Medicare account numbers.

Medicare will pay for recipients to receive fortified milk if the person in question can only be fed through a tube. Morfa simply paid doctors to sign forms stating that his clients had the necessary medical conditions. Dr. Mario Fonseca -- the man whose license hung on the wall at Gables Trauma Center -- was one of these doctors. Morfa also hired recruiters and paid them up to $100 to find new recipients.

The money was well spent. For each client promised free milk, Morfa and company collected $650 dollars per month from Medicare ($400 for five cases of milk plus $250 for tubal feeding kits). The same quantity of fortified milk sells in supermarkets for $75. As for the tubal kits, as Leyva told investigators, he and his staff never saw or delivered any.

The perpetrators were careful, though. To limit profits and avoid detection by auditors, they continually shut down older companies and started new ones. At their pinnacle, they were running a dozen companies and delivering milk to some 2000 lucky seniors. Prosecutors say they also set up companies to launder their considerable profits.

Before he was sentenced to 125 months in federal prison, Frank Morfa made a mint in the milk business. But he became better known as the owner of Little Havana's Mambo Club. And he apparently had a third business, as well. According to court documents, he faces federal drug-trafficking charges in Detroit.

Ironically, the 45-year-old Morfa, whose real name is Froilan Delgado, is no stranger to local law enforcement. He has a lengthy criminal record. Back in 1989, the same year he met Francisco Leyva, police busted him at Miami International Airport for carrying a fake passport. He eventually pleaded guilty, and his sentence was cut short after he entered into a cooperation agreement to help federal prosecutors with an unspecified criminal case.

The fake name on the passport? Frank Morfa, the same man Medicare would soon blithely enrich.

IMPORT/EXPORT
Miami's medical fraudsters generally prefer to ply their trade in South Florida, where the authorities are thoroughly overwhelmed. But they are not beyond seeking new horizons.

Take Eugenio Sanchez, who worked for ten years in the financial accounts department of HRS. It was there, he later told investigators, that he acquired his extensive knowledge of the Medicare and Medicaid systems. According to court papers, Sanchez was the brain behind a little-publicized scam that drained Medicare of more than four million dollars.

In 1989 he and his accomplices launched the first of five companies specializing in Medicare-approved respiratory equipment. As with the Morfa milk scam, the lure was a free giveaway. This time it was for a gadget that would help with allergies or sinus problems or even colds. Rather than canvass for patients in Miami, however, Sanchez targeted the quiet neighborhoods of Belle Glade, near Lake keechobee.

Recruiters went door to door, offering a wondrous "breathing machine" to anyone willing to impart their Medicare number and sign a few forms. If people asked, the recruiters identified themselves as respiratory therapists. (The mechanism, called a nebulizer, is used in combination with medications to dilate a patient's bronchial passages.)

Back in Miami, Sanchez took care of the paperwork. He paid three doctors to sign documents stating that they had seen "patients" in Belle Glade, and that it was medically necessary for each to receive a nebulizer. Then it was off to the reimbursement races.

Medicare paid through the nose. About $450 for the breathing machine, and up to $600 for the necessary medications -- per patient each month.

The feds caught on to the plan because one of the doctors helping Sanchez, Frank Ballesteros, was arrested in Miami on a different charge. He was accused of billing Medicare for diagnostic tests that were never done, another common form of fraud.

In his urgency to cooperate with the authorities, Ballasteros mentioned the Belle Glade operation.

Sanchez and two other defendants, Larry Waters and Jose Carlos Perez, maintained their innocence until the eve of the trial this past year. Then they abruptly pleaded guilty. Sanchez was sentenced to 46 months in prison, Waters to 41 months, and Perez to 51 months. Among the exhibits prosecutors were prepared to present at trial was a diagram highlighting the number of homes in Belle Glade where nebulizers had been delivered. "In some areas, practically the whole block had them," notes prosecutor Adrienne Rabinowitz. "They were obviously not medically necessary."

Just as Miami exports fraud, the city has an uncanny knack for attracting scoundrels. A financial prodigy with a degree from the Harvard Business School, Akiyoshi Yamada pleaded guilty to assorted stock frauds in New York and New Jersey. One 1987 arrest left him facing five years behind bars. Instead, Yamada made a deal to help federal authorities with other cases, and then lit out for -- where else? -- Miami, where, according to the FBI, he set up -- what else? -- a Medicare mill.

Yamada is currently the target of a federal grand jury investigation centered on a complex of clinics and medical laboratories on West Flagler Street. The FBI suspects Yamada and his associates charged Medicare at least $20 million for medical treatment and equipment that was either unnecessary or undelivered.

WE DON'T NEED NO STINKIN' PATIENTS
Those who have the unenviable task of catching scalawags in South Florida have, perhaps inevitably, developed their own specialized lingo.

There are, for instance, professional bennies, shorthand for beneficiaries. These are people who accept payment to take part in fraudulent medical services A usually diagnostic tests A that are billed to the Meds. Sometimes the pay is a free lunch; other times it's a small amount of cash. In Miami FBI agents report instances in which professional bennies have attempted to sell their services to the highest bidder.

Recruiters find professional bennies and transport them to clinics for testing. On some streets -- Flagler, for instance -- the glut of recruiter vans and buses has spurred complaints from neighborhood residents. Not to worry: According to the FBI, certain clinics have hired off-duty police officers for crowd control.

The entire Medicare/Medicaid system is driven by physicians. Without their certification that a test or procedure is "medically necessary," the government won't pay. Doctors who receive kickbacks for their signatures are known as doctors of signology. One state investigator is fond of recalling his visit with one suspected doctor of signology. The man, who is ostensibly examining patients for twenty different clinics around town, was so infirm he could barely totter from his living room to his bathroom.

Weary of the rigors of government paperwork, doctors are increasingly turning to professional billing services, which some investigators have dubbed bilking services.

The jargon is fascinating, but fast becoming dated. South Florida's most recent big-ticket scam, in fact, required no professional bennies or recruiters or doctors of signology. No people at all. Just a few industrious nerds sitting at home with personal computers and modems.

According to an indictment filed last month, nine Dade Countians were able to take Medicaid for more than a half-million dollars by filing electronic claims for treatments at phantom clinics, using the names of eligible patients and doctors. The ring is said to consist of four sisters and their friends joy riding the Medicaid system.

The case may be a harbinger. Prosecutors say that as more and more billing is done via computer, they fear the system will become vulnerable to a new breed of charlatan -- computer hackers who can tap into the system and wreak havoc, leaving not a trace of paper behind.

It is comforting to know that as technology advances, South Florida's scammers keep pace.

A PUBLIC SERVICE
At this point, you may be shaking your head and muttering about how easy it is to defraud Medicare and Medicaid.

Conversely, you may be wondering how to grab your slice of the pie.
Without getting too specific -- New Times wouldn't want to be held responsible for fostering criminal behavior -- we offer the following primer.

Step 1: Using a fictitious name, file papers of incorporation with the state for your new medical-service company.

Step 2: Rent a mailbox and buy a beeper.
Step 3: Apply to receive your Medicare (or Medicaid) provider number. The applications are just a few pages long and only ask for basic information. Name, address, and phone number. To avoid detection, it's best to list your fictitious name, the address of your rented mailbox, and your beeper number. Remember, verification is minimal, especially for medical suppliers and diagnostic clinics.

Step 4: Get your hands on some Medicare/Medicaid recipient numbers. These can be acquired through door-to-door recruiting, visiting nursing homes, or simply cozying up to the right hospital staffers.

Step 5: Find a physician who doesn't mind bending the rules a little by providing his signatures for necessary medical forms. It's best to look for an older doctor, preferably one who was trained outside the U.S. Remember: In a pinch, you can always forge a signature.

Step 6: File your claims!
Helpful hint: If you're planning to do big business, open a few companies. That way payments will stay small enough to escape the interest of those pesky auditors.

CRACKDOWN
Federal Magistrate William C. Turnoff was incredulous. Before him stood a balding man with a ponytail. Pedro Luis Artola described himself as an unemployed tow-truck driver from Boston. He was being arraigned in federal court because prosecutors alleged he was the mastermind of a scheme that took Medicare for $300,000 by billing the system for diagnostic tests performed at a phantom medical lab. Some 70 of the patients purportedly tested were dead.

"Is no one checking?" Turnoff wondered aloud. By which he meant: "You mean this guy nearly got away with 300 grand? Why in God's name did I allow my parents to push me into law school?"

The case was actually a little less outrageous than it seemed to Turnoff last July. Yes, a fraud had been committed. And yes, supervision had been virtually nil. But Artola wasn't the mastermind. Though he had spent nine months in jail under this presumption, prosecutors eventually would admit that he was only a gofer who'd been paid a total of $200.

As embarrassing as the Artola affair was, it did lead to a major innovation in the fraud crackdown, one that may change the way prosecutors all across the U.S. pursue fraud criminals.

Artola was caught when he tried to withdraw $200,000 in cash from a bank account connected to a phony laboratory. In assessing the situation, federal prosecutors reached the not-so-startling conclusion that going after the money might be a dandy way to shut down this and other fraud operations. Rather than pursuing lengthy criminal probes, which allow perpetrators to spend or launder their profits, the feds are now filing civil suits to freeze ill-gotten assets within days of their discovery. They have collected about five million dollars so far using this technique, and helped stop payment on another three million dollars in apparently fraudulent Medicare payments. The Florida Attorney General's Office is taking a similar tack by suing Medicaid criminals for treble damages in civil court under the recently passed False Claims Act.

In a more fundamental sense, law enforcement officials are revising their approach to health-care fraud. Previously, cases were made by reconstructing criminal conduct through documents, a process that took years. "Those days are over," vows one FBI agent. "From now on, we're going to be working proactive cases." In other words, going undercover. Planting wiretaps. Opening fake clinics. Catching crooks in the act.

Accordingly, local fraudbusters are finally receiving the help they've clamored for. The FBI's Miami fraud squad has grown from eight investigators to twenty this year. The Dade contingent of the Medicaid Fraud Unit will have up to 39 investigators by July, more than half the staffing for the entire state. And most dramatically, local Health and Human Services investigators now number a half-dozen, up from an all-time low of one agent last year.

Representatives from these units are also meeting with Medicare/Medicaid officials on a regular basis to develop a unified strategy. "We're trying to treat medical fraud like any other organized crime syndicate," notes one HHS agent. "That means going after the kingpins -- the doctors and the owners of these fraudulent provider companies."

State and federal sources say at least four major cases are under investigation by the grand jury, each of which involves losses to the Medicare/Medicaid systems of five million dollars or more.

Law enforcement officials are also pushing for tougher state and federal sentencing guidelines. Historically, fraud has been considered a lesser offense because it is a nonviolent and so-called victimless crime. "They may not have been stealing with a gun, but they're stealing a lot more," argues Mark Schlein, director of Florida's Medicaid fraud unit. "And the people who suffer in the end are the sick and the elderly."

In his March address to Congress, FBI director Louis Freeh called for a revision of existing racketeering and money-laundering statutes so federal prosecutors can more easily build cases against medical fraud suspects.

OOOPS!
For all the noble intent, there have been a few glitches in the new approach. The most striking example -- one that would be funny if it weren't so pathetic -- was an FBI operation to catch thieves by selling copies of 35 actual Medicare cards to a suspected Medicare mill. Essentially, a Medicare card is like a credit card that allows a health-care provider to bill the government in a patient's name. Because the cards are based on Social Security numbers, Medicare cannot cancel the cards.

The FBI sold the cards, hoping to get some good leads. But they never bothered to inform their rightful owners or Medicare officials. The result: Scammers billed and received tens of thousands of dollars for medical care never provided.

Furious Medicare officials point out that the FBI easily could have requested that phony cards be issued for the probe.

The FBI's defense? They bought the cards on the street, so they would have fallen into the wrong hands anyhow.

THE BOTTOM LINE
As lame an excuse as that might be (and it sounds plenty lame), it does highlight the root disease of the Medicare/Medicaid system.

Simply put: The government gives away its money too freely.
"It's this never-ending game of pay and chase," complains one fraud prosecutor. "We can add agents until the cows come home, but the only way to stop fraud is to set up a meaningful screening process on the front end."

Officials at the Health Care Financing Administration (HCFA), the federal agency that runs Medicare and Medicaid, say they are acutely aware of the problem.

"We know we have to start putting some controls in, and that's precisely what's happening," says Linda Ruiz, director of HCFA's Office of Medicare Benefits Administration. She points to efforts such as the National Supplier Clearinghouse, a survey set up to more closely monitor which suppliers are allowed to bill Medicare. As a result of this added supervision, HCFA has disqualified about 1500 suppliers. Administrators also hope to introduce a new computer system designed to detect patterns of fraudulent billing. Ruiz says HCFA was so concerned about the situation in Dade that the agency set up the South Florida Workgroup, a collection of local and national Medicare and Medicaid experts who spent a year studying ways to stanch fraud.

But she warns that the Med systems are simply too huge to be retooled overnight. Last year, for example, Medicare disbursed $158 billion to 1.6 million providers on behalf of 36 million patients. Medicaid will provide $7.2 billion worth of care this year to 1.5 million indigent Floridians.

Critics of HCFA say reform has been glacial at best. "If you really want to stop fraud, the first thing to do is blow up HCFA and start all over again," says one exasperated federal official. "They run all over the country saying all the wonderful things they're going to do. But they're still trapped in this leftover mentality that 'we have to be nice to the providers or they won't take the Meds.' They act as if being a provider is every American's right. They need to realize that more than ten percent of these providers are criminals. And they've raped South Florida."

In spite of HCFA's get-tough rhetoric, this same official notes, the processing of claims continues unabated. "What most people don't realize is that HCFA contracts out claims-processing to private insurance firms, and the marching orders they give are, 'Pay those claims fast. Don't keep the providers waiting.' Besides, the private companies themselves get paid by the claim, so there's no great incentive for them to root out fraud."

Among the measures she advocates:
requiring providers to put up a bond as part of the application process;
charging an application-processing fee to providers and using the surplus to defray the costs of on-site inspections and other safeguards;

forcing providers and doctors to submit an affidavit, under penalty of perjury, swearing not to file fraudulent claims;

easing the process by which Medicare cards can be revoked and reissued, should they fall into the hands of scammers;

mandating that all physicians accept Medicare and Medicaid patients.
One veteran fraud investigator suggests a more radical approach. "They should just put a freeze on all payments for a few months, until they can weed out the bad guys," he huffs.

HCFA officials argue that such moves could cause providers to refuse treatment to Medicare and Medicaid patients.

But others maintain that plenty of lesser reforms could be enacted without jeopardizing the efficiency of the system. For instance, HCFA could make sure all recipients are sent an explanation of benefits -- in the recipient's native language -- to ensure they received a service for which the government was billed. As it is, Medicare often doesn't bother.

They might also pay closer attention to their own fraud investigators, who for years have been filing Management Implication Reports with specific recommendations. "I don't know what happens to those things," says one dejected investigator. "They sure don't get read."

To local prosecutors and fraud investigators who face the nation's highest rate of fraud, frustration with HCFA comes naturally.

"They're up against a bunch of criminals who are like morphic parasites, constantly changing form, and they're this big clunky bureaucracy without the slightest common sense," says one federal prosecutor. "Take the Morfa milk case. How much common sense does it take to see something's wrong there? Do they think the entire population of Dade County is unable to eat solid food?"

ANYONE INTERESTED IN A 1987 CHEVY CAPRICE?
Amid all the naysaying, there remain a few shining examples of the system at its best. One of the most touching occurred last year in Palm Beach, where state officials witnessed the stunning results of a pilot program designed to make it easier for Medicaid patients to receive free transportation to area doctors and hospitals.

In other counties, Medicaid recipients had to obtain prior approval before arranging a ride. The authorities did away with all that messy red tape in Palm Beach. Patients were allowed to call taxis directly. The drivers, in turn, were paid simply by submitting a voucher with a Medicaid recipient's ID number and signature, along with a record of how long the trip was.

The response was phenomenal. In the first ten months of 1994 alone, cabbies billed Medicaid for more than 400,000 trips, at a total cost of nearly $15 million. In fact, more money was shelled out by Medicaid to drivers in tiny Palm Beach County than the entire rest of the state combined!

Obviously the program was a tremendous success. New cab companies sprang up like toadstools. Based on the billing, each of these companies transported a remarkable 90 Medicaid recipients every day.

Perhaps the most inspiring story was that of two Haitian brothers who, according to the bills they submitted, drove Medicaid patients 1.3 million miles in ten months using just one cab -- a 1987 Chevy Caprice. Figuring they drove their cab sixteen hours a day, seven days a week, they averaged a speed of 203 miles per hour. Might sound a little dangerous, but when you're dealing with patients in need, speedy transport is a must, and well worth the $1.1 million they wanted to be reimbursed.

Inexplicably, state authorities claim they were actually trying to shut down the pilot program in Palm Beach as early as 1993. And a handful of cab company owners whose heroic efforts distinguished the program were, sadly, arrested on grand theft charges just this past Friday.

A similarly cruel fate may await 57-year-old Jesus Castillo, a Miami physician who was arrested just this past week for allegedly orchestrating a series of fake auto accidents, then billing the Meds millions in bogus medical costs. According to the federal indictment, three companies owned by Castillo paid recruiters up to $300 for "patients" willing to take part in the accidents.

As preposterous as this may seem, a number of upstanding personal-injury attorneys may also be implicated in the alleged scheme.

THE RULES ARE DIFFERENT HERE
The latest trend in Medicaid involves enrolling recipients in Health Maintenance Organizations (HMOs), private insurance groups that stress preventive care. Recipients who sign up for HMOs, however, surrender their rights to other Medicaid coverage. The idea was to cut costs while offering healthy recipients better preventive care.

It didn't take long for scammers to find an angle.
Because Medicaid pays a set fee for each recipient enrolled, certain HMOs have dispatched recruiters to sign up indigents. "They stalk these poor people," says Dr. Joe Greer, medical director at the Camillus House homeless shelter downtown. "They love us because they know our clients are the least likely to actually use the services, yet the providers still get their monthly check from Medicaid."

Greer has made it clear he doesn't want any recruiters on the premises. But he still hears about their exploits from confused clients. "They convinced one woman, who actually couldn't read, to sign up her three little kids in an HMO."

Greer says he's received reports from staffers that recruiters have been trolling under the highway overpasses, signing up AIDS patients. "The cynicism is amazing," he observes.

There's even one food stamp distribution line where recruiters from rival HMOs got into a physical fight over who had the right to sign up recipients on particular days. The combatants eventually wound up agreeing to a schedule.

"That's South Florida for you," Greer says. "The rules are different.

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