Huge Medicare Fraud Case Highlights Voter Frustration with Government Spending

Doctor identities were stolen and $163 million were billed in Medicare fraud, allegedly by an Armenian-American group. 73 were charged Wednesday with racketeering and more, resulting in what prosecutors told the New York Times is the largest Medicare fraud ever connected to one group. These charges come almost on top of an election that already has voters frustrated with the level of government spending.

The fraudulent Medicare billing over a four-year span was for treatments that never happened. There was no real doctor-patient interaction. The racket included over 188 fake clinics in 25 states. Of the $163 million billed, $35 million in fraudulent Medicare reimbursements were payed.

Fraud a Huge Drain on Medicare

While this may be an enormous instance of Medicare fraud, abuse of the system is not uncommon. The National Health Care Anti-Fraud Association estimates that more than $60 billion is lost to medical fraud each year. This cost is filtered down to voters in higher medical costs, raised insurance rates and higher taxes.

In July, two brothers, Rolando Nogueira and Jose Nogueira, pleaded guilty to multiple charges dealing with $13.7 million Medicare fraud. The Florida case involved false HIV infusion claims. Of that total, Medicare paid $4.1 million toward the claims. The brothers had bribed or offered kick-backs to patients to make the claims for transfusions that were either not needed or never administered.

The Nogueiras face prison time, the amount to be determined at their Nov. 5, 2010, sentencing. The conspiracy to defraud the United States charge carries a five-year maximum sentence and the health care fraud conspiracy charge tops at 10 years. Two other conspirators will be sentenced on the same date, and another is still awaiting trial.

SEC Not Politically Influenced in Settled Goldman Fraud Case

Another case was cleared up Wednesday, this one against the Securities and Exchange Commission (SEC), concerning Goldman Sachs fraud charges. An internal investigation determined that the SEC did not allow political motivation to influence their handling of the Goldman Sachs fraud case.

It was found that the SEC broke its own rules by not doing enough to warn the Wall Street bank of the possible fraud charges.

This Goldman Sachs case is a hot button topic with voters, since it concerned the financial meltdown and recession. The SEC sued Goldman for fraud on the basis of selling financial securities that the bank knew would fail to European financial firms. Goldman settled the case, without any admission of guilt, by agreeing to pay a penalty of $550 million.

Medicare Fraud & Voters

According to a Tarrance Group and Hart Research poll, 71 percent of likely-to-vote Americans think that government spending is too high. Only 8 percent believe that it is too low.

What does this have to do with the Medicare fraud case? The poll cites that 68 percent believe that government spending affects their lives personally. Medicare is a government program, and the voting public may see that lost $35 million as another instance of waste or frivolous spending--in that it should have been detected. This voter frustration may come out this November.

If the 44 charged are convicted and the bulk of the stolen Medicare money returned, this could turn into a government win, just not in time for the mid-term elections. Voters will have more confidence that the government is doing its job and administering proper oversight over taxpayer money. However, convictions are not guaranteed or always warranted in fraud cases (and many are settled), which could lower voter confidence and raise frustration with government spending.

Sources:

'34 L.A.-area residents held in Medicare fraud scheme' Ching-Ching Ni, LATimes.com

'44 Charged in Huge Medicare Fraud Scheme' William K. Rashbaum and Michael Wilson, NYTimes.com

Tarrance Group and Hart Research Poll: Spending Just Got Personal

'SEC Cleared in Goldman Fraud Case' Zachary A. Goldfarb, WashingtonPost.com

'Two Brothers Plead Guilty in Miami HIV Infusion Medicare Fraud Scheme' Department of Justice 7/30/10 press release, Justice.gov