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Growing health care fraud drastically affects all of us

Source: Association of Certified Fraud Examiners

Rx for Fraud: Health care fraud issues

Welcome to the new health care fraud column. In May, U.S. authorities charged 107 people — including doctors, nurses and other licensed medical professionals, for allegedly trying to defraud Medicare of about $452 million, the largest Medicare fraud sweep to date. “Health care fraud shows no sign of abating,” said Dr. Joseph T. Wells, CFE, CPA, founder and Chairman of the ACFE, during his recent keynote message at the 23rd Annual ACFE Fraud Conference & Exhibition. “Don’t expect a downturn any time soon because governments have a long history of being able to dole out money without keeping very good track of it.”

In this inaugural column, Lauren E. Davis, CFE, ASA, a consulting manager with Pershing Yoakley & Associates, P.C., describes other recent cases, pertinent U.S. legislation and governing agencies, typical schemes and ways to detect and deter health care fraud. — ed.

Shidonna Raven Garden and Cook

Health care fraud is a serious problem affecting every patient and consumer. The devastating situation is rooted not only in the excessive financial losses incurred, which extend into the billions of dollars every year, but also in patient harm. It’s estimated that the economic cost of fraud related to health care in the U.S. is 3 percent to 10 percent of all healthcare spending — an estimated $68 billion to $260 billion annually.  

Fraudsters commit a wide variety of schemes against private and public insurance companies by filing fictitious health care claims to generate profits. As health care costs rise, so will the costs associated with these schemes. Consumers then will endure rising insurance premiums and out-of-pocket expenses.


The successful prosecution of individuals charged with committing health care fraud is an essential step in the deterrence of fraudulent activity. The punishment of health care fraud perpetrators can include such serious consequences as fines, incarceration and even the loss of the provider’s right to practice in the medical profession. The following are examples of recent fraud indictments:

Medicare Fraudulent Billing Scheme — Justice News, June 2012 
Various individuals, including owners, the CEO and other senior employees, of American Therapeutic Corporation (ATC), a mental health company in Miami, have been convicted or named as defendants for their participation in a $205 million Medicare fraud scheme involving fraudulent billings. The defendants are alleged to have billed Medicare for hundreds of millions of dollars for services that were either unnecessary or never provided to the patients, and based on fraudulent documentation. Some key participants — ATC’s executives, Lawrence Duran, Marianella Valera, Judith Negron, and Margarita Acevado — were sentenced to 50 years, 35 years, 35 years and 91 months in prison, respectively, for their roles in the fraud scheme. 

Settlement of False Claims Act allegations — Justice News, December 2010
Detroit Medical Center, a non-profit company that owns and operates hospitals and outpatient facilities in Detroit, allegedly engaged in improper financial relationships with referring physicians. The company has agreed to pay $30 million to settle allegations that it violated the False Claims Act, the Anti-Kickback Statute and the Stark Statute. 

Medicare fraud scheme — Justice News, December 2010
The owner and vice president of Wayne County Therapeutic Inc. were sentenced to 151 months and 108 months in prison, respectively, and ordered to pay $6.5 million in restitution. The two were the leaders in a $23 million Medicare fraud scheme, which included the filing of false claims for physical and occupational therapy services that were never provided

Medicare and Private Insurance Fraud Scheme — Justice News, June 2012
Boris Sachakov, M.D., owner and operator of Colon and Rectal Care of New York, P.C., was found guilty on one count of health care fraud and five counts of health care false statements. The indictment alleged that Sachakov submitted more than $22.6 million in false and fraudulent claims to Medicare and private insurance companies for surgeries and medical services that were never provided and received in excess of $9 million on those claims. Sachakov faces a maximum penalty of 35 years in prison and an $18 million fine. 

Organized crime health care fraud — Justice News, October 2010
A total of 73 defendants, including alleged members and associates of an organized crime enterprise, were indicted for various fraudulent billing schemes totaling approximately $163 million. The frauds committed included submission of bills for medically unnecessary treatments or for treatments that were never provided, identity theft of physicians and Medicare beneficiaries and the operation of phony clinics for the purpose of submitting Medicare reimbursement claims. 

Would you recognize health care fraud of you saw it? Financial gain is often the reason behind most health care fraud? What other reasons are there? Why? Why not?

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Surgeon who billed insurers of nearly $30 million pleads guilty to federal fraud charges

Jeff Burlew, Tallahassee Democrat
Source: Tallahassee Democrat

Dr. Moses deGraft-Johnson
Source: Tallahassee Democrat
Shidonna Raven Garden and Cook

Dr. Moses deGraft-Johnson, a cardiovascular surgeon who snaked his way into under-served communities to find patients to rip off and deceive for his own financial gain, pleaded guilty to federal fraud charges.

DeGraft-Johnson, owner of the now-shuttered Heart and Vascular Institute of North Florida, was indicted Feb. 4 on numerous counts of health-care fraud and related charges. He pleaded guilty Friday to 56 counts of health-care fraud, conspiracy to commit fraud and aggravated identity theft.

He was accused of billing Capital Health Plan, Medicare and others for procedures he never performed at the clinic and walking away with at least $29 million, which he used to bankroll a jet-set lifestyle.

DeGraft-Johnson appeared before U.S. Chief District Judge Mark Walker via video link from the Federal Detention Center in Tallahassee, where he has been held since his indictment was unsealed. 

According to the U.S. Attorney’s Office, he used churches, nursing homes and at least one hospital to find vulnerable victims, many of whom were subjected to invasive and unnecessary procedures. His crimes left some patients unsure about the veracity of their own medical records and what treatment they may actually need.

The back story:

Prosecutors: Tallahassee cardiovascular surgeon bilked health insurers of $23 million

Poached patients, phantom surgeries and betrayal: Feds call $23 million scheme a ‘cancer’

Tallahassee surgeon expected to plead guilty in massive federal health-care fraud case

Federal prosecutors said they will continue to work to uncover all aspects of deGraft-Johnson’s scheme so patients can be properly informed and treated.

“It is critically important that we do everything within the scope of our authority to help the patients preyed upon by this criminal doctor, in order to seek recovery of the $29-million-plus that he fraudulently received and to prevent similar schemes from happening in the future — both by deterring the would-be perpetrators and by educating those they would exploit,” U.S. Attorney Larry Keefe said in a written release.

Prosecutors also vowed to “aggressively pursue” all of his forfeitable assets in the United States and abroad, including luxury cars, jewelry, watches, more than $1 million in cash and homes in and around New York City, Miami and Houston.

The investigation was conducted by the FBI, the IRS, the U.S. Department of Health and Human Services, the U.S. Department of Commerce, the Bureau of Alcohol, Tobacco, Firearms and Explosives and the Florida Attorney General. Assistant U.S. Attorney Andrew Grogan serves as lead prosecutor.

Rachel Rojas, special agent in charge of the FBI’s Jacksonville Division, said such fraud reduces the availability of critical resources and contributes to the rising cost of medical care.

“Today’s plea is a direct result of the commitment by the FBI and our law enforcement partners to aggressively pursue those who willingly defraud American citizens,” she said in a news release. 

Degraft-Johnson, 46, was born in Ghana but immigrated to America with his family as a child, settling in the Houston area. He had a storied medical career — including reportedly saving the life of rapper 50 Cent, who came into his Queens trauma ward in 2000 with gunshot wounds.

In recent years, he divided his time between Tallahassee, where he had a downtown condo, and New York City, where his wife and children resided. He joined Capital Regional Medical Center’s staff in 2014, working as an independent doctor until sometime before his crimes came to light.

He had numerous business ventures in the U.S. and Africa, including a hamburger restaurant, a nightclub and a failed effort to build a hospital in Ghana. He even aspired to run one day for president of Ghana; one of his family members served as vice president of the country in the early 1980s.

Kimberly Austin, who worked as an office manager at the institute, was also charged by a federal grand jury in Tallahassee. She pleaded guilty last month.

Degraft-Johnson faces a maximum sentence of 10 years in prison on each of the fraud and conspiracy counts, another maximum sentence of two years for the identity theft and hundreds of thousands of dollars in potential fines. He will be sentenced April 8, 2021, at the U.S. Courthouse in Tallahassee.

Contact Jeff Burlew at or follow @JeffBurlew on Twitter.

How far will doctors go to commit fraud? Some have reported doctors appearing in the community where they are including coming on their jobs. Health Insurance Fraud cost taxpayers and insurance companies billions and sometimes trillions of dollars annually. For some patients it costs them their life due to poor health outcomes due to medical fraud. When asked about the frequent appears of medical professionals at locations where their patients where in public, we were told that it is public space. What are your thoughts on this matter? How is this different from stalking and what are the HIPPA implications? The department of Justice prosecutes several health care fraud cases every year. What are the economic implications for the areas where medical care fraud is rampant and the medical industry is large?