A recent FBI investigation in Los Angeles has led to the discovery of a scheme that allegedly exploited the homeless to commit tens of millions of dollars worth of health insurance fraud.
The investigation began in 2004 when Union Rescue Mission employee Scott Johnson began noticing vans loading up homeless people in front of his workplace on LA’s notorious “Skid Row”. Concerned by what he saw, Johnson notified the state authorities. Security cameras on the building also recorded footage of ambulances disposing of patients on the street corner.
Police investigations allege that a conspiracy between the mission operator and a group of private hospitals sought to bribe the local homeless in exchange for their Medicare benefits information. Apparently, the information was then used by the hospitals to submit false health claims on their behalf. Union Rescue Mission residents said that recruiters would arrive each morning and offer food, cigarettes, and sometimes cash to the homeless.
Recruits often received no medical care, but some received medical treatment even when unnecessary. One patient reported receiving a nitroglycerin patch for a non-existent cardiopulmonary condition. The procedure caused a drop in her blood pressure, leaving her ill.
Three hospitals were investigated in connection with the scheme that began in August 2004 and lasted until about October 2007: Los Angeles Metropolitan Medical Centre, City of Angels Medical Centre, and Tustin Hospital and Medical Centre in Orange County.
The investigation has resulted in the arrest of City of Angels Medical Center executive Rudra Sabaratnam and Union Rescue Mission operator Estill Mills. Both men are charged with conspiring to take and receive bribes and with committing health care fraud.
City of Angels and Tustin Hospital reportedly paid Mills $1,600 - $20,000 a month and distributed salaries for the recruiters Mills managed (New York Times 2008/08/10).
As investigations move forward, more arrests are expected to take place. If convicted of all counts, Sabaratnam would face a maximum penalty of 50 years in federal prison, and Mitts would face a maximum sentence of 140 years in prison (CNN 2008/08/07).