Billions Blown on Power Wheelchairs in Medicare Scam
Policy + Politics

Billions Blown on Power Wheelchairs in Medicare Scam


LOS ANGELES — In the little office where they ran the scam, a cellphone would ring on Sonia Bonilla’s desk. That was the sound of good news: Somebody had found them a patient.

When Bonilla answered the phone, one of the scam’s professional “patient recruiters” would read off the personal data of a senior citizen. Name. DOB. Medicare ID number. Bonilla would hang up and call Medicare, the enormous federal health-insurance program for those over 65.

She asked a single question: Had the government ever bought this patient a power wheelchair? No? Then the scam was off and running.

“If they did not have one, they would be taken to the doctor, so the doctor could prescribe a chair for them,” Bonilla recalled. On a log sheet, Bonilla would make a note that the recruiter was owed an $800 finder’s fee. “They were paid for each chair.”

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This summer, in a Los Angeles courtroom, Bonilla described the workings of a peculiar fraud scheme that — starting in the mid-1990s — became one of the great success stories in American crime. The sucker in this scheme was the U.S. government. That wasn’t the peculiar part. The tool of the crime was the motorized wheelchair.

The wheelchair scam was designed to exploit blind spots in Medicare, which often pays insurance claims without checking them first. Criminals disguised themselves as medical-supply companies. They ginned up bogus bills, saying they’d provided expensive wheelchairs to Medicare patients — who, in reality, didn’t need wheelchairs at all. Then the scammers asked Medicare to pay them back, so they could pocket the huge markup that the government paid on each chair.

A lot of the time, Medicare was fooled. The government paid. Since 1999, Medicare has spent $8.2 billion to procure power wheelchairs and “scooters” for 2.7 million people. Today, the government cannot even guess at how much of that money was paid out to scammers.

Now, the golden age of the wheelchair scam is probably over. But, while it lasted, the scam illuminated a critical failure point in the federal bureaucracy: Medicare’s weak defenses against fraud. The government knew how the wheelchair scheme worked in 1998. But it wasn’t until 15 years later that officials finally did enough to significantly curb the practice.

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“If you play it right, you can make a lot of money quickly, stealing from Medicare,” said James Quiggle, of the nonprofit Coalition Against Insurance Fraud, recounting the lesson of the past decade and a half. “You can walk into the United States, with limited English skills, no knowledge of medicine, and — if you hook up with the right people, that know how to play the system like a Stradivarius — you can become an overnight millionaire.”

‘I Said I Didn’t Need It’
In the courtroom in Los Angeles, 42-year-old Olufunke Fadojutimi was on trial. Prosecutors alleged she’d run a wheelchair-scam operation out of an office-park suite in suburban Carson, Calif. As these scams go, this one was medium-sized. It billed Medicare for about 1,000 power wheelchairs.

“I said I didn’t need it,” witness Heriberto Cortez, 73, testified on the stand. Cortez was recalling the day when a stranger — allegedly one of Fadojutimi’s patient recruiters — came to his house and offered him a wheelchair. He said no. She didn’t listen. “She insisted,” Cortez said. “She said that they were giving the chairs away.”

Later in the trial, 71-year-old Rodolfo Fernandez testified that a woman showed up at his house in Los Angeles. The woman asked if he was on Medicare. He was. The next day, she came back with a van. Other seniors were already inside. “They took us to a clinic. They did an exam on us,” Fernandez recalled, translated speaking through a Spanish interpreter.

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Authorities said the doctor at this clinic was in on the scam, too. He was paid to find the same problems, every time. The patient was too weak to use a cane. Or a walker. Or even a non-motorized wheelchair. Only a motorized wheelchair would do. Instead of making lame men walk, the doctor’s job was to make walking men lame — at least on paper.

A surge in power wheelchairs and scooters paid for by Medicare: Since 1999, Medicare has spent $8.2 billion to procure power wheelchairs and scooters for 2.7 million people. Today, the federal government does not know how much of that money was actually paid to scammers.

In his testimony, Fernandez noted that the clinic was in a second-floor walk-up. “I had to climb the stairs,” Fernandez said, in order for the doctor to proclaim him unfit to climb stairs. After seeing the doctor, prosecutors said, both Cortez and Fernandez got power wheelchairs from Fadojutimi’s company. The company then sent Medicare the bills. Medicare paid.

Today, Cortez’s wheelchair sits in his garage, still wrapped in plastic from the factory. Fernandez’s wheelchair is occupied by an enormous stuffed animal wearing a Los Angeles Lakers hat. “I put my little teddy bear on top of it,” Fernandez said, as jurors smiled at a photo of the bear in the chair.

An Overwhelmed System
Fraud in Medicare has been a top concern in Washington for decades, in part because the program’s mistakes are so expensive. In fiscal 2013, for instance, Medicare paid out almost $50 billion in “improper payments.” These were bills that, upon further reflection, contained mistakes and should not have been paid.

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No one knows how much of that money was actually lost to fraud, and how much of it was caused by innocent errors.

The power-wheelchair scam provided a painful and expensive example of why Medicare fraud works so often. The fault lay partly with Congress, which designed this system to be fast and generous. And it lay partly with Medicare bureaucrats — who were slow to recognize the threat and use the powers they had to stop it. As a result, scammers took advantage of a system that was overwhelmed by its own claims and lacked the manpower and money to check most of those claims before it paid.

The scheme first appeared in the mid-1990s in Miami — a city whose mix of elderly people and professional scammers has always made it the DARPA of Medicare fraud, where bad ideas begin.

“The patients would be walking,” said one former Justice Department official, recalling investigations from that time. “And they’d have the wheelchair, a $2,500 wheelchair, sitting in the corner with stacks of [stuff] on it. And [investigators] would say, ‘Why do you have this?’ And they would say, ‘They told me I could have this, so I took it.’ ”

Fraudsters, they were learning, had invented a new twist on an old trick: the Medicare equipment scam. 

The original equipment scam had sprung up in the 1970s, at a time when Medicare was young and criminals were still learning how to steal its money. Doctors, for example, could bill Medicare for exams they didn’t do. Hospitals could bill for tests that patients didn’t need.

The equipment scam was the poor man’s way in, an entry-level fraud that didn’t require a medical degree or a hospital. Instead, the crooks only had to set up a “medical equipment” company and get access to the Medicare system. Then, they needed to learn a simple scheme, in which the fraudster would run the normal order of medical decision-making in reverse.

A legitimate medical-supply company, of course, has to must wait for a patient to see a doctor, then come looking for somebody to fill a prescription. But a fraudster starts with a prescription he wants to fill. Then he goes looking for a patient and a doctor to foist it on. 

By the 1990s, fraudsters had already perfected parts of this equipment scam. To find the patients, for instance, they had learned to use professional recruiters, called “marketers” or “cappers.” These recruiters induced seniors to hand over their Medicare ID numbers. Sometimes, they just paid the patients a bribe. Other times, they talked them into giving the number up free. The government is offering free wheelchairs, but only for a limited time. If you don’t act now . . .

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Most fraudsters had also learned to buy off a doctor or two, paying a set price for each bogus prescription. But some had also perfected a cheaper method. They corrupted dead doctors instead. “The Russian mob up in Brooklyn has been doing this for years. . . . They scour the obits. They find out when Doctor Morris has died. They immediately write to Medicare and they say, ‘Hi, I’m Doctor Morris, and I’m changing my address,' ” said Lewis Morris, a former top official at the Department of Health and Human Services’ office of the inspector general.

If it works, the dead doctor’s mail is delivered to the live crook. Including paperwork with the doctor’s Medicare ID number. “So the new Doctor Morris, Sammy Scumbag, starts writing scrip in the name of Doctor Morris,” Morris said. Recent reforms have lessened this problem.

The payoff of this whole scheme came when a scammer sent Medicare a bill. The bill would say that the bought-off doctor had prescribed some piece of equipment to the bought-off (or hoodwinked) patient. The fraudster would say that he had supplied that thing. Now, he wanted Medicare to pay its share — usually, 80 percent of the price tag.

But what was the best kind of equipment to use?

Banjo also told the jury that he objected to something a prosecutor had said: that Fadojutimi’s wheelchair operation had “stolen” money from the government. “This is not about stealing,” Banjo said, trying to draw a moral distinction. “This is fraud.”

After a five-day trial, jurors found Fadojutimi guilty on all seven counts of health-care fraud, plus one count of conspiracy and one count of money laundering. She is awaiting her sentence.

A scam’s slow death In the past few years, at last, the government says it has outsmarted the wheelchair scammers. For one thing, Medicare began using competitive-bidding processes to lower what it paid for wheelchairs. The total spending on wheelchairs and scooters — which had reached as high as $964 million in 2003 — fell to $190 million last year. It also required wheelchairs to be given out on a rent-to-own basis, instead of paid for all upfront. That gave more time to check if the claim was bogus.

And in 2012, Medicare also made a crucial change in the way it handled wheelchair claims. Now, in 19 states, the government reviews all wheelchair bills before it pays them. Finally, last year the feds went after the Scooter Store.

That company had become famous for its commercials telling seniors: “Your power chair will be paid in full.” In 2007, the store had already been fined for fraudulent practices, which included billing Medicare for power wheelchairs that patients did not want or need. Last year, as part of a new investigation, federal agents with a search warrant raided the Scooter Store headquarters in New Braunfels, Texas.

No new criminal charges have been brought. But Medicare was still concerned enough to cut off funding to the Scooter Store. It was a death sentence. The business, heavily dependent on federal payments, shut down last fall. Last year, about 124,000 people got power wheelchairs from Medicare. That was the lowest total since 2001, equivalent to one for every 400 beneficiaries. That’s the good news.

The bad news is that, when officials go back to try to figure out what the scammers stole, they get mired in an unholy bureaucratic mess. When officials review old wheelchair bills, they discover that at least 80 percent of them were “improper”: They contain major errors and shouldn’t have been paid as is. Perhaps the patient’s diagnosis didn’t actually qualify for a power wheelchair. Perhaps the paperwork was incomplete. How many of those bills were sent in by fraudsters, trying to squeeze through the system’s blind spots? Medicare can’t say.

“You’d have to talk to the patient. You’d have to talk to the providers” and ask if the wheelchair was really needed, said Shantanu Agarwal, a doctor who is Medicare’s top fraud fighter. “And then, at the end of it, you could make a reasonable, fact-based, experienced-based determination about whether this is probably fraud,” Agarwal said.

Medicare doesn’t have the time or money to do that for power wheelchairs now. Today, even while the wheelchair scam is in decline, that same “pay and chase” system is allowing other variants of the Medicare equipment scam to thrive. They aren’t perfect. But they work.

In Brooklyn, for instance, the next big thing is shoe inserts. Scammers bill Medicare for a $500 custom-made orthotic, according to investigators. They give the patient a $30 Dr. Scholl’s. In Puerto Rico, the next big thing seems to be arms and legs. In one case there, two dozen companies billed Medicare for $5.3 million in prosthetic legs inside of a year. In many cases, their “patients” had no record of amputations in their medical history. Many of them didn’t even live in Puerto Rico.

But Medicare paid for the legs.

Alice Crites in Washington contributed to this report, which originally appeared in The Washington Post.

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