More than 150 teams led by FBI special agents and task force officers fanned out in several municipalities in Puerto Rico last month and arrested -- without incident—about 200 of the 533 people named in a federal indictment involving a nearly $7 million health care fraud scheme.
Over a dozen others were arrested on the U.S. mainland and the Dominican Republic, while the 300 or so people in Puerto Rico began to surrender -- at the rate of about 70 a day.
Phony health claims
What were they accused of? Submitting bogus accidental injury claim forms to a large U.S. insurance company and receiving payment in return. Among those indicted was the doctor who fraudulently signed all the forms.
The January 2011 arrests was actually the second phase of Operation Bad Medicine. In December 2009, 103 individuals, including two other doctors, were indicted for the same criminal activity that resulted in the insurance company paying out more than $800,000. All 103 were convicted.
How the case began
Several years ago, internal auditors from the victim insurance company, which was headquartered in Atlanta, contacted the FBI office there with suspicions that certain doctors working in Puerto Rico were facilitating a scam against the company.
After the initial investigative work and the first round of indictments, the bureau was able to identify more than 500 others involved in the same accidental injury scam against the same company. According to the indictment, from 2004 to 2008, a doctor from Lares, Puerto Rico, falsely completed and signed some of the accidental injury claim forms for policyholders and their dependants -- and pocketed approximately $450,000 for doing it.
How the scheme worked
In general -- after word got out that this particular doctor could be bought -- policyholders would go to his office claiming every sort of accidental injury imaginable. The doctor, without even examining the patient, would fill out the claim form for a fee of between $10 to $20 per form.
The policyholders would also make fraudulent claims of accidental injuries on behalf of their kids and other family members...injuries that were never properly verified by the doctor.
The scheme became so popular that some of the policyholders became intermediaries between the doctor and other policyholders. People didn’t even have to go to the doctor’s office. For a $20 fee, intermediaries would carry the necessary paperwork to and from the office for them.
Once the claim form was mailed, the insurance company would send the supposed “injured” party a check within about four weeks. Officials say that's why most of the defendants didn’t just submit one claim; over time, some submitted hundreds of claims totaling thousands of dollars.
The bureau notes that what’s surprising about this case is that the defendants aren’t -- for the most part -- hardened criminals. They are business professionals, blue-collar workers, housewives, government workers, and even some law enforcement officers. If convicted, they face up to 20 years in prison.