Covid Kickbacks

We’ve spent trillions of tax dollars on Covid-related aid and health care. For context, one trillion is a million million dollars, 12 zeros on the end. And we already know there’s been billions upon billions of dollars in fraud so far, not counting the ones that got away. Today, we follow the money and profile one of the biggest Covid scams you may not have heard about but are paying for all the same. It involves Medicare, genetic tests, and elaborate kickback schemes.

When Covid hit, the government made temporary changes so it would be easier for older people on Medicare to get health care at home.

Some of the changes involved “telehealth”— seeing doctors online instead of at the office. Fraudsters quickly found ways to exploit that shortcut, according to Omar Pérez Aybar. He’s Special Agent in Charge of the Inspector General’s Office for Health and Human Services. Pérez helped ferret out a major Florida kickback scheme centered on genetic testing.

Omar Pérez: Genetic testing, it's a test that uses your own DNA to determine if you have a predisposition for one of the suites of the genetic tests that are out there. In this particular case, they were focused on cancer genetic testing.

Normally, a doctor orders any medically-necessary genetic tests only after an in-person medical exam. But during Covid, in-person visits weren’t required in order for the doctor to get paid by Medicare. Scamsters began recruiting patients at malls, churches, door-to-door, or on the phone, convincing them to get genetic testing they didn’t need by claiming it was free or giving them gift cards or prepaid cell phones. Labs collected big payments from Medicare and gave illegal cash kickbacks to the recruiters.

Pérez: Oftentimes, the tests were never performed. If they were performed and they were sent back, it was sent maybe to the patient, not to the physician. Sometimes the physicians would see this and say, "I don't really understand, you know, what this means. How does this help me?" So it really was a sham all the way through.

Sharyl: And who was getting paid? How was money being passed?

Pérez: So, Medicare was paying the labs that were purportedly running these tests. But in general terms, you had, again, a number of recruiters or telemarketers that were out there, again, luring these patients to get in. Then they had a number of doctors within a telehealth center, they were the ones who in turn would authorize the test. Now, Medicare requires that there be a doctor-patient relationship. That didn't happen.

Before Covid, Pérez and his team were already looking at a dozen genetic test labs involved in a case they built called Operation Double Helix — referring to DNA structure. That case led to a focus on two men: Michael Stein and Leonel Palatnik. Prosecutors claim Stein arranged for doctors to authorize cancer and heart genetic test orders on patients they never saw in person and sent them on to Palatnik’s labs in exchange for kickbacks.

Sharyl: What kind of money are we talking about for a test like that?

Pérez: So, we saw the average payment for that is about $7,000.

Sharyl: Wow.

Pérez: But we saw it as low as $4,000 and as high as $15,000. It depends again on what types of tests, genetic tests, they were performing on the patient.

Sharyl: No wonder they were trying this out.

Pérez: It's very lucrative.

So lucrative, it turns out, lots of con-artists got the same idea.

Video from HHS-OIG: Criminals across the country are exploiting the ongoing pandemic to enrich themselves, creating schemes to victimize beneficiaries and steal from federal health care programs.

In recent years, prosecutors have brought many cases. There was a similar scheme in Georgia involving $1.1 million in fraudulent Medicare claims.

A $160 million case in Connecticut, Washington D.C., New Jersey, New York and Pennsylvania. 48 people were charged including 15 medical professionals.

Another $160 million fraud case in Florida and Georgia, with 67 charged.

A $214 million genetic testing fraud case in California. The married couple — previously convicted on felony medical fraud — allegedly bought real estate and luxury items with their profits.

$250 million in illegitimate claims in Michigan, Illinois, and Minnesota.

And a $2.1 billion scheme across Florida, Georgia, and Louisiana.

Sharyl: And I think a lot of people, when they hear about this kind of fraud, they may think it doesn't touch them, because they may not understand this money comes from a pot of money that a lot of ordinary Americans have paid into.

Pérez: First of all, Medicare is not a victimless crime because the first victims, in my opinion, starts with you and I. If we look at our paychecks, all of us pay into the Medicare Medicaid program. So certainly, our parents, our grandparents, our loved ones are all part of the program, and we're the ones being defrauded.

Sharyl: Were doctors considered in some cases to be part of the fraud or just unwitting participants?

Pérez: In some instances they were unwitting. Again, they worked for a telehealth company, and they were asked to see and review claims that were coming into them, right? Orders. But we did know, and we do know, that there are a number of physicians that knew precisely because they weren't really having conversations with the patients. And if they did, it was very minimal, but yet they submitted or allowed their company to submit a claim for a 30 to 45-minute visit when that, in fact, didn't take place.

Palatnik stood out, Pérez says, because of how much his medical test lab business exploded during Covid.

Pérez: Again, in 2018, he had only billed about $2.8 million. In 2019, it had gone up to about $9.8 million. And in 2020, it was, again, $90 million billed. About 73, or so kind of made it through, and then 50 was what was paid.

For all the crooks trying to steal, Pérez points to aggressive enforcement. A special strike force for health care fraud has charged a total of more than 4,200 people who billed Medicare more than $19 billion.

Perez: If you specifically maneuver yourselves, right, to take advantage of the population's most vulnerable victims, which tend to be ours, the elderly, the disabled, and children, then you activate that innate kind of hunger in us as watchdogs. And we're going to get on that particular sniff, right, on that trail, and we're going to come after you.

Sharyl (on-camera): Stein, one of the defendants, has pleaded not guilty and is scheduled for trial next spring.