US Justice Department brings charges in massive Medicare fraud scheme

The US Department of Justice has arrested and charged 28 people for allegedly operating a 25 state scheme to defraud Medicare, the federal health insurance programme for people aged 65 or over.

The fraudsters set up dozens of phoney clinics across the country and gained more than $35m (£22m; €25m) in concocted medical bills, the prosecutors say.

The indictment ties the operation to an Armenian-American organised crime group, which it identifies as the Mirzoyan-Terdjanian Organization.

Officials at Medicare became suspicious when they came across bills that were clearly anomalous. They noticed, for example, bills from ophthalmologists for bladder tests, from ear, nose, and throat specialists for ultrasound scans, and from a forensic pathologist for office visits.

The prosecutors claim that the crimes were carried out by a syndicate that stole the identities of doctors and patients. These names were then used to file reimbursement requests to Medicare for procedures supposedly performed at 118 clinics in 25 states. But none of the clinics really existed, the prosecutors say.

Janice Fedarcyk, assistant director in charge of the New York office of the Federal Bureau of Investigation, said, “The diabolical beauty of the Medicare fraud scheme—from the criminals’ standpoint—was that it was completely notional. There were no real medical clinics behind the fraudulent billings, just stolen doctors’ identities. There were no runners or colluding patients showing up at clinics for unneeded or ‘upcoded’ treatments, just stolen patient identities. The whole doctor-patient interaction was a mirage” (New York Times, http://cityroom.blogs.nytimes.com/2010/10/13/44-charged-in-huge-medicare-fraud-scheme/).

Prosecutors alleged that the crime syndicate was run by Armen Kazarian, 46, who originates from the former Soviet Union. If convicted he could face life imprisonment and millions of dollars in fines.