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State ramps up fight against fraud

By   /   July 25, 2012  /   1 Comment

By M.D. Kittle | Wisconsin Reporter

MADISON — Erica Danley last week was the last of seven defendants sentenced in a Milwaukee Medicaid fraud scandal that bilked taxpayers out of more than $1 million.

Milwaukee Circuit Court Judge Dennis R. Cimpl sentenced Danley to one year in prison, stayed a six-year prison term and placed the Milwaukee woman on four years’ probation for her role in a scheme to submit fraudulent Medicaid payment claims for durable medical equipment.

Wisconsin Attorney General J.B. Van Hollen said the orthotics patients who depend on specialized mechanical devices to help support their weakened joints and limbs had no idea the scammers were submitting claims using their Medicaid identification information. The investigation found Danley and her fellow defendants tapped into at least 1,000 recipient ID numbers, Wisconsin’s top fraud fighting agent told Wisconsin Reporter.

Not counting national drug fraud cases, the durable medical equipment case was one of the biggest fraud schemes prosecuted in Wisconsin, according to Alan White, the state inspector general.

The Office of the Inspector General — inside the state Department of Health Services and working with the Wisconsin Attorney General’s Office and county law enforcement — appear to be going after cases of waste, fraud and abuse more zealously than they have in the past, and the public is assisting in that pursuit.

Fraud phone

Since launching late last year, the state’s toll-free fraud hotline – 877-865-3432 – has generated 881 calls from people who suspect fraudulent activity in government assistance programs, according to White. An anti-fraud website, launched in March, has posted 922 complaints.

“We are running ahead of what we expected,” White told Wisconsin Reporter on Wednesday. “It’s being much more widely used than anticipated.”

The fraud reporting system apparently is so popular it has turned into a full-time job for the state employee who started out handling calls part-time, White said.

About 80 percent of the complaints are being pursued “in one form or another,” the inspector general said. Many of the complaints involve allegations of recipient fraud in FoodShare Wisconsin, the state’s food stamp program.

But Medicaid service provider fraud is “where the big money is,” White said.

Making the case

The Attorney General’s Medicaid Fraud Control and Elder Abuse Unit has opened significantly more cases in recent years.

In 2011, the unit investigated 120 allegations of fraud, and 143 the year before, according to documents obtained by Wisconsin Reporter. In 2006, 38 investigations were opened, 35 in 2007.

Investigations, however, lead to relatively few formal complaints. The A.G.’s office had enough evidence to bring 10 complaints in 2011, and six the year before.

Through June this year, the fraud unit had investigated 50 fraud allegations, issuing five complaints.

Of the six cases now in the court system, one is scheduled for trial in October, according to A.G. spokeswoman Dana Brueck. The other five are in the initial appearance stage.

In 2011, the Attorney General’s Office recovered more than $11.3 million in fraud fines and forfeitures and criminal and civil restitution, according to the agency. That’s less than half of the $25 million-plus the office recovered in 2010.

So far this year, state prosecutors have recovered more than $8.5 million in the fraud fight.

The seven people convicted in the Milwaukee Medicaid fraud case have been ordered to pay restitution ranging from $28,220 to $356,366.

Danley, 35, who operated Essential Services, was ordered to pay $114,856.12 in restitution.

Food fraud

At DHS, $1,869,168 in FoodShare Wisconsin benefits were saved in the first quarter of this year, up by more than $1 million, or 120 percent, from the same period last year, according to DHS documents obtained by Wisconsin Reporter.

Fraud investigators found more than $1.34 million in overpaid claims to recipients, up 119 percent from the first quarter of 2011. And DHS kicked 37 FoodShare recipients out of the program in the first three months of this year, compared to 10 in the same period last year.

On the Medicaid front, White said fraud fighters are now able to suspend payments to providers where there is a credible fraud allegation. Since that initiative began four months ago, funding to eight providers has been frozen, pending the results of a thorough investigation and, possibly, prosecution.

White said last year the state paid the providers now under suspension more than $500,000.

“Additionally several of those under suspension are nurses who worked in home agencies whom we did not pay directly, but were paid by the agency. SO we will seek to recover funds from the agencies involved,” White wrote in a follow-up email. He did not disclose the names of the care providers.

Those in fraud prevention and prosecution have their work cut out for them.

A state audit earlier this year identified 447 state prison inmates receiving public food assistance, with 293 of the prisoners netting $413,000 – an average haul of $1,410.

Department of Health Services Secretary Dennis Smith in a statement said the Legislative Audit Bureau’s report will assist the agency’s efforts to “ensure the program is operating as it should be and that the correct benefits are provided to the right people.”

“We will also use this information to ensure that the people who receive the benefits are using them in an honest way and that we are continuing to work with the USDA to pursue vendors who may be defrauding the system,” Smith said.


  • Jim

    This is nothing! When I investigated medical fraud for Champus, my biggest case was $72.4 Billion – and that was one of 68 cases on my desk at any given time from 1990 – 1994. In my day, the average case was $440 million and 115 investigators were working nationwide. The average desl load was 58 cases. Multiply 115 x 58 x $440 million. Medicare is far worse because you have a bigger population. If you think that’s bad – just wait until Obama care takes effect. It has no fraud controls whatsoever. The best way to control medical fraud is to simply get rid of the programs.