Medicare fraud flourished in Miami due to lax oversight

In January 2007, Medicare shut down the businesses of 18 medical equipment suppliers in Miami-Dade County after investigators told the federal agency that the companies were shams.

But when Medicare heard their appeals, the operators were quickly reinstated – only to be indicted later that year for submitting more than $10 million in phony claims to the very agency that had let them back in business, court records show.

Medicare wound up paying those suppliers at least $5 million. Despite mostly successful prosecutions, much of that ill-gotten money was never recovered.

"Healthcare fraud in Miami is viral, and these perpetrators replicate it," said Kirk Ogrosky, deputy chief of healthcare fraud at the Justice Department.

Last fall, the U.S. Department of Health and Human Services' Office of Inspector General cited the 18 medical equipment suppliers in a critical report concluding that Medicare's appeals system was flawed because it lacked strict rules of evidence. Medicare officials don't disagree.

"It's always troubling when you have 18 reinstated like that," acknowledged Kimberly Brandt, Medicare's anti-fraud director. "They may have gotten back in, but they didn't get back in for a very long time. That doesn't mean we couldn't have been more vigilant."

But nearly six months later, Medicare officials told The Miami Herald they have yet to establish new guidelines that would thwart fraudulent medical equipment operators from regaining billing privileges, as recommended by the inspector general. Brandt said the change in presidential administrations has caused delays.

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