When hundreds of thousands of Medicare recipients were billed for expensive medical equipment they never asked for in 2023, doctors and health care providers around the United States feared a far-reaching fraud.
Those fears were well-founded, federal prosecutors say.
The surge in Medicare claims, for urinary catheters, braces and other durable medical equipment, was part of one the largest schemes ever designed to defraud the program, according to an indictment unsealed in the Eastern District of New York this week.
The indictment charges 11 citizens of the United States, Estonia and the Czech Republic with working for a criminal organization based in Russia that, prosecutors say, defrauded Medicare of $10.6 billion.
The scheme involved buying dozens of companies that were accredited to submit claims to Medicare and the program’s supplemental insurers, prosecutors say.
Then, using personal information stolen from more than a million Americans, the defendants filed billions of dollars in claims for equipment that had not been ordered by Medicare beneficiaries and was not delivered to them, according to the indictment.
Even if the patients themselves did not pay for the phantom medical supplies, such schemes can affect Medicare recipients by causing premium costs to rise.
Medical supply companies offer criminals an easy route for bilking Medicare because they are relatively simple to establish and there is often little oversight as to whether the claims they submit are legitimate, experts say.
In 2019, the Justice Department uncovered a scheme that it said had defrauded the program of more than $1 billion with phony claims for back and knee braces. In April 2023, prosecutors charged 18 defendants in a nearly $500 million scheme that involved false billing for Covid-19 tests that were never administered.
The defendants charged in New York’s Eastern District this week face charges that include health care fraud and money laundering conspiracy. They are not in federal custody, and it was unclear whether they had lawyers.
The organization moved its proceeds through shell companies to bank accounts in Singapore, Pakistan, Israel and other countries, and laundered it using cryptocurrency, according to the indictment.
Medicare and its contractors received more than 400,000 complaints from beneficiaries related to the group’s fraudulent claims, court papers show. Elements of the scheme were described in a 2024 report by the National Association of Accountable Care Organizations, an advocacy group that represents health care systems.
That report found that more than 450,000 Medicare beneficiaries had been billed for urinary catheters in 2023, roughly a ninefold increase from previous years. Seven medical suppliers were responsible for filing the vast majority of the claims, the report said. Only one of the seven had a working phone number when The New York Times tried to contact them last year.
Stephen Nuckolls, the chief executive of Coastal Carolina Health Care and a member of the association’s board, said he had started to notice an unusual number of monthly claims for medical equipment being submitted to his organization’s providers in fall 2023. He reported what he thought was fraud to the federal Centers for Medicare and Medicaid Service.
Mr. Nuckolls said systemic changes were needed to address how vendors are vetted, potentially by putting a monthly cap on their spending.
“We were trying to stop it,” he said. “Everybody was screaming.”
Santul Nerkar is a Times reporter covering federal courts in Brooklyn.
The post U.S. Charges 11 in Russia-Based Scheme to Bilk Medicare of $10.6 Billion appeared first on New York Times.
