Bogus Medicaid fares leave the meter running for taxpayers

February 25, 1994|By Gary Cohn | Gary Cohn,Sun Staff Writer

In June 1990, a cab driver for Taxi-Taxi picked up a Medicaid patient at her Germantown home to take her to Montgomery General Hospital's drug-rehabilitation program. Instead, he drove her to a street corner in Washington, D.C., notorious for illegal drug dealing.

The fare was $54.80. Taxpayers paid it.

The company filed a false invoice with Medicaid claiming the woman had been dropped off at the hospital for treatment.

It was not an isolated case.

Indeed, more than 25,000 fraudulent claims were filed by Maryland taxi and medical-van companies between 1989 and 1992 under a program to provide low-income people with rides to medical appointments. Authorities estimate that as much as

was defrauded from the program.

The abuse was so pervasive that the program had to be largely scrapped except in the neediest of cases.

The companies were paid by taxpayers for rides that were never provided and for inflated fares; some drivers kicked back money patients in return for the use of their Medicaid numbers.

In at least one instance, a cab driver went to Burger King to pick up lunch for a patient who had signed hundreds of phony vouchers, an extensive investigation by the state Medicaid Fraud Control Unit found.

"It ran on the honor system, and the honor system was violated," said state Attorney General J. Joseph Curran Jr. "The meter was running, but the back seat was empty."

Yesterday in Baltimore Circuit Court, Larry Hines, owner of Tidal Wave Transportation Inc. of Baltimore, pleaded guilty to defrauding Medicaid of $35,000.

Hines, according to prosecutors, was paid for providing transportation to people who weren't eligible for the program as well as for rides that were not provided.

Judge Ellen L. Hollander gave Hines a suspended five-year jail sentence, fined him $5,000 and ordered him to pay restitution of $35,000.

Hines was the 16th person convicted in the unit's three-year investigation into the Medicaid transportation program. The probe is continuing.

Those convicted include the owners of three medical van companies in Baltimore and the owners of two taxi firms in Montgomery County as well as nine cab drivers and two Medicaid recipients.

But the discoveries go well beyond abuses in the transportation program.

They underscore how lucrative defrauding the health care system is and the ease of doing so; how the system is largely limited to relying on the integrity of people and whistle-blowers; and how efforts to reform health care and control its costs cannot succeed without stopping the fraud.

"Why is there fraud? The easy answer is that that is literally where the money is these days," says William J. Mahon, executive director of the National Health Care Anti-Fraud Association in Washington.

Officials say that fraud and abuse will account for as much as $100 billion of the $1 trillion Americans will spend on health care this year. It happens every day in every U.S. city.

Much of that fraud occurs in government-sponsored programs, such as Medicaid and Medicare, that provide health insurance to people who would otherwise go without health care.

Maryland's transportation program is one example.

It was intended to provide low-income people with rides to doctors' offices, hospitals, drug-treatment programs and other medical appointments. A patient would call for a taxi. The driver would have the patient sign an invoice and submit the form to Medicaid for reimbursement.

An anonymous tip

"It was a well intentioned program, but there was just such massive fraud," said Daniel R. Anderson, chief of the anti-fraud unit.

"It's an example of how you don't just have to worry about delivering health care to patients but also have to be concerned about how providers are going to rip off the system."

Maryland's transportation program would probably still be operating in full today had an investigator not received an anonymous phone call in January 1991. Authorities built their trap by poring through thousands of taxi vouchers and medical records. The evidence was so airtight that all but one of the 16 entered guilty pleas rather than go to trial.

No case was more offensive to investigators than the one involving William Falkner Middleton's cab company, Taxi-Taxi, and a Montgomery County woman with a long history of drug addiction.

Rather than driving the woman to Montgomery General Hospital's drug-rehab program, the cab company routinely took her to a section in northwest Washington, where drugs were bought and sold in the open. Taxi-Taxi then filed claims with Medicaid and was reimbursed as if it had transported the woman to the hospital for treatment.

The woman also "often signed stacks" of invoices for rides she did not receive, according to court records. In a six-month period -- from May 24 to Dec. 14, 1990 -- 165 false claims were submitted by Middleton's firm and signed by the woman. The cost to taxpayers was $4,640.

More invoices ordered

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