HMO fraud charged in indictments

June 14, 1995|By Diana K. Sugg | Diana K. Sugg,Sun Staff Writer

Two dozen people were indicted yesterday after state investigators uncovered allegations of insurance company marketers lying, forging signatures and bribing state workers to enroll poor people in health maintenance organizations.

Five of those indicted pleaded guilty to charges including bribery and Medicaid fraud before Judge Clifton J. Gordy in Baltimore Circuit Court. The indictments came after a four-month investigation by the office of State Attorney General J. Joseph Curran Jr. into marketing practices of HMOs, which increasingly see taking care of poor people as big business.

Investigators found marketers luring state workers to turn over confidential information on hundreds of Medicaid families for modest sums such as $1 or $2 a family, often after striking up friendships or dating the workers.

Some of the relationships started on a smoking break, when a marketer would approach a social service caseworker outside a building.

With the information, marketers could then show up on doorsteps, armed with a pitch directed at that family. If they failed, the marketers would often forge signatures and use the confidential information to fill out the enrollment forms, documents say. Some families never even met anyone from an HMO, and later discovered they were enrolled.

Later, investigators found, marketers began to sell the data in turn to co-workers. One marketer, Hamilton Pollock, who pleaded guilty, got so many families' names, addresses, ages and other personal facts that he sold the excess to co-workers.

When Mr. Pollock was transferred from Baltimore to Prince George's County, his supervisor at Chesapeake Health Plan paid him $120 for information on Baltimore Medicaid patients, documents say.

That supervisor as well as a marketing supervisor with a competitor, Prudential Health Care Plan, were among those indicted. Indictments were also brought against eight social services caseworkers and 14 marketers employed by four HMOs -- Chesapeake, Prudential, Optimum Choice and Total Health Care.

The crimes -- mostly misdemeanors punishable by a few years in jail and fines -- were born in the modern world of health care. States struggling with huge Medicaid bills are beginning to turn over health care for the poor to managed care companies. Similar abuses have cropped up around the country, from California to Florida.

$20 million a month

In Maryland, about 20 percent of the 467,000 Medicaid patients are enrolled in HMOs, which are being paid $20 million a month for that care, Mr. Curran said.

Among HMOs, the competition for the thousands of other Maryland Medicaid patients still receiving care in the old system is fierce. But the HMOs are not given lists of Medicaid recipients, so their marketers stake out neighborhoods and social service offices. The marketers, who are paid commissions by the HMO for every person they sign up, sometimes are fired for not meeting quotas, according to court documents.

One marketer who pleaded guilty, Katrina McAllister, 27, teamed with another marketer whose sister worked at social services. Through the sister and another caseworker at the Dunbar office, the pair allegedly got names and addresses of Medicaid recipients. According to documents, the pair would sometimes

bribe Medicaid recipients with cash or alcohol

to sign up for HMOs. If that didn't work, they often forged the patients' signatures.

Among Baltimore marketers at Prudential, Ms. McAllister and her partner's tactics were so well known that the two were nicknamed "Hook" and "Crook." When Ms. McAllister later went to work for Chesapeake Health Plan, she said the privileged patient information was as widely used there as at Prudential, according to documents. She said three of her co-workers at Chesapeake openly sold the patient information, and she continued to forge signatures.

Ms. McAllister was fired for not meeting her quotas, documents say.

Commissions blamed

Total Health Care officials said they paid about $10 per enrollment in commission, but Mr. Curran said investigators came across commissions that were twice that.

"There is an incentive to get as many patients as you can enrolled," Mr. Curran said. "If there is a culprit, it was this concept of a commission-driven process."

In light of the investigation, Dr. Martin P. Wasserman, state health secretary, said he is considering making the state solely responsible for the marketing.

HMO officials yesterday said their health plans all have oversight policies in place, and that they cooperated with the investigation.

Chesapeake Health Plan officials said they have "strengthened the internal oversight and additional management infrastructure." In a written statement, Prudential officials said the company "has always condemned any fraud and marketing abuse by its employees" and that all those indicted have been fired.

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