The Sopranokovs 

The Russian mob comes to town with a new scam—medical identity theft. 

When FBI special agent Ted Price peered through the window of a dingy brick storefront on Southwest Morrison Street in March, it was what he didn’t see that caught his attention. 

The business, called UnimedCorner, claimed to provide ailing seniors with orthotics—braces and other devices to correct foot, joint and back problems. 

Price and other federal investigators were skeptical. 

On Unimed’s showroom floor, Price saw wheelchairs, motorized scooters, a variety of canes and, on the walls, a selection of amateurish paintings and framed photographs. There was no evidence, however, of the kinds of equipment for which Unimed had billed Medicare nearly $2 million in the previous couple of months. 

“I observed wheelchairs and canes through the window but did not see any orthotics in the store,” Price later wrote in a search-warrant affidavit. “It is a sign of fraud that the store is not stocking the items [for which] it is billing.” 

By the time Price arrived on the scene, the company’s owner, a shadowy Russian immigrant named Alexandr Shcherbakov, was long gone. 

Today, Shcherbakov’s store sits undisturbed. The message light on the phone blinks, dead potted plants droop and a stuffed toy monkey slumps in a glass display case. 

And behind the cash register hangs a framed poster of television’s best-known mobsters, the Sopranos. 

From interviews and information presented in federal affidavits, it is clear Shcherbakov moved to Oregon to commit a crime elegant and lucrative enough to make Tony Soprano envious: medical identity theft. 

... 

“Medical identity theft is the new frontier for organized crime,” says Alex Johnson, a former FBI agent who investigates fraud for Regence BlueShield. “Pretty much anybody can set up a mom-and-pop operation and start cranking out claims.” Someday, most Americans will need a cane, wheelchair, home hospital bed or another of the items healthcare professionals call “durable medical equipment,” or DME. 

For those over 64 and without private insurance, there’s a good chance federally funded Medicare will pick up the tab for that equipment. Last year, according to federal statistics, Medicare spent $8.6 billion on DME. 

Here’s the way the system is supposed to work: A doctor prescribes a device such as a wheelchair for a patient, who presents his prescription to a DME supplier. The supplier provides the equipment and bills Medicare, which typically pays 80 percent of the cost. Unlike pharmacists, who fill prescriptions under strict scrutiny of state and federal watchdogs, DME suppliers are lightly regulated. “DME is very vulnerable to fraud,” says Consuelo Woodhead, the chief healthcare fraud prosecutor for the U.S. Attorney’s Office in Los Angeles. “It doesn’t require any background in medicine, any kind of professional licensure or appreciable capital. 

There are barriers of entry in other medical fields, but not in DME.” To operate, DME suppliers simply need a place of business, a business license and liability insurance. Unlike pharmacists, DME suppliers operate under an honor system: The feds count on them to supply the equipment they claim to provide to the beneficiaries who need it. 

That honor system is not working. 

The epicenter of DME fraud, according to the federal Department of Health and Human Services, is South Florida, where Medicare billing for DME quadrupled from 2002 to 2006 to $1.7 billion. Investigators found much of that increase was due to fraud. In 2006, federal inspectors revoked the licenses of 634 DME suppliers in South Florida, nearly half the DME dealers in the region. 

Later the same year, raids in Southern California yielded similar results: The feds shut down 95 DME suppliers. Many of the DME suppliers shut down around Los Angeles were run by immigrants from the former Soviet Union. It’s probably no coincidence that when the feds raided Los Angeles DME suppliers, some Angelenos fled to cities where there was less scrutiny—such as Portland.

Now slap yourself and head back into the detention hall. Dumbass.

From the Houston Chronicle:

George Bush High School’s valedictorian is among a group of Fort Bend Independent School District seniors who will not be allowed to take part in graduation ceremonies because of an investigation into tampering with the district’s computer network.

Khurrum Khan, 18, is the only valedictorian involved in the computer tampering incidents, which also occurred at Hightower and Elkins high schools, district spokeswoman Mary Ann Simpson said Tuesday.

The speech at the Bush graduation ceremonies will be given by the class salutatorian Saturday.

I recall this one. I wrote about this a while ago. But this part still amazes me,

The case is a potential a felony because investigators estimated the financial loss to the school district at a minimum of $190,000.

Sure block them from the grad ceremony, fair enough. But, 190K? Bite me.

Article Link

• In New York City, they want SSNs from everybody. Just because it’s authorized by law (in the NYC Administrative Code) doesn’t mean it’s a good idea. Everywhere else, they’re only collecting SSNs or income tax returns from low-income seniors.
• It’s hard to justify leaving so much personal financial information sloshing around assessor’s offices all over the state. And which is worse: copies of tax returns in piles in sleepy small-town assessor’s messy offices, or huge indifferent big-city assessor’s chaotic offices? Need to know? Mind your own business.
• As their normal traffic is public information, assessors are not necessarily tuned to protecting private personal information. For a recent example of a public record agency handling private data, see the story of how the Suffolk County (NY) clerk’s normal processes put a few thousand SSN’s in the public record [via Emergent Chaos].
• Perhaps all these violations of “don’t ask for information you don’t need” and “don’t store information you don’t need again” were less serious even a few years ago, but the consequences of these old ways are getting worse every day.
• Though it’s hard to patch the process perfectly, one simple fix would be to direct the flow of sensitive information away from local offices, e.g. create a state tax return checkoff that allows the income tax people to inform the assessors about eligibility and primary residence status without revealing any income information.
• Well, the politics is irritating too. Creating yet another “take with one hand, give back with another” program is inefficient, and clearly its primary purpose is to create an opportunity for attaching a politician’s name to a tax cut, with extra discrimination making the program harder to kill.

Update 3/7/2006 see also: The public servants at the Ohio secretary of state insist on treating documents that pass through their hands as public despite embedded SSNs.

Update 4/11/2006 see also: Broward County (FL).