Experts say the the state is bilked out of 10 percent of its $1.2-billion annual Medicaid budget, most of it by corporations.
By ALISA ULFERTS
Published September 8, 2003
So he approved it.
Now, Florida Attorney General Charlie Crist has reopened the case, convinced the judge was right to be skeptical.
The case involved a nursing home operator accused of taking kickbacks and arranging a sham purchase of facilities to artificially boost their value and increase the amount of money Medicaid will pay.
Critics say the case shows how Crist's predecessor, Democrat Bob Butterworth, ignored or bungled major, white-collar fraud cases.
Instead, his Medicaid fraud section focused on patients suspected of milking the system.
Such individual cases pale in comparison to the hundreds of millions of dollars lost to corporate Medicaid fraud each year.
Experts estimate fraud eats up $1.2-billion a year, or 10 percent of the state's Medicaid budget. That could go a long way toward paying for such things as dental care for the poor.
"We have suggested in the past that they pay more attention," said social services lobbyist Karen Woodall, an advocate for Medicaid patients. "Not a lot has been done in the past," she added.
In fact, the state did so little to root out major fraud cases the U.S. Department of Health and Human Services put the fraud office on probation, a move that could jeopardize the state's entire Medicaid program.
"It's a focus now," Crist, a Republican, said last week. "We want to do as much as we can for the people," he added.
Medicaid pays for health care for the poor and disabled, including room, board and medical bills of many of the state's nursing home patients.
Florida's $12-billion program is shared by the state and federal government, and roughly half the Medicaid money spent at the federal level goes to elder care such as nursing homes. The amount each nursing home gets from Medicaid depends largely on a nursing home's expenses.
When a nursing home is sold, the new owner can ask the state to increase the amount of money it gets from Medicaid to cover the sale costs plus additional overhead the new owners might have.
Fraud investigators working for Florida's attorney general investigate many types of fraud. When it comes to nursing homes, they are supposed to watch for companies that pull a fast one to increase their Medicaid funding.
The companies can inflate their expenses or create a new company to buy the home or get another person to pose as a buyer.
Investigators say they found such a case in 1999.
OMEGA Healthcare Investors had a problem. The Maryland real estate investment trust wanted to buy four nursing homes, but couldn't because it financed the homes for the current owner.
Russell Brent Maggio of Pensacola Beach had a different problem. He wanted to buy two nursing homes but needed financing. So they cut a deal: Maggio posed as the buyer of the four nursing homes OMEGA wanted and OMEGA financed the two Maggio wanted, state records show.
There was an added bonus for Maggio. As the official purchaser of OMEGA's four nursing homes, investigators said he made another deal with the company managing them, Diversicare Management Services. Maggio would keep Diversicare as manager if the company paid him $60,000 a year per facility in consulting fees. The state called the fees kickbacks.
Those payments and others were listed as legitimate business expenses in reports filed with the state Agency for Health Care Administration, which runs Florida's Medicaid program.
Because those added expenses appeared related to the recent purchase of the homes, Florida law allowed AHCA to increase the Medicaid money paid to the nursing homes.
By 1999, the fraudulent reimbursements totaled some $40-million, court records show.
But the Attorney General's Office dropped all criminal charges against Maggio.
The state offered to settle with him and some of the other companies involved, but only on the kickbacks issue and only for $100,000.
The state dismissed its case against Diversicare, according to the company's attorney.
The state never addressed the change-of-ownership issue that increased the amount of Medicaid money the nursing homes got, the source of most of the $40-million.
"I'm ashamed," David Moye muttered earlier this month as he rifled through settlement papers. Moye, a former assistant U.S. attorney, was picked by Crist to clean up his Medicaid Fraud Control Unit.
In the five months since Moye took over, the office has collected $27-million in fraud settlements, compared to $36-million the office collected in the previous nine years under Butterworth.
The top two officers in the unit have been forced out and more resignations are possible. Moye is scrambling to fill vacant positions with lawyers who understand fraud.
He expects to collect about $100-million a year once his staff is up to speed.
Moye is looking closely at cases that languished or were settled before he got there. He's keenly interested in the OMEGA case.
Though he can't rescind the settlement, Moye can go after the same companies on criminal charges and seek restitution.
Butterworth said the unit was troubled when he took it from the state Auditor General's office in 1994. He said he fought for years to build up the office.
AHCA was too quick to write checks to any quack who portrayed himself as a doctor, Butterworth said. And getting money from lawmakers to go after fraud was like pulling teeth, he complained.
"The Legislature was terrible," Butterworth said.
His biggest legislative opponent, he said, was former state Sen. Alberto Gutman, who went to prison in 2000 for Medicare fraud.
In 2001, Butterworth's office collected $17-million in fraud, roughly doubling the amount it collected up to that point. Term limits forced Butterworth from office last year. Much of the money Moye has collected is from cases already in the works when he left office, Butterworth said.
But critics say the problems are deeper.
More than half the investigators in the Miami and Fort Lauderdale offices, for example, were police officers hired from Miami and New York with little or no fraud experience, an audit found.
Many of the officers lacked the forensic accounting experience needed to take apart a complex fraud scheme. So they focused on cases that more closely resembled street crime, such as drug dealers who coerce addicts to exchange their HIV cocktails for heroin or crack.
Such cases are considered "recipient fraud" and, according to federal rules, are supposed to be investigated by other agencies, not the Medicaid Fraud Control Unit.
Moye has sought training for investigators but said about half of them still lack the basics.
Sen. Dennis Jones, R-Treasure Island, who sits on the Senate Health Care Appropriations Committee, predicted lawmakers will be anxious to increase funding for the office once they see results. He's delighted to hear how much fraud money the office has snared since April.
"That will go a long way in giving health care services to the underserved," said Jones.
"If they would come before us and show us what they've done, I would certainly think they would get support from the Legislature."
