Three-Ring Circus


Three-ring circuses are famous for having multiple performing acts going on at the same time. Similarly, a healthcare clinic manager ran a Medicaid and Medicare fraud ring at three clinics across New York City. Just as it can be hard to focus in on a high wire act, dog and pony show and clowns all at the same time, this fraud ringmaster was hoping the government was not paying much attention to his devious three-ring circus that involved the submission of more than $70 million in fraudulent claims to Medicaid, Medicare and other private insurers.

The scheme, which went on for nine years, involved accomplices who recruited disadvantaged individuals from soup kitchens and welfare offices across the city. The clinic manager directed his associates to “help” the Medicaid and Medicare beneficiaries fill out their medical forms so that unnecessary medical tests would be approved.

The next step involved the accomplices acquiring personal Medicaid and Medicare information, which allowed them to verify that the insurance payer would reimburse the clinic for the unnecessary tests. Once it was certain that the medical clinic would receive payment, the patients were directed to visit the clinic for stress or sleep tests. (Patients got in on the action too by receiving kickbacks if they visited the clinics.)

The ruse continued once the patient was at the clinic. The medically unnecessary tests were performed by non-qualified clinic staff. (Both Medicaid and Medicare require that a licensed physician administer medical services before reimbursement can occur.) In addition, two of the clinic owners concealed their ownership of the facilities by paying another licensed physician to act as an owner and/or physician, who then billed the insurance programs for the medical tests performed. (The proceeds were then laundered through shell companies owned and controlled by the two clinic owners who were not licensed physicians.)

The health clinic manager pleaded guilty for his role in the Medicaid and Medicare fraud ring, which involved conspiracy to commit wire fraud, mail fraud and healthcare fraud. Eight others between the ages of 33 and 60 previously pled guilty to the same counts. All guilty parties face a maximum prison sentence of 20 years and a fine of up to $250,000 or double the gross gain or loss stemming from the scheme.

While more than $70 million in fraudulent medical bills were submitted in this fraudulent scheme, only $25 million in reimbursements were paid. It turns out that the government was able to shine a spotlight on this particular three-ring circus and stopped these clowns from getting away with additional government funding they did not deserve.

Source: Today’s “Fraud of the Day” is based on an article entitled, “NY Clinic Manager Pleads Guilty in $70M Medicare Fraud Scheme,” posted on on February 9, 2017.

A New York-based healthcare clinic manager recently pled guilty for his role in a Medicaid and Medicare fraud ring involving three clinics across New York City. The scheme to defraud federal healthcare programs resulted in $70 million in fraudulent Medicaid and Medicare claims.

Eduard Zavalunov, the clinic manager, was the latest individual to face the US Attorney for the Southern District of New York for his role in the Medicaid and Medicare fraud that lasted from 2005 to 2014. Eight other individuals have already pled guilty to the same counts, which includes conspiracy to commit wire fraud, mail fraud, and healthcare fraud.

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Larry Benson
Larry Benson is currently the Director of Strategic Alliances for Revenue Discovery and Recovery at LexisNexis Risk Solutions. In this role, Benson is responsible for developing partnerships for the tax and revenue and child support enforcement verticals. He focuses on embedded companies that have a need for third-party analytics to enhance their current offerings.