By Laurence Darmiento
For five years Long Beach’s Pacific Care Medical Supply billed Medicare for power wheelchairs, hospital beds and other medical supplies for elderly patients.
But there was a problem: Most of the time physicians never ordered the stuff, and patients never received it, according to government prosecutors.
The alleged $2.4 million scam qualifies as garden variety for Southern California, which federal officials have labeled as one of the top regions for healthcare fraud in the nation.
Now the U.S. Attorney’s Office in Los Angeles has set up a unit that will focus on prosecuting healthcare fraud, joining in a crackdown already under way by other agencies.
“We could double or triple the number of prosecutors on this, and we would still be understaffed,” said Assistant U.S. Attorney Consuelo Woodhead, who is heading the three-attorney unit. “We talk to people who say they have been in the healthcare fraud business for a decade.”
Atim Okorn, a 49-year-old Chino resident who owns Pacific Care Medical, is the first to be prosecuted under the crackdown. He was arrested earlier this month on charges of Medicare fraud. His attorney declined to comment.
His arrest follows a number of high-profile healthcare fraud investigations conducted in Southern California by the FBI, the Office of the Inspector General of the Health and Human Services Agency and other state and federal investigators.
They include the October indictment of the owners and employees of a Santa Ana surgery center who are accused of inducing patients from around the country to have unnecessary surgeries in exchange for cash and vouchers for plastic surgery. More indictments are expected.
In the past four years, about 400 people have been arrested statewide as part of operation Durascam, which targeted durable medical suppliers and laboratories believed to be submitting bogus Medicare claims.
The unit’s start this month follows a decision by the Centers for Medicare & Medicaid Services to step up its investigation and prosecution of local Medicare fraud. It established a Southern California office of its program integrity division.
The division works with law enforcement agencies such as the FBI and the U.S. Attorney’s Office, as well as the private contractors that actually process the Medicare claims, to facilitate the discovery and prosecution of fraud.
The Medicare system is so large that the government has hired more than two dozen contractors to process and pay the more than one billion claims that are submitted to it annually nationwide.
The integrity division works with contractors who use sophisticated software that can ferret out bogus claims,noting when there is an unexpected cluster of claims for a particular service.
Healthcare fraud in Southern California has evolved over the past decade, according to law enforcement officials.
In the 1990s, there were staged car accidents and fraudulent claims by laboratories. That was followed by a surge in fraud by medical equipment providers and clinics. Most recently there has been fraud by home health agencies and outpatient surgery clinics. Southern California is only rivaled by South Florida for these frauds, officials say, likely because both areas have large elderly populations, as well as large populations of poorer immigrants.
In the case of Pacific Care, Johnston said the company had some legitimate business, but also submitted claims for phony patients or supplied products to patients at costs lower than billed to the government.
Darmiento is a staff writer with the Los Angeles Business Journal.
