The Medicaid Grifters

Sometimes a scam becomes too successful for its own good. So it was in the case of about 100 people -- including 82 pharmacists and a doctor -- arrested last week in 50 cities. Two of the conspirators had complained, in a phone call that was wiretapped, that they were running out of places to stash all the illicit cash they were taking in. With such evidence in hand, an army of more than 1,100 FBI agents and other federal law-enforcement officials ended the largest health-care fraud investigation to date. Under the complex scheme, medical professionals and their accomplices stole tens of millions of dollars from Medicaid as prescriptions were falsified or resold. Said President Bush after the arrests: "These people are charged with betraying a sacred trust."

The crooked network, centered in New York City, Chicago and Atlanta, reportedly used several grifts. The simpler versions included billing Medicaid for prescriptions that were never filled or substituting cheaper generic drugs while billing Medicaid for higher-priced alternatives. But the operation also did a brisk business in reselling drugs. A doctor, for example, would prescribe medicine for a healthy Medicaid beneficiary, who would fill the prescription at a crooked pharmacy. The "patient" would then sell the medicine for about 10% of its value to a "diverter," who would repackage and resell it, often on the black market in Puerto Rico. In New York City, this sort of scheme is known on the street as "playing the doctor." Law- enforcement officials estimate that these and many other forms of fraud drain upwards of $75 billion from the U.S. health-care system every year.