Miami authorities bust suspected Medicare fraud ring they say spanned 5 states, 8 charged

Miami authorities bust suspected Medicare fraud ring they say spanned 5 states, 8 charged

MIAMI — It may be the center for Medicare fraud, but even Miami officials said Tuesday they were surprised by the breadth of a ring they say spanned five states, used 29 fake storefronts and attempted to steal $100 million from Medicare and Medicare Advantage.

Eight defendants were charged in the elaborate scam authorities say billed Medicare for bogus HIV and cancer infusion drugs using dozens of storefronts in Florida, North Carolina, South Carolina, Georgia and Louisiana, authorities said.

Two of the defendants and about $30 million are still missing.


“The breadth and scope of these schemes is different than what we’ve seen before,” Acting Miami U.S. Attorney Jeffrey Sloman said.

In some ways, Miami federal authorities say, that’s good news. It shows Miami’s stepped up health care fraud task force is working. They’ve prosecuted $1.5 billion in health care fraud cases in the past three years. Miami alone has had 146 convictions since 2007 in these cases.

The fact that the suspects had to move to other states and other avenues of Medicare — in this case, Medicare Advantage — signals an understanding on the streets that officials are on to their old tricks. And that the task forces are working, Sloman said.

Medicare Advantage allows the elderly and disabled to get benefits through private health insurers. The plans receive a government subsidy and generally offer more benefits than traditional Medicare.

In most health care fraud cases, the money is easier to track because there’s a bank transfer. Authorities say the group owned two check cashing stores, netting between $30,000 and $80,000 in cash several times a week. They fronted through bogus medical clinics around the Southeast. Some of the storefronts in other states were nothing more than P.O. boxes.

Miami has long been considered a hotspot for such crimes. For example, South Florida bills for 75 percent of all HIV insurance claims nationally, though the area is home to less than 10 percent of patients with HIV.

In the past, authorities have struggled to catch up with the fast-moving crooks. By the time the local authorities are alerted to potential fraud, it’s already been committed. Sometimes the storefront has shut down and moved somewhere else under a different name.

Last month, U.S. Attorney General Eric Holder announced the federal government would step up health care fraud efforts nationally, increasing the budget by 50 percent to $311 million in 2010 and adding manpower to task forces in Miami, Los Angeles, Houston and Detroit.

Tuesday’s indictment was one of the quickest health care fraud turnarounds, with about two months lapsing from the tip to the indictment, Sloman said.

Authorities say Michel De Jesus Huarte and the defendants operated more than a dozen clinics, mostly dealing with costly HIV and cancer drugs. To throw off authorities, he hired the other defendants to keep some of the companies in their names, according to court documents.

Huarte, 38, pleaded not guilty Monday on various charges including Medicare fraud, money laundering and aggravated identity theft. An e-mail and phone call to his attorney were not immediately returned Tuesday.

At least three other suspects have also pleaded not guilty.

Huarte paid the fake store owners in cash “with the understanding that (they) would flee to Cuba to avoid law enforcement detection or capture,” according to the indictment.

Experts say it’s a common problem in health care fraud cases, with suspects taking advantage of Miami’s easy access to other countries to flee. Dozens of defendants are all believed to be in Cuba.

“We have about 50 fugitives in health care fraud cases, many of them in Cuba,” said Alicia Valle, special counsel to the Acting U.S. Attorney.