DEFRAUDING MEDICARE AND MEDICAID


Joon H. Kim, the Acting United States Attorney for the Southern District of New York, announced that ALEKSANDR BURMAN, a/k/a “Alexander Burman,” was sentenced today by U.S. District Judge Paul G. Gardephe to 10 years in prison. BURMAN organized and managed a large health care fraud scheme through six medical clinics in Brooklyn, through which BURMAN and his co-conspirators defrauded the Medicare and New York State Medicaid (“Medicaid”) programs of more than $26 million. As part of the scheme, BURMAN and his co-conspirators paid cash kickbacks to elderly and financially disadvantaged patients insured by Medicare and/or Medicaid, to induce those patients to receive medically unnecessary medical services and equipment, and then to bill Medicare and Medicaid for those unnecessary services or for additional non-existent services and equipment. BURMAN pled guilty on March 18, 2016, before U.S. Magistrate Judge Henry B. Pitman to conspiring to commit wire fraud and health care fraud, health care fraud, and committing an offense while on pretrial release in an earlier criminal case.

Acting U.S. Attorney Joon H. Kim said: “Aleksandr Burman victimized both patients and taxpayers. He established and operated six fraudulent medical clinics, bilking Medicare and Medicaid out of more than $26 million. Medicare and Medicaid were established to assist the elderly and disadvantaged, not to enrich corrupt fraudsters.”

According to the Information to which BURMAN pled guilty, other filings in Manhattan federal court, and statements made in connection with BURMAN’s sentencing:

ALEKSANDR BURMAN established six clinics in Brooklyn (the “BURMAN Clinics”) that operated between 2007 and July 2013, which purported to offer medical services and diagnostic testing performed by or under the supervision of licensed medical doctors. Although BURMAN in fact owned and operated the Clinics, he caused them to employ three doctors (the “Clinic Doctors”) and arranged for these doctors to be listed as the respective nominal owners of the Clinics, since New York State law requires that such clinics be owned by health care professionals. Under BURMAN’s direction, employees of the Clinics paid cash kickbacks to elderly and disadvantaged people insured by Medicare and/or Medicaid to undergo unnecessary medical tests and procedures, and then fraudulently billed Medicare and Medicaid for such visits. The bills submitted to Medicare and Medicaid were fraudulent because, among other things, (a) they were for medically unnecessary treatment; (b) patients were paid kickbacks for receiving treatment; and (c) the bills fraudulently claimed that the Clinic Doctors had treated the patients. In other cases, BURMAN and his co-conspirators billed Medicare and Medicaid for medical services and supplies that were not provided at all.

The fraud also extended to other companies. For example, prescriptions from the doctors at the BURMAN clinics were used by a supply company that BURMAN partly owned to bill Medicaid for more than $3.5 million in durable medical equipment such as adult diapers, many of which were never provided to patients. Similarly, referrals from these same doctors were used by transportation companies to bill Medicaid for millions of dollars for medically unnecessary ambulette services.

Greece has the most corrupt public health system on planet Earth! Greek doctors in public hospitals demand bribes for all operations!  No bribe means a lot of trouble, such as infinite delays, curved queueing, bad operations, and wrong medicines!  Health insurance means nothing to Greek public doctors! The government encourages doctor bribes and long queues!  To see a public doctor, you have to wait six months!  Even though Greeks paid for state health insurance, the government of Greece wants to make their experience in public hospitals so miserable in order for them to go to private doctors and private hospitals, which are not covered by the state health insurance!  This way, the Greek government saves a lot of money.

Greece’s hospitals welcome back corrupt doctors ousted for demanding huge bribes from patients.  The legal remedy allowing the reinstatement of corrupt doctors emanates from a notorious Katrougalos law named after the relevant labor minister. Among others, the law stipulates that public employees suspended for serious on-the-job infractions can re-appeal their cases. Based on the Katrougalos law’s procedures, suspended doctors can have their case returned to the pseudo-disciplinary boards of their respective hospitals in order for their case be reviewed anew by amiable corrupt colleagues. 

A culture of bribes in Greek hospitals is extremely disgusting. Nurses are very glad to help doctors lie, abuse, and rob patients at pain point under duress.  Nobody cares, nobody gives a damn. Administrators are in cahoots with the corrupt doctors. The whole staff is a big mafia protecting corrupt doctors. Medical errors and other safety lapses have a lot to do with the flow of bribes.

We cannot believe that the administrations of hospitals are not aware of the huge corruption of their doctors, and we cannot believe the Greek Ministry of Health is not aware of what’s happening at hospitals.  We do not know how the flow of medical bribes works, where it originates and where it ends.  The European Union must investigate the flow of bribes, because no Greek organization is willing to do it.

Widespread grafts and bribes by Depuy, a subsidiary of Johnson & Johnson, through a network of offshore companies, went to Greek doctors in two hundred public hospitals who received bribes amounting to thirty billion euros. The charges include passive and active bribery, fraud, embezzling public money, and laundering.

The investigations revealed that medical equipment imported into Greece by Depuy were overpriced by up to 35%, with 20% going to doctors for their pseudo-preference to the products and 15% to cover expenses to maintain the network of accountants and lawyers who had set up and were operating the 15 off-shore consultant services companies through which the money was funneled to the end recipients.

Greek authorities are investigating the Swiss pharmaceutical giant Novartis over bribery and price inflation. These involve illegal earnings of a dozen billion euros. A Novartis executive had walked out onto a high terrace of the Hilton Hotel in Athens and threatened to jump off. He has been summoned to give evidence in the case. Police negotiators were able to prevent the suicide at the last minute.

Novartis paid huge bribes to many Greek officials, politicians, and doctors in public hospitals. Whistleblowers have passed documents to the judicial authorities which indicate that five thousand people in Greece were targeted, and were given bribes. People who didn’t go along with it were subjected to workplace harassment. Company employees felt like warriors with high sales targets that absolutely had to be achieved, even though the pharmaceutical market kept shrinking because of the economic crisis.

Many people had been putting their hand deep in the honeypot. Novartis was selling medicines and services to state clinics at inflated prices, and this poses the question of whether a lack of transparency in the procurement system may have led to this cost trap. State hospitals are forced to pay too much for medicines. The state prosecutor is currently examining files and bank transactions of doctors suspected of receiving money from Novartis. The investigators want to use these to trace the flow of money.

Virtually every 21st century business scandal is reducible to a morality tale of a technology that allows us to do things we couldn’t before, coupled with major institutional failures that were enabled by failures of omission and commission of corporate leaders.

Consider the major, self-inflicted crises at Wells Fargo, where two million accounts were opened without customers’ knowledge, or at Volkswagen, where emissions data was falsified, or News Corp, where editors illegally hacked cell phones to publish private information.

These are different from the kind of product-safety scandals we grew accustomed to in the 20th century. And yet most business schools and leadership development programs still focus on those. Consider the Columbia and Challenger space shuttle disasters. These are still two of the most popular case studies taught in business schools, and because of them, we believe we know why organizations self-inflict crises. Countless executives and MBAs have studied the key lessons, learning about individual and institutional biases that warp our world views. They learn that the absence of psychological safety keeps team members from disagreeing with dominant opinions. They learn that organizational failures result from rigid reporting lines, “one right way” problem-solving, cultures that shoot – or specify unreasonable standards for – the messenger, and restrictive communications protocols. These lessons are valuable, but incomplete for today’s world.

Digital technologies today enable individual employees to do much more than they could before. Mid-tier executives, who have serious decision-making power devolved to them (compared to 25 years ago) drive this workflow. The reasons behind this vary by organization, but they are often rooted in the cultures that the ease and openness of information sharing have spawned. These executives lead teams in which globally dispersed people from multiple organizations collaborate on critical tasks.

But in most companies, despite the free-flow of exchanges, they still lack information they need, can’t communicate with team members in real time, or can’t foresee the implications of key decisions. Undoubtedly, one of them pulls the trigger when something goes wrong – whether it is an inability to design to needed standards at Volkswagen or the opening of unauthorized accounts at Wells Fargo. They are blamed because they can easily be blamed. More than 5,000 midlevel or junior people were fired at Wells Fargo after the truth came out.

Have we rethought how we work in a digital age when work increasingly requires large doses of unseen discretionary effort? Have we redesigned processes and structures to surface problems before these become crises? Have we allowed the free flow of key information to distributed decision makers? Have we created collaborative, learning-focused cultures? In most companies, we have not.

When a crisis unfolds, we are now quick to say, as General Duane Deal said of the Columbia explosion, that “the institution allowed it.” And yet we have been too hesitant to add the necessary phrase: “and top leaders enabled it.” The motive force behind institutional failure is leadership failure. The failure may be unintended, but that doesn’t exculpate individuals who spend their adult lives seeking the power and prestige of top positions.

Top leaders are enabling the current failures in two ways. First, though they speak of ecosystems and a VUCA world, they fail to rationally consider the implications of these realities for the day-to-day jobs their mid-tier executives. They make the mistake of thinking 20th century human organizations can thrive amidst 21st century technology. They don’t even recognize that the slate of questions posed above are relevant, even critically important. Second, they don’t consider at a human level how their stated strategic intents shape the acceptable ethical boundaries for those who must turn those intents into reality.

In the highly interconnected digital world, it is very hard to rationally consider the many factors that affect any event. The difficulties are magnified when the factors change unpredictably and with great speed, and give rise to precious few “one right answer” and many “no good answers.” Given the archaic structures and processes, and without repeated, clear guidance on “what we don’t ever risk,” is it any surprise that decisions about ambiguous options subsequently turn out to be ethically compromised?

While an editor “pulled the trigger” to illegally hack the mobile phone of a kidnapped child, Rupert Murdoch enabled the decision. He didn’t set ethical boundaries in a scoop-focused media market, and he hired executives who didn’t set policies and procedures to preclude such acts. Indeed, he rehired an executive cleared of criminal wrongdoing, signaling that her ethical and managerial failures didn’t matter. While mid-tier executives and engineers pulled the trigger to design Volkswagen engines that responded falsely to emissions tests, Ferdinand Piech and Martin Winterkorn’s demands of win-at-all-costs performance and the absence of appropriate procedural safeguards enabled – even encouraged – them to do so. At Wells Fargo, a culture and a warped incentive system created by top executives enabled malfeasance. That didn’t stop CEO John Stumpf from blaming employees who didn’t get it right, or CFO John Shrewsberry from blaming underperformers. Stumpf was forced out, but since neither Mr. Shrewsberry nor CAO/HR Director Hope Harrison were, the seeds for future crises have been left undisturbed.

Avoiding further self-inflicted crises – and the human damage they cause – will require more attention to both institutional norms and ethical leadership. That responsibility ultimately lies at the very top. When they hire CEOs, Boards of Directors must make ethics the deal-breaking criterion. CEOs and their direct reports must rethink not just how to compete using digital technology, but more importantly, how work should be done in a world mediated by digital technology.

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