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US Officials Continue Crack Down On Medicare Fraud

WASHINGTON -(Dow Jones)- Street gangs are getting into a surprising new line of business in southern California: Medicare fraud.

Federal officials on Wednesday announced six Los Angeles-area defendants were arrested and charged with taking part in schemes that bilked the federal medical program of $25 million. Some of the defendants allegedly paid members of a Santa Ana gang up to $10,000 to serve as straw owners of medical-equipment companies that submitted false claims for reimbursement to Medicare.

Many of the bogus bills allegedly were for expensive powered wheelchairs for individuals who were deceased, or for patients who didn't need them or never received them, authorities said.

The cases stem from an investigation by the Medicare Fraud Strike Force, which has been probing unusual Medicare billing in four cities - Detroit, Houston, Los Angeles and Miami.

To date, the strike force approach has yielded charges against 331 individuals who allegedly submitted $720 million in bogus bills to Medicare since March 2007, said Lanny Breuer, Assistant Attorney General of the U.S. Justice Department's criminal division.

At a press briefing Wednesday, Breuer said the strike-force approach has been effective at deterring Medicare fraud and that he would like to expand it to other cities, which he declined to identify. He declined to comment on whether the Medicare fraud cases have implications for federal health care policy, but said that at a time when federal deficits are rising, it's important that federal funds aren't lost to fraud.

-By Judith Burns, Dow Jones Newswires; 202-862-6692; judith.burns@dowjones.com

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