Doctors Earning Money From Dead Patients? Not in New York, They Don’t

 “For me, the #1 way of knowing we have a lot of fraud, is that whenever we look, we find more.” (Peter Budetti, Director,CMS Center for Program Integrity)


James Sheehan

James Sheehan

There are medical heroes among us and they deserve to be recognized. And one of those heroes – a man you have probably never heard of – is James Sheehan.


Inspector General Jim Sheehan ticked off many hospitals and nursing homes in aggressively recouping more than $1 billion in improper Medicaid payments.


James Sheehan happens to be the Medicaid Inspector General for the state of New York. And Mr. Sheehan is our kind of guy, because he absolutely loathes healthcare fraud. That’s why his staff created a sophisticated database investigation tool that identified more than 300 doctors who were sending bills to insurance providers for their “treatments” of dead people. Lo and behold, a few dead doctors popped up, too – not from the grave, you understand. From the snoopy database. Yes, indeed. Because in the Twilight Zone of “healthcare” a handful of MDs appeared to be writing prescriptions and ordering diagnostic exams from beyond the grave. And other doctors – very much alive – were gaining wealth because of it.

In the halls of healthcare this is known as a

In the halls of healthcare this is known as a “wallet biopsy.”

Gotta love U.S. medicine.

Sheehan’s staff leaped into action. They sent official letters of query to these questionable healthcare providers, asking them to clarify this little matter of medically treating their walking dead. Since the New York state death records system makes very, very few mistakes, Sheehan’s staff insisted that the treating clinics prove the patients they said they took care of were . . . well, alive. Not really too much to ask.

The early results were interesting. 67 doctors fessed up that – surprise, surprise – some of the patients that they’d said they treated were indeed actually in graveyards. Sorry about that. Oops. The billings were the result of  “errors.”

“We’re pretty sure that’s wrong,” says Sheehan. His office is now matching records of thousands more patients with death certificates, to be sure. It’s called babysitting college-educated physicians.

Dead “patients” – as interesting as they are – are merely part of physician crime in America. During his three years as inspector general, Sheehan has witnessed plenty of other doctor scams. One of the most common thefts is by dentists who pay Medicaid patients cash, for them to agree to unnecessary, highly expensive treatments. And New York isn’t alone in dealing with physician criminal creativity. In Florida, the Office of Program Policy Analysis and Government Accountability, determined that Medicaid fraud costs to the state might be as high as $3,000,000,000 a year. And that’s just one state in a single 12-month period.

With such appalling waste of taxpayer money, a growing number of states are putting up funding and staffing to address the problem. Ohio has hired 10 new staff positions to their Medicaid Fraud Control Unit, which allowed them to recover $91,000,000 in 2009 alone. State Medicaid fraud units also are joining forces, to mount complex, interstate cases, many targeting pharmaceutical company fraud.

The federal government is offering a helping hand to recover money lost to scams. In 2005, the federal Centers for Medicare and Medicaid Services (CMS) created the Medicaid Integrity Program to provide state Medicaid programs with the technical assistance, such as sophisticated data-mining, to identify overpayments. The feds are sure the states won’t come up empty-handed. “For me, the # 1 way of knowing we have a lot of fraud,” says Peter Budetti, deputy administrator and director of the CMS Center for Program Integrity, “is that whenever we look, we find more.”

While states differ on tactics, there’s widespread agreement on at least one issue: efforts to combat fraud pay for themselves. According to CMS’s Budetti, studies of fraud prosecutions have found that health insurers recoup money on a seven-to-one ratio.

New York responded with a two-pronged approach. The first part involved a renewed push by New York’s MFCU to crack down on crime. In 2008, New York’s MFCU secured nearly 150 convictions and recovered $263,000,000, more than any other MFCU in the country. The second involved the creation of a new Office of the Medicaid Inspector General. The state turned to James Sheehan to head that project.

Sheehan was well versed in health-care fraud. As an assistant U.S. attorney in Philadelphia, he spent nearly two decades working fraud cases. He also played a major role in a case against pharmaceutical company SmithKline Beecham that resulted in a $330,000,000 settlement.

Taking advantage of New York’s relatively comprehensive Medicaid database, Sheehan’s staff teamed up to identify the outliers –  providers whose billing practices clearly stood outside the norm. They divied that group into three categories: ethical providers who sometimes struggled with complex systems; providers who simply don’t follow the rules; and the outright criminals, like those who send bills for dead patients and dead doctors. While the latter category received the most attention, Sheehan’s staff demand that all providers comply with the letter of the law..

Sheehan’s aggressive tactics have drawn criticism. At a hearing called by legislators close to the health-care industry, Sheehan was accused of relying on “gangster-style” tactics. Some private providers complained that state agencies are now treating mistakes previously considered “technical errors” as abuse, and are meting out heftier fines than are necessary.

For Sheehan, the answer to that charge is straightforward: “A number of providers had not been audited in 15 or 20 years,” he says. “When you tell people they got money they shouldn’t have and they have to give it back, it’s never a pleasant moment.”

And Medical Miscreants tips our cap to Mr. James Sheehan and his dedicated staff. Kudos.



One thought on “Doctors Earning Money From Dead Patients? Not in New York, They Don’t

  1. Donna says:

    My kind of gangsters!

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