Medicaid cheats pay for crimes

State recoups $1 million a year in penalties as many get jail sentences

By Peter Korn

The Portland Tribune, Jan 13, 2006, Updated Oct 30, 2009

Ellyn Sternfield remembers watching the television show “The Untouchables” growing up. She remembers how the FBI couldn’t figure out a way to nail Al Capone on criminal charges ,so they had to get to him through the back door Ñ tax fraud charges on all that illegal money he’d collected.

Sternfield watched, she learned, and today she regularly practices something similar as director of the Oregon Department of Justice’s Medicaid Fraud Unit in Portland.

Sternfield, 49, has been attracting attention for her efforts. The federal Office of Inspector General presented her with its Integrity Award in November, an addition to the President’s Council on Integrity and Efficiency award that Sternfield previously garnered for her work prosecuting a multimillion-dollar, multistate kickback scheme involving pharmaceutical giant Schering-Plough.

The money’s been pouring in, too Ñ the Medicaid Fraud Unit brings in about $1 million each year to Oregon in the form of awards and penalties in the fraud cases it wins.

But back to Sternfield and “The Untouchables.” Last June, Sternfield’s unit convicted Robert White, a licensed clinical social worker, on charges of aggravated theft and submitting false claims for health care payments. On the face of it, those charges might appear minor, almost bureaucratic. But in Sternfield’s world, the law is often a means to an end.

White was a Manzanita social worker billing Medicaid about $70,000 a year for counseling sessions he held at nursing homes. Sternfield first heard about him years before; an administrator at one of the facilities the social worker visited complained that White was falsifying records.

Sternfield couldn’t pursue the case because at the time White was billing Medicare, not Medicaid. Medicare is funded and administered by the federal government, Medicaid is state-run (though jointly funded by the federal and state governments), and Sternfield works for the Oregon Department of Justice. She turned the complaint over to federal investigators who never followed up.

But Sternfield isn’t the type of attorney to let something go just because of a little jurisdictional dispute. “We knew something was happening and I kept an eye on him,” she says. Six years later, in 2003, when White started billing Medicaid, Sternfield’s team was ready to take action.

False billing is common

Sternfield has to deal with a harsh reality in her world Ñ proving fraud is a lot harder than uncovering it. Consider, for instance, a bill for counseling and how it could be proved that some form of counseling didn’t take place. Not easy. False billing has become institutionalized throughout the nation’s health care system, Sternfield says.

Providers know which procedures insurers such as Medicaid will cover and which they won’t, and they frequently change their billings to legitimate treatments so their patients’ bills get paid.

Immoral? Maybe, maybe not. But it’s fraud, as far as Sternfield and the law are concerned. “Overbilling or billing for something other than what a patient received because it’s covered by Medicare or Medicaid is rife,” Sternfield says. “Doctors know what insurance will pay. It happens all the time.”

So catching White on fraud charges was going to be difficult. Sternfield did not start by having her staff pore over billing records. Why? “You couldn’t look at his billings and pull the medical records and see fraud on its face,” Sternfield says. “The documents showed services were provided.” Instead, Sternfield assigned an investigator to shadow White. “I wanted to see how he spent his time,” she says.

Investigators followed White to nursing homes and after White would leave, they would go inside and ask what the social worker had done there. They asked which resident or patient White had visited, and for how long.

Months later, when White’s bills would arrive, Sternfield’s investigators could compare the time billed against what they had learned. And there was more. They checked White’s expense reimbursement for days he supposedly was spending in Salem as a member of the Governor’s Commission on Senior Services, and found he was billing for counseling sessions in Warrenton, Seaside and Astoria on those same days.

“There are some cases that are based on billing records and there are some that are old-fashioned police work,” Sternfield says.

‘She stands on principle’

John Masters, special agent in the U.S. Department of Health and Human Services Office of Inspector General, worked with Sternfield on the White case and came away impressed. “This woman is like the Energizer bunny,” Masters says. Masters became most impressed after White confessed and negotiations began over a plea bargain.

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