Patient Whistleblower Exposes $150 Million Medicaid Fraud

Dec 7, 2011 10:00am

In a real-life David versus Goliath story, a 63-year-old wheelchair-bound Medicaid patient took on the multi-billion-dollar healthcare giant Maxim Healthcare. And he won.

Today the House Oversight Committee heard the saga of how Richard West exposed Maxim’s widespread Medicaid fraud and helped government officials reclaim millions for the cash-strapped program.

“This [fraud] is wholly unacceptable,” said Rep. Trey Gowdy, R-S.C., “This is why people have lost trust in the insitutions of government and why our fellow citizens have so little trust that we are spending their money as carefully as we would spend our own.”

Richard West is in a wheelchair, uses a ventilator and needs oxygen.  He also needs Medicaid so he can stay at home while getting care.

In March of 2003, West started receiving that in-home care but in September of 2004 New Jersey state officials suspended his Medicaid benefits claiming he had exceeded his monthly cap.  West knew that was wrong.  He keeps good records.

West determined that his healthcare provider, Maxim, had billed Medicaid for 735 hours of nursing care he never got, fraudulent charges that amounted to more than $20,000.

Armed with the evidence, West complained to New Jersey officials.  They ignored him.

Next he went to Medicaid.   They didn’t care.

He took his case to a social worker, but the social worker did nothing.

So West found an attorney who filed a whistleblower lawsuit under the False Claims Act and that triggered an investigation of Maxim.

“Somebody decided to make a profit on my disability and rip off the government,” West, also a Vietnam War veteran, told the committee. “That was wrong and the right thing for me to do was expose it.”

Today, seven years later, Gary Cantrell, a top government investigator in the Health and Human Service’s Inspector General’s office, told Congress that West is the reason Maxim Healthcare got caught and recently agreed to pay more than $150 million to “resolve civil and criminal charges,” the “largest ever involving home healthcare services.”

But Rep. Elijah Cummings, D-Md., said that fine was nothing more than a “slap on the wrist.”

“Here we have Maxim, a company that has basically stolen, stolen from the American people,” Cummings animatedly said at Wednesday’s hearing. “Maxim, a country that has taken away the services not only from you, but from so many others, but yet and still they are in a position to continue to make millions. Something is absolutley wrong with that picture.”

Cummings said it was “ridiculous” that Maxim can “steal millions” and continue to be employed by the federal government when a young man who steals a $300 bike will have a criminal record “not be able to get a job for a lifetime.”

“I cannot understand for the life of me how every member of this Congress should not want to put Maxim out of business, at least with regard to its business with the federal government,” Cummings said.

Nine people–eight former Maxim employees, including three senior managers and the parent of a former Maxim patient–have pleaded guilty to felony charges for committing fraud, Cantrell testified.

Under the whistleblower protection act, West will receive $14.8 million from the fine Maxim will pay.

“It is impossible to believe that Mr. West’s story is isolated,” Gowdy said. “Medicaid is designated a high-risk program and is therefore highly susceptible to waste, fraud and abuse. ”

In fiscal year 2010, whistleblowers like West helped recover $2.39 billion lost to fraud, according to a Taxpayers Against Fraud report cited in West’s attorney’s testimony. Gowdy said as much as one-fifth of the money Medicaid spends is wasted on fraud.

A provision of the Affordable Care Act provides an additional $350 million over the next decade to help fight fraud, resources Cummings  said were necessary to prevent cases like West’s.

“When we invest in fraud prevention government spending more than pays for itself,” Cummings said. “That is one reason why repealing the Affordable Care Act and cutting Medicaid’s enforcement budget would be very short sighted and indeed counter-productive.”

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