Federal Task Force Boots Medicare Shoe-Insert Crime Ring

February 11, 2011

Before we get into the guts of the criminal prosecution, let me give credit where credit is due. This case was brought as part of the Medicare Fraud Strike Force, supervised by the United States Department of Justice's (DOJ's) Criminal Division's Fraud Section and the U.S. Attorney's Office for the Eastern District of New York. The case was investigated by:
  • The Federal Bureau of Investigation (FBI)
  • The Department of Health and Human Services (HHS) Office of the Inspector General, and
  • The New York State Office of the Medicaid Inspector General.

Also, the case was prosecuted by DOJ's Criminal Division's Fraud Section.

Official pronouncements inform us that since their inception in March 2007, Medicare Fraud Strike Force operations in seven districts have obtained indictments of more than 850 individuals who collectively have falsely billed the Medicare program for more than $2.1 billion. In addition, the HHS Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.

Impressive. Very impressive -- and with apparently stellar results.

The Shoe-Insert Conspiracy

On December 15, 2009, a federal indictment was unsealed charging Parke Levy of Brooklyn, NY, owner of Americare In Home LLC (Americare) and his mother, Lorraine Levy of Coconut Creek, FL, who served as the director of customer service at Americare, each with one count of conspiracy to commit health care fraud and eight counts of health care fraud in connection with a scheme to submit claims to Medicare for medically unnecessary durable medical equipment. Americare is technically referred to as a durable medical equipment (DME) company.

Medicare.gov

If you visit the Medicare.gov website, you learn the following basics Medicare is a Health Insurance Program for:
  • People age 65 or older.
  • People under age 65 with certain disabilities.
  • People of all ages with End-Stage Renal Disease (permanent kidney failure requiring dialysis or a transplant).
Medicare has Two Parts:
  • Part A (Hospital Insurance) Most people don't have to pay for Part A.
  • Part B (Medical Insurance) Most people pay monthly for Part B.

Part B medical insurance pays for doctors' services, outpatient hospital care, and some other medical services that Part A doesn't cover, such as the services of physical and occupational therapists, and some home health care. Part B helps pay for these covered services and supplies when they are medically necessary.

Here's a bit more information concerning the pertinent Medicare rules for the federal criminal case that we are considering. According to Medicare's pamphlet Medicare Coverage of Diabetes Supplies & Services, Medicare Part B covers therapeutic shoes or inserts for people with diabetes who have severe diabetic foot disease. The doctor who treats your diabetes must certify your need for therapeutic shoes or inserts. Specifically, each year, Medicare will cover up to three pairs of inserts.

Custom Molded

According to the indictment, Americare purported to provide diabetic supplies, including shoes and custom-made inserts, as well as other equipment to Medicare beneficiaries. As noted above, on an annual, per-patient basis, Medicare covered up to three pairs of inserts, provided that the item was deemed medically necessary by a qualified physician. Medicare covered two types of shoe inserts: a high-end heat-molded insert (typical cost about $180), and a low-end pressure molded insert (typical cost about $121). Medicare does not reimburse for inserts which were not custom molded.

Allegedly, Parke and Lorraine Levy solicited Medicare beneficiaries in order for Americare to provide them with diabetic supplies, including "free" shoes and inserts every year, even if they were not medically necessary. Maybe you missed that key point - let me underscore that for you: even if the shoes and inserts were not medically necessary. So, right off the bat, the Levys are running afoul of Medicare's rules. Medical necessities, the government may pay for. Rip-offs? I don't think so.

Drawing showing a Brannock Device, taken from ...Apparently, in some misguided attempt at giving this scam some credibility (or what a prosecutor might call going through the motions), Parke Levy and others met with Medicare beneficiaries and measured their feet.

Okay, so, yeah, it's sort of tough to order shoes or custom molded shoe-inserts for someone if you don't have their shoe size. Of course, there's that gadget at the shoe store where you turn it one way for "Right" and the other way for "Left" and then you step in the back and pull that thingamajig around the ball of your foot and that gives you your shoe width and then you push or pull that bar which gives you your shoe size, and then you do that whole process with your other foot. Actually, I looked it up, it's called a Brannock Device. Boy, am I ever the professional researcher!

Of course, why bother having your feet measured at the shoe store because half the time they either don't have your size or don't have it in your width or they have it but only in something call taupe. I don't wear taupe colored shoes.
 
Back to Parke Levy and his buddies, who are getting ready to measure the feet of the Medicare beneficiaries. Do they use that metal shoe measuring gadget? Apparently not. Do they use some sophisticated shoe measuring computer? No. According to the indictment, these entrepreneurs used a "measuring stick or ruler." Remember that rule about Medicare only covering high-end heat-molded or low-end pressure molded inserts? You think that you can make those using just a stick or ruler?
 
Ever intrepid, Parke Levy and Lorraine Levy submitted or caused to be submitted false Medicare claims for three pairs of custom molded inserts, when in fact only off-the-shelf inserts that cost about $20 were delivered to the beneficiaries although the Levys billed Medicare from about $121 to $216 for the three pairs.

Guilty Pleas

On February 10, 2011, the Levys pleaded guilty in Brooklyn federal court to one count of conspiracy to commit health care fraud. In their plea, Parke Levy, 48, and his mother, Lorraine Levy, 79, admitted that they billed Medicare for equipment and supplies that were never actually provided to Medicare beneficiaries. Sentencing is scheduled for May 17, 2011. All in all, the Levys seem to have gotten what they deserved. A crime is a crime is a crime.

A Tight Fit?

On the other hand, there's this one little thing about this case that bothers me. It's more a pragmatic concern than a philosophical because there is absolutely no question in my mind that Medicare fraud is a serious criminal problem that must be rooted out.
 
On the other foot, we have the FBI, HHS, DOJ, various federal and state prosecutors -- that whole massive task force. And all of those diligent folks put in likely countless hours of time catching the Levys -- hours that cost lots of dollars and likely diverted such talent from other ongoing crimes.
 
Nonetheless, don't get me wrong and please don't put words in my mouth: I agree that criminals can't be permitted to get away with their crimes.
 
Don't look down at the end of this article. C'mon now, no peeking! How many customers, how many dozens of pairs of shoes, how many hundreds of thousands of dollars do you think the Levys' crime involved?
 
Given that I don't want to be accused of fabricating the answer, I've actually gone to the Indictment, taken a screen shot of the relevant portions of the charged crimes, and presented this massive conspiracy for your consideration. We appear to be talking about a three-year crime wave that presented $1,406.99 worth of bills for eight pairs of feet.
 
Screen shot of Indictment (Claims for Counts 2 - 7)
 
 
Screen shot of Indictment (Claims for Counts 8-9)