Testimony Before the United States House of Representatives  
 
    
Committee on Oversight and Government Reform:      
Subcommittee on Government Organization, Efficiency and      
Financial Management; and Subcommittee on Health Care, District 
of Columbia, Census and the National Archives 
 
 
 
 
 
A Medicaid Fraud Victim Speaks Out:  Whats Going Wrong and Why? 
 
Testimony of: 
 
  Gary Cantrell 
 
Assistant Inspector General for Investigations 
 
Department of Health and Human Services 
 
   
December 7, 2011 
10 a.m. 
Rayburn Building, Room 2154 
 
  Testimony of:  
Gary Cantrell  
Assistant Inspector General for Investigations 
U.S. Department of Health and Human Services 
Office of Inspector General  
_________________________________________________________________________________  
 
INTRODUCTION 
 
Good morning Chairmen, Ranking Members, and other distinguished Members of the 
Subcommittees.  I am Gary Cantrell, Assistant Inspector General for Investigations with the U.S. 
Department of Health and Human Services (HHS), Office of Inspector General (OIG).  Thank 
you for the opportunity to testify about OIGs efforts to combat Medicaid fraud.  My testimony 
will provide an overview of certain areas of Medicaid fraud, describe our law enforcement 
efforts and investigative challenges, and make recommendations to improve Medicaid oversight. 
 
BACKGROUND 
 
OIGs mission is to protect the integrity of over 300 HHS programs, as well as the health and 
welfare of program beneficiaries.  In fulfillment of this mission, we investigate and hold 
accountable those who defraud and abuse the Departments programs, promote provider 
compliance, and recommend program safeguards. 
 
OIG has a robust program of audits, evaluations, and investigations directed towards identifying, 
preventing, and stopping Medicaid fraud, waste, and abuse.  OIG employs more than 1,700 
dedicated professionals, including a cadre of over 480 highly skilled criminal investigators, 
trained to conduct criminal, civil, and administrative investigations of fraud related to HHS 
programs and operations.  Our special agents have full law enforcement authority to effect a 
broad range of actions, including the execution of search and arrest warrants.  We use state-of-
the-art technologies and a wide range of tools in carrying out these important responsibilities.  
We are the Nations premiere health care fraud law enforcement agency. 
 
Our constituents are the American taxpayers, and we work hard to ensure that their money is not 
stolen or misused.  In fiscal year 2011, OIG opened over 2,000 investigations.  Enforcement 
efforts for the same fiscal year resulted in record numbers that included over 1,100 criminal and 
Page 1 of 8 
  Testimony of:  
Gary Cantrell  
Assistant Inspector General for Investigations 
U.S. Department of Health and Human Services 
Office of Inspector General  
_________________________________________________________________________________  
civil actions and $4.6 billion in expected recoveries.  Of this, nearly 400 criminal and civil 
actions are related to Medicaid and over $1.1 billion in restitutions or recoveries are to be 
returned to Federal and State Medicaid programs. 
 
MEDICAID FRAUD OVERVIEW 
 
Medicaid is an important health care benefit for approximately 56 million Americans with 
limited incomes or disabilities that rely on the program for medical care.  The program is funded 
jointly by Federal and State governments.  Generally speaking, the Federal Government sets 
broad guidelines for Medicaid, and the States have flexibility to administer the program within 
those guidelines.  The scope and composition of each Medicaid program vary significantly 
across States.  In fiscal year 2011, the program accounted for nearly $275 billion in Federal 
spending.  Medicaid fraud drains vital Federal and State program dollars, in turn, harming both 
recipients and the American taxpayers. 
 
OIG is leading the fight against health care fraud  
 
OIG brings a formidable combination of cutting edge techniques and traditional investigative 
skills to the fight against Medicaid fraud.  This has been useful in uncovering a range of 
schemes, especially those relating to home health and personal care services, prescription drug 
diversion, durable medical equipment, and ambulance transportation.  These schemes have 
involved many types of fraud, including billing for equipment not provided or for services not 
rendered, medical identity theft, false statements, bribery, and kickbacks. 
 
We receive information related to these schemes through a variety of sources, including the 
Centers for Medicare & Medicaid Services (CMS) as well as qui tam referrals from the 
Department of Justice (DOJ). 
 
Page 2 of 8 
  Testimony of:  
Gary Cantrell  
Assistant Inspector General for Investigations 
U.S. Department of Health and Human Services 
Office of Inspector General  
_________________________________________________________________________________  
One such example is our recent investigation of Maxim Healthcare Services, Inc. (Maxim), 
which was initiated on the basis of Mr. Richard Wests qui tam complaint against the company.  
Mr. West was a patient of Maxim, one of the Nations leading providers of home health services.  
The settlement resolved allegations that between 1998 and 2009, Maxim filed false claims with 
State Medicaid programs and the Department of Veterans Affairs for services either not 
provided, not sufficiently documented to show they were provided, or delivered from unlicensed 
offices.  Our investigation resulted in a settlement in which Maxim agreed to pay more than $150 
million to resolve civil and criminal charges.  The settlement represents the largest-ever 
involving home health services.  The company has also entered into a 5-year Corporate Integrity 
Agreement (CIA) with OIG, which requires additional reforms and monitoring under our 
supervision. 
 
In addition,  nine individuals--eight former Maxim employees, including three senior managers, 
and the parent of a former Maxim patient--have pleaded guilty to felony charges arising from the 
submission of fraudulent billings to government health care programs, the creation of fraudulent 
documentation associated with government program billings, or false statements to government 
health care program officials regarding Maxims activities. 
 
The Maxim case is also an example of a recent increase in fraud cases involving home health and 
personal care providers.  According to data obtained from the Medicaid Fraud Control Units 
(MFCUs), as of the fourth quarter of 2010, we are now seeing more Medicaid fraud cases 
involving home health services than any other single program area.  The vast majority involve 
personal care services, which are nonmedical services provided by unskilled aides who assist 
recipients with activities of daily living, such as bathing, meal preparation, and feeding. 
 
As stated above, we are also witnessing persistent fraud trends surrounding misuse of 
prescription drugs.  These cases are among the most deplorable because they involve the over-
prescribing of dangerous narcotics and sometimes the diversion of dangerous narcotics to street 
drugs, often causing harmful or deadly results to those who abuse them.  We saw a particularly 
Page 3 of 8 
  Testimony of:  
Gary Cantrell  
Assistant Inspector General for Investigations 
U.S. Department of Health and Human Services 
Office of Inspector General  
_________________________________________________________________________________  
egregious example of this in the State of Washington, which resulted in the death of a patient 
from an overdose of Oxycodone prescribed by the patients physician.  The physician had 
established relationships in the local heroin-user community and was writing medically 
unnecessary prescriptions to patients for narcotics, including Oxycodone and Vicodin.  In this 
case, the physician was incarcerated and ordered to pay $700,000 in restitution.  The physician 
also lost her medical license and was excluded from all Federal health care programs. 
 
OIG is collaborating with Medicaid Fraud Control Units 
 
State MFCUs have played a significant role in helping us identify the fraudulent activities 
discussed above and other fraud trends in Medicaid.  The number of our joint investigations with 
MFCUs nearly doubled in the past 5 years from 621 to over 1,100.  The collaboration with 
MFCUs and other law enforcement partners has been critical, as many of the providers 
defrauding Medicaid have operations throughout the United States.   
 
For nationwide investigations, the National Association of Medicaid Fraud Control Units 
(NAMFCU) plays a coordinating role in marshaling the investigative efforts of the many 
individual States affected by fraud.  In a recent nationwide investigation, OIG collaborated with 
the MFCUs, through a NAMFCU committee, as well as other law enforcement partners, to 
investigate the pediatric dental clinic Small Smiles, managed by FORBA Holdings, LLC 
(FORBA).  The investigation revealed that FORBA, among other things, allegedly caused the 
submission of claims to Medicaid for dental services that either were not medically necessary or 
did not meet professionally recognized standards of care.  These unnecessary services included 
pulpotomies (baby root canals), placing multiple crowns, administering anesthesia, performing 
extractions, and providing fillings and/or sealants.  This investigation resulted in an agreement 
from FORBA to pay over $24 million plus interest and enter into a 5-year quality-of-care CIA to 
settle allegations that it performed unnecessary and often painful services on children to 
maximize Medicaid reimbursement.   
 
Page 4 of 8 
  Testimony of:  
Gary Cantrell  
Assistant Inspector General for Investigations 
U.S. Department of Health and Human Services 
Office of Inspector General  
_________________________________________________________________________________  
OIG is engaging health care providers and the public in the fight against fraud 
 
OIG is using a variety of tools to engage all our stakeholders in our efforts to prevent, detect, and 
combat health care fraud.  OIG is extensively using the Internet to enlist the health care industry 
and the public in the fight against fraud.  Our Web site, www.oig.hhs.gov, offers a wide range of 
information to health care providers and patients about ways to reduce the risk of fraud and 
abuse.  These resources include OIGs provider compliance training, voluntary compliance 
program guidance, fraud alerts, self-disclosure protocol, and advisory opinions on fraud and 
abuse laws.1  OIG also offers a guide to prevent medical identity theft.2  And we recently 
published A Roadmap for New Physicians:  Avoiding Medicare and Medicaid Fraud and Abuse,3 
which summarizes five main Federal fraud and abuse laws and provides guidance on how 
physicians should comply with these laws in their relationships with payers, vendors, and fellow 
providers.  
 
The OIG Hotline is another valuable fraud-fighting tool, which allows individuals to contact OIG 
directly through our Web site or by calling 1-800-HHS-TIPS to provide information regarding 
these and other types of fraud, waste, and abuse schemes in HHS programs.4  
 
We have also posted OIGs list of the 10 most wanted health care fraud fugitives, including 
photographs and details about the individuals and their schemes.5  One of our top most wanted 
fugitives, Dr. Gautam Gupta, is wanted for allegedly defrauding Medicaid and private insurance 
companies of millions of dollars.  Gupta owned and operated several weight loss nutrition clinics 
in northern Illinois and the Chicago metropolitan area.  According to the arrest warrant, the clinic 
defrauded Medicaid and private insurance companies of as much as $24 million from 
unwarranted medical tests and false billings for doctor visits. 
 
                                                           
1 Available at http://oig.hhs.gov/compliance/.  
2 Available at http://oig.hhs.gov/fraud/medical-id-theft/index.asp.  
3 Available at http://oig.hhs.gov/compliance/physician-education/index.asp.  
4 Information about the OIG Hotline can be found at http://oig.hhs.gov/fraud/report-fraud/index.asp. 
5 Available at http://oig.hhs.gov/fraud/fugitives/index.asp.  
Page 5 of 8 
  Testimony of:  
Gary Cantrell  
Assistant Inspector General for Investigations 
U.S. Department of Health and Human Services 
Office of Inspector General  
_________________________________________________________________________________  
We are asking the public to help us bring these fugitives to justice by reporting any information 
about their whereabouts to our Web site or Fugitive Hotline (1-888-476-4453).  A recent call to 
the Hotline led to the capture of one of OIGs top 10 most wanted fugitives; we hope, with the 
publics help, to also bring Gupta to justice in the near future. 
 
RECOMMENDATIONS TO IMPROVE MEDICAID OVERSIGHT 
 
OIG uses data to detect possible fraudulent billing at the earliest possible stage.  In combating 
Medicare fraud, OIG has worked closely with its partners, including CMS, to provide our special 
agents with access to more data sources and real-time access to Medicare claims data.  This has 
been critical in our enforcement efforts and has enabled us to develop a consolidated data 
analysis center, which integrates business intelligence tools and develops new data analytics to 
enhance our fraud detection efforts.  This has improved OIGs ability to access, analyze, and 
share data with our law enforcement partners and accomplish this in a manner consistent with 
applicable privacy, security, and disclosure requirements.  The centralized data analysis center 
has already enhanced the efficiency and coordination of our collective efforts by enabling law 
enforcement to identify a broader range of potentially fraudulent activities and more efficiently 
use our investigative resources.  Much of our Medicare enforcement success can be attributed to 
our timely access to useful data, which has played a pivotal role in our recent enforcement 
results.   
 
Inability to access useful, timely Medicaid data hinders oversight efforts 
 
In contrast to Medicare, our efforts to use data analytics to oversee Medicaid have been impeded 
by the lack of national-level, timely Medicaid data.  Medicaid presents unique data challenges 
because key program operations occur across 50 States, the District of Columbia, and U.S. 
territories, rather than on a national level.  The Medicaid Statistical Information System (MSIS) 
is the only source of nationwide Medicaid claims information, and weaknesses in MSIS data 
limit its usefulness for oversight and monitoring of the program.  In a 2009 report, OIG 
Page 6 of 8 
  Testimony of:  
Gary Cantrell  
Assistant Inspector General for Investigations 
U.S. Department of Health and Human Services 
Office of Inspector General  
_________________________________________________________________________________  
determined that MSIS data were an average of 1 1/2 years old when released by CMS to users 
for data analysis purposes.6  In law enforcement, a 1 1/2-year timelag is an eternity, especially 
when dealing with astute criminals who cash out quickly and move on to the next scheme.  
Moreover, MSIS was not designed for anti-fraud efforts and lacks many basic data elements that 
can assist in fraud, waste, and abuse detection.  Additionally, MSIS does not include complete 
data received through managed care plans, despite the fact that the majority of Medicaid 
beneficiaries received their health care services through Medicaid managed care.7 
 
Our investigation of Maxim illustrates challenges faced in conducting nationwide investigations 
involving Medicaid fraud.  Maxim is a nationwide conglomerate providing home health services 
in over 40 States, which made it difficult to collect comprehensive Medicaid claims data in 
support of our investigation.  We understand that CMS is working to address these and other data 
issues.  We hope that CMS moves forward expeditiously to systematically collect comprehensive 
data and make the data available to us.   
 
We further recommend that MFCUs abilities to access data be enhanced.  Our goal is to help 
them establish their own analytic capabilities with regard to their respective State Medicaid data.  
To support this, OIG issued a notice of proposed rulemaking to permit MFCUs, under certain 
conditions, to use Federal matching funds to identify fraud through screening and analyzing State 
Medicaid claims data.8  We believe this will enhance our enforcement efforts and improve 
Medicaid oversight. 
 
CONCLUSION 
 
The need to protect Medicaid from fraud has never been more important.  The Congressional 
Budget Office estimates that in 2014, 16 million new recipients will join the Medicaid program.  
                                                           
6 MSIS Data Usefulness for Detecting Fraud, Waste, and Abuse, OEI-04-07-00240, August 2009, available at 
http://oig.hhs.gov/oei/reports/oei-04-07-00240.pdf.  
7 Medicaid Managed Care Encounter Data:  Collection and Use, OEI-07-06-00540, May 2009, available at 
http://oig.hhs.gov/oei/reports/oei-07-06-00540.pdf.  
8 76 Fed. Reg. 52 (March 17, 2011), pp. 1463714641. 
Page 7 of 8 
  Testimony of:  
Gary Cantrell  
Assistant Inspector General for Investigations 
U.S. Department of Health and Human Services 
Office of Inspector General  
_________________________________________________________________________________  
States and the Federal Government alike must work to eliminate vulnerabilities and ensure that 
we are positioned to effectively oversee the program in the years to come.  It is critical that OIG 
have access to timely and accurate Medicaid data to protect program recipients and expenditures.  
As shown through our accomplishments in Medicare, data analysis is vital to fighting health care 
fraud.  We believe comparable access to Medicaid data will yield similar successes.   
 
To that end, OIG will continue moving forward to implement mechanisms to protect the integrity 
and vitality of Medicaid and punish those who defraud the program.  We will continue partnering 
with those who share our objectives to safeguard the programs that protect the health of all 
Americans and provide essential health care to those in need. 
 
Thank you for your support of OIGs mission.  I would be happy to answer any questions. 
Page 8 of 8