Journalist Nick Shirley Documents Over $300 Million in Alleged Kickback Schemes from
Pharmacies Operating in Queens Investigative Journalist Uncovers Allegedly Hundreds of Millions in Fraudulent Billing Practices by Pharmacies and Social Adult Day Care Centers Receiving Funding From M
Nick Shirley, investigative journalist that previously brought to light widespread fraud of over $110 million against a daycare system operating in Minnesota was able to uncover large-scale fraud involving several pharmacies in Queens, NY that were allegedly receiving money through a massive kickback scheme. The journalists investigation along with the Center for Medicare Services (CMS) administrator Dr. Mehmet Oz uncovered evidence of an organized group of adult day care centers and pharmacies that were allegedly using Medicare and Medicaid funds for services not required.
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The amount of money being taken in is difficult to understand. According to Shirley’s investigation into Flushing, Queens, there is alleged to be over $190 million in fraudulent activity taking place among adult day care centers and pharmacies working together to submit false claims to Medicare and Medicaid. Based upon additional information available within the overall scope of Shirley’s investigation, the estimated total could exceed $310 million if all of the other scams are considered.
How would something such as this occur?
Based upon Shirley’s reporting, the adult day care centers involved in the scam were offering “kick-backs” ranging from $100 to the elderly individuals participating in the scheme in exchange for allowing those seniors to obtain prescription medication at associated pharmacies, and/or bringing in additional friends/clients to utilize their adult day care services. As reported by Shirley, the individuals running these organizations have ties to the Korean and Chinese organized crime groups which use the Medicaid funding dollars for their own financial gain and pass a portion of that money back to the senior citizens used to create the false Medicare/Medicaid claims.
In one example of how the organization worked center by center – Shirley met face-to-face with the owners/operators of Sunrise Senior Service, one of the facilities reportedly raking-in over $44 million in fraud. One of Sunrise Senior Service’s clients outside of her residence told Shirley that she had been paid a “kick-back” herself; however, prior to speaking with Shirley the owner/operator of Sunrise Senior Service denied any wrongdoing. Records obtained by Shirley through a Freedom of Information Act request show the center claimed 7900 patients in one year alone — given its size and layout it appears unlikely that the facility could provide medical services to that number of people. This is not an isolated incident. While Shirley was investigating portions of this issue, federal authorities were also moving forward.
This is not an isolated incident. While Shirley was investigating this part of the story, federal authorities were already ahead of him. In February, prosecutors charged Inwoo Kim and Daniel Lee in a separate but related $120 million Medicare and Medicaid fraud scheme, also centered on an adult day care and pharmacy operation in the same neighborhood. Kim owned Royal Adult Daycare and Happy Life Inc. Lee served as program director at Happy Life. Both allegedly paid kickbacks to patients who filled prescriptions at their pharmacy while also billing for medically unnecessary services.
Regarding the extent of the problem Dr. Oz said, “Queens is a hotbed for this type of activity.” He further stated, “Social adult daycares in Queens generate approximately $2.1 billion per year.” That is just one category of service, in one county, generating enough income for it to become an easy target for scammers.
Why has this continued?
As Shirley has asked publicly – why should hardworking American taxpayers continue paying for government programs intended to assist the elderly and vulnerable when fraudsters continue exploiting those programs for their own financial gain? With increasing support from officials willing to take action based on his findings – including Dr. Oz physically accompanying him during filming -- Shirley’s latest expose is no different.