Rising to the Challenge


James D. Ratley, CFE, ACFE President

Remember this scene in The Godfather, Part II? In 1959, pre-Castro Havana, mafioso Hyman Roth boasts, “We now have what we’ve always needed – partnership with a government…We’re bigger than U.S. Steel!”

Real-life gangster Meyer Lansky actually made that claim. Rising to the challenge, Congress and President Nixon created the Racketeer Influenced and Corrupt Organizations Act (RICO) in 1970.

Fast forward to New York’s Tribeca 2010 Film Festival, in which a Russian documentary, Thieves by Law (Vory v Zakone), earned praise for its chilling interviews of wealthy, vicious underworld bosses. These vory – high-ranking criminals – are among those who banded together in communist prisons and strictly adhered to their own law – a thieves’ code of conduct.

When the Soviet Union collapsed, released vory drove forcefully into the resulting power vacuum, establishing alliances with corrupt government officials and obtaining funding for criminal enterprises. Many left their homeland on cross-border quests for plunder. One of their specialties is healthcare fraud.

This Time It’s Different

The movie may be out, but the vory are far from defeated. Case in point: On Oct. 13, the U.S. Department of Justice indicted 44 alleged members and associates of an Armenian-American organized crime ring on charges related to more than $100 million in fraudulent Medicare billing – the largest such scheme ever perpetrated.

The defendants allegedly stole the identities of dozens of physicians and thousands of Medicare beneficiaries while operating at least 118 phony clinics in 25 states. The primary suspect, a California resident, migrated to the United States from Armenia, a former Soviet republic; the FBI believes he is a vor.

Meanwhile, our nation’s healthcare system is undergoing enormous changes under The Affordable Care Act of 2010. The new law encourages doctors and hospitals to join forces in controlling medical costs, and offers bonuses if they succeed.

Some provider networks are eager to consolidate without undue hindrance. As quoted in the New York Times, Charles N. Kahn III, president of the Federation of American Hospitals, said, “To provide a fertile field to develop truly innovative, coordinated care models, [related] fraud and abuse laws should be waived altogether.”

Conflicting pressures for stronger anti-fraud resources and more economical healthcare systems will put fraud fighters to the test.

Let’s rise to the challenge. Let’s be extra alert for the signs and agents of Medicare and Medicaid fraud. That means keeping up with the latest detection and prevention techniques. For those who need it, upcoming courses like the ACFE’s Principles of Fraud Examination and Healthcare Fraud offer comprehensive practical instruction.

CFEs, working together, will help America overcome this challenge.