Aetna Life Insurance Co. says the $18 million that a federal judge awarded to it and two other health insurance carriers on Thursday was the largest health-care fraud judgment ever secured under the federal Racketeer Influenced and Corrupt Organizations Act (RICO).
But Aetna acknowledged that the hard part will be getting its hands on the money.
The award came in a civil lawsuit that accused two brothers of operating a string of Los Angeles-based mobile medical diagnostic laboratories that filed fraudulent claims totaling more than $100 million.
One of the brothers, David Smushkevich, was found guilty in 1987 of criminal violations of the anti-kickback provisions of federal laws governing the Medicare program. He served time in prison. He and his brother Michael--also named in the suit--left the country after the insurers' suit was filed.
Federal prosecutors also tried and convicted several others who were said to have been involved in various schemes to refer patients to the Smushkevichs' labs in exchange for payments. In the criminal proceedings, witnesses claimed that the labs not only filed exorbitant bills with Medicare and private insurers, but often didn't give patients test results.
The Smushkevich brothers operated about 240 labs under a variety of names, including American Diagnostics Inc., Alpha Medical and American Cardiology Diagnostic Clinic, according to the civil suit. Aetna claimed that the brothers were engaged in the most massive health-care fraud in the history of the United States.
Judith Hyfield-Starr, an Aetna spokeswoman, said the insurance companies realize that they will have difficulty collecting the default judgment. The Smushkevichs filed bankruptcy and liquidated their companies before they left the country, she said. One of the brothers is in Russia and the other--it isn't certain which of the two--is believed to be in Mexico, she said. The Smushkevichs were Russian emigres in Los Angeles.
Hyfield-Starr said the company believes that it may be able to collect some of the judgment if it traces the brother in Mexico. "I imagine it's going to be quite difficult," she said.
However, Aetna said it was still pleased with the court judgment. "One reason health costs are going up is fraud and Aetna wants to send a clear message that it is aggressively pursuing fraud claims," said James L. Garcia, director of fraud investigations for Aetna's Employee Benefits division. "Health insurance fraud in this country is an over $60-billion-a-year problem that every one of us pays for in higher health-care costs."
Garcia said Aetna wants the federal government to enact laws specifically for health-care fraud so that insurance scam operators would be more readily subject to criminal prosecution. Hyfield-Starr said most health insurance criminal fraud cases are brought under mail fraud statutes because claims are processed through the postal service. But, she said, there are so many other crimes that come under the postal laws and RICO that "white collar" crimes like health insurance fraud get pushed to "the bottom of the list."
"Although we feel good about the civil judgment, health-care fraud continues to grow and the public should be aware of this. Copy-cat scams are springing up in other states," Garcia said.
Blue Shield of California said recently that "rolling lab" operations still engage in fraud in California. The insurer said it discovered $1.5 million in fraudulent claims in 1989. "One of the biggest rip-offs has been the vast number of falsely filed claims from shady 'rolling lab' operators that continue to bilk the public," said Harry S. Miller, Blue Shield vice president for consumer affairs.
Miller said Blue Shield is working closely with the Internal Revenue Service, the postal service and law enforcement agencies to prosecute fraudulent operators.