If you have issues viewing or accessing this file contact us at NCJRS.gov. -- -------------------- . r) 0, '" .y ,- i , " I National Criminal Justice Reference Service ------------~~----------------------------------------------------r nCJrs 11 ' Pennsylvania This microfiche was produced from documents received for inclusion in the NCJRS data base. Since NCJRS cannot exercise control over the physical condition of the documents submitted, Crime Comrrlission the individual frame quality will vary. The resolution chart on this frame may be used to evaluate the documel)t quality. 2 8 2 5 1.0 :~ 11111 . 11111 . ~ ~F2 I,Y u: Ii£ J w. Health Care Fraud: :i ~ L:. ~ 1.1 t:lI.;:.LI. II i'.. ~ : A Rising Threat 111111.25 111111.4 ~~ '." :."- lllll1.6 ,0 MICROCOPY RESOLUTION TEST CHART NATIONAL BUREAU OF STANDARDS-1963-A - " i ..... c:= < Microfilming procedures used to create this fiche comply with 'j, the standards set forth in 41CFR 101-11.504. .'tlr' -:4;"1 'I Points of view or opinions stated in this document are those of the author(s) and do not represent the official December 1981 pOSition or policies of the U. S. Depaliment of Justice. National Institute of Justice, 10/26/82 .', United States Department of Justicte Washington, D. C. 20531 ,. " r . -' - --- -~-~,----,~-- -~---- -----~--~ rf " \l ' (j - ~ ~;, .. _._ _ ___ _ ,11._ ~ __ ".' ., " , c ~, .. COMMONWEALTH OF PENNSYLVANIA o Health Care Fraud: > . jARising Threat t~~~~':'~:;'·-~c 'J; ~ ~~ '.. ~;~ ~, )!' 1ri i;;9 l -,~~i'\ ':>;'rv J :APR }~8 19az (> t I I . j) I) I ;j ,. ~ 0 • ~ ~ ; ; . Pennsylvania C~i\i{'1e Commission i \. j , \\11 .-j - r~ . " . " ISBN 0-937972-02-9 Printed in the Commonwealth of Pennsylvania " , 523 E. Lancaster Ave.\;L. , ' Post Office. Box 45 St. Dav~cts, PA 19087 (215r087 -6500 , ~. " l - I,' ".' / I) ·---....-~1-(--~-------'----~-.,-..-----';--~---..,,.·"----:-::~ "'!" _, "~f - ".7:,?~--~'_:'---.'''-- . " .,," ~ , " .: ',.~,- .. ~ .'.'--- ~.-,.~"- .. ' .- The following agencies and individ· uals were instrumental in aiding the The Commission Acknowledgements Commission in its investigation: Pennsylvania.. Crime Commission The Pennsylvania Crime Commis· This report is the result of an inten­ Arizona Drug Control District, Tucson sion is an independent state agency sive investigation and analysis done California Department of Justice mandated to investigate organized Alvin B. I.ewis, Jr., Esq., Chairman by the Southeastern Regional Office Illinois Department of Law En- crime and PlJblic corruption, to issue with the cooperation of numerous forcement reports on these investigations to tile Clifford C. Coopelr, Esq. Malcolm L. Lazin, Esq. other agencies. Illinois Legislative Investigating Com· General Assembly and the people, arid Staff members who participated in mission to refer information on criminal viola­ Thomas F. lamb, Esq. Dean Roach the investigation under the direction Long Beach, California, Police Depart­ tions to prosecutors and other lawen· of Special Agent in Charge Frank ment forcement agencies. Booth are: Los Angeles, California, Police Depart· The Pennsylvania Crime Commis­ Wallace P. Hay, Executive Director Carl Brown ment sion Act (Act of October 4, 1978, P. L. Vincent Clemente . New Jersey State Police 876, No. 169) became effective on De· Victor DiCicco New York Department of Labor cember 4, 1978. Prior laws and execu· Donald Johnson, Esq., Df!puty Executive Director/Chief Counsel Jeannie McBride New York Police Department tive orders authorized the work of the Joseph Morace New York State Commission of Inves­ Commission sinCe 1967. Jack Murmylo tigation Due to the Commission's unique Albert Risdorfer New York State Organized Crime Task status, it can focus on broad or narrow Staff Victor DiCicco Nancy Monzi MAGLOCLEN Gerald Rockey Force patterns of organized criminal activity. Pennsylvania State Police Its purpose is not to 1001< at isolated, Sharon Beerman John Ditmore Joseph Morace Brooke Appleby Joseph Salerno Carol Salter Philadelphia Police Department transactional, incidents of criminal ac· Frank Booth Daniel Fedeanis Wasyl Polischuk Jean Degnan Phoenix, Arizona, Police Department John Contino, Esq. was the legal tivity in one municipality or another. Carl Brown William Foran Riverside County Sheriff's Office, Cali- Gerald Rockey Marilyn B. Peterson advisor to the investigation. Marilyn B. The Commission looks at patterns and Deborah Brown William J. Fry, III Sharon Rockey AlexanderJ. Rock Peterson edited this document. fornia interrelationships of criminal activities Nancy Checket Donna Groom Department of Justice across the state, which extend beyond Albert Risdorfer Warren B. Surdam Special acl<nowledgements go to United States Department of Justice Vincent Clemente Michael Hoey the geographic or capability range of Mary M. Russell Margaret Taylor Gregory Magarity, Esq., who acted as Strike Force, Philadelphia and Los existing police agencies. Eileen Commons Oliver Hunter Lois Ryals LEVITICUS Special Counsel to the Crime Commis· Angeles The Commission maintains one Tom Connor James Kanavy Connie Schaffer Julie Brinkley sion for the public hearings held July headquarters and four regional offices 28,29 and 30, 1981. John Contino, Esq. Lee Kautzman Luke Schultz Deborah Feurer in the state. It has a current authorized personnel complement of 57 posi· Willie C. Byrd Steven Keller Diana Schwandt George Galovitch Wendy D'Agostino tions. In addition, the Commission is Gregory Kerpchar Gregory Smith Bill Richett the recipient of two federal grants with Michael D'Aniello Gino Lazzari Paul Spear authorized personnel complements Christopher DeCree Jeannie McBride George Van Durick totailing 13 positions. Dwight McKee Margaret Ward Those two grants fund the Leviti· Edward Mokos cus and MAGLOCEN projects. Leviti· Joan Weiner, Esq. cus is a seven-state consortium of law Michael Zaffiri enforcement and regulatory agencies which focuses on fraud in the coal in­ dustry. MAGLOCLEN is an association of more than a dozen major lawen· forcement agencies in eight states. It is designed to provide investigative and technical support, an information system, and auxiiliary funding to aid those agencies in the apprehension of organized criminals involved in inter· state activities. ,- Through its work with these proj· ects and its ongoing investigations, the Pennsylvania Crime Commission continues working toward cooperative law enforcement activities in Pennsyl· vania. The realization of this goal will U.S. Dej"Jartment of Justice greatly" enhance law enforcement's National Institute of Justice ability to fight organized crime. This document has been reproduced exactly as received from the person or organization originating it. Points of view oropinions stat~d in this document are those of the authors and do not necessarily represent the official position or policies of the National Institute of Justice. Permission to reproduce this ~hled material has been granted by • • Pennsylvania Crime CommlSSlon to the National Criminal Justice Reference SelVice (NCJRS). Further reproduction outside of the NCJRS system requires permis­ \1 sion of the ~owner. ... "I I The Commission further investigat­ AHP employee, Carol P. Lozanoff, Contents Investigative ed the two local companies, A.M.M.A. which showed wide discrepancies be­ and AH P, to determine if there was any tween actual and reported usage of Investigative Summary ................... , 1 Summary fraudulent activities in the administra­ services of these two unions. In all, Conclusions ............................ , 2 tion of dental and health plans offered AHP reported over $2 million in value This report is one result of a three­ Recommendations. .. 2 by these companies. In both cases, it of services to the unions which were year investigation by the Pennsylvania was found that services rendered were never received. Chapter 1 A National Problem ................. 3 Crime Commission into the influence substantially over-reported to the Through the falsification of utiliza­ How Health Plans Work ................... , 4 of organized crime in the field of pre­ client unions and that the companies tlre)n reports and the omission of actual The Roles of Organized Crime. .. 5 paid health care services and the ques­ were involved in questionable invest­ profits made from the contracts, both Union Trust Funds. .. 7 tionable business activities engaged ments. companies were able to convince New Jersey Plan Tied to Bruno. .. 7 in by some health care plan providers. In the case of A.M.M.A., the Com­ union leaders that their services were Fraud in New York ........................ 8 As examples of these situations in mission obtained records from partici­ necessary and within a reasonable Federal Investigations. .. 8 the health plan industry, the Commis­ pating doctors and clinics. These price range. sion looked into three companies: Current Laws ............................ , 9 reports showed that, in relation to a While the Commission was unable Labor Health Plans, Inc. (LHP), of Chi­ to determine the actual profits gar­ ERISA and Other Controls .................. 12 contract with Teamsters Local 837, cago; the A.M.M.A. Health Center, Inc., A.M.M.A. over-reported the value of ilered by either company, there are The Commission's Investigation ............ 12 in Philadelphia; and American Health services received by union members some indications that the companies Chapter2 Labor Health Plans, Inc . ............. 13 Programs, Inc., (AHP), located in Tre­ by $254,715. had money readily available for some