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Pondera FraudCast

Welcome to the Pondera FraudCast, a weekly blog where we post information on fraud trends, lessons learned from client engagements, and observations from our investigators in the field. We hope you’ll check back often to stay current with our efforts to combat fraud, waste, and abuse in large government programs.

An “Amazing” Contributor to the Nation’s Opioid Crisis

An “Amazing” Contributor to the Nation’s Opioid Crisis

The Sacramento Bee, my local newspaper, reported this week on an area doctor, a seemingly successful cardiologist and graduate of Northwestern’s medical school, who plead guilty and was sentenced to 52 months for illegally prescribing opioids.

After reading about Doctor Capos’s crimes, 52 months seems grossly inadequate. The sentencing judge agreed, despite acknowledging the doctor’s cooperation, stating that "It's probably giving you a break more than you deserve at this time."

The sheer volume of Capos’s crimes are alarming. In one case, he prescribed 2,640 hydrocodone pills to a single patient in 28 days. This would have required the patient to take 98 doses per day. Of course, what likely happened is that the pills were sold on the street to addicts and future addicts—some undoubtedly to our young people.

The judge called his actions an “amazing” contribution to the opioid crisis. Yet a quick look at average sentences for drug dealers reveals that convicted methamphetamine dealers average 87 months in prison. Heroin dealers average 63 months. While this “amazing” opioid dealer only received 52 months.

It seems to me that the time for talking about the opioid crisis has passed. It’s time for action and one place to start would be tougher sentencing laws on the greedy fraudsters who push these drugs into our neighborhoods.
A New Way to Rip Off the Taxpayer

A New Way to Rip Off the Taxpayer

I often mention how “impressed” I am by the ingenuity of fraudsters and their ability to find new and creative ways to steal money. And now, with the country starting to pay attention to the opioid crisis, comes word of one of these fraud innovations. This time, fraud (and to be fair, often just massive waste) is found in the escalating number of urine tests being performed to detect opioids and other drugs in patients.

Kaiser Health News, with help from the Mayo Clinic, found billing for urine screens and related tests quadrupled from 2011 to 2014 to $8.5 billion a year. The federal government paid providers more for drug urine screens than they paid for the four most common types of cancer screens combined. $8.5 billion is more than the annual budget of the Environmental Protection Agency!

It’s easy to see how this could happen. In the cases of 50 less-than-scrupulous doctors who operate their own labs, Medicare paid over $1 million for drug tests at their pain management practices. 31 of these received over 80 percent of their Medicare payments from urine tests—in other words, less than 20 percent was for patient care!

Other labs have hired sales team that employ high-pressure tactics, telling doctors to order more tests to lower patients’ risks and to protect their practices against law enforcement or medical licensing board investigations. One labs sales manager earned $700,000 in salary and commissions, and the company later had to pay $256 million to settle claims with the justice department.

While some of the data in this blog post is over two years old, opioid prescriptions (and deaths) continue to climb—the latter at about 20 percent per year. Despite the government’s enforcement efforts, I assume that the urine test cash grab is also accelerating. It’s also safe to assume that when this scheme is shut down, the fraudsters will find another way to rip us off.
Jackpotting Comes to the U.S.

Jackpotting Comes to the U.S.

We’ve written several times about skimmers, devices that thieves place into gas pumps, ATMs, and other machines to steal personal and financial information from unsuspecting patrons. Now, it seems that a form of skimming, called “jackpotting” is making its way from Europe and Asia to the states.

The aptly named jackpotting, like skimming, uses a device inserted into ATM machines to take control of the CPU and dispense large amounts of cash to the fraudsters. The thieves often dress as ATM technicians and use an endoscope to view the inside of the machine and attach their system to the ATM. They can then control the system remotely and dispense as many as 120 bills per minute to “jackpotting mules” who collect the money.

The Secret Service is now issuing warnings about the spread of jackpotting, and organized criminal gangs are targeting stand-alone ATMs in pharmacies, big box retailers and drive-thru ATMs. And, of course, thanks to the anonymity of the dark web, criminals can easily purchase the software and equipment necessary to pull off the schemes.

While still in its infancy here in the states-- in a recent week there were six attacks that stole just over $1 million-- jackpotting is quickly establishing itself as one more fraud tactic that businesses and citizens will have to watch out for. The good news in this case is that the ATMs, when hacked, appear as out-of-order to consumers. At least we won’t insert our cards and we won’t lose our data. The bad news is that institutional losses often get passed to us in the form of higher fees and more complex processes. As usual, we all pay in the end.

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Pondera leverages advanced prediction algorithms and the power of cloud computing to combat fraud, waste, and abuse in government programs.



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