Patient Recruiters and the Anatomy of a Healthcare Scam

Healthcare scams are constantly evolving and costing tax payers billions of dollars, most of which will probably never be recovered. The U.S. Department of…

Healthcare scams are constantly evolving and costing tax payers billions of dollars, most of which will probably never be recovered. The U.S. Department of Health and Human Services’ strike force operations have obtained over 1,000 indictments for individuals who have fraudulently billed Medicare for more than $2.3 billion since March 2007.

A healthcare scam is the premeditated fraud carried out by a provider, hospital, clinic, employer group, member, or other group or individual for illegal financial gain. Fraud takes many forms, and can involve what are known as “cappers,” or patient recruiters who literally recruit patients to become part of a healthcare scam designed to bilk millions out of the Medicare program.

Here’s how a typical healthcare scam involving patient recruiters works:

  1. A clinic owner pays patient recruiters $100 for every patient they send to the clinic for testing or to receive a medical procedure

  2. The patient recruiter approaches individuals who are easy targets, especially poor people and even the homeless, and pays them $50 to provide their Medicare number and submit to unnecessary testing or other healthcare service

  3. The patient recruiter pockets $50 per individual

  4. The clinic bills Medicare for millions of dollars for patients they have never seen

  5. Medicare pays millions of dollars to the fictitious clinics, some of which may even be Medicare certified

  6. Taxpayers foot the bill for tests or procedures that were never actually performed

Uncovering a healthcare scam is difficult because everyone involved in the scam is getting rich. The doctors, clinic owners, and patients receiving kickbacks receive a steady stream of fraudulently obtained income. Insurers can even profit from a healthcare scam because they can raise premiums to cover their costs. Essentially, everybody but the American taxpayer benefits from a healthcare scam.

But authorities are working hard to stop healthcare scams and, in many instances, have been instrumental in securing the convictions of unscrupulous doctors, clinics, and patient recruiters all over the country. For example, a patient recruiter for a Houston durable medical equipment (DME) company was recently convicted of a healthcare scam involving power wheelchairs. The patient recruiter was paid kickbacks for providing the DME company with the Medicare numbers of beneficiaries, often totaling more than $6,000 per chair. The patient recruiter faces a maximum penalty of ten years in prison for healthcare fraud and related charges.

In another healthcare scam, several California hospitals, their executive officers, and other individuals were recently charged with recruiting homeless people for unnecessary medical procedures for which they billed Medi-Cal and Medicare millions of dollars. Since they were preying on the very poor who needed the money and had no reason to expose the scheme, the scammers assumed they would never be caught. After several months the healthcare scam was finally stopped by police officers who initially suspected a homeless dumping scheme, but a subsequent investigation determined the homeless individuals were actually recruits in the hospitals’ lucrative healthcare scam.

In an alleged healthcare scam that has yet to go to trial, eight people associated with Orange County’s Unity Outpatient Surgery Center have been charged with insurance fraud, theft, and conspiracy. The lawsuit accuses the center of recruiting patients to “come to the clinics and undergo completely unnecessary diagnostic and surgical procedures, so that the clinics and the surgeons could submit phony insurance claims.” An investigation alleges that the Unity clinic billed nearly $97 million to insurers in less than a year.

These are just a few of the many healthcare scams carried out each year that cost taxpayers millions of dollars and ultimately damage our already embattled healthcare system. As long as there are healthcare providers willing to pay patient recruiters to deliver people to their doorsteps for cash, we will all continue to pay exorbitant sums to finance their fraudulent operations.

If you’re a doctor, owner of a clinic, hospital administrator, or other healthcare provider who wants to learn more about spotting and stopping a healthcare scam, visit or call 310.831.4400.