Investigation by Montana State Auditor and Commissioner of Insurance James Brown, and other state and federal agencies, have halted a fraudulent scheme of more than $50 million from an insurance company and the Affordable Care Act (ACA often called Obama Care).

The out-of-state fraudsters targeted vulnerable Native Americans in Montana, explained Brown. They sent recruiters to Montana reservations, convinced their victims to signup for rehabilitation services under an ACA plan, then transported the victims across state lines to fake clinics – most often in California – “for rehab treatments that did not take place, were unnecessary, or performed at greatly inflated prices.”

The perpetrators then billed the insurance company and ACA about $9000 a day for three months, which was the term of the treatment program. After three months, the offenders would ”dump vulnerable Native Americans onto the streets” with no means of returning home or means of support.

Following almost a year- long investigation, Brown said he was able to “claw back” more than $23.3 million of $54.7 million in fraudulent treatment claims, which victimized “Montana health care insurers, their customers, and some of the most vulnerable members of Montana’s tribal communities.”

To date, the US Department of Health and Human Services (HHS) Centers for Medicare and Medicaid Services (CMS) has approved the rescission of 80  policies, with dozens more under review. 

Brown said that a goal of investigating agencies and his office was to halt the fraud before the perpetrators were able to implement their scheme in other states. Their continued efforts are to locate some of the 207 victims of the fraud.

“We are trying to determine where they are at this point,” said Brown, “We don’t believe that they were knowingly involved in the fraudulent scheme.”

One reason that members of Montana’s tribal communities were targeted was that under the Affordable Care Act, Native Americans may enroll in a marketplace health plan at any time.

Not long after assuming office as State Auditor, at the beginning of last year, Brown was notified by PacificSource about the suspicious activity. PacificSource is a not-for-profit health insurance provider, and one of Montana’s three providers of health insurance plans under the Affordable Care Act. PacificSource identified more than 200 health insurance policies against which tens of millions of dollars in potentially fraudulent claims had been filed.

Commissioner Brown said, “PacificSource did the right thing by coming to our office quickly to disclose this serious problem and work with us to protect an important player in our state’s health insurance system. That helped us put an end to this fraud scheme which preyed on innocent and vulnerable people in our state.”

For its part, PacificSource spokesperson Erik Wood said, “We’re grateful to Commissioner Brown and his team for their partnership and support. Their involvement has been instrumental in helping stop suspected fraudulent activity in the individual marketplace. As a nonprofit health plan, PacificSource exists to keep health care accessible and affordable for our members, and preventing fraud is an important part of that work. We appreciate the state’s commitment to protecting Montanans and the integrity of our health insurance system.”

The State Auditor’s authority ends at the state border, so the continued investigation required contacting the Federal Bureau of Investigation (FBI) and state agencies in other states, including California and Arizona. Prosecution of the suspected criminals must be pursued by the federal government.

I am pleased that we were able to get out ahead of this. We stopped the fraud,” said Brown, “We are government officials doing our jobs.” 

The CSI investigation found:

* Unlicensed and out-of-state actors manipulating federal healthcare enrollment systems

* False residency claims, fabricated addresses and unsupported earnings information used to obtain coverage

* Immediate, high-dollar billing patterns designed to extract maximum payouts

* Evidence warranting criminal referrals at both the state and federal level 

“This was deliberate abuse of a broken federal system,” Brown said. “If you exploit Montana’s healthcare system, we will identify and unwind your fraud, claw back the money, revoke licenses, and prosecute you. Period.”

“Montana is not Minnesota,” Brown said. “If you try to run healthcare scams here, you won’t get excuses, delays, or political cover. In Montana, you’ll get investigations, rescissions, and criminal referrals.”