HMO fraud charged in indictments


Two dozen people were indicted yesterday after state investigators uncovered allegations of insurance company marketers lying, forging signatures and bribing state workers to enroll poor people in health maintenance organizations.

Five of those indicted pleaded guilty to charges including bribery and Medicaid fraud before Judge Clifton J. Gordy in Baltimore Circuit Court. The indictments came after a four-month investigation by the office of State Attorney General J. Joseph Curran Jr. into marketing practices of HMOs, which increasingly see taking care of poor people as big business.

Investigators found marketers luring state workers to turn over confidential information on hundreds of Medicaid families for modest sums such as $1 or $2 a family, often after striking up friendships or dating the workers.

Some of the relationships started on a smoking break, when a marketer would approach a social service caseworker outside a building.

With the information, marketers could then show up on doorsteps, armed with a pitch directed at that family. If they failed, the marketers would often forge signatures and use the confidential information to fill out the enrollment forms, documents say. Some families never even met anyone from an HMO, and later discovered they were enrolled.

Later, investigators found, marketers began to sell the data in turn to co-workers. One marketer, Hamilton Pollock, who pleaded guilty, got so many families' names, addresses, ages and other personal facts that he sold the excess to co-workers.

When Mr. Pollock was transferred from Baltimore to Prince George's County, his supervisor at Chesapeake Health Plan paid him $120 for information on Baltimore Medicaid patients, documents say.

That supervisor as well as a marketing supervisor with a competitor, Prudential Health Care Plan, were among those indicted. Indictments were also brought against eight social services caseworkers and 14 marketers employed by four HMOs -- Chesapeake, Prudential, Optimum Choice and Total Health Care.

The crimes -- mostly misdemeanors punishable by a few years in jail and fines -- were born in the modern world of health care. States struggling with huge Medicaid bills are beginning to turn over health care for the poor to managed care companies. Similar abuses have cropped up around the country, from California to Florida.

$20 million a month

In Maryland, about 20 percent of the 467,000 Medicaid patients are enrolled in HMOs, which are being paid $20 million a month for that care, Mr. Curran said.

Among HMOs, the competition for the thousands of other Maryland Medicaid patients still receiving care in the old system is fierce. But the HMOs are not given lists of Medicaid recipients, so their marketers stake out neighborhoods and social service offices. The marketers, who are paid commissions by the HMO for every person they sign up, sometimes are fired for not meeting quotas, according to court documents.

One marketer who pleaded guilty, Katrina McAllister, 27, teamed with another marketer whose sister worked at social services. Through the sister and another caseworker at the Dunbar office, the pair allegedly got names and addresses of Medicaid recipients. According to documents, the pair would sometimes

bribe Medicaid recipients with cash or alcohol

to sign up for HMOs. If that didn't work, they often forged the patients' signatures.

Among Baltimore marketers at Prudential, Ms. McAllister and her partner's tactics were so well known that the two were nicknamed "Hook" and "Crook." When Ms. McAllister later went to work for Chesapeake Health Plan, she said the privileged patient information was as widely used there as at Prudential, according to documents. She said three of her co-workers at Chesapeake openly sold the patient information, and she continued to forge signatures.

Ms. McAllister was fired for not meeting her quotas, documents say.

Commissions blamed

Total Health Care officials said they paid about $10 per enrollment in commission, but Mr. Curran said investigators came across commissions that were twice that.

"There is an incentive to get as many patients as you can enrolled," Mr. Curran said. "If there is a culprit, it was this concept of a commission-driven process."

In light of the investigation, Dr. Martin P. Wasserman, state health secretary, said he is considering making the state solely responsible for the marketing.

HMO officials yesterday said their health plans all have oversight policies in place, and that they cooperated with the investigation.

Chesapeake Health Plan officials said they have "strengthened the internal oversight and additional management infrastructure." In a written statement, Prudential officials said the company "has always condemned any fraud and marketing abuse by its employees" and that all those indicted have been fired.

Optimum Choice officials said it is their stated policy that "only recipients should sign applications." Total Health Care officials said they feared the indictments would make recipients distrust all marketers, "many of whom are honest and caring."

The fifth HMO that provides health care to Medicaid patients, Columbia Medical Plan, did not have any employees who were charged.

For the poor, the marketing abuses mean being cut off -- if only temporarily -- from longtime doctors. What happened to a local family is a typical example.

In March 1994, Eileen Prettiman discovered that she, her son and her granddaughter had been enrolled in Chesapeake Health Plan -- even though she had never received a marketing presentation nor signed an enrollment contract.

Investigators found that Ms. Prettiman's name was forged -- misspelled -- on the enrollment application, her granddaughter bTC was identified as her daughter, and her address was wrong.

Worse, her asthmatic son couldn't get in to see the physician who had cared for him for years.

In another case, Roy Johnson was approached in June 1993. The father told investigators he didn't give any information to the marketer, Roosevelt Karmo, who pleaded guilty yesterday. But Mr. Karmo knew that Mr. Johnson was a welfare recipient and the names and ages of his children. They were told they could win a stereo if they heard the presentation, and after hearing it, Mr. Johnson declined to join.

State paid $3,004

Later Mr. Johnson discovered they had been enrolled in Total Health Care's HMO. Before they could get out, the state paid Total Health Care $3,004 for the Johnsons' care over a five-month period.

The remaining people who pleaded guilty yesterday are James Donovan, 29, a marketer who worked for both Prudential and Chesapeake, and Deborah Wilks, 38, a social service caseworker.

None of the HMOs whose employees were indicted are expected to be charged because investigators gathered no information to prove high-level executives were involved.

Mr. Curran said the investigation is continuing, and that it exposed problems with the state's regulation of the HMO industry.

At the state Department of Health and Mental Hygiene, which runs the Medicaid program, Dr. Martin Wasserman said the state has recently renegotiated new contracts with the HMOs that allow his department to impose fines of up to $10,000 for fraudulent marketing practices.

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