30,000 Medicaid providers cheating on their taxes

Published 12:32 pm Monday, November 19, 2007

By Staff
More than 30,000 Medicaid providers in seven states – California, Colorado, Florida, Maryland, New York, Pennsylvania and Texas – failed to pay more than $1 billion in federal taxes last year, according to a report released Nov. 14.
In its fifth report to a Senate panel investigating tax cheats that do business with the government, the Government Accountability Office (GAO) says 5 percent of Medicaid providers in the seven states cheat on their taxes – particularly payroll taxes collected from employers.
Some of the more flagrant violators own multi-million-dollar homes, along with fancy cars and boats, the report says.
Others were guilty of patient abuse or other health care violations.
"These doctors are supposed to be serving the most needy. Instead, they are cheating taxpayers to line their pockets," said Sen. Norm Coleman, R-Minn., who initiated the tax-delinquency investigations four years ago. "These are not your everyday tax cheats. These are health care providers that receive billions from Medicaid every year."
This report follows others detailing how tens of thousands of defense and other government contractors and Medicare providers also cheated on their taxes.
All told, the reports show, almost $10 billion went uncollected.
Since this inquiry started in 2003, the government has reduced payments to recover about $122 million in back taxes.
The most came from defense contractors: $78 million, including $31 million last year.
With Medicaid, the federal government pays about 57 percent of the $324 billion cost for the federal-state health care program for the poor and disabled that is run through the states.
The original goal of the Senate Permanent Subcommittee on Investigations was to go after "waste, fraud and abuse" by forcing tax cheats to pay by having their payments reduced.
It also became a way for the Internal Revenue Service (IRS) to chip away at the "tax gap" – an estimated $400 billion or more that goes uncollected each year.
The GAO found: the owner of a chain of nursing homes who owed more than $14 million in taxes had a $2 million home decorated with crystal chandeliers, porcelain china and Oriental rugs; the owners of a hospital who owed $5 million in payroll taxes purchased a vacation home worth about $1 million; and a medical-clinic owner who owed more than $1 million had a $4 million house, luxury vehicles and a pleasure boat.
"We need to figure out how to … stop those Medicaid medical providers from putting taxpayer dollars into one pocket while stiffing Uncle Sam by dodging their taxes," said Sen. Carl Levin, D-Mich., the panel's chairman.
It doesn't help that the Bush administration turns watchdogs into lap dogs. There are 29 inspectors within the executive branch who are supposed to be immune from political meddling so they can root out wrongdoing.
Since 1978, as a post-Watergate check on Richard Nixon's power abuses, inspectors bypass the chain of command within their own agencies and report their findings directly to Congress.
By law, the president is to appoint watchdogs "without regard to political affiliation" and "solely on the basis of integrity and demonstrated ability."
But just as he politicized FEMA, President Bush ignored the law and stocked inspector general posts with unqualified cronies.
According to a study by the House Oversight Committee, more than a third of Bush's inspectors previously held political posts in the White House – compared to none of Bill Clinton's.