The “fraud scandal that rattled Minnesota,” reports the New York Times, “was staggering in its scale and brazenness.” Dozens of Minnesotans are facing felony charges for defrauding multiple government programs, including Medicaid. How staggering and brazen was it, you might ask? Let me put it this way: the title of this blog post is a quote from one of the defense attorneys.
Anti-immigration activists are using the scandal to argue for stricter immigration controls. A majority of the defendants are US citizens, but many or most are Somali immigrants, and nearly all are of Somali descent. The Times: “Mr. Trump last week denounced the Minnesota fraud cases on social media and simultaneously announced an end to a temporary legal status that allows several hundred Somali immigrants to live and work in the United States.”
So far as I can tell, though, the “scale and brazenness” of these fraud schemes are not unique. In Overcharged, Cato adjunct scholars Charles Silver and David Hyman recount the tale of Michigan oncologist Dr. Farid Fata:
Fata told healthy patients that they had cancer so he could make money by giving them chemotherapy they didn’t need. Fata reportedly “gave one of his patients 155 chemo treatments over two-and-a-half years—even though the patient was cancer-free.”… In 2015, he was found guilty and sentenced to 45 years in prison after abusing the trust of more than 550 patients and receiving more than $17 million through fraudulent billings.
In 2003, the George W. Bush administration secured a $1.7 billion settlement against the hospital giant HCA (that’s about $3 billion in 2025 dollars), which was the largest anti-fraud settlement at the time. Silver and Hyman also write about Dr. Salomon Melgen, whom federal prosecutors claimed “had stolen up to $105 million from Medicare,” in large part because he “falsely diagnosed patients as suffering from wet age-related macular degeneration, then charged Medicare for treating them.” (Silver and Hyman will soon have more to say about the Minnesota case.)
The fraud schemes in the Minnesota fraud scandal do not appear to be exceptional. What’s exceptional is that people are not adopting the blasé attitude that they typically take. Consider that Silver and Hyman found “a Detroit magazine named [Fata] one of the ‘Top Docs’ in 2006, 2007, 2008, 2009, 2011, and 2012.” Or that a US senator intervened with Medicare on behalf of Melgen, and that President Trump ultimately commuted his sentence. Or that the CEO who ran HCA at the time of the alleged frauds is now himself a US senator.
As I have written elsewhere:
The three most salient characteristics of Medicare and Medicaid fraud are: It’s brazen, it’s ubiquitous, and it’s other people’s money, so nobody cares.
In that article and this video, I explain that there is a fraud lobby that guarantees “you’re never going to get Medicare and Medicaid fraud down to the levels we see in the private sector”:
One of the prosecutors in the Minnesota fraud cases said, “No one will support these programs if they continue to be riddled with fraud.” That is manifestly false.
