N.Y. Officials Trying to Stamp Out Million-Dollar Foot Fraud Scams

The first time special prosecutor Edward J. Kuriansky uncovered a major case of foot fraud--an $800,000 scam in 1985--he was convinced that it was an aberration.

He was wrong.

Dr. Jeffry Simon proved him wrong to the tune of $1.8 million. The Seigal brothers did the same with $1.2 million. And Dr. Michael S. Greenburgh made Kuriansky $965,000 wrong.

These four, along with dozens of other podiatric specialists, made fortunes hand-over-feet through Medicaid rip-offs uncovered in a state crackdown on crooked podiatrists.

“I heard someone refer to it as ‘white-collar wilding,’ and that’s not too far off the mark,” said Kuriansky, who was dubbed “Medicaid Fraud’s Top Gun” in a Podiatric Staff magazine article focusing on his efforts against corrupt foot doctors.

But those efforts, particularly in the last year, have drawn an angry outcry from podiatrists who contend that Kuriansky has overstepped his role of prosecutor and “assumed the role of zealot.” The New York State Podiatric Medicine Assn. has promised to fight a recent round of indictments brought by Kuriansky’s office.

Kuriansky and the podiatrists agree that rip-offs are not confined to any branch of medicine. But podiatry--due to since-closed loopholes in state Medicaid policies--became the most fertile fast-buck field, Kuriansky said.

Podiatrists looked at feet and saw golden arches during the mid-1980s, he said.

Doctors, who were not required to get prior Medicaid approval, would order expensive orthopedic devices and deliver inferior products. The most popular scam had the doctors funneling patients to shoe stores in return for kickbacks, with everybody making a quick illegal buck.

“They knew the system, they knew they weren’t being watched, and they exploited it mercilessly,” Kuriansky said. “There was a feeding frenzy by podiatrists and orthopedic shoe vendors from 1983 through 1986.”

Statistics bear him out. In 1982, Medicaid billings in New York state for orthopedic footwear totaled $2 million; by 1985, they skyrocketed to $30 million. That same year, podiatrists’ billings for office visits and services hit an all-time high of $35 million.

Since the state crackdown, the figures are down to $2 million for footwear and $17.5 million for office billings. But the cheating goes on, as the steady flow of Kuriansky press releases announcing new indictments attests.

Medicaid policy changes deserve some credit for the drop, but aggressive prosecution didn’t hurt. Since 1985, Kuriansky’s office has indicted and prosecuted 137 cases involving podiatrists, orthotic labs and orthopedic shoe vendors. The results are astounding: 135 convictions and more than $23 million in fines and restitution.

Medical fraud is not a solely a New York problem; Dick Ekfelt, spokesman for the National Health Care Anti-Fraud Assn. in Washington, estimates that it costs more than $10 billion a year nationally. Insurance industry estimates run as high as $80 billion, or 25% of the country’s annual health-care bill.

New York state, which has the nation’s largest Medicaid system, also has the highest number of Medicaid frauds, said Kevin Ryan, a Kuriansky spokesman.

But Steve Adler, bureau chief for medical fraud in the California attorney general’s office, said foot fraud “might be kind of a New York thing.”

Such cases are rare in California. “There’s not enough so you would notice,” said Adler, who cited major rip-offs in the adult diaper industry as California’s biggest scam.

Kuriansky estimated 5% of New York’s 2,555 licensed podiatrists are involved in fraud. Between 5% and 10% of all Medicaid claims in the state are bogus, he speculated.

In New York City, evidence of the problem’s deep roots came when five doctors on the faculty at the New York College of Podiatric Medicine were indicted in a $56,000 fraud case.

“When you see professors engaging in the very schemes their students are convicted of, you see a very depressing pattern,” Kuriansky said.

But it was that indictment that persuaded the New York State Podiatric Medicine Assn. that Kuriansky had gone too far, said the group’s executive director, Stanley Matek.

“Until this year, the cases he brought were legitimate. But he’s become the Inspector Javert of New York Medicaid, chasing after Jean Valjean,” said Matek, a reference to the obsessive manhunt that is the plot of Victor Hugo’s “Les Miserables.”

Matek concedes that there was a problem when Kuriansky first started his crusade. Foot fraud was spreading faster than fungus five years ago, with doctors being recruited right out of medical school, Kuriansky said.

“It was an interesting phenomenon. Most of them were sort of yuppies--young, fresh out of podiatry schools. . . . They bankrolled their early careers at the expense of Medicaid,” he said.

Among them was Dr. Michael S. Greenburgh, indicted in October, 1988, and accused of stealing $965,000 in Medicaid funds, beginning in 1984. Greenburgh, in an oft-repeated scenario, worked in a poverty-stricken city neighborhood where Medicaid recipients were plentiful. He pleaded guilty and was sentenced to one year in prison while agreeing to make full restitution.

One scam, run by another podiatrist, was advertised on fliers at a city high school. Students were offered free sneakers at certain shoe stores; the doctor would instead file for orthopedic shoes and split the profit with the store.

The Seigal brothers, Sheldon and Otto, were accused of making $1.2 million in seven months through a sneaker scam. They pleaded guilty and were sentenced to one to three years in prison. They also were ordered to repay some of the money they stole.

But Kuriansky described Dr. Jeffry Simon as “the archetypal profiteer.” Simon was charged with ripping off Medicaid for $1.8 million and went to great lengths to cover up his efforts.

When investigators closed in on Simon, the podiatrist created an entirely bogus lab to cover up his phony Medicaid claims, filling the room with molds made from the feet of any employee he could get his hands on. It didn’t work; he was sentenced to one to three years in prison.

His indictment came two years after his first bust, the $800,000 scam that broke in 1985 and was then the largest Medicaid fraud.