Governor’s Rage Against Medi-Cal Fraud Machine

Gov. Gray Davis is chewing on a turkey sandwich and raging. He’s practically choking on his lunch as he rails about the swindlers who have been bilking the government out of health care money set aside for the poor.

“It ticks me off that scam artists are preying on the most vulnerable Californians,” he says between mouthfuls during an interview. “I intend to be their worst nightmare. I mean, if you sit around all day scamming and being a con artist, I’m going to follow you to the grave.”

Davis has created a joint state-FBI task force to investigate massive fraud in California’s Medi-Cal program, whose $18.5-billion annual costs are split evenly by Sacramento and Washington. Crooks posing as medical equipment suppliers have been billing Medi-Cal for goods never delivered--wheelchairs, crutches, adult diapers. Especially diapers.

“The budget for incontinent supplies has doubled every year in California,” says veteran state fraud investigator J. Alan Cates, Davis’ point man in the probe. “We don’t have that many people who can’t hold their bowels. When you look at the amount of adult diapers going into the San Fernando Valley, you either have to call the Centers for Disease Control or call the FBI.”

Cates called the FBI. That was in 1998, when he worked for state Controller Kathleen Connell and she couldn’t get anybody very interested in her audits pointing to probable Medi-Cal fraud. The Wilson administration then was targeting Medi-Cal recipients rather than corrupt suppliers.

There’s also suspicion that Gov. Pete Wilson and Atty. Gen. Dan Lungren--both Republicans--were ignoring Connell because she’s a Democrat.

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Now the taxpayers are paying the price for past neglect.

The FBI previously estimated that the fraud, concentrated in the L.A. area, has cost at least $1 billion. But it may be billions more than that, says James Wedick, the Sacramento-based FBI agent in charge of health care fraud.

He already has found more than $200 million in admitted or suspected rip-offs involving prescription drugs and medical equipment. So far, 78 providers have been charged; 36 have pleaded guilty. Another 250 are under investigation.

“Each day it’s growing,” Wedick says.

The investigators also will be targeting other suspected Medi-Cal frauds--phony or unnecessary tooth fillings, lab tests and transportation for the disabled.

Davis got curious last May when health officials pleaded for more Medi-Cal money. Wait a minute, he said. The economy’s booming, people are leaving welfare.

The governor called Cates, his favorite auditor, whom he’d worked with years earlier as state controller. It so happened Cates already was helping the FBI look into health care fraud.

Davis accelerated the probe by forming the joint task force. He invited FBI agents to use state facilities and bring along their computers, giving them access to state data. Federal and state investigators are working side by side.

“I give the governor a huge amount of credit,” Wedick says. “This task force is the first of its kind in the nation. We have virtually no turf battles.”

No turf battles! That alone is unprecedented.

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The scandal verifies many voters’ worst suspicions--that there’s rampant waste and abuse of their tax money.

How will this affect public support for new spending programs or bond issues? Davis claims not to be worried.

“Just the contrary,” he says. “Vigorous action on my part reassures the public that somebody is watching their money. . . . I’m sure there’s more fraud out there, and we will go after it with a vengeance.”

Crooks already are on the run, he says. Recent visits by investigators to 4,000 providers found 880 abandoned mail drops or offices. Some Medi-Cal “reimbursement” checks were left behind on the floor. In the last three weeks, the state has pulled back $670,000 in Medi-Cal checks as they were about to be mailed.

In the new year, Davis will ask the Legislature to significantly beef up his anti-fraud unit and to provide the state with streamlined, FBI-type authority in health care investigations.

He’s ordering bureaucrats to think like “a big bank,” not merely be check-writers for medical care.

What’s the root problem here, I ask. Davis’ mouth is full of turkey, so he grabs a sheet of paper and writes a one-word response, then underlines it: “Greed.”

Sure. But sloppiness and stupidity also seem to fit, from top to bottom in Sacramento.

For Davis, all this is a political gift from the previous administration. He now gets to be a fraud buster--a nice complement to his tough-on-crime, tightwad image.