Taxpayer money frittered away by phony disability claims

By James Quiggle
April 1, 2019
Compound meds, fake injuries drain insurance plans funded by honest taxpayers

Honest taxpayers hand over good money to support government employee health and disability plans. Yet millions of tax dollars at a time are squandered when cheaters soak the plans by claiming fake illnesses and crippling medical conditions.

New Jersey’s state health plan is the latest victim. Nearly 2 dozen people were convicted in a plot that stole $50 million from the state health system and private insurers.

Gooey and expensive compound creams were charged to health plans in the names of employees who were perfectly fine. The stuff was hand-made in specialty pharmacies. It’s often used for scars, vitamins, libidos, fungus, headaches and other things. Tubes of the gunk, in general, can cost $30,000 each or more.

Recruiters bribed New Jersey employees with cash to lend their names and policy information for inflated claims against New Jersey’s generous employee drug plan — whether or not the workers needed the meds. Ring members shared in the large insurance payoffs for phantom or unneeded drugs.

Teachers, firefighters, police and others are implicated. Prosecutors are coming down hard. Several ring members were convicted, and others remain charged.

Dr. John Gaffney often didn’t examine patients, yet signed bogus prescriptions that were faxed to pharmacies. Gaffney faces up to 10 years in federal prison when sentenced.

Middle-school teacher Shawn Sypherd recruited employees into the scam. He earned nearly $355,000 total, netting a share of each insurance payout. Sypherd awaits sentencing. A high school guidance counselor pled guilty. Sales reps for large drug firms also helped put the compound meds into play.

$600-million disability plot

Fake disability claims are another profit-making way to steal from taxpayer health insurers.

Kentucky disability lawyer Eric C. Conn pulled off the largest federal disability ripoff in U.S. history — a $600-million looting. Conn bribed a corrupt judge and doctor to rubber-stamp bogus disability claims through the federal system.

Conn convinced impoverished coal miners and others in rural Kentucky to sign up. Some knew they were doing wrong, though wanted a lifetime of free insurance checks flowing in. Other workers had legitimate injuries and other medical conditions. The money was their lifeline.

“The cost is invariably pushed onto the public,” says Tracy Thompson, Acting Insurance Fraud Prosecutor for New Jersey.

Taxpayer money flowed into Conn’s bank account as claims were paid out. He grew rich and built one of America’s largest disability practices.

The feds finally broke open his behemoth scam. Payouts were suspended while the feds investigated. Truly disabled workers lost money they needed for medical and scratch out a living.

Tim Dye is a former coal miner — and Conn client with real medical problems. Social Security stopped his checks after Conn was busted. Dye’s wife sold her jewelry and possessions from their home. She even begged neighbors for water to make ends meet.

Other Kentuckians lost their homes, and several committed suicide. Conn lost his freedom, ending up with 27 years in federal prison.

Railroad robbed

Early retirement on fake disability is another dodge. Public employees have invented bad backs and nerve problems. The painful and debilitating injuries forced them to retire early, they lied.

They collected disability checks and fat pensions for the rest of their lives. Only to be caught weight lifting, playing tennis, running marathons, scuba diving and traveling the globe with ease.

Employees of the Long Island (N.Y.) Rail Road rushed into early retirement for years, on the backs of well, back injuries and other maladies. Up to 1,500 retirees teamed with physicians and a union official. Almost all claims were approved. The total payouts could’ve exceeded $1 billion if they weren’t caught in time. 

Pension and disability money fattened the retirees’ bank accounts while they cavorted with few apparent afflictions.

An employee claimed ‘disabling’ and ‘unbearable’ pain in a half-dozen body parts when she retired in 2007. Then she was surveilled working out a gym and doing step aerobics. A signalman rode in a 400-mile bike race after retiring. His disability application claimed he was stuck in a wheelchair. An electrician convinced doctors he couldn’t work any more, then was caught landscaping and electrical work for pay after retiring.

A top New Jersey official tasked with taking down dishonest insurance claims got it right: It’s our taxpayer money, so we’re the victims.

“The cost is invariably pushed onto the public,” says Tracy Thompson, Acting Insurance Fraud Prosecutor for New Jersey.

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