Government

Attorney General Abbott’s Medicaid Fraud Unit uncovers multi-million dollar scheme; 33 indicted

Investigation targets businesses for defrauding state healthcare program

By Greg Abbott, Attorney General of Texas

December 7, 2006

HOUSTON–Texas Attorney General Greg Abbott announced multiple indictments and arrests in connection with a six-month investigation by the Office of Attorney General’s Medicaid Fraud Control Unit (MFCU) into a fraudulent scheme that allegedly cost taxpayers more than $7.7 million. Prosecutors with Harris County District Attorney Chuck Rosenthal’s office presented information to a Harris County grand jury, which handed down indictments against 28 men and five women for felony theft.

The MFCU’s investigation focused on 32 businesses in Harris County that billed Medicaid for adult diapers, wheelchairs, and other medical supplies. According to the indictments, the suspects accepted reimbursements, based on those billings, for supplies that were never delivered to Medicaid patients. The case was referred to the Office of Attorney General by the Texas Health and Human Services Commission, which received complaints against the providers.

Ededem Edem, president of Houston-based Edison Medical Supplies Inc. was indicted by a Harris County grand jury on Nov. 27, 2006, for second-degree felony aggregate theft by a government contractor for billing and receiving payments of over $100,000 from the Medicaid program for adult diapers that were never delivered to Medicaid recipients. The indictment states that the theft occurred between Jan 1, 2003, and March 9, 2006. The Texas Attorney General's Medicaid Fraud Unit arrested Edem at his Sugar Land home. Edison Medical Supplies is located at 9894 Bissonnet Street in Houston. A conviction on the theft charge carries punishment of 2-20 years in prison and a fine of up to $10,000.

“Texas will not tolerate criminals who defraud taxpayers,” said Attorney General Abbott. “The Medicaid program is designed to help the neediest Texans, including children and seniors, with basic health care services. Thanks to an outstanding joint effort by officers from our Medicaid Fraud Control Unit, the Harris County Sheriff’s Department and the Fort Bend County Sheriff’s Department, a scam that harmed Medicaid recipients and wasted taxpayer dollars has been shut down.”

Attorney General Abbott added: “We commend the Texas Health and Human Services Commission for bringing this case to our attention, and we are grateful to Harris County District Attorney Chuck Rosenthal for vigorously prosecuting these criminals.”

Last July, the Attorney General’s office deployed 27 MFCU investigators and eight investigative auditors to the Houston area to investigate these fraud allegations. Personnel from the Office of Attorney General conducted more than 1,200 interviews and prepared numerous investigative reports that supported the district attorney’s appearance before the grand jury Monday. (The names of those arrested, as well as their businesses, are included as a separate attachment.)

In 2005 alone, the costs of the Medicaid program in Texas totaled more than $17 billion. As the state’s chief law enforcement official, Attorney General Abbott has dramatically expanded the Medicaid Fraud Control Unit to save more taxpayer dollars and increase protection for Texas seniors. The Unit has established field offices in Corpus Christi, Dallas, El Paso, Houston, Lubbock, McAllen, San Antonio and Tyler through authorization and funding from the 77th Texas Legislature. Attorney General Abbott’s MFCU works with state and local agencies across the state to identify and prosecute those who defraud Medicaid.

Attorney General Abbott’s MFCU was honored in 2004 by the U.S. Department of Health and Human Services with the Inspector General’s State Fraud Award for effectiveness and efficiency during federal fiscal year 2003 in combating fraud, patient abuse and neglect in the Medicaid program.

To obtain more information about the Attorney General’s efforts to fight Medicaid fraud, access the agency’s Web site at www.oag.state.tx.us.