- The Washington Times - Thursday, April 24, 2008

MADISON, Wis. (AP) — The U.S. military’s health insurance program has been swindled out of more than $100 million over the past decade in the Philippines, where doctors, hospitals and clinics have conspired with American veterans to submit bogus claims, according to prosecutors and court records.

Seventeen people, including at least a dozen U.S. military retirees, have been convicted so far in a little-noticed investigation that has been handled by federal prosecutors out of Wisconsin because a Madison company holds the contract to process many of the claims. The company has not been accused of any wrongdoing.

At the center of the case is Tricare, a Pentagon-run program that insures 9.2 million current and former service members and dependents worldwide. The U.S. closed its military bases in the Philippines in 1992 and withdrew its active-duty forces, but thousands of retirees remained. Some saw an opportunity to pry easy cash from Tricare.

Health care providers in the Philippines filed claims for medical services never delivered, inflated claims by as much as 2,000 percent and shared kickbacks with retirees who went along with the scheme, court records reviewed by the Associated Press show.

“There just seemed to be so many possibilities for abuse of the system, and there were so few controls in terms of monitoring,” said former U.S. Attorney Peg Lautenschlager, who oversaw prosecutions in the late 1990s.

Pentagon auditors say Tricare moved slowly to uncover and stop the fraud. A February audit warned that the program is still vulnerable to rip-offs because of lax controls and that similar fraud schemes are emerging in Latin America.

The scope of the fraud was revealed as the Pentagon seeks to raise fees for Tricare’s beneficiaries — fourfold, in some cases. The proposed increases have outraged groups representing servicemen and have been blocked by Congress.

Tricare paid $210.9 million in overseas claims in 2006, the latest year for which figures were available. At the height of the fraud in 2003, Pentagon officials say, two-thirds of the $61.8 million paid to Philippine providers — about $40 million — was fraudulent.

The fraud in the Philippines was so extensive that the number of claims filed there skyrocketed nearly 2,000 percent between 1998 and 2003 as beneficiaries there — about 9,000 mostly retired military members and dependents — remained constant.

“I know this is illegal and wrong to submit fraudulent claims to get money, but I did it for fun,” U.S. Navy retiree Romulo Estoesta told investigators. He died in 2002.

Austin Camacho, a spokesman for the Pentagon’s Tricare Management Activity, which runs the program, said the fraud has been hard to prove because of language barriers, a lack of cooperation from providers and limited law-enforcement resources. But he said the agency has added many controls and is making every effort to stop fraud.

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