Blood Money

Lab Case Highlights Nationwide Medicaid Fraud Units


By By John Krayniak, J.D., and Marilyn B. Peterson, CFE

Editor’s note: The opinions expressed here are those of the authors and don’t necessarily reflect the opinion of the New Jersey Department of Law and Public Safety, Division of Criminal Justice.  

Mohammad Akthat Javid thought he had the perfect scam: he would magically transform red blood into green cash. And his fraud worked quite well, for awhile. As the president of a clinical laboratory in New Jersey, he had constructed an elaborate Medicaid fraud and money-laundering operation through which he paid out more than $1.5 million in kickbacks to his co-conspirators during a 10-month period.

Unfortunately for Javid, New Jersey’s Medicaid Fraud Control Unit (MFCU) – a group of fraud examiners, investigators, attorneys, auditors, and analysts – had a strong desire to cut off his blood supply. When they were finally done with him, Javid was in jail and his operation was history.

Javid’s crime wasn’t an aberration in the ’90s but was part of a trend as fraudsters did their best to rip off the Medicaid system. The U.S. spent more than $41 trillion on healthcare in 1999, or 15 percent of its gross national product. At the same time, the General Accounting Office has estimated that fraud and abuse account for at least 10 percent of healthcare costs. Applied to 1999 spending figures, that brings the cost of healthcare fraud to $410 billion a year.

But state MCFUs, created in 1977 through amendments to the Social Security Act, were also a trend in the ’90s that promise to make a sizable dent in Medicaid fraud in the new decade. The units, which have been established in all but three states, have a combined strength of 1,275 staff members and a total federal budget of $95 million.


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