Article - May 13, 2007 - Baltimore Sun

Md. says worker siphoned off funds
Money allegedly taken from kidney program raises auditing concerns

By Jennifer Skalka

For 27 years, Donna M. Lam of Dundalk led the life of a career civil servant, for much of that time helping to make sure that the bills of end-stage kidney disease patients were paid.

But state prosecutors now allege that for the past dozen years, Lam has been serving herself -- siphoning off $1.7 million in Medicaid payments from the Kidney Disease Program of the Maryland Department of Health and Mental Hygiene.

Since 1995, according to documents filed by the attorney general and department inspector general's office with the Baltimore County Circuit Court, the former claims processor allegedly conducted an "illegal billing scheme" by creating fake patients and providers, depositing money into bank accounts she created for those companies and then withdrawing cash.

She used the money "to purchase goods, services, real and personal property," says the complaint filed by Maryland Attorney General Douglas F. Gansler, who has announced several major fraud cases in recent weeks.

The state is asking for a civil judgment of $5 million each against Lam, 50, her husband, Wilson A. Lam, 52, and at least two other unidentified individuals who participated in or were "unjustly enriched" by the plan, according to the complaint. No criminal charges have been filed in the case.

State officials said the episode reveals a major flaw in the state's auditing system that is not readily repaired.

Though Medicaid is audited every three years, the Kidney Disease Program is one of thousands of smaller programs that do not necessarily get a thorough evaluation.

"Our mandate is to audit every agency once every three years. It is not to audit every program," said chief legislative auditor Bruce A. Myers. "I would need a thousand people over here to do that."

Nationally, Medicaid fraud is a complicated and rampant problem. Patrick Burns, a spokesman for Taxpayers Against Fraud, a Washington nonprofit, said it is difficult to gauge the amount of money that taxpayers lose as a result of such crimes.

"Fraud within the renal care world is huge," Burns said, adding that much of it is perpetrated by providers who bill for services that aren't provided and pad charges.

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