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Bust the CEOs? It’s a start!

By Jay MacDonald · Bankrate.com
Friday, June 3, 2011
Posted: 9 am ET

It seems federal investigators are so fed up with corporate Medicare and Medicaid fraud that they now plan to prosecute the well-heeled executives of the offending companies. I love the sheer righteousness of this move, but I'm afraid it's going to wind up another costly snipe hunt.

With Medicare's solvency ticking down like an expiring parking meter, there's plenty of pressure being applied to white-collar Medicare-Medicaid fraud, which by some estimates costs us taxpayers $60 billion-with-a-B per year. As the 2012 campaign season cranks up, it's hard to imagine a hotter hot potato than Medicare, the health insurance most of us will depend on when we retire.

I'm always intrigued when a government bureaucracy like the Department of Health and Human Services gets all Bruce-Willis-rogue-cop over something. In this instance, they're really taking off the gloves: Instead of simply shaking down the offending companies as usual for their overbilling oversights, they've vowed to bring criminal charges against individual executives, even if they weren't involved but could have stopped it had they known.

They've also threatened to ban the bad boys from doing business with government health insurance programs, which frankly doesn't strike me as much of a deterrent for guys who earn the equivalent of the gross national product of many small countries.

I'm fairly certain the CEOs of those pharmaceutical makers, medical device manufacturers, chains of nursing homes and major health care conglomerates had a good chuckle over this turn of events en route to the 14th tee.

As any Fortune 500 head-knocker knows, corporate chiefs enjoy a bulletproof directors and officers, or D&O, insurance package on top of their errors and omissions coverage that effectively insulates them from the legal assaults that come with the job. The biggest offenders tend to wield the best defense teams as well as D&O policies that provide uncapped legal defense, none of which comes as news to the feds.

Don't get me wrong: I would be the first to dance in the streets if the Justice Department actually managed to hold even one of these scoundrels responsible for ripping us off.

But in my heart of hearts, I'm convinced it won't happen; and perhaps, legally can't happen. After all, if you intend to ask a court to probe the membrane that separates corporate and criminal behavior, the logical place to start would be Wall Street, don't you think?

What I smell instead are good old election-year campaign theatrics disguised as a consumer watchdog campaign, another predictable box-checked talking point in the stalemate tic-tac-toe game that is modern American politics.

Please talk me down on this. As "X-Files" Agent Fox Mulder would say, I want to believe.

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5 Comments
Jay MacDonald
June 20, 2011 at 9:03 am

The operative word here being "insulates." Nothing "covers" fraud.

bizness
June 19, 2011 at 6:55 pm

D&O policies cover fraud perpetrated by CEO's, whose outsized pahychecks ride (one would think) on their outsized responsibilities--e.g., "know(ing) or should have known" how exactly the business profits? I'd really like to hear more about this.

lorene
June 08, 2011 at 1:12 pm

It seems that Humana Part D does not agree to cancel coverage when a subscriber goes into Hospice. First was told they would cancel and then received a letter stating request denied. So next time just send the bill to the cemetery!