How American Medicine Conspired To Build A Cathedral Of Fraud
I know you thought you had seen everything by now, but I have news for you: you haven’t
In the late sixth century, a Benedictine monk named Gregory became Pope of a broken civilization.
He wrote a commentary on the Book of Job that cataloged the seven deadly sins.
Pride, envy, anger, sadness, avarice, gluttony, and lust. Gregory ranked them by the degree to which each offended against love. Avarice landed in fifth place.
That ordering looks merciful to those of us who watched American medicine reorganize itself around the love of money. He also wrote in the same commentary that avarice was not merely the desire for wealth.
The avaricious man wanted honors, high positions, and coin. Gregory understood, fourteen centuries before us, that greed wears robes and titles, not money clips alone. The seventh-century desert father saw what a 2026 hospital CEO no longer sees in himself.
Dante, seven centuries after Gregory, placed the avaricious in the fourth circle of hell. They shoved heavy weights at one another, hoarders against squanderers, for eternity. The fifteenth-century Flemish artist Pieter Bruegel the Elder painted an allegory of greed titled Avaritia.
A well-dressed woman sits at the center, with coins piled in her lap and a toad at her feet, surrounded by examples of avarice playing out. The Latin inscription at the bottom reads, “Scraping Avarice sees neither honour nor courtesy, shame nor divine admonition.”
A reasonable epigraph for the modern American hospital.
The story in the headlines
The current press cycle has focused on the Somali community in Minneapolis. Federal prosecutors have charged dozens of defendants with looting state Medicaid. The schemes used faked autism diagnoses, ghost therapy sessions, kickbacks to recruited parents, and shell clinics staffed by 18-year-olds with no clinical training.
The U.S. Attorney’s Office in Minnesota announced in December 2025 that fraud across Minnesota-run Medicaid services exceeded $9 billion.
The lead case, called the largest autism fraud scheme in U.S. Department of Justice (DOJ) history, charged 15 defendants with stealing more than $90 million through a network called Star Autism and similar shops.
Abdinajib Hassan Yussuf, 27, the chief executive officer (CEO) of Star Autism Center, pleaded guilty after admitting that he did not know a single individual with autism. Asha Farhan Hassan, 28, was charged with running a $14 million scam through a company called Smart Therapy.
Money flowed to Kenya, to semi-trucks, to a federal court docket.
The cultural angle is not the topic of this essay, but it holds up: recently arrived immigrants from countries where the state was treated as a hostile entity to be plundered have brought the same attitude to American social programs.
The defendants will go to prison, as they should. Aimee Bock, the convicted mastermind of the related Feeding Our Future case, got a forty-one-year sentence.
What the press coverage gets wrong is the scale. Even at $9 billion, the Minnesota Medicaid fraud cases are a rounding error compared to the larger story. The National Health Care Anti-Fraud Association estimates that total US healthcare fraud amounts to $100 billion a year.
The Government Accountability Office (GAO) documented $100 billion in improper Medicare and Medicaid payments in 2023 alone. These are conservative estimates.
The 2025 National Health Care Fraud Takedown, announced by the DOJ on June 30, charged 324 defendants with $14.6 billion in alleged fraud across 50 federal districts. The total more than doubled the previous record of $6 billion.
Among the 324 were 96 doctors, nurse practitioners, pharmacists, and other licensed medical professionals. The cases involved fraudulent wound care, prescription opioid trafficking, telemedicine fraud, and a transnational criminal organization called Operation Gold Rush.
Medicare recovers only about 2.8 percent of the losses it incurs to fraud each year.
A first-time visitor from Mars, reading the press, would conclude that healthcare fraud in America is an immigrant phenomenon. The Somali cases get the headlines because they are recent, ethnic, photogenic, and politically useful to one side of an argument.
The much larger story, the $50 billion or $100 billion or likely far larger annual extraction by white-coated doctors and reputation-laundered hospitals, gets no equivalent attention. The reason is that the latter group includes friends of friends, donors to universities, and advertisers on cable networks.
The former is none of those things. The press is doing what the press does.
The amateur leagues: upcoding
Comment: I begin with a confession. In an early phase of my career, I billed Medicare and other insurance carriers for office visits and picked the highest code my chart notes supported. The coding system gave us four levels: basic, intermediate, extensive, and comprehensive. A longer chart note and a few extra check boxes turned a basic into an intermediate, and an intermediate into an extensive. A hundred extra dollars came with each bump.
I never invented a patient. I never billed for a procedure I did not perform. By my colleagues’ standards, I was an amateur. By the standards of Gregory’s avarice, I was a participant.
The upcoding habit is the bottom rung of physician fraud, and it is universal. Every doctor in a fee-for-service practice has felt the temptation. The Current Procedural Terminology (CPT) coding system, used by Medicare and every commercial insurer, lets the doctor specify the level of service rendered.
The doctor coding by the book picks the level that matches the visit. The less scrupulous doctor adds a 15-minute review of systems and an extra examination component, bumping the level. The bill goes up by a couple of hundred dollars.
The chart note looks fine on audit because the audit reviews paper, not people, and the paper says what the doctor wrote.
This is the amateur game. The professional game is orders of magnitude bigger. A general surgeon opens an abdomen, removes a gallbladder, looks around, closes the patient up, and codes the operation.
What happened inside the abdomen is unknown to anyone outside the operating room.
The pathologist sees the gallbladder. The anesthesiologist sees the monitors. The surgeon sees the operative field and writes the operative note. If the surgeon writes that adhesions required twenty additional minutes of surgical time, that is the record, and Medicare pays.
Whatever happens inside the belly becomes whatever was written down.
In residency, I was taught that the operative note is the only record of what happened. The professors meant it as a warning against sloppy documentation. The students heard it as an instruction about who controls the narrative.
They were both right.
Dr. David Morrow had a black belt in billing fraud
His plastic surgery practice was in Rancho Mirage, California, and his specialty was doing insurance billing for people having cosmetic surgery. We knew he was making money because he ran ads in Palm Springs Life Magazine that cost up to $80,000 a month.
I thought he was a marvelous marketer, but he was not screening for rich patients. He was looking for people who had fancy insurance plans that could be ripped off.
He billed his nose jobs as deviated septum surgeries. He billed his breast augmentations as treatment of tuberous breast deformities. He billed his tummy tucks as repair of umbilical and ventral hernias.
Some of his charges reached $700,000 for a single day’s work on a single patient. He sued his patients’ employers when their medical insurers sensibly refused to pay. He had decades of this behind him before federal prosecutors finally caught up.
The break came when a Morrow patient died during surgery. The plaintiffs’ attorneys, sniffing through his billing records during the malpractice work-up, found the fraud underneath the malpractice.
By 2017, Morrow and his co-defendant wife (header image – Ed) were facing decades in prison for an alleged $80 million in fraudulent billing.
Insider Note: Morrow was ratted out by a competitor who knew what he was up to, and he had been hassling this doctor for years. The prosecutors were so stupid that they would never have figured it all out without hours of coaching. Once they finally caught on, however, the Morrows were toast.
The Morrows took a plea bargain. Right before sentencing, they sold their $9.5 million Beverly Hills mansion, wire-transferred the proceeds to Israel, jumped bail, and disappeared. But it soon came to pass that they were ratted out again.
It seems that their new neighbors in Israel found their behavior just as arrogant and entitled as their Palm Springs colleagues did, and the police caught them in 2019.
The Los Angeles Times ran the story under the headline “Southern California Plastic Surgeon Extradited Two Years After Fleeing With Fake Passports to Israel”. He and his wife, both in their 70s when they were caught, will probably die in federal prison.
I knew them, but have no sympathy.
The pair were rotten apples, but their billing practices were just an extreme example of a standard practice. The breast-reduction-for-back-pain dodge is performed every week in plastic surgery offices across America.
Some surgeons submit preoperative photos of someone else’s enormous breasts to support fake or exaggerated stories. They often submit narratives of pain that the patient never reported.
The patients are co-conspirators to scams like these. They get their cosmetic surgery for free, with the insurance company paying the bill, and the surgeon is paid at a covered-procedure rate rather than a cash discount.
Many hundreds of thousands of dollars a year is a normal income from this kind of work.
The fraud is hard to spot unless a staff member or disgruntled patient blows the whistle.
After the skin is closed, the evidence is hidden.
See more here substack.com