In the spring of 2008, a federal court convicted Gustavo Adolfo Smith of health care fraud -- according to the government's case, Smith reaped over a million dollars off bogus claims for durable medical equipment.

While awaiting sentencing, the court ordered Smith to wear an electronic monitoring device. On June 14, 2008, the device sounded an alarm. The police never found him. That same day, he boarded a flight from Miami to Santo Domingo in the Dominican Republic, and became one of the federal government's 10 most-wanted health care fugitives.

His picture and the details of his case, mentioned above, now appear on a new website launched by the feds in their latest attempt to crack down on a growing and profitable scam -- bilking Medicare and Medicaid.

Officials say health care fraud increasingly attracts organized crime, and involves an underworld where batches of stolen beneficiary numbers are sold on the street or traded online.

Currently, the Office of Inspector General for the Department of Health and Human Services says it's hunting about 170 fugitives who are accused or have been convicted of health care fraud. And it's hoping its new 10-most-wanted list, which launched in February and which copies a tradition started by the FBI in 1950, will help publicize cases.

"Someone knows where they are," Roberta Baskin, an OIG spokeswoman, said. "There's an outlet now to get info to us."

It's still in its infancy, though, so the OIG can't really say how effective it has been in generating leads. But the department says they have now seven fugitives in custody since the website started, and the office has received almost 8,000 tips so far this year.

Gerald Roy, deputy inspector general of investigations -- in effect, the man responsible for heading all investigations in this area -- says the site appears to be doing well. Already, it has had about 185,000 unique hits.

"Tips from the public have certainly turned cold trails into warm trails, and hot trails into hotter trails in our efforts to bring people to justice," Roy told DOTmed News, when we spoke by phone earlier this month.

Growing problem

The world of health care fraud is not how it was in 1995, when Roy joined the OIG, a position he came to from the U.S. Immigration Office.

He says when he first started in California, a known list containing 3,500 stolen Medicare beneficiaries' numbers was making the rounds, passed from crook to crook on sheets of paper. Now, it's swollen to more than 250,000 numbers, and it's being passed electronically "to those who indulge in health care fraud," Roy says.

More Medicare fraud is now committed by organized crime, as gangsters find it, in Roy's words, "safer than, for instance, dealing drugs or engaging in racketeering activities."

"They find it easier as well," he added.

Over the past few years, Roy says they've seen stepped up activity by Eurasian gangs in Southern California, loose-knit groups in Miami, and Nigerian-connected outfits in Texas.

And with mafias come territorial feuds, and violence, Roy says. After investigators clamped down on Eurasian gang-run health care fraud in Los Angeles, Roy said members fled to Phoenix or Las Vegas, where they then wrestled for control of the lucrative Medicare scams in those cities.

Typical scam

Would-be Medicare scammers often target nursing home facilities or other areas they know there'll be a high density of beneficiaries, the OIG says.

Some crooks, known as "cappers," drive around in vans, taking elderly patients to clinics under the ruse of offering them a legitimate medical service. Sometimes, they'll even give free groceries to needy seniors as a way to trick them into providing their information. A small number of beneficiaries even take a cut of the scam.

"Overall, these individuals recognize that there are some vulnerabilities with our Medicare beneficiaries. They prey on those vulnerabilities -- cultural barriers, language barriers," Roy said.

But they also go after doctors, whose provider numbers are needed to file the dubious claims.

In Southern California, where Roy led investigations on organized crime and health care fraud until a few years ago, a typical trap for doctors would go like this: a crime faction would take out an ad in the local paper, saying it was looking for a doctor to oversee a new clinic. A physician would see the ad, and show up at the clinic for an interview.

At the interview, the crooks get the doctor's social security number, date of birth and Medicare provider number, all of which they use to set up a phony bank account under the doctor's name, and to submit fraudulent claims to the Centers for Medicare and Medicaid Services.

On some occasions, the doctor is complicit, netting a $5,000 monthly payout for "oversight," Roy says, but more often than not the doctor is an innocent gull in the crooks' plot.

The criminals then use this number to file claims for roughly 90 days, the time it takes for Medicare to catch on that something's fishy. By that point, the gang will often ditch the provider number and any associated cell phones, and walk away from the bank account, Roy says.

Fighting back

But Roy says Medicare's getting quicker at catching fraud, in general by copying strategies used by credit card companies and even local law enforcement. Medicare now tries to analyze billing patterns, looking for suspicious spikes in usage -- for instance, if one day a provider goes from billing next to nothing for motorized wheelchairs, to, the following day, billing thousands of dollars.

Teaming up with other law enforcement groups, they're also adopting CompStat-like approaches, targeting their resources at hotspots, such as Miami, home to many seniors and a notoriously fertile ground for health care scams, and now Detroit.

"They're not making cars right now. It's a depressed area," Roy said.

Getting your money's worth

In 2011, the OIG expects to spend $345 million to support oversight of HHS programs.

But last year, Roy said the agency recovered approximately $3.2 billion, and has consistently recovered around $3 billion every year for the past five years. And there's payback: last year the OIG helped net 647 criminal convictions, mostly around health care fraud charges, he said.

"For every dollar spent on my organization, we return $5 back to the program," Roy said. "We are good for the taxpayers."

To tackle health care crimes, Roy says the OIG has about 450 federal agents fanned out over the country, who work with local law enforcement -- the rapport in the Los Angeles area is, apparently, quite close.

But he said he could use some dedicated prosecutors to pursue more cases. And of course, he needs more eyes on the lookout for fugitives -- and for that, he hopes the new website helps.