Diplomatic Immunity Shelters Russian Diplomats And Spouses Charged With $1.5 Million In Fraudulent Medicaid Claims
A criminal complaint unsealed last December in a New York federal court describes a widespread Medicaid fraud perpetrated by current and former Russian diplomats and their spouses, uncovered during the course of a one-and-a-half year FBI investigation. The complaint charges forty-nine defendants with conspiracy to commit health care fraud, conspiracy to steal government funds, and conspiracy to make false statements relating to health care matters. According to the complaint, between 2004 and August 2013, the defendants and “dozens” of unnamed co-conspirators submitted applications for Medicaid benefits that contained false information –generally underreported income – and on the basis of the false information, received Medicaid coverage for prenatal, childbirth, and first-year postnatal care costs to which they would not have been entitled if the information had been accurately reported. All told, participants in the alleged conspiracy fraudulently received approximately $1.5 million in Medicaid benefits.
According to the government’s complaint, foreign diplomats and their children are generally not eligible for Medicaid, the government program that provides health insurance for low-income families. However, according to U.S. Attorney Preet Bharara, the defendants in this case “exposed a weakness in the Medicaid system.” The government alleges that the defendants took advantage of New York’s “presumptive eligibility” policy in screening applicants for Medicare pregnancy benefits. Under this policy, pregnant women are deemed “presumptively eligible” for Medicaid pregnancy benefits following completion of an “Access NY Healthcare” application and a preliminary income assessment based on documents or self-reported information regarding monthly household income provided by the mother. Notably, the application process does not require proof of citizenship and does not take into consideration any financial resources other than monthly income. Once designated “presumptively eligible,” the mother can receive benefits until sixty days after the child is born, and the child can receive benefits for its first year of life.
The most common tactic described in the complaint was simple – the defendants falsely reported their household income on the “Access NY Healthcare” application at an amount low enough to qualify. Frequently, the applicants also provided letters, signed by “senior Russian officials” from the diplomat’s employer, which purported to confirm the false income information reported by the applicant. The income figures reported on the Medicaid applications were demonstrated to be false by a review of household bank records indicating deposits that exceeded – in some cases considerably – the amounts reported to the government. Further, in many cases credit card records and store receipts depicted spending habits strikingly inconsistent with the receipt of Medicaid benefits, including shopping at high-end retail stores and purchases of jewelry, luxury vacations, and – in one case – a chartered helicopter. For example, one couple charged over $50,000 on a single credit card, including purchases at Prada and Bloomingdale’s, during a period that the couple’s children were on Medicaid.
It is unlikely that these charges will lead to any arrests. Mr. Bharara reported that only eleven of the forty-nine defendants were still living in the United States, and that all are protected by diplomatic immunity. Diplomatic immunity, codified under international law in the Vienna Convention on Diplomatic Relations of 1961, provides near absolute protection from criminal or civil liability in the host country. Notably, at least one court has held that the Vienna Convention contains no general exception for fraud. While there are some narrow exceptions to diplomatic immunity, these exceptions are likely inapplicable. For example, a diplomat’s immunity does not extend to “professional or commercial activity . . . outside his official functions.” However, the United States has interpreted this commercial-activities exception as referring to “trade or business activity,” and not activity relating to “services incidental to the daily life” of the diplomat and his or her family. Diplomats might also be subject to liability for acts unrelated to their diplomatic duties in the host country once those duties have ended, though the government has apparently conceded that all of the defendants named in the complaint are currently protected by diplomatic immunity. Mr. Bharara reported, however, that it is the State Department’s policy to request a diplomat’s home country to waive diplomatic immunity when the prosecutor advises that he or she would prosecute if not for immunity, and to require the defendants to leave the country if immunity is not waived.