NOVEMBER 15, 2007
Thousands of health care providers across the nation that receive payments from the government for their services owe at least $1 billion in back taxes even though they have luxurious lifestyles, reside in multi million-dollar mansions and drive fancy cars.
The physicians and health care facility owners are contractors of the federal-state program for the poor called Medicaid, which covers about 55 million poor people. In fiscal year 2006 outlays for Medicaid were about $324 billion with $185 billion paid by the federal government and the rest by individual states.
Because there has been abusive and criminal activity among Medicaid contractors in the past, a Congressional investigative committee conducted an in-depth probe and the findings were published this week in a 35-page report.
It reveals that more than 30,000 Medicaid providers in seven different states—including California, Colorado, Florida and New York–failed to pay more than $1 billion in federal taxes. Besides not paying their personal income tax, many didn’t bother paying their payroll taxes either. The money has been spent on vacations, houses and expensive jewelry, among other things.
One example includes the owner of several nursing homes who had been convicted for failing to pay $14 million in back taxes yet continued collecting government Medicaid payments. He purchased a luxury home for several million dollars and spent tens of thousands of dollars furnishing it with crystal chandeliers, upscale porcelain china and expensive rugs. He also took exotic vacations and bought a Rolex watch for $16,000.
Because Medicaid payments are actually made by individual states, Internal Revenue Service (IRS) officials say they cannot levy Medicaid payments to collect the back taxes even though the program is mostly funded with federal tax dollars.
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