Medicare Fraud and USAt. Firings, Part III [Updated x2]

This is just getting freaky.

Here's a story from March, 2005, entitled Misuse of USA Patriot Act Leads to Exposure of Medicare/Medicaid Fraud Scheme Costing Taxpayers Tens of Billions of Dollars.

The Patriot Act raises its ugly head again. Thinking quickly: The article seems to be saying - it's not completely drawn out - that the Patriot Act was used to protect gigantic - really gigantic - health care Group Purchasing Organizations (GPO’s) from competition. GPOs are the businesses that supply hospitals with the stuff hospitals need to operate:

Medical Supply Chain's successful entry into the market for medical supplies would have surely led to lower cost for medical supplies and equipment and curtailed the profits coming from the sector and therefore the earnings generated by investment firm Piper Jaffray (NYSE: PJC), who at one time had seventy percent of its investments in health care supply stocks. To prevent this from happening, U.S Bancorp (NYSE: USB) and Piper Jaffray apparently believed they had no choice other than their malicious use of the USA Patriot Act to destroy Medical Supply Chain's ability to raise capital and launch its enterprise.

Think of it:

• Patriot Act provision protects monopolizing practices of these GPOs
• Patriot Act provision allows the President to appoint USAt.s without congressional approval
• President uses the provision to replace USAt.s who are going after the Patriot Act-protected GPOs

These are some huge charges. I have no idea who Samuel Lipari, the guy putting this story out, is and I have no idea if this has been looked into and it's been figured out that the guy is nuts. For now, I'm going to keep digging.

UPDATE: More details (cached) about how the Patriot Act was allegedly used to stop funding for what sounds like a pretty amazing idea.

Lipari believes his company can save hospitals more than $20 billion a year, compared to existing suppliers, who he alleges are operating as a monopoly to drive up prices. Most hospitals around the nation are supplied by Group Purchasing Organizations, or GPOs.

A GPO acts as a middleman. Lipari's product eliminates them and creates an Internet market instead. This allows the free market to determine prices.

Lipari went to US Bank for funding to launch his business and delivered his business plan under terms of confidentiality. He negotiated a specific price for the escrow accounts with representatives of US Bank, who told him the line of credit should be a "slam dunk." At the last minute, the bank denied the accounts and cited the USA Patriot Act as the reason.


Lipari believes this explanation was a sham and the denial was actually due to US Bank's relation with Piper Jaffray, which has heavy investments in health care industries that Medical Supply Chain's product would threaten. These investments include a GPO called Novation.

I want to hear more. How about you?

UPDATE II: More on the lawsuit here.