The Fight Against Fraud

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Man sitting in front of his home

In a small Los Angeles condo, an 82-year-old retiree named Ron lived alone; no children or spouse. From the windows of his home, Ron could not see the famous Hollywood sign, but he knew so much went on outside those windows, a whole glittering world. 

In the summer of 2013, when Ron’s phone rang and the man on the other end of the line gave him a pitch, Ron listened. He had a good mind to hang up on the caller. And yet, that voice made him want to listen. The voice was friendly. The voice was persuasive. The voice promised a Mercedes. The voice promised a lottery to the tune of $250,000. And Ron listened to every word. He’d never won anything in his life. He wasn’t completely convinced he had won anything now. But he listened anyway. The voice said this call will change your life forever and, for once, the voice wasn’t lying.

The elder fraud epidemic

Elder fraud didn’t begin with the advent of telephones or cutting-edge technology, though these inventions have allowed thieves easier access to other people’s money. A 2011 study by MetLife tabbed the bill of financial fraud against American seniors at $2.9 billion a year. The actual number is much higher, as the vast majority of elder abuse cases go unreported due to the victim’s fear, embarrassment or refusal to turn in the perpetrator. 

According to a report released by the 2015 White House Conference on Aging, “Elder abuse is a serious public health problem affecting millions of older Americans each year, with some studies suggesting that as few as one in 23 cases is reported to authorities. 

With the aging population doubling over the next several decades and wily criminals inventing new ways to exploit the elderly, those numbers are poised to explode. In 2050, the number of Americans aged 65 and older is projected to be 88.5 million, more than double its projected population of 40.2 million in 2010, according to a U.S. Census Bureau study from that year.

The variety of schemes to pry money away from elder Americans is dizzying, and the man who scammed Ron comes in many guises. Sometimes he wears the face of a Bernie Madoff, who makes headlines by stealing billions from wealthy clients through Ponzi schemes; sometimes he’s a Nigerian prince asking for a good-faith payment; sometimes he’s a conniving family member who seeks a hefty nest egg. Sometimes, though, he’s the waiter at your favorite restaurant, who takes your credit card and disappears around a corner to run your card through a device called a skimmer. The skimmer costs as little as $19.95 on Amazon or eBay, takes less than a second to record your card information and can store up to 10,000 cards at a time.

But no matter the face the man assumes, he is the same man, a man who often preys on the confusion, the trust, the loneliness of strangers who are willing to buy his line. He is, for lack of a better word, a crook, and he is everywhere. And if you’re not taking the precautions to protect your assets and identity, then more than likely he already has your information.

Identity theft and the evangelist

“The elderly are only the second most targeted demographic of financial crooks,” says Cary Johnson, Director of Crime Prevention with the Jefferson County Colorado District Attorney’s office.  

The number one age group targeted by identity thieves is 18- to 25-year-olds.

“Almost all of our identity theft is related to meth addiction and it’s moving to heroin, if you can believe that. But it’s meth for now,” Johnson says.

“And we’re the meth hub for the United States. Denver is the meth hub.”

“With the great Northeast/Southwest highway system, we’re perfect to move all the meth. And Colorado is usually about fifth in the U.S. for identity theft. California is number one.”

The Federal Trade Commission (FTC) estimates that about nine million Americans are victims of identity theft each year.

Ron revisited

By the time Christian Cordoba, a retirement specialist in Southern California, learned of the scam against Ron, the thieves had taken $170,000 of the retiree’s assets.

Two decades ago, Ron was referred by a client of Cordoba [who has managed some of Ron’s assets ever since].

“One day in 2014, one of my assistants contacted me about Ron,” says Cordoba. “Ron received a monthly distribution from his account, but he had been making additional requests for distributions above the set monthly amounts, and that raised a red flag.” Cordoba, says the requests from Ron were becoming more frequent, more urgent, and they called Ron to see what was going on.

At first, Ron’s answers seemed reasonable. He needed to pay back a personal loan to a friend. He had car repairs. Those crazy California property taxes were due. At a certain point though, Ron ran out of excuses to give and began recycling the reasons why he needed the extra money. 

At that time, we began discussing with him the fact that many seniors today are taken advantage of, and we just wanted to make sure he was not one of them,” Cordoba says. “Eventually he told us his story, that he had won a sweepstakes.”

Prevention is the key

When that first call came in, a part of Ron didn’t want to believe it. Really he didn’t. But he kept clinging to the voice on the other end of the line and the voice told Ron he needed to make a good-faith payment to unlock his winnings. 

“What prompted you to give them the money?” Cordoba asked him.

“I’ve never won anything in my life,” said Ron. “They promised me I’d won something. I’d won a prize. They said they had my lottery earnings and car in storage, and if I paid them I’d get my winnings.”

And so Ron paid the voice by way of Western Union, the voice of a person he’d never actually met. The money dripped from his bank account — $4,000 or so at a time — and when that money was gone, Ron ran up an additional $40,000 on his credit card. With the card maxed out, he finally turned to the asset account that Cordoba managed. Working with his client, Cordoba was able to put a stop to the payments being made to the scammers, effectively preserving the assets that Ron had under his management.

Ron wasn’t as lucky with his personal savings, much of which were already gone, as were the thieves — gone like ghosts, already on to their next mark.

To catch a thief

“It gets very challenging to catch them,” says Sergeant Ana Brun of the Lakewood Police Department. Brun and Detective Lee Thomas, also of the Lakewood Police Department, are protégés of Cary Johnson, the evangelist, who work to educate seniors about the financial dangers facing the elderly.

“These phone calls can come from anywhere, and it can make it look like it’s coming from Denver. You can create any email address and dump it two days later. You can use burner phones, which have no tracking. There’s a large amount of it that cannot be investigated, that’s why I’m saying prevention is the key.”

On July 1, 2014, a law went into effect in Colorado to protect the state’s elders. It requires employees and volunteers in a wide range of professions to report to police within 24 hours if they suspect someone 70 or older is being abused or exploited. Colorado was the 48th state to pass the law, according to the Department of Human Services.

“The financial institutions are watching for irregular behaviors that crop up,” says Brun. “We’ll hear from them if they have somebody come in who is trying to take a large amount of money out and put it on a Green Dot card or to wire money,” she says. “If a person with an account comes in and says I need five grand, I need it today, and I need it wired to wherever. In that instance, that bank has to notify us with a phone call within 24 hours.”

The cognitive question

At this point, you may be asking yourself why anyone of sound mind would willingly hand over money to a scam artist. In Ron’s case, as in so many cases involving elder fraud, the question of cognitive abilities complicates the issue. Even after finally admitting to Cordoba what had taken place, Ron still couldn’t bring himself to accept that he had been scammed. He kept holding out hope that he would get his winnings, which Cordoba could only construe as cognitive impairment. At the very least, his decision-making was not good. Even when faced with all the facts of what had happened, he continued to wire money to the crooks. 

After talking with Ron, Cordoba had questions about his client’s mental health and brought the case to Adult Protective Services as well as the DA’s office and local law enforcement. When tested, though, “doctors we were unable to state that Ron was incompetent,” Cordoba says. “They said that he was in fact of sound mind and healthy, with the exception of having become a horrible judge of circumstances and now trusting of total strangers, which was not a diagnosis that was able to have him deemed incompetent.”

What Ron did agree to was allowing his niece to sit in on a meeting with Cordoba. “It ultimately took his willingness, after sitting with us and his niece and recognizing his path to destruction, that he willfully agreed to put her in charge of his finances,” says Cordoba. They were able to develop a plan to get Ron out of trouble. They sold his house to pay off the debt and, with the remaining money and a long-term care policy that pays $5,200 a month, Ron was checked into a memory facility.

Cordoba says it’s difficult, even heartbreaking, to think back to his conversations with Ron, who would almost get the situation pinned down, get full understanding of what was going on only to slip back into holding out hope that his payoff would finally come in with the next $4,000 wire transfer. Cordoba is shaken, recalling a conversation he had with his client.

“Ron, what makes you think this time will be any different?” Cordoba asked him.

“I just have a hunch. I’ve lost a lot of money, really a lot. It’s put me in a hole. I’ve been scratching just to maintain a living. That’s why.”

“I’m trying to understand your situation, Ron” Cordoba said. After you didn’t get your money the first time or even the second time you wired them money, why didn’t you stop? What do you think will happen this time that will be any different?”

Ron paused for a long time, searching the recesses of his unreliable memory for an answer. “I just have a hunch.”

Secret Deals and Paying More For Prescriptions

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Doctor talking to patient

Several prescription drug pricing experts say that secret deals often prompt drug benefit companies to cover brand-name prescriptions when equally effective generic, or even over-the- counter medications, are also readily available. 

These companies, known as pharmacy benefit managers (PBMs), negotiate deals with drug makers that include rebates and other compensation to encourage certain drugs and come up with lists of drugs that their insurance plans will cover. Employer unions and insurance companies then determine which drugs to encourage on these formularies.

The process is so convoluted that even the United States’ largest insurer, Anthem, discovered $3 billion in overcharges by Express Scripts and filed suit Monday, March 21 2016 against the PBM for damages.

In their deals with drugmakers, PBMs agree to favor the higher cost drugs on the PBMs’ formularies and agree that they won’t place quantity limits — or prior authorization rules — on the drugs, even though doing so would help health plans save money and make medical sense, says Linda Cahn, founder and president of Pharmacy Benefit Consultants, which audits PBM contracts.

Generic drugs get lower rebates or none at all, while the brand-name drugs can command rebates of as much as 40%, says Mel Brodsky, president of Keystone, a Philadelphia area buying group for small pharmacies that is suing the pharmacy benefit manager Catamaran for “unfair business practices” and to require more transparency.

As drug prices fall under greater scrutiny following the disclosure of the massive price increases by drugmakers including Turing Pharmaceuticals and Valeant, the role of PBMs is also being more closely examined.

The Centers for Medicare and Medicaid Services is considering whether to require more transparency in the Medicare Part D prescription drug program. Representative Doug Collins, RGa., reintroduced legislation [February 2016] that would require more public disclosure in how PBMs determine their reimbursements, especially with government drug benefit programs including Medicare Part D.

Mark Merritt, CEO of the PBMs’ trade group, said more regulation wasn’t the answer. In March 2016, PCMA launched a national campaign to emphasize that PBMs are part of the solution to high drug prices and not part of the problem. The group says its members cut drug prices by 30%.

But those who audit PBM contracts for a living disagree.

“What really gets me started is when PBMs sell the insurance companies on programs that increase costs by encouraging brands so that the PBM can collect rebates,” says Susan Hayes, a principal in Pharmacy Outcomes Specialists, which represents plan sponsors and audits their PBM contracts. “And many insurance companies do not know the cost implications when they sign off on these programs.”

Few companies or other plan sponsors, such as unions, contract with auditors like Hayes and do not drill down into the complicated details of their formularies. Hayes says she has realized that a group of union funds had agreed to require a step therapy program requiring patients to take pricey brand-name drugs before generics to get guaranteed rebates.

PBMs pass along some of the rebates to their employer unions, but Hayes says they seldom make brand-name drugs cheaper than generics for employer unions, based on contracts she has audited.

Unless a PBM proves that the use of a brand-name drug is bringing the cost down to lower than the generic through rebates passed along to the employer unions, Hayes says she tells companies “you can assume it’s not.”

When PBMs are pushed to be more transparent about their deals, PBMs and the drug companies “start arguing that they can’t give as good of deals” if they have to start disclosing the details, says Stephen Schondelmeyer, a pharmaceutical economics professor at the University of Minnesota.

That argument, he says, “ignores the basic premise of economics,” namely that consumers need to know all the alternatives and the pricing, he says.

When generic versions of drugs are introduced, it can lower the price of a drug by up to 85%, according to the Food and Drug Administration. Published by researchers online in the Journal of the National Cancer Institute [March 2016], say that if all patients with a chronic form of leukemia started on the generic form of the drug Gleevec when they were diagnosed, the cost of treatment per patient over five years would be nearly $100,000 less than it is now. Most of these patients need lifelong, daily medication.

Another egregious example of the problem, according to Cahn, is the class of ulcer drugs known as “protonpump inhibitors” or PPIs. The best known of these drugs is Nexium, which costs several times the price of generics, which often cost far more than many over-the-counter options.

Most drug benefit plans, including Medicare and Medicaid, are “spending an absurd amount of money” on prescription PPIs, says Cahn.

Cahn says all of the players are contributing to the problem. Drugmakers do a disservice when they get FDA approval for higher cost “copycat PPIs ” that add no additional value. Doctors should stop writing PPI prescriptions and tell their patients to use over-the-counter versions. And PBMs should remove brand PPIs from their standard formularies and educate their employer unions and insurance companies to stop coverage for brand PPIs.

Cahn adds that pharmacists could also suggest to consumers that they stop using prescription versions and use over-the-counter PPIs instead.

CVS Caremark [the drugstore chain’s PBM] doesn’t exclude brand-name ulcer drug Nexium from its 2016 formulary, but spokeswoman Christine Cramer says “in some cases, although less expensive over-the-counter versions of drugs may be available, some patients will still require access to a prescription drug to treat their condition.”

“We offer a variety of formulary options that help deliver lower costs for beneficiaries…,” she said.

Sanjay Sandhir, a Dayton, Ohio, gastroenterologist, says he has a patient who was spending $140 a month for her share of the cost of Nexium, which was on her insurance plan’s drug formulary, so he told her to just buy one of the nonprescription over-the- counter versions, which saved her $100 a month.

“The prices are too high for patients and there’s a lack of transparency,” says Sandhir. And there’s no discernible difference between the over-the-counter drugs and pricey brand-name ones.

Douglas Dykman, an Annapolis, Maryland, gastroenterologist, says it “doesn’t matter to me” which version of the medications patients with ulcers use as they all work the same. He seldom knows what out-of-pocket costs patients are facing — only whether a drug is or isn’t on their formulary.

Cahn says drugmakers should stop selling “copycat PPIs,” doctors should stop writing prescriptions for PPIs and PBMs should educate their employer unions and insurance companies on how to cut waste. Pharmacists should suggest patients stop using the prescription versions.



College Freshman Learns About Growing Old

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April Pearce

April Pearce is in the middle of her freshman year at UCLA, settling into life away from home for the first time. But instead of thinking about dorm food or exams, the 19-year-old is focused on something a little more abstract: old age. 

That’s because of a unique course April is taking called Frontiers in Human Aging, designed to teach first-year college students what it means to get old — physically, emotionally and financially.

April said that before, she barely noticed elderly people when she passed them on the street. Since being in the aging class, seeing them fills her mind with questions: Do they live alone? Will they develop dementia? Do they interact with anyone apart from relatives?

“It’s weird, I know,” she said. “But before, I didn’t have any knowledge really about aging. I didn’t even interact with any older people except for my grandmother. Now I’m learning so much.”

In addition to teaching students about aging, the professors have another goal in mind: inspiring them to pursue careers working with the elderly.

With more than 10,000 baby boomers turning 65 every day, there is a growing need, said Rita Effros, a professor at UCLA’s David Geffen School of Medicine who teaches both undergraduates and medical students.

People over 65 represented about 14 percent of the U.S. population in 2013, and that figure is expected to increase to nearly 22 percent by 2040. During that same time period, the number of people over 85 is expected to triple.

And jobs working with the elderly won’t just be in medicine but also in social work, psychiatry, technology and law, Effros said.

We try to make it clear that aging is going to be big business,” she said. “Whatever their interests are, they should think about serving the elderly.” The strategy seems to be working on many of the students, including April. She started UCLA in the fall of 2015 wanting to be a veterinarian and now is thinking about becoming a geriatrician.

The class, which has about 120 students, is taught jointly by Effros, an immunologist, Paul Hsu, an epidemiologist, and Lené Levy-Storms, a social welfare professor. UCLA started offering the course in 2001, but the professors said it is becoming increasingly important.

Throughout the year, students hear lectures about anxiety, genetics and dementia. They discuss ageism and read about Social Security. They stage debates on assisted suicide and watch films about growing old.

The course lasts from September to June, and students can go on to take other classes about aging, including ones that focus on diversity or public policy.

Effros said she wants the students to understand people don’t suddenly become old. Rather, the aging process starts when they are conceived. “A lot of life habits and choices they make as college students can affect them decades later,” she said.

During one guest lecture, UCLA medical school professor David Reuben explained how geriatricians evaluate patients and told students about some of the most common problems older people face — dementia, falls, sensory impairment.

He also described how the students’ own lives will change as they age. Instead of traveling the world, older people eventually become unable to travel out of their own bedrooms.

One student raised his hand and said being a geriatrician sounded gratifying, but also seemed heartbreaking. “You watch so many people decline … how do you handle that?”

Reuben responded that he does get sad and he does cry. “Nobody lives forever and nobody should live forever,” he said. “Death is part of the human experience.”

Michael Margolis, 17, said being in the class has made him think for the first time about his own mortality. “It’s not something we typically think about as teenagers,” he said.

One requirement of the class is that students spend a total of 20 hours volunteering with seniors.

Just after the New Year [2016], the students gathered in a large room on campus to meet representatives from several agencies that serve the elderly. Andres Gonzalez, a director at St. Barnabas Senior Center in Hollywood, told the students they could teach technology classes to active seniors or help deliver meals to homebound ones.

“Even that short interaction becomes very meaningful to the seniors,” Gonzalez said. “You might be the only person they see that day. And they get even more excited seeing younger people.”

April Pearce was assigned to Wise & Healthy Aging, which runs an adult day service center for seniors with dementia. Catherine Jonas, who previously directed the center, said the students bring a lot of energy to the center, and they often lead bingo games and exercises. They also have lengthy conversations with the seniors.

“What the older adults need is that dialogue,” Jonas said. And for students interested in learning about dementia, interacting with people affected by it “is so much better than what they get from a book,” she added.

One morning in early February [2016], the center was decorated for Valentine’s Day, with red and white streamers and cut-out hearts hanging from the ceiling.

One of the student volunteers, Julia Gierasimow, led the group as they rolled their shoulders, stretched their legs and tried to touch their toes. Julia, who is also considering a career in geriatrics, said all the seniors she’s met so far have interesting life stories.

“I don’t know if they remember me from week to week … but they are very friendly,” she said. “As bad as their dementia may be, they still give you a hug.”

After the physical exercises, April sat in a chair in the middle of the room, picked up a microphone and commenced with the mind exercises she’s led each visit. Today’s activity: a quiz game about football.

“Which team won the first Super Bowl ever?” she asked, smiling.

Several of the seniors shrugged. One man, 76-year-old Tracy Williams, yelled out the right answer: “Green Bay Packers!”

Williams, retired from the Air Force, said he enjoys when the college students come to visit — even though he never would have done the same at their age. “When I was young, I didn’t want to even be near an old person,” he recalled.

April said that in just a few weeks of volunteering, she is becoming more patient and is learning how to talk to people with dementia. “If they say it’s Tuesday, you’re supposed to go with it,” April said. The class has given her a new perspective on her own life, too. She is trying to eat less fast food and exercise more. And she tries not to worry so much about things like not doing well on an exam. “I’m going to have health problems later if I let the stress get to me,” she said.

April is also seeing her grandmother in a new light, especially after doing an in-depth interview with her for a class assignment.

She said she learned that her grandmother had undergone hip replacement surgery, a kidney transplant, and treatment for cancer. She also discovered her grandmother had loved to dance when she was younger, and was popular with the boys.

“I had never really thought about my grandmother as a young woman,” April said. “This class is making me appreciate her more.” .