Feds investigating insurance fraud that duped U.S. military

We have a follow-up to our CBS News investigation that exposed an insurance scam in which taxpayers are the victims.

Members of the U.S. military have been duped into getting unnecessary medical tests that are paid for by the Pentagon’s insurance plan.

After our report aired Wednesday, CBS News confirmed the federal government has opened a criminal investigation.

A heap of trash dumped into a shed at a clinic near Fort Hood contained soldiers’ social security numbers, medical information, DNA specimens, and more than 60 photocopies of military IDs.

As CBS News showed you last night, makeshift clinics offered soldiers $50 Walmart gift cards in exchange for their urine and DNA.

Some of those samples were sent to Cockerell Dermatopathology lab in Dallas — which billed the military’s insurance — Tricare — for millions of dollars worth of largely unneeded drug testing.

Agents with the Defense Criminal Investigative Service are now trying to determine who made money at Tricare’s expense — and how much.

On Thursday, Pentagon spokesman Peter Cook addressed CBS News’ story.

“Reports like this are obviously of concern to us and something we want to address,” he said.

This is not the first time Tricare has been targeted by scammers.

“These criminals were filling sandbags with cash as quickly as they could before we cut it off,” said Richard Thomas.

Until April, retired two-star General Richard Thomas ran Tricare. As CBS News reported last year, claims for custom made prescription creams called compounds had grown exponentially until the Pentagon stopped paying for most of them due to their dubious medical value.

General Richard Thomas walks with CBS News’ Jim Axelrod.

CBS News

Tricare was $1.3 billion in the hole.

Is that largely due to this fraudulent billing of compound drugs?

“Absolutely it was,” said Thomas. “That was the biggest single source of us being overspent.”

The…

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