Gingrich Super PAC Head: Romney Is a Medicare Fraudster, but Will It Matter?

Rick Tyler, the head of Newt Gingrich’s Super Pac, was on Steve Bannon’s KABC Victory Sessions this evening and revealed the next phase of their attack on Mitt Romney: tying Mitt Romney to Damon Corp, perpetrator of one of the largest Medicare frauds in American history. Tyler plans to spend $10 million in Florida, though he has “not yet” raised the money needed. Tyler is promising to also connect Romney to Charlie Christ.

When it comes to Medicare fraud, Tyler is referring to Bain Capital’s controlling interest in Damon Corp, a medical testing company located in Needham, Massachusetts. During the time that Mitt Romney headed Bain and therefore controlled Damon Corp., Damon Corp. was busy submitting fraudulent reimbursement claims for blood tests to Medicare to the tune of tens of millions of dollars. Romney served on the board of Damon Corp. from 1990 to 1993. Bain Capital more than tripped its initial investment when Corning Inc. purchased Damon Corp. Romney personally made $473,000. Although Romney claims that the fraudulent practices stopped in December 1992, a Boston Globe investigation concluded that the practices were ongoing until at least mid-July 1993, when Damon Corp. was in negotiations with Corning Inc.

In 1996 Damon Corp. pled guilty to a federal conspiracy charge of defrauding the government of $25 million between 1988 and 1993. Damon Corp. paid a record $119 million fine. Then-US Attorney Donald Stern labeled “a case, pure and simple, of corporate greed run amok.”

Although Romney claims that the fraudulent practices stopped in December 1992, a Boston Globe investigation concluded that the practices were ongoing until at least mid-July 1993, when Damon Corp. was in negotiations with Corning Inc. According to The Boston Globe, which wrote about the scandal in October of 2002:

Romney insists he and the Damon board immediately investigated the company’s billing system after National Health Laboratories pleaded guilty to fraud in December 1992 for a similar billing process. “We put in place a program to stop that immediately,” Romney said yesterday at a news conference at the State House where he talked about economic development. He said the corrective action allowed investors such as him and his firm to receive “a good return” when the company was sold.

But court documents – and Damon’s admission – reveal that the fraudulent activity was occurring right up until the time Corning purchased the company from Bain and other owners. (“Romney Profited on Firm Later Tied to Fraud Damon Corp. Fined After Sale by Bain,” Boston Globe, October 10, 2002)

It remains to be seen how much of a political role Romney’s ties to a Medicare fraud-commiting firm will have.

After all, Rick Scott, Florida’s current Republican governor, headed a firm that pled guilty to 14 felonies and agreed a $600+ million fine in the largest fraud settlement in history. Despite the Democrats incessant criticism of Scott, he narrowly one beat Alex Sink. Remember, he headed the firm, rather than simply serving on its board, as was the case with Mitt Romney.

These attacks might also not matter because a chunk of Florida’s electorate–220,000 people–may have already voted. (There are four million Republicans registered to vote in the primary.)

Tyler is hoping that Romney’s Medicare fraud connection will hurt him in Florida, especially among its elderly population. But much of that electorate already votes Democrat and besides, if political positions will prove a liability, Romney could easily counter that Tyler was behind the campaign to increase domestic drilling. His “Drill Here, Drill Now, and Pay Less,” was launched in 2008. “With any energy there’s risk,” Tyler told the St. Petersburg Times in 2008. “We haven’t had a major spill since 1980.”

We did have a major spill in 2010. The cleanup costs for the Gulf oil spill was over $3 billion and it decimated tourism in the Gulf and would certainly be a political issue in Florida, which is a swing state.

Still Tyler’s decision to tie Romney to Charlie Crist may prove political effective among conservatives disdainful of how the establishment picks our candidates.