The astonishing prevalence of health care fraud in the Russian-speaking communities of Brighton Beach and Coney Island in New York City presents an interesting case study on the causes of corruption. The Brighton Beach-Coney Island area is populated by people who immigrated from one of the most corrupt countries in the world to one of the least. You can take the person out of the corrupt system, but does this remove the propensity to engage in corrupt acts from the person?
In the wake of a recent spate of health care fraud scandals in Russian-speaking New York City communities (as well as a scheme to defraud Medicaid perpetuated by dozens of Russian diplomats), the facts and some commentators suggest no. Brighton Beach has the second highest rate of Medicaid and Medicare-related malfeasance in the United States. In February 2012, federal authorities uncovered the largest no-fault insurance fraud scheme in United States history, which was operated out of Brighton Beach-based clinics. A law-enforcement official drew a direct link between “the Russian mind-set” that “if you’re not scamming the government…you’re looked upon as a patsy” and this widespread fraud. Professor Mark Galeotti expanded on this point, suggesting that “from cradle to grave” Russians have been inculcated to “bureaucratic systems that are parasitic and hostile, almost designed to make you pay bribes.”
I think “old habits die hard” as an explanation is too simplistic and uncomfortably resembles notions (discussed elsewhere on this blog) that corruption is an inherent cultural touchstone in certain societies. Furthermore, emerging evidence shows that Russians within Russia are developing a moral aversion to bribery.
An alternative explanation for the puzzle of the Brighton Beach health care fraud phenomenon is below. Under this model, culture is not the only, and perhaps not the first, link in the chain of causation.
- First, economic incentives, rather than culture or habit, are probably the most important culprit. According to the New York State Comptroller, the health care industry employs a much greater share of the workforce in Brighton Beach and Coney Island than in any other part of New York City, and wages in the health care sector outstrip the average private sector wage in the neighborhood. Perhaps health care fraud has multiplied as a result of the same economic forces that foster the concentration of lawful immigrant small business ownership (including Eastern European immigrant business ownership in New York City) in certain sectors. The development of group networks and resources allows immigrants to more cheaply and successfully conduct business activities in sectors where other immigrants are already established.
- Second, in some instances, organized crime groups in Russia provide individuals with seed money to carry out fraud in the United States before returning home. If such groups are responsible for the health care fraud epidemic in Russian communities, then such fraud does not reflect the culture or tendencies of these communities or of Russians more broadly.
- Finally, the prevalence of health care fraud might be a symptom not of cultural mores imported from Russia, but of localized Brighton Beach-Coney Island mores that originated in the economic forces and isolated criminal acts described above.
In a 2010 paper, Richard Rose and William Mishler explored the question of why individual Russians living in Russia engage in corruption. Using data from the 2007 New Russian Barometer Survey, Rose and Mishler explored the correlation between several factors and the propensity of an individual to pay a bribe. They found that income, education level, social status, and age are not correlated with the propensity to bribe. As one might expect, the frequency of a person’s interaction with public services is the strongest predictor of whether a person paid a bribe. More interestingly, the second strongest predictor is awareness of other instances of corruption. When Russians learn about corruption from friends and “from what [they] see” in their local communities, they are more likely to pay a bribe than when they learn about corruption from national media.
Rose and Mishler’s analysis dispels the idea that corruption stems from a universally ingrained “Russian mind-set,” as highly localized events influence an individual’s thinking more than the national discourse. As Russian immigrants encountered the commonplace practice of health care fraud within Brighton Beach, they were more likely to participate in (whether as heath care providers or consumers), condone, or simply silently accept the corrupt health care industry.
In conclusion, we should take pause before construing health care fraud in Russian communities in the United States as another thread in the narrative of a Russian culture of corruption or, at a minimum, recognize that a culture can be bred in complex and indirect ways.