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ANDERSON COOPER 360 DEGREES

Fiscal Cliff Compromise?; Fiscal Cliff Clash; Benghazi Attack Questions; 160 People Killed in Syria

Aired November 28, 2012 - 20:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


WOLF BLITZER, CNN ANCHOR: Erin, thanks very much.

We begin the way Anderson does every night. "Keeping Them Honest." Not choosing sides or playing political favorite. There's plenty of that on the other cable news channels. We are interested in facts. They do exist. And our goal is to show them to you honestly.

So, tonight, the facts about taxes that a majority of Americans established on election day and an even bigger majority endorsed in recent polling. The nation's leading conservative paper is onboard and most recently so is a leading Republican lawmaker. They now agree with the president who wants to let taxes go up on income more than $250,000 a year.

Mr. Obama and the Democrats get their way doing a deal to raise just those rates would avoid the fiscal cliff where all the Bush era cuts and all -- on all tax brackets expire at the end of the year. That scenario, the election, popular opinion and more certainly give President Obama a lot of clout right now. And now you can agree or disagree with the President Obama's policy. That's for you to decide.

Republican Congressman Tom Cole of Oklahoma happens to disagree strongly at the same time, though, he recognizes the political reality that all tax cuts will expire on January 1st and no one wants to raise taxes on what would amount to 98 percent of all taxpayers.

(BEGIN VIDEO CLIP)

REP. TOM COLE (R), OKLAHOMA: In my view, we all agree that we are not going to raise taxes on people that make less than $250,000. We should just take them out of this discussion right now and continue to fight against any rate increases, continue to try to work honestly for a much bigger deal.

(END VIDEO CLIP)

BLITZER: Congressman Cole joins us shortly as a rock ribbed conservative, a former chairman of the National Republican Congressional Committee and is no longer a lone voice in the wilderness. The staunchly conservative editorial page of the "Wall Street Journal" is on board as well. And I'm quoting now, "The fact is that Republicans face a new political reality on taxes. President Obama's re-election means that taxes for upper income earners are going up one way or another. The question is how Republicans should handle this reality."

Congressman Cole, as you heard, and a number of other conservatives, they believe they should give this one to the president not because they want to, but because they have to. Republican leaders, though, they disagree.

(BEGIN VIDEO CLIP)

REP. JOHN BOEHNER (R), HOUSE SPEAKER: I told Tom earlier in our conference meeting that I disagreed with him. It will hurt small businesses, it will hurt our economy. That's why this is not the right approach.

(END VIDEO CLIP)

BLITZER: Now you can agree or disagree with that position. However, "Keeping Them Honest," House Speaker John Boehner and other top Republicans have been trying to justify it in part by playing down the fact that President Obama and Democrats got a significant boost from voters.

(BEGIN VIDEO CLIP)

SEN. MITCH MCCONNELL (R), MINORITY LEADER: In politics there is always a temptation among those who win office to think that they have a mandate to do what they will.

REP. PAUL RYAN (R), BUDGET COMMITTEE CHAIRMAN: I don't think so because they also re-elected the House Republicans. So whether people intended or not, we've got a divided government.

BOEHNER: The American people have also made clear that there is no mandate for raising tax rates.

(END VIDEO CLIP)

BLITZER: "Keeping Them Honest," President Obama campaigned and won on letting taxes go up for the top earners. So his victory throws a little cold water on that claim. Democrats gained seats in the Senate and the House. And recent CNN/ORC polling shows that more than two in three people support tax hikes for the wealthy. It's a reality Republicans will be grappling with from now until New Year's Day.

Joining us now Congressman Tom Cole of Oklahoma. He's a Republican.

Congressman, thanks very much for joining us.

COLE: Wolf, thank you.

BLITZER: Your proposal that Republican lawmakers should agree with Democrats extend the tax breaks for those making $250,000 a year or less before the end of the year deal with these tax rates for the wealthiest later. That's an idea that a lot of Republicans are resisting. What's been the reaction? What kind of pushback are you getting? COLE: I think the reaction is mixed. Some support it, some don't. Some have more questions about it. But look, I think the issue is really pretty simple. I don't believe in raising tax rates on anybody. I think it's bad for the economy, bad for job creation. Ultimately by slowing down growth cuts revenue. And I think the president needs to come to the table with real spending restraint and real, frankly, entitlement reform.

Having said that, if we agree that taxes shouldn't go up on 98 percent of the people, shouldn't we take that now and get that set aside and make sure that they know their taxes aren't going up. I think they'll actually listen to us and we'll win the argument on the other areas. But, you know, putting people at risk when we agree their taxes shouldn't go up is something, in my opinion, we shouldn't do.

BLITZER: Speaker Boehner earlier today told House Republicans said they need to stick to their position. Tax rates. I guess they believe, and a lot of Republicans say, that if you do what you're suggesting, you'll lose a lot of leverage as far as entitlement cuts or other spending cuts are concerned. How do you respond to that?

COLE: Well, I respect that point of view. I don't agree with it. Frankly, I don't think you ever use the American people as a hostage in a negotiating type situation. And I think at the end this is really the leverage for the Democrats, not the Republicans in this. Again, my advice was given privately at a whip meeting. I was asked what I thought. Asked again a couple of weeks later. My position hasn't changed. Somebody leaked it. So, again, I'm happy to talk about it because that's just my point of view.

At the end of the day the speaker is going to negotiate this deal with the president. It will be a tough deal. It will come back and ask for support. I've supported him every time he's asked us to make a tough vote. I'm sure I'll do that again. And I have a lot of confidence in him as a negotiator but, you know, again, when I'm asked for my opinion as to what we should do with 98 percent of the American people, I would say let's protect them and continue the fight.

BLITZER: Is this an idea you're totally committed to and you're ready to fight for it in spite of this pushback you're getting from members of your own party including Grover Norquist who always puts forward that no new tax pledge?

COLE: I admire Grover Norquist. I think he's done a lot of good. I signed that pledge. I'm honored to do it. I don't think in this case we would be breaking it by making what are temporary tax cuts permanent. I think we'd be doing the right thing. I want to make all of them permanent quite frankly. So this is really a debate about political tactics. It's not a difference over political theology.

In the end, all Republicans want to make sure that we don't increase taxes. That's where we differ with the Democrats. But if there's a place we can, again, get 80 percent of the Bush tax cuts for 98 percent of the American people made permanent, I think we should do that and I think we should continue to fight for the rest.

BLITZER: I spoke to Grover Norquist yesterday, he opposes anything along the lines of allowing a debate to go forward next year over the 2 percent, the 3 percent, the richest Americans, those making $250,000 a year. He wants it all part of the same package. You obviously disagree with him.

COLE: Well, look, Grover Norquist is my friend. And we talk, you know, political strategy and politics. This is my position. It was given in private when it was asked. It was leaked by somebody. Again, that's fine. I'm not going to say one thing to you that's different than I would say, you know, to my own constituents in Moore, Oklahoma. This is what I tell them.

If they said, Congressman, what do you think we ought to do? But, you know, I'm one voice. I'm not king of the universe. And I support the speaker. I recognize he is the speaker. I support my conference. They're trying to do the right thing. I think in this case the Democrats and the president are trying to use the tax issue. Instead they ought to be coming to the table with real spending cuts, real entitlement reform and real compromise proposals. So far they haven't done it.

BLITZER: Congressman Tom Cole, thanks very much for joining us.

COLE: Wolf, thank you.

BLITZER: Joining us now, Republicans Senator Rand Paul of Kentucky.

Senator, thanks for coming in. Let's get to this so-called fiscal cliff. The president has set a goal, as you know, $4 trillion in debt reduction over the next decade. Are there any specific ways of reaching that figure that both of you might agree on?

SEN. RAND PAUL (R), KENTUCKY: Well, you know, I think one compromise that I can agree with Democrats on is that we need to cut some military spending. So I think the compromise is conservatives like myself who think national defense is very important should compromise on military spending and the liberals should compromise on entitlements and on social welfare spending. I think that compromise could get to some spending cuts.

BLITZER: Here's the question, though. Both sides are going to have to compromise on this beyond defense spending. Is there any other compromise that you can see you supporting?

PAUL: Mostly has to be, to me, on the spending side. We used to spend about 20 percent of GDP. We're not spending 25 percent of GDP. So the federal spending has gone up at an alarming rate in the last four years. And when people come to me and say, we just have to raise taxes on rich people, one, there's not enough money, and two, you often find that when you raise rates, you get less revenue. And sometimes you find when you lower rates you get more revenue.

BLITZER: What do you make of your fellow Republican Congressman Tom Cole's proposal that Republican lawmakers should extend the tax rates for those making $250,000 a year or less, that's about 98 percent of Americans before the end of this year and deal with the tax rates for the wealthiest Americans at a later date?

PAUL: Once you separate them out there's not a lot of sympathy among the public for rich people. They say, oh, let's get those rich people. But the public often doesn't realize the rich people already paying all of the income tax. public pays almost half of the income tax.

Top 1 percent pay almost half of the income tax. So when the president says oh, it's bad to raise taxes on everyone, that would be tax-mageddon, but I want to raise it on 40 percent of the nation's income? I think that's a mistake. If it's bad to raise taxes on everyone, it's also bad to raise taxes on 40 percent of the nation's income. It's better to leave that money in the hands of those who earned it, leave it in Kentucky, leave it in the private sector.

BLITZER: Because I understand you don't want to raise tax -- the tax rates on anyone, rich or middle class or anyone. But what about capping deductions, eliminating loop holes, stuff like that? Are you open to that?

PAUL: Yes, if it's for tax reform. And that's why it's not going to happen in this. If we were to lower rates -- see, for example, I think you could lower the top rate from 35 to 33 and actually get more revenue. And get rid of some of the deductions at the same time. But I'm not going to vote to bring more revenue to Washington. I want less money coming to Washington. Less money spent up here. And that's how you get the economy to grow. We're not going to have more economic growth if we send more money to Washington. We'll have less economic growth.

BLITZER: You know, if all the Republicans hold firm to that position you just spelled out in significant detail, there's not going to be a deal, you know, between now and December 31st, and all Americans, for all practical purposes, middle class, rich, they're all going to see their tax rates going up starting January 1st.

How are you going to feel about that?

PAUL: Well, the thing is, is last year we did make a deal. The president came forward and said when you have sluggish economic growth and it was about 2 percent, he says raising taxes is a bad idea. Well, we have economic growth less than 2 percent now, why would raising taxes now be a good idea?

If it was a bad idea last year, it's still a bad idea. And I think while I do think there is room for compromise, I don't think one person gets to define where the compromise is.

BLITZER: Senator, the administration, the president who was re- elected, impressive electoral college win, he got the majority of the vote, won by several million votes. He ran on this notion of raising taxes on the wealthiest Americans. I suspect he's -- you know, he's probably going to hold pretty firm on that. But we'll see what happens over the next three, four weeks because that clock is ticking.

Anything you want to leave us with?

PAUL: No, but as long as we're spending money on robots, corals, don't raise any taxes.

BLITZER: Yes. OK.

(LAUGHTER)

Hey, Senator, thanks very much.

All right. So let us know what you think. You can follow us on Twitter, @AC360.

Up next, yet another twist in the administration's attempt to explain what happened the night four Americans died in Libya. And their attempt to explain their explanation. A potential nominee for secretary of state caught up in the controversy may have sunk a little bit deeper today.

(COMMERCIAL BREAK)

BLITZER: "Keeping Them Honest" now on the Libya tragedy and the Obama administration's blurry account of it after the fact. Four Americans died that night and there are plenty of unanswered questions about what went wrong. For now, though, most of the attention is focused on the messaging afterwards.

Another scorching day today for one of the chief messengers, the U.N. Ambassador Susan Rice who President Obama might try to make the secretary of state. Just a day after a rocky session with Senators John McCain, Lindsey Graham, Kelly Ayotte, she met this morning with another Republican senator, Susan Collins, of Maine.

(BEGIN VIDEO CLIP)

SEN. SUSAN COLLINS (R), MAINE: I continue to be troubled by the fact that the U.N. ambassador decided to play what was a political role at the height of a contentious presidential election campaign by agreeing to go on the Sunday shows to present the administration's position.

(END VIDEO CLIP)

BLITZER: Listen to what she's talking about. One of several appearances Ambassador Rice made five days after the consulate killings.

(BEGIN VIDEO CLIP)

SUSAN RICE, U.S. AMBASSADOR TO U.N.: Our current assessment is that what happened in Benghazi was in fact, initially, a spontaneous reaction to what had just transpired hours before in Cairo. What we think then transpired in Benghazi is that opportunistic extremist elements came to the consulate as this was unfolding. (END VIDEO CLIP)

BLITZER: Notice the phrase "extremist elements." We've since learned that Ambassador Rice was speaking from talking points edited to remove any named reference to local Jihadist groups including a local al Qaeda affiliate. If you recall former CIA director, David Petraeus, recently told Congress the intelligence community made the edit.

Then yesterday while accompanying Ambassador Rice on the Hill, the acting CIA director, Michael Morell, told senators the FBI was responsible. Then later CIA officials contacted the senators and said the acting director misspoke and it was actually the CIA that changed the talking points.

As we said last night it's a bit of a mess and a real headache for President Obama who defended Susan Rice today but did not mention Libya.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: All right, guys. Thank you. We want to get back to work.

UNIDENTIFIED REPORTER: Mr. President, do you think the Hill is being fair to Susan Rice in its meetings?

OBAMA: Thank you so much, guys.

UNIDENTIFIED REPORTER: Any thoughts on that at all?

OBAMA: Susan Rice is extraordinary. I couldn't be prouder of the job that she's done as the USPR.

(APPLAUSE)

(END VIDEO CLIP)

BLITZER: Here to talk about it, the former CIA officer, Reuel Marc Gerecht, he's a senior fellow at the Foundation of the Defense of Democracies. Also joining us our national security contributor, Fran Townsend. She was President George W. Bush's homeland security adviser, currently serves on the CIA's External Advisory Committee.

Fran, you've been at the White House when a nominee or potential nominee is in trouble with members of Congress. You know what a high- stakes meeting this was yesterday between Ambassador Rice and three of her harshest Senate critics.

Usually a lot of preparations goes into a meeting like this and that makes it all the more surprising to me and I'm sure to you that the acting CIA director, Michael Morell, would stumble so badly. First thing, the FBI changed those public talking points, then having a CIA official call the senators back six hours later and say it was actually the CIA that took out the references to al Qaeda.

Do you think that there was an innocent mistake? It just sort of adds fuel to the fire, doesn't it?

FRAN TOWNSEND, CNN NATIONAL SECURITY CONTRIBUTOR: That's right, Wolf. Look, and, you know, this was -- the event took place on September 11th. Mistakes in the early days, the first few days, are understandable because of the fog of war and conflicting reports.

You can sort of excuse that. But this far later it's really unfortunate. Look, Mike Morell, the acting director of the CIA, he had been Senate confirmed as the deputy prior to this. He's a career officer. Very well respected. I imagine he is furious at having made the mistake and having been given bad information.

But there really is no excuse for it across the administration this late in the game for these meetings were so critically important to be making those kinds of mistakes now.

BLITZER: And, Reuel, you say it's not an insignificant mistake that Mike Morell made.

REUEL MARC GERECHT, FORMER CIA OFFICER: No. I mean I don't think so. I mean the administration got itself into a lot of trouble, particularly Ambassador Rice got herself, I think, under a lot of unnecessary trouble. Which is being so assertive on television and denying the possibility that you had an organized terrorist attack in Benghazi. And I think the narratives of Cairo got conflated with the narratives in Benghazi.

And if Ambassador Rice and others in the administration had just been a little less determined to say that this well-known video now was behind it all I think this problem never would have happened.

BLITZER: Reuel, as for those talking points that were used by Ambassador Rice, subject, as you know, of great, great contention. Still there's still a number of unanswered questions. As a former CIA officer, you say her performance raises a red flag. That officials are supposed to analyze this information for themselves, but isn't there a danger in having a political appointee like a U.S. ambassador in a sense freelancing when sensitive classified material is concerned.

GERECHT: You know, I don't really think so. I mean, I think Ambassador Rice could easily have said that we may have had an organized terrorist group that may have been affiliated with al Qaeda behind the attack in Benghazi. I don't think it would have been compromising of any sensitive information. I think the administration has used that as an excuse in that really -- you know, America has a lot of over-classification. There's no doubt about it. But that's one reason, you know, we have adults in (INAUDIBLE) positions is that they're supposed to be able to handle this. And I don't really think it would have been all that difficult for her to give a somewhat more nuance discussion of what really transpired in Benghazi.

BLITZER: Fran, you've dealt with the classified and unclassified talking points when you served over at the White House. You agree with Reuel? TOWNSEND: Well, you know, normally, Wolf, before a Sunday show what happens is the communicators and those who drafted the talking points, in this case perhaps the intelligence community, will prepare the individuals who's going out on the Sunday shows especially when they're going to do multiple shows. Make sure they understand where the lines are.

We don't know if that happened here. If it didn't, it certainly should have and it leaves to what Reuel -- you learn how to make a more nuanced argument so that you don't cross classification lines but you don't speak inaccurately.

Frankly, you know, Wolf, this was just poorly handled. Clearly the talking points were poorly coordinated. And she went out there made it -- making it sound crystal clear and she was -- I think she was both poorly served and then she didn't really use the talking points she was given in the way that she might have to get to Reuel's point.

BLITZER: Fran, you've been to Libya, you were there, in fact, just before the terrorist attack on the U.S. consulate in Benghazi. You were warning that al Qaeda was gaining a foothold in Libya. What do you make of the reason as to why those direct references to al Qaeda were deleted?

TOWNSEND: You know, it's not -- oftentimes, Wolf, these talking points went to multiple agencies, probably a dozen agencies and dozens of people touched them. And nobody ever took final responsibility for the clearing of them. It's sort of a typical bureaucratic fumble as far as I'm concerned.

And the more frustrating thing to me, Wolf, is the fact that what we're not talking about, while we continue to talk about the talking points, what's been lost in this is, what you say, prior to this event it was clear that terrorists were gaining a foothold in eastern Libya and why wasn't more done to prevent the attack to give them the security that they needed at the Benghazi consulate?

The substance of this is sort of lost, I think, in the debate about the talking points and that's the far more important issue to me.

BLITZER: Fran Townsend, Reuel Marc Gerecht, guys, thanks very much for joining us.

TOWNSEND: Thanks, Wolf.

GERECHT: Pleasure.

BLITZER: Rebel fighters in Syria are claiming a major victory. They say they have shot down three regime military aircraft in the past 24 hours including a MIG fighter jet. If it's true, the regime may be taking hits from its own weapon.

CNN's Arwa Damon is on the scene. She joins us next.

(COMMERCIAL BREAK)

BLITZER: In Syria, new signs tonight that the regime is now being battered wit his own weapons. Opposition fighters say they've shot down three Syrian military aircraft in the past 24 hours.

Here's what CNN's Arwa Damon and her team found at the site of one of the crashes. Rebels claim that's the wreckage of a MIG fighter jet they brought down. This was in Aleppo province in northern Syria, by the way. CNN shot that video.

This one was posted online by the rebels. It shows a helicopter they claim they shot down with a missile. It appears to take a direct hit. There it is. CNN can't verify the video's authenticity.

Until now the rebels haven't had the fire power to pull off attacks like these. But in recent weeks they've captured a number of government air bases.

Arwa Damon visited one of them in Aleppo and saw for herself the weapons caches the rebels have seized including surface-to-air missiles.

Arwa Damon joins us now.

Arwa, opposition fighters claimed they shot down three Syrian military aircraft over the past 24 hours. You went to the scene of one of the crashes today. Tell our viewers what you saw.

ARWA DAMON, CNN SENIOR INTERNATIONAL CORRESPONDENT: In the past 24 hours, it's mostly certainly the pretty dramatic development, Wolf, given that one of the main complaints that opposition fighters have had is that they do not have the capability to take on the Assad regime's air power.

We went to the scene of where a fighter jet was down earlier. We saw the burnt wreckage. Spanning quite a distance and being picked through by villagers, young and old alike, rejoicing in the fact that they were finally able to see something that have caused them so many nightmares because of the jet pounding, the helicopters pounding these various villages, towns and cities nonstop. Now being -- becoming trophies of war that they were proud, they're showing off.

We saw children on the back of a tractor making off of a sizable tangled lump of metal. We spoke to one man who said that he was an eyewitness to everything. He said he was picking olives, the crash happened in the middle of an olive grove.

He saw the plane being hit, the two pilots ejecting. He says at that point, everyone standout looking for the pilots and he says that they managed to find one of them unconscious with a head injury and they are actually looking for the second tyrant right now.

BLITZER: You also, Arwa, went to a former Syrian air force base, a headquarter if you will, that was ceased by the rebels, where heavy weapons were confiscated. What are the opposition fighters tell you there? DAMON: Well, it is exactly because of the seizure of this base that they are telling us that they were able to bring down the jet and that they were able to bring down the two other aircraft with the two helicopters.

This base is massive. I mean, it spans as far as the eye can see. There was an incredibly intense battle that took place there for 24 hours. That was after the rebels had actually (inaudible) to the base for two entire months. They managed to clear all of those (inaudible) of Assad loyalists and Assad fighters.

They then positioned snipers around the base preventing, they were telling us, regime helicopters from bringing in resupply, from bringing in food. There are reports that they try to air dropped supplies to this unit that was trying to keep a grip on the base.

But often times they would miss their target and the supplies would end up in rebel hands. They felt that their enemy was weak enough that is when they finally moved in. They are telling us that they captured a treasure trove of weaponry from this location.

Heavy machine guns, AK-47s, but most importantly of all, Wolf, was the anti-aircraft missiles. They are telling us that they found hundreds of them. Even though they are not all functioning and in fact, there's video posted to YouTube right after the assault took place showing stacks of metal boxes (inaudible) anti-aircraft missiles.

And so while at this point, the regime does still have the military advantage because of the size of this arsenal, many are telling us that right now the balance is beginning to slightly shift.

BLITZER: Is there a sense though and you are there on the ground in Northern Syria that one of these sides, the regime or the opposition, has the upper hand right now where you are in Northern Syria?

DAMON: The rebels are slowly, slowly gaining ground. But at this point in time, the regime still does have the advantage of its air power. It still does have the advantage of its military arsenal.

Wolf, there's been one scene that's been resonating, all of the fighters from all of the activists and that is that the longer Assad stays in power, the greater the strength is going to grow of the extremists that have managed to implement themselves on the fringes of the opposition and elements of al Qaeda as well.

BLITZER: Very disturbing development, Arwa, stay safe over there. Thank you.

It could be the largest case of Medicare fraud ever, a dialysis company accused of throwing away medicine worth hundreds of millions of dollars with taxpayers footing the bill. "Keeping Them Honest," next.

(COMMERCIAL BREAK) BLITZER: Texas authorities take steps to seize the polygamous ranch used by followers of the sect leader Warren Jeffs. Why they are making the move when 360 continues.

(COMMERCIAL BREAK)

BLITZER: Tonight, we're keeping them honest with an example of just how much money can be made treating sick Americans. In downtown Denver, a company called "DaVita" just moved into this brand new $101 million office tower complete with fountains, gardens, even a suspended ski gondola inside for private meetings.

So what does "DaVita" do? It runs 2,000 dialysis clinics across the United States and that has added up to a $7 billion business. The dialysis empire run by a guy who dresses like one of the three musketeers lives by his company's slogan, all for one and one for all.

And in company staff meetings, leaves his employees who he calls villagers in cheers.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: It's so good to get out of that CEO costume and back in my regular clothes.

(END VIDEO CLIP)

BLITZER: Kent Thiry is his name with an estimated $15 million a year. The "Wall Street Journal" says he is the best compensated CEO in Colorado. So why should you care, because most of his company's revenue comes from a single source, taxpayers.

More than two thirds of DaVita's revenue comes from Medicare and Medicaid patients, which is why the allegations you are about to hear about how DaVita has been billing the federal government are so alarming.

If the allegations are true, the company threw away hundreds of millions of dollars of medicine and you paid for it. It could be the largest case of Medicare fraud in U.S. history. Here's Drew Griffin.

(BEGIN VIDEOTAPE)

DREW GRIFFIN, CNN INVESTIGATIVE CORRESPONDENT (voice-over): It was just by chance Dr. Alon Vainer, a medical director at dialysis clinics in Georgia was discussing clinic procedures with one of the nurses, Daniel Barber.

And the two say they saw something they believed was very wrong. Medicine, lots of it, was being tossed in the trash. And the clinic workers were being told to do it.

DR. ALON VAINER, FILED LAWSUIT AGAINST DAVITA: When we sat down and started talking about it, and getting into the details. We actually realized exactly what was going on. GRIFFIN: The alleged waste was being carried on a massive scale and the nurse and doctors say they knew almost immediately just why. They claim it was a way for their company, DaVita, to defraud the government, overbill Medicare and Medicaid and make a fortune.

(on camera): We are talking about a huge amount of money?

VAINER: We are talking about is hundreds of millions easily, of the profits that this company had from those two drugs, hundreds of millions of dollars.

GRIFFIN (voice-over): And because we are talking about defrauding Medicaid and Medicare, that's hundreds of millions that you, the taxpayer, pay for. Vainer and Barber say the alleged fraud schemes they discovered were going out of the company's clinics all across the country, more than 1,800 of them with tens of thousands of patients. Multiply the numbers, the waste and the billing, Dr. Alon Vainer says it was all a deliberate strategy.

VAINER: Absolutely, it was a scheme, you know, to fraudulently increase and maximize and boost the Medicare revenue, Medicare payments to increase the revenue.

GRIFFIN: Here is how Dr. Vainer says DaVita instructed its nurses to administer a 100-mg dose of iron called "Venofer."

VAINER: This is Venofer. It's iron.

GRIFFIN (on camera): And how much is this? I mean, how many --

VAINER: That's 100 mg. So for example, if a patient requires this dose once per week you would administer 100 mg and waste nothing and charge Medicare for 100 mg. What DaVita did instead of this one vile, they gave 50 mg out of this vial and residual trashed, 25, 75, to the trash, 25 again, 75 to the trash so essentially, two whole vials that could have been given without waste.

GRIFFIN (voice-over): The more vials DaVita used, the more DaVita was able to bill the government. Vainer and Barber claimed they tried to call attention to the massive waste and tried to get it stopped. But they say they were basically told to stop causing trouble themselves and continue following the company's protocols.

DANIEL BARBIR, FILED LAWSUIT AGAINST DAVITA: That is what upset me the most. That is when I went to Dr. Vainer. I said, Dr. Vainer, I can't do that.

GRIFFIN: Barbir said he quit his job and left the clinic rather than continue where fraud was going on. Dr. Vainer claims the company punished him for speaking up.

VAINER: Of course, once they found out, they did not renew my medical directorship or my practice. And it was a significant loss of revenue.

GRIFFIN: Today, both men have filed a whistleblower lawsuit under the U.S. false claims act on behalf of the U.S. government charging DaVita with massive Medicare fraud. They stand to make millions of DaVita is found guilty. DaVita's CEO wouldn't talk, but the company's attorney, Kim Rivera, did.

(on camera): The allegation is pretty simple. That DaVita was being paid to throw away medicine and came up with schemes as the plaintiffs call it, grids to maximize profits in terms of throwing away waste. What is DaVita's response?

KIM RIVERA, DAVITA INC. Well, that is just wrong. If you look at the facts of the case, first of all, the doctors make dosing decisions. When you look at what the practices were. Decisions were being made by doctors based on what was in the best interests of their patients.

And they took into account a variety of things. You can't just look at you know, one issue. You have to look at things like infection control. What the patient is going to do, how the patient is going to do with particular doses and so during that entire time, what we did what the doctors did was appropriate.

GRIFFIN (voice-over): But other companies including DaVita's main competitor used smaller vials, smaller combinations limiting what was thrown away. DaVita only reiterated to us its decision to throw away medicine was for sound clinical reasons and never to increase wastage.

Attorneys Lin Wood and Marlan Wilbanks who claimed DaVita made as much as $800 million overbilling the government say that defense won't hold up in court.

LIN WOOD, PLAINTIFFS' ATTORNEY: It is not just the taxpayers that are the victims here. It is the health care system.

MARLAN WILBANKS, PLAINTIFF'S ATTORNEY: It doesn't take a graduate degree to understand what is going on here. This is just dishonesty.

GRIFFIN: DaVita denies that and vows to fight this case in a Georgia court. But earlier this year in Texas, though denying it did anything wrong, DaVita settled a similar case for $55 million.

Pat Burns with the watchdog group, "Taxpayers Against Fraud," says the bigger problem is even if a company gets caught cheating the government the company executives never seem to face any punishment. Fines are paid, business continues as usual.

PAT BURNS, TAXPAYERS AGAINST FRAUD: The way its setup right now is if the fraud is not caught then taxpayers foot the bill. If the fraud is caught, stockholders foot the bill.

GRIFFIN: Burns and other have been arguing for much harsher treatment when companies are found guilty of defrauding the federal government. He points to record billion dollar fines particularly in the pharmaceutical business that are paid, but executives don't get punished and the companies continue to do business with the government.

In fact, one of DaVita's defenses to CNN is that the federal government itself has declined to charge the company with wrong doing even after reviewing the fraud allegations.

RIVERA: The government has come in and thoroughly investigated what the allegations are and in both cases the government decided to drop it and move on.

GRIFFIN: The U.S. attorney did decline to prosecute the case, but says the decision should not be misconstrued as a statement about the merits of the case.

BURNS: The U.S. Department of Justice simply doesn't have the people.

GRIFFIN: Pat Burns says the short staffed U.S. Department of Justice declines to join lawsuits all the time instead allowing private citizens who hire private lawyers to essentially prosecute for the government, which brings us back to one doctor and one nurse who stand to make millions if those allegations of fraud are proven true.

The biggest winners though in their lawsuit could be taxpayers. The U.S. government will recover the bulk of whatever they win. They and others like them are essentially the U.S. taxpayers' deputies in the fight against health care fraud.

(on camera): Are you surprised that you guys have to defend the U.S. taxpayer and not the U.S. government knocking on this door?

BARBIR: I'm not surprised. It is not easy to come forward and stand up and tell the truth, but it is the right thing to do.

GRIFFIN (voice-over): Their case set for trial later this year.

(END VIDEOTAPE)

BLITZER: Drew Griffin joins us now. Drew, is there a chance DaVita just settles this case like the one they settled in Texas and then just put all these allegations behind them, continue to do business with the government?

GRIFFIN: You know the attorney for DaVita couldn't rule that out, Wolf, but insists this time the company is going to fight the allegations. And as for continuing to do business with the government, that is the bread and butter of DaVita's $7 billion business.

More than two-thirds of the company's revenue comes from treating patients on Medicare and Medicaid. So DaVita needs the government, Wolf, and most likely do everything it can to make sure that it has that contract in place.

BLITZER: Yet, even with all that money at stake, Drew and so much fraud being alleged here, why isn't the government's own lawyers taking up the case? Is DaVita right in saying that is proof there is no case?

GRIFFIN: Well, it is a fair question to ask, where are the government's lawyers? And I don't know the answer. The U.S. attorney here in Georgia would be the one to push this case. Congress has set aside more than $600 million specifically to prosecute health care fraud.

But the U.S. attorney based in Atlanta has decided not to intervene. Does that mean that she thinks that this is a bad case? She wouldn't answer our call so all we can tell you is in a letter the U.S. Attorney Office stated, lack of prosecution should have no bearing on the merits of the case.

And a reminder, Wolf, if these two guys win, the doctor and the nurse win, whatever settlement they do get, the biggest winner of that settlement is going to be the federal government.

BLITZER: Drew Griffin reporting for us. Drew, thanks very much for that report. We'll continue to monitor and see what happens.

Fifty seven years after Albert Einstein's death, the world is now getting a look at 14 recently discovered photographs of his brain. For neurosurgeons like our own, Dr. Sanjay Gupta, it's a gift, a window into genius. Sanjay joins us that is next.

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BLITZER: Let's face it. We all know deep down that Albert Einstein's brain was different from ours, but now new research published in the journal "Brain," literally shows that those differences are serious and how they might explain Einstein's genius.

The paper includes 14 recently discovered photographs of Einstein's cerebral cortex, that's the outside of his brain. They were taken shortly after his death in 1955. Fast forward to 2012, you can imagine the interest these images hold for our chief medical correspondent, the neurosurgeon, Sanjay Gupta.

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BLITZER: Sanjay Gupta joins us now. Sanjay, what can you tell about a brain just by looking at it from the outside?

DR. SANJAY GUPTA, CNN CHIEF MEDICAL CORRESPONDENT: Wolf, take a look at some of these images over here and pay close attention to the convolutions, the ridges and the valleys, if you will, of the brain.

This is something that develops as the brain develops and can even change as someone goes through their life. What we noticed in Einstein's brain in particular is that there are a lot of convolutions.

And compared to other brains, people of his age at the time that he died, more convolutions than normal, more ridges, more valleys and that's important, Wolf, because you have more surface area to the brain then. More surface area means more neurons and what's really fascinating, Wolf, is that alone doesn't indicate that someone is going to necessary be more intelligent, but what it means probably, more likely is that they have the capacity for it.

BLITZER: How else does Einstein's brain, Sanjay, differ from most people?

GUPTA: Keep in mind, it's hard to know exactly what these differences mean, but take a look at this image in particular. Wolf, you see a split in the brain, in the frontal lobe and that's unusual.

We don't know exactly for sure what that means, but we do know that part of the brain is responsible for executive decision making. It's responsible for judgment. It's responsible for actually getting tasks done.

So someone, a third-grade thinker, but they never act on those thoughts, never actually deliver on those thoughts and maybe the world (inaudible). Also just one more image, what you are looking at here is the parietal lobes.

You are looking at the back of the brain now. There's a purple area and turquoise are on both sides. Notice that they are different right to left. Everyone has a little bit of a variation, but on Einstein, it was quite different.

On one side, on the right side there, that is an area the brain is responsible for special relations, for taking abstract ideas perhaps and putting them together. That's the area in the brain where that's done and in Einstein's case, it was quite large compared to other brains that were examined.

BLITZER: Fascinating stuff, Sanjay, is there anything about Einstein's brain that has implications for mere mortals like us?

GUPTA: I thought about that a lot as well and I think the one thing I think is really interesting is this idea that are you born with it or do you develop it? It's the nature or nurture question and we can ask the same thing when it comes to Einstein's brain.

And I will tell you, Wolf, if you look at this one image again over here, and you look specifically in the middle of the brain, on that left side, you see sort of an upside down horseshoe area, Wolf. That's an area that's responsible for your motor control, for example.

And in this case, somebody who has merely fine dexterity, for example, would have a developed area of the brain there. We know Einstein was a musician. He played the violin and here's why that's so important is that he could have been born with that.

That was something that he developed. He became a progressively better musician. That part of his brain actually changed. It's the most remarkable thing.

BLITZER: Sanjay, all of our viewers should know is himself a neurosurgeon so he has a lot of experience with brains. Sanjay, thanks very much.

GUPTA: Thank you, Wolf, anytime.

(END VIDEOTAPE)

BLITZER: He's also a very, very smart guy. Let's get the latest on some other stories we are following right now. Isha Sesay has a "360 Bulletin" -- Isha.

ISHA SESAY, CNN CORRESPONDENT: Wolf, the New York City nanny charged with murder in the killings of two children in her care has pleaded not guilty. Jocelyn Ortega is accused of stabbing a 6-year- old girl and a 2-year-old boy. Police say when the children's mother came home on the night of October 25th, she found the kids dead and saw Ortega stab herself with a kitchen knife.

Another 360 follow on polygamous sect leader, Warren Jeffs, who is serving a life sentence on sexual assault charges. The Texas Attorney General's office has started legal proceedings to seize the ranch where prosecutors say Jeffs and others sexually abused children.

Wolf, a record breaking $550 million Powerball drawing is just about two hours away. Officials say even more people than expected have bought tickets. The odds of winning, Wolf, one in 175 million, I'll be watching like this.

BLITZER: Yes, me too. I've got the winning ticket. Isha, I got them right here. I spend $20. I got 10 chances of winning. What do you think?

SESAY: Let's see if you are in the chair tomorrow.

BLITZER: I'll be here. No matter what. We'll be right back.

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BLITZER: That does it for us. We'll see you again at 10:00 Eastern. "PIERS MORGAN TONIGHT" starts right now.