Successfully Protecting Public Insurance from Fraud

In Washington, D.C., a former nurse who was not entitled to take part in the Medicaid program was fraudulently approved to collect government funds. She and her husband then recruited family members to engage in a false billing scheme to take millions of dollars from Medicaid. They purchased a million-dollar home and five luxury vehicles worth a total of $400,000, and then stashed away $11 million in 76 banks accounts. Your tax dollars paid for it. The husband and wife are now facing seven and ten years in prison, respectively, and will pay $80.6 million back to the government after forfeiting their home and luxury vehicles. The U.S. Department of Health and Human Services (HHS) and U.S. Department of Justice (DOJ) include this couple and other defendants in their Health Care Fraud and Abuse Control (HCFAC) Program Report for fiscal year 2016. Through a combination of winning and settling cases, the government was able to recover over $3 billion in health care fraud judgments to the U.S. Department of the Treasury, Centers for Medicare and Medicaid Services, and whistleblowers who made the cases possible. This money comes from over 658 defendants who were sentenced for health care fraud-related crimes. Further, HHS excluded 3,635 individual practitioners, companies, and hospitals from participating in federal health care programs. Over the past three years, the health care fraud program has returned five dollars for every dollar invested in it. The entities found to have committed fraud include doctors, hospitals, hospice providers, medical device manufacturers, and drug companies. One such entity was the owner of several health clinics in North Carolina who was sentenced to prison for 20 years. He will also pay $5.9 million to the victims, whose identities he stole in order to make false claims and launder money through nonprofits and shell companies. In addition to HCFAC, the Anti-Kickback Statute makes it a felony for any person to offer, solicit, or make a payment intentionally in order to increase business referrals reimbursable under federal health benefits programs. Last year, the largest distributor of endoscopes in the country settled a case by paying $632.2 million for allegedly paying doctors and hospitals kickbacks to increase sales of its products. The settlement includes a three-year deferred prosecution, during which time the company must reform its compliance measures. HCFAC reports that the settlement “is the largest total amount paid in U.S. history for violations” of the Anti-Kickback Statute. Moreover, the False Claims Act allows triple damages for any person who intentionally presents a false or fraudulent claim to the government for payment. These lawsuits often intersect with the Anti-Kickback Statute and off-label marketing. A defendant company can be charged with off-label marketing if it markets a product for a use that was not approved by the U.S. Food and Drug Administration (FDA). The government could thus prosecute a single defendant for all three offenses. For example, if a drug company offers to pay doctors to increase drug prescriptions for a use that was not approved by FDA and the patient then uses Medicare or Medicaid to pay for treatment, the government could bring a case for off-labeling marketing, providing kickbacks, and making false claims. To encourage individual citizens to bring these cases, the government offers incentives, such as the millions of dollars it has secured for whistleblowers who brought cases against their employers. In these whistleblower suits, known as “qui tam actions,” employees may sue their employers on behalf of the United States. The DOJ is allowed to investigate the issue, and if it chooses to bring a suit, the employee is awarded a percentage of the damages. If the DOJ decides not to bring the case, however, as happens in 75 percent of cases, the whistleblower can bring a lawsuit independently. The DOJ may also dismiss the employee’s claim if it finds that there is no viable case. In 2016, qui tam actions resulted in whistleblowers being awarded over $500 million. The report also highlights the interagency work that made these returns possible. Congress established HCFAC under the Health Insurance Portability and Accountability Act of 1996. Through a partnership of federal, state, and local law enforcement, the program has secured $31 billion for federal insurance funds. Much of this success rests on collaboration between HHS, DOJ, and other private and public partners. For instance, with the Healthcare Fraud Prevention Partnership, the government has brought together over 70 public, private, and state organizations to research false store fronts—also known as “phantom providers”—and top billing pharmacies. In several major U.S. cities, the DOJ and HHS have established Medicare Fraud Strike Force operations. These operations target the “worst offenders in regions with the highest known concentration of fraudulent activities.” In 2016, the Strike Force operations accounted for 260 guilty pleas and 32 guilty verdicts for defendants who had billed over $2.8 billion to Medicare in false claims. Most recently, DOJ and HHS built on their successful collaboration by creating the Health Care Fraud Prevention and Enforcement Action Team (HEAT). HEAT increases resources by supplying federal, state, and local investigators, as well as highlighting best practices to reduce health care costs, including those arising from false claims. HEAT has increased data sharing across agencies to address the “worst actors” that may be billing large false claims, and created training programs for medical practitioners that are intended “to prevent honest mistakes and help stop potential fraud before it happens.” Unfortunately, the future of these collaborative enterprises is uncertain, as the HCFAC program reports that it has been underfunded. The program has received $94.8 million less than it has requested in the past four years