Health Care Fraud Blog

From experience as criminal defense attorneys, nothing enrages agents and prosecutors more than extravagances by those accused. That is why good defense attorneys will make sure a client being accused of stealing vast or even minor sums of money go into a meeting with the government or into court without wearing a Rolex or pulling up in a new Mercedes. Justifiably, it grates on one’s sensibility that a thief should live better than the rest of the hard working population.

Usually everyone involved in the proceedings knows how much money is at issue, but that will often take a back seat in the minds of those involved to the obvious displays or wealth. Those items also often form the basis for the otherwise irrelevant but juicy nuggets at trial where the prosecutor or witness will speak about those items to inflame the jury. Remember the $6000 shower curtain in the trial of the former Tyco CEO Dennis Kozlowski, do you remember anything else? As with other jurisdictions, California is getting heavily into health care fraud prosecutions.

This article is about a criminal prosecution brought by the California AG over $678,000 in DME fraud. The reporter, generally given such information by agents or prosecutors, feels compelled to point out a defendant bought a new Hummer, as if allegedly stealing $678,000 is not enough.

In a case originating in the 1990’s, former pharmaceutical sales representatives for Johnson and Johnson (J&J) alleged 80% of a medication they marketed, Procrit, was used to commit Medicare Fraud; an amount equal to $3 billion for the company as a whole. Sales of the drug were promoted using several methods, all alleged to be illegal. One method was called “the spread.” The spread is the difference between the amount J&J would sell the drug using undisclosed discounts to physicians and hospitals and the amount those providers could claim and receive in reimbursement.

J&J, it is alleged, artificially inflated its prices as reflected in reports to the public and government to increase the spread. Those allegations are actually not new, J&J had previously settled with the United States over that issue. J&J sought to have the case dismissed on that basis and was initially successful. However, the suit also alleges that the manufacturer also engaged in other practices such as providing “discount cards” disguised as kickbacks at $1000 per card for physicians to use to purchase the already discounted drugs. The physicians would then bill Medicare for the full price of the drug even though they had paid next to nothing for the drug. In addition the suit alleges that J&J would pay large grants and speaking fees as bribes to physicians to purchase the drug. Those allegations will be allowed to proceed.

For more details, click here

Of general interest and with particular application in health care, the federal government has, over the course of several decades, criminalized an entire range of behavior that most people did not know or perceive to be criminal. This is not lost on the people who practice in the medical field; one client recently surmised “If it is a good idea in healthcare, it is probably a misdemeanor, if it is a great idea, it's a a felony.”

One other client, after being acquitted of federal criminal charges predicated upon the application of a vague regulation, asked “What did I do wrong?” The only answer I could come up with was “You made money in health care.”

The intricate and ever expanding number of regulations, national and local coverage determinations, and transmittals from Medicare and Medicaid often carry with them potential criminal penalties for fraudulent claims. Fox News has an interesting article about hearings being conducted by Congress on the issue of the over criminalization of federal law.

To read the Fox News article, click here.