Health Care Fraud Blog

According to Senator LeMieux of Florida, Florida is the health care fraud capital of the world and instead of reforming health care, the government should be focusing on fixing the current system, particularly targeting fraud waste and abuse.

Meanwhile, federal authorities are using South Florida as the testing site for the health care fraud initiatives given the prevalence of health care fraud in Dade, Broward and Palm Beach counties. The Obama administration has asked for $300 million to combat health care fraud in 2010.

To view his speech on the Senate floor in this video.

To read more, click here.

The growing issue of the number and vagueness of federal criminal statutes has led to a push back from even conservative groups, disdaining the over criminalization of federal law, leading one author to write a book arguing that each person likely commits up to three federal crimes a day.

The New York Times has now reported on the issue. The most recent flashpoint of this debate concerns 18 USC 1346 which defines a scheme or artifice to defraud to include a scheme to “deprive another of the intangible right of honest services.” Justice Scalia himself has commented that law has been “invoked to impose criminal penalties upon a staggeringly broad swath of behavior, including misconduct not only by public officials and employees but also by private employees and corporate fiduciaries…”

Also touched upon is the growing list of federal crimes that do not require proof of intent to commit the crime, lessening the burden on prosecutors.

Click here to read the New York Times article.

The federal agents arrested 20 people for a Palm Beach operation that engaged in buying up oxycontin from Broward County pain clinics and pharmacies and shipping those drugs to Tennessee, Kentucky, West Virginia, Virginia and North Carolina . The operation had been going on for several years, with participants visiting up to five pain clinics a day to obtain drugs.

To read more, click here.

The FDA recently moved to shut down internet pharmacy “affiliate” websites in the United States . The Ryan Haight Act, passed in 2008 was the first effort to define the lawful and unlawful practice of telemedicine with respect to controlled substances and required all internet pharmacies to register with the DEA. In addition, many states have moved to restrict or prosecute physicians and pharmacies involved in the internet sales of non-controlled substances. As a consequence, there are fewer of such operations inside the United States and often prescription drugs being purchased online are done from pharmacies located outside the United States . However, the marketers for such pharmacies are often website owners and advertisers known as “affiliates” located inside the United States. Recently the FDA targeted websites operating inside the United States as marketers.

To read more, click here and here.

For more info about Buying Medicine and Medical Products over the Internet, click here.

Federal officials in charge of preventing fraud in the billion-dollar Medicare program ignored dozens of warnings of criminal activity during the Bush administration, according to investigations by the Associated Press and U.S. Senator Charles Grassley’s (R-IA) office.

CMS received about 30 tips over more than three-years reporting scams, but less than half of them got any attention. Organized crime groups have realized it is much easier and less dangerous to steal millions from the Medicare without as opposed to traditional criminal enterprises like prostitution, gambling or dope dealing.

Southern California is one that has been particularly hard hit area for Medicare fraud, where Russian, Armenian and Nigerian mafias are under investigation by federal agents. Konstantin Grigoryan, a former Soviet army colonel turned crime boss, recently pled guilty to taking $20 million from Medicare. Click here to watch a CNN report including undercover surveillance video.

WASHINGTON (November 17, 2009) — Today President Barack Obama established by Executive Order an interagency Financial Fraud Enforcement Task Force (FFETF) to strengthen efforts to combat financial crime. According to a press release, the Department of Justice will lead the task force and the Department of Treasury, HUD and the SEC will serve on the steering committee. The task force's leadership, along with representatives from a broad range of federal agencies, regulatory authorities and inspectors general, will work with state and local partners to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, address discrimination in the lending and financial markets and recover proceeds for victims.

To read the press release in its entirety, click here.

CMS uses contractors to process claims, but also to use sophisticated software to detect fraud patterns and make referrals for claims denials, audits and criminal investigations. At one time the system was somewhat fragmented, given that there are different contractors who process part A, B and D claims in given regions and a series of contractors were looking at data based upon particular types of claims or criteria. In addition, the flow of data prevented the contractors from analyzing and detecting fraud patterns until long after claims had been paid. Lately, CMS has moved to contractors who electronically review all claims for 7 regions searching for claims patterns that reflect fraud. The program, called ZPIC (Zone Program Integrity Contractors) has led, at least at the inception, to many providers receiving audit inquiries, chart reviews, and application renewals; and according to the program, the denial of $1.5 billion in claims in Florida alone since May.

Click here to read more.

We have done posts on the various monikers given to task forces, including the most recent in healthcare fraud, HEAT (Healthcare Fraud Prevention and Enforcement Team) and the agencies in involved in those investigations; the FBI (Federal Bureau of Investigation), OIG (Office of Inspector General), MFCU (Medicaid Fraud Control Unit); but the British, when they go to investigate large frauds have a more direct name, “Serious Fraud Office” which in England and Wales is a separate entity from the other governmental agencies and has specific criteria as to the amounts number of potential victims, and the general importance of the prosecution.

In the healthcare field, their most recent investigations have involved frauds on the British healthcare systems by drug manufacturers. The analogous agency in the United States would likely be the Department Of Justice or Main Justice and one of its individual units, but the names aren’t as cool. On the one hand, getting a visit from the Federal Bureau of Investigation is frightening, but it might be more so if you get an investigation from the Serious Fraud Office.

Click here to read more.

Often, we hear that white collar crime is treated differently than other types of crime. However, it is often who commits white collar crime that brings about different treatment. I had a client indicted for fraud related to a DME. Monthly, he would send me articles about large DME companies paying large fines and false claims settlements for the same conduct he was alleged to have engaged in and asked the simple question, “Why am I supposed to go to jail and they don’t?”

People arrested for crimes, and in particular health care fraud can find many rationales for conduct that objectively looks bad; some form the bases for defenses; some are to try to feel better. One reaction is generally the same for nearly all, whether it is speeding or a million dollar fraud, “everyone is doing it.” A variation on that theme, and a fair one is that often individuals and small companies are treated much differently than much larger companies.

In 2004, at the same time Pfizer was negotiating a resolution of a $460 million settlement with the United States for unlawful “off label” uses of its drugs, it also was planning and executing marketing campaigns for other drugs doing precisely the same conduct. The results, a huge fine and restitution, but no criminal charges for individuals. An individual that takes a million dollars in a Medicare fraud scheme is going to jail; as are employees and others most closely associated with that person and the scheme. The world’s largest drug company agreed it participated in a $1 billion in Medicare fraud and pays money. The company, or likely a subsidiary, also plead guilty to a crime, but no person goes to jail. $2 billion is not a small sum, but many sitting in prison wonder why the rules are different.

Currently, the highest dollar “amount of loss” category for sentencing purposes involving fraud is for a loss figure of $400,000,000 or more, garnering a 30 level sentencing enhancement; whereas $1,000,000 or more will get a 16 level enhancement. If someone participated in a scheme with a resulting loss of $1million dollars, they are likely to go to prison for a minimum (without other adjustments) of 41 months. This sentence could be applicable to the person who masterminded the scheme as well as some low level employee who merely assisted. A person who participates in a scheme with a resulting loss of $1 billion would be subject to prison for a minimum of 188 months; however in this case, no one goes to jail. Clients complain, "the rich (corporate defendants) get richer, while the poor (individual defendant) gets prison."

Click here to read more.

Proposals to increase the criminal penalties for health care fraud are making their way into the Senate’s health care reform bill. The proposal, The Health Care Fraud Enforcement Act, involves significant increases in potential jail time through modifications of the Federal Sentencing Guidelines to increase sentencing levels predicated upon the “amount of loss” if the offenses involve health care fraud. Also, the proposal would lessen the proof requirements in kickback cases to no longer require willful conduct for a conviction. The proposal, S.B. 1959, by Senator Kaufman is co-sponsored by other fairly powerful Senators including Schumer, Specter and Leahy.

To lear more, click here.

Budget priorities and redirection of investigations at the state level, has led to a drop off in investigations of workers compensation fraud at a time when such fraud is increasing, according to investigators. The focus on Medicare and Medicaid fraud prosecutions has led, according to insurance industry sources, to a decrease in private insurance fraud cases, including health care insurance fraud and most notably worker’s compensation fraud. Actually, the rationales are somewhat simple, legislatures looking at investigation budgets, State and Federal, are often concerned with the return on investment. Therefore, if a state agency is bring back stolen Medicaid funds, the legislator sees a direct benefit to funding those fraud investigation programs as the programs become budget neutral or even a budget positive. However, recouping funds for private companies does not share the same status. This is a phenomenon more likely in Attorney General Office or state programs directly funded by the legislature, as opposed to more local offices.

To read more, click here.

A Federal False Claims Act Case filed by an employee of a dialysis center owned by Fresenius North America, which has over 1500 clinics serving dialysis patients, alleges that a clinics in El Paso and elsewhere used unlicensed employees to cover for supervision required to be performed by physicians. The company denies the allegations. However, this is the same company that in January of 2000 settled one of the largest Federal False Claims Act Cases in US history (actually the 12th largest) with an agreement to pay $486 million in false claims and penalties for various practices involving false claims and kickbacks.

To read more click here.

In a Sixty Miutes piece on Medicare Fraud, reviewed by the HCFBlog here, Steve Kroft claimed the government loses $60 Billion to health care fraud. The piece, otherwise quite good, then goes on to describe some of what we have been documenting here. However, the $60 Billion dollar a year health care fraud number used on Sixty Minutes and now making the rounds doesn’t seem to have roots in any actual data. The figure, first attributed to US DOJ Heathcare fraud prosecutor Kirk Ogrosky, started getting pretty mushy when a reporter tried to get to the actual source. The reporter, Pierre Tristam, soon found numbers ranging from $13 Billion to $68 Billion all using a perception that a certain percentage of health care spending must be fraud rather than some actual data on the fraud.

Tor read more click here.

After 15 long months of hard word work, West Publishing is almost ready to release my book. The book is expected to be released before the end of the month. In the mean while, the publisher just sent me a proof of the cover of the book.

Available in both electronic (through Westlaw) and print formats, a partial list of topics covered in the book include the following:

*Inter-disciplinary Dimensions of Health Care Fraud: Economic, Social, and Political Implications
*National Security Implications of Health Care Fraud
*The Common Law of Health Care Fraud
*Centrality of “Certification” in the Common Law Of Health Care Fraud
*Criminal Health Care Fraud
*Stark Act
*Health Insurance Portability and Accountability Act
*Emergency Medical Treatment and Active Labor Act (EMTALA)
*American Recovery and Reinvestment Act of 2009 (ARRA)
*Fraud Enforcement and Recovery Act of 2009 (FERA)
*State Children’s Health Insurance Program: (SCHIP)
*Administrative and Regulatory Controls over Health Care Fraud
*HHS Enforcement Priorities: 2009 Hot Topics
*Centrality of “Certification” in the Common Law Of Health Care Fraud
*Corporate Crime by Health Care Providers
*Corporate Governance: Fiduciary Duties
*Federal Organizational Sentencing Guidelines
*Punishment for Providers and Health Care Executives
*White Collar Lawyering

Part of the Health Care Fraud Task Force initiative in Miami, Houston, Detroit and Los Angeles has met with some success, and not so coincidently some of the cases have Miami roots. The FBI press release related to a plea in a in a $10 million infusion fraud case which mirrors frauds extensively prosecuted in Miami, a Miami resident plead guilty with regard to the fraud in Detroit.