20:1 Benefit-to-Cost Ratio of Health Care-Related False Claims Act Enforcement

The results of a study commissioned by the Taxpayers Against Fraud Educational Fund (TAFEF) to provide an estimate of the costs expended by the government in fighting fraud related to Medicare and Medicaid, and how much benefit is received by the actions, have been released. The study author evidences a 16.33 to 1 return for the federal government from federal False Claims Act (FCA) investigation and prosecution. However, because the real return taxpayers are receiving on expenditures due to increasingly large settlements are now recovered from large criminal fines and state Medicaid recoveries, which are not accounted for in federal FCA statistics, the study author believes the benefit-to-cost ratio is drastically underestimated, and is much closer to 20:1. This study is an update to previous studies conducted in 2006 and 2001.

History

Fraud against the government is governed by the FCA, which, since 1986 amendments to the law, states that “people who submit, or cause another person to submit, false claims for payment of government funds are liable for up to three times the government’s damages plus civil penalties.” Included within the FCA is the provision that relators, or whistleblowers, having evidence of fraud may sue on behalf of the government under a qui tam suit, in return for 15 to 30 percent of the civil recovery. The Health Insurance Portability and Accountability Act of 1996 (HIPAA) (P.L. 104-191) further provides funding to HHS and the Department of Justice (DOJ) for coordinating enforcement efforts, investigating, and guiding the health care industry on fraudulent practices, among other duties.

There are also criminal actions increasingly taken against those committing health care fraud, and there are also both civil and criminal elements to investigations. The Health Care Fraud Prevention & Enforcement Team (HEAT), initiated in 2009 to help coordinate efforts by HHS and DOJ, has not only prosecuted much fraud against the government, it has also deterred fraud from occurring.

Benefits

A net recovery from civil health care fraud enforcement was received under the FCA during 2008 to 2012 in the amount of 9.4 billion dollars (this is after relators were paid 1.4 billion dollars out of the total 10.8 billion dollar recovery during this time period).

Costs

As far as the expenditures by the government for these enforcements and recoveries, the report notes that these efforts cost U.S. attorneys a total of 377 million dollars, the Office of Inspector General 103.2 million dollars, and the DOJ, Civil Division, 94.4 million dollars. Therefore, the total health care fraud-related outlays for these three agencies amount to 574.6 million dollars.

Returns

The TAFEF states that, based solely on these measurable amounts, the benefit-to-cost ratio is 16.33 to 1 (based on 9.4 billion in recovery and 574 million in costs). This means that for each dollar the federal government spends on investigations and prosecution of health care fraud against the federal government, $16.33 is recovered, after the whistleblowers are paid.

TAFEF, supported by successful whistleblowers and their counsel, is a nonprofit, public interest organization dedicated to fighting fraud against the government and protecting public resources.