Kusserow on Compliance: DOJ Reports Over 700 Whistleblower Cases in 2014

The Civil Division of the Department of Justice (DOJ) reports obtaining a record $5.69 billion in settlements and judgments from civil cases involving fraud and false claims against the government in 2014. About 40 percent of this ($2.3 billion) involved federal health care programs (mostly Medicare and Medicaid). The balance of $3.1 billion was from banks and other financial institutions involved in making false claims for federally insured mortgages and loans. In a separate announcement, the DOJ reported that the total combined collection from both the civil and criminal DOJ enforcement actions was $24.7 billion and includes $13 billion collected directly and $11 billion in indirect payments made to other federal agencies, states, and other recipients.

Whistleblower Rewards

The DOJ made note that most false claims actions are filed under the act’s whistleblower, or qui tam, provisions that allow individuals to file lawsuits alleging false claims on behalf of the government. The number of these cases exceeded 700 this year. More than half of the recoveries are from the qui tam cases, with the highest percentage found in the health care cases. In the nearly $3 billion recoveries related to qui tam lawsuits, whistleblowers received $435 million in payouts. From January 2009 to the end of fiscal year 2014, the government paid awards in excess of $2.47 billion.

Health Care Fraud

From 2009 through 2014, the DOJ used the False Claims Act to recover $14.5 billion in federal health care dollars. In the current year, most of the recoveries ($2.3 billion) came from the pharmaceutical industry. Half of that came from the Johnson and Johnson related cases. Another notable case resulted in a recovery of $116 million from Omnicare that resolved allegations that Omnicare engaged in a kickback arrangement with skilled nursing facilities to induce the facilities to select Omnicare as their pharmacy provider, in violation of the Anti-Kickback Statute.

Hospital Cases

Cases involving hospitals resulted in $333 million in 2014 settlements and judgments, with significant recoveries from two hospital chains. Community Health Systems, Inc., the nation’s largest operator of acute care hospitals, paid $98.15 million in a settlement for inpatient services that should have been provided in a less costly outpatient or observation setting. Halifax Hospital Medical Center paid $85 million to resolve allegations that it violated the Stark Law, which prohibits hospitals from billing Medicare for certain services when referred by physicians who have a financial relationship with the hospital.

Home Health

Home health services occupied considerable attention of the DOJ, both in its criminal and civil divisions. On the civil side, Amedisys Inc., one of the nation’s largest providers of home health services, paid $150 million to resolve allegations that it billed Medicare for medically unnecessary services, for services to patients who were not homebound, and for violations of the Anti-Kickback Statute.

Cardiac Cases

Boston Scientific Corp., which purchased Guidant LLC and Guidant Sales LLC, and Cardiac Pacemakers Inc. in 2006, paid $30 million to settle claims that Guidant sold defective heart devices to health care facilities that implanted them into Medicare patients. King’s Daughters Medical Center paid $41 million for billing Medicare and Medicaid for coronary procedures that the government alleged were unnecessary. St. Joseph’s Health System paid over $16 million to settle allegations that it billed Medicare and Medicaid for numerous invasive cardiac procedures that were performed on patients who did not need them.

Richard P. Kusserow served as DHHS Inspector General for 11 years. He currently is CEO of Strategic Management Services, LLC (SM), a firm that has assisted more than 3,000 organizations and entities with compliance related matters. The SM sister company, CRC, provides a wide range of compliance tools including sanction-screening.

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Copyright © 2014 Strategic Management Services, LLC. Published with permission.