Kusserow on Compliance: Most civil fraud recoveries in 2015 were from health care costs

The Department of Justice (DOJ) reported obtaining more than $3.5 billion in settlements and judgments from civil fraud cases in fiscal year 2015. Significantly, $1.9 billion in recoveries came from the health care industry sector as result of investigations of situations in which: (1) unnecessary or inadequate care was provided; (2) kickbacks to health care providers to induce the use of certain goods and services were paid; or (3) goods and services paid for by Medicare, Medicaid, and other federal health care programs were overcharged. This was over half of the total amount recovered across all sectors and up from about 40 percent in 2014. The cumulative amount recovered from health care fraud cases since January 2009 was reported to be $16.5 billion.

Some of the highlighted cases from 2015 included the following:

  • Two of the largest recoveries were from dialysis services provider, DaVita Healthcare Partners, Inc., who paid $450 million to resolve a civil fraud case.
  • Hospitals were involved in nearly $330 million in settlements and judgments this past year. By far the biggest enforcement effort involved nearly 500 hospitals for implanting cardiac devices in Medicare patients contrary to criteria established by CMS that resulted in settlements of $250 million, including $216 million recovered in the past fiscal year.
  • Hospitals settling false claims involving Stark violations include Adventist Health System for $115 million; North Broward  Hospital District for $69.5 million; and Georgia hospital system Columbus Regional Healthcare System for $25 million plus contingent payments up to an additional $10 million.
  • Claims involving the pharmaceutical industry accounted for $96 million in settlements and judgments. Daiichi Sankyo Inc., paid $39 million to resolve allegations of false claims and paying kickbacks to physicians to induce them to prescribe Daiichi drugs. AstraZeneca LP and Cephalon Inc. paid $26.7 million and $4.3 million, respectively, in separate settlements for underpaying rebates owed under the Medicaid Drug Rebate Program. In another settlement, PharMerica Corp., agreed to pay $9.25 million to resolve allegations that it solicited and received kickbacks from Abbott Laboratories in exchange for promoting drugs for nursing home patients.
  • In the largest failure of care settlement with a skilled nursing home chain in the department’s history, Extendicare Health Services Inc. agreed to pay $32.3 million to resolve allegations for billing Medicare for deficient nursing services and for medically unreasonable and unnecessary rehabilitation therapy services. The DOJ took action in ongoing litigation against additional nursing home chains and rehabilitation centers based on similar allegations of false claims for medically unreasonable or unnecessary rehabilitation therapy.

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 © 2015 Strategic Management Services, LLC. Published with permission.