Feds allege 412 individuals responsible for $1.3B in Medicare fraud

In the largest health care fraud enforcement action by the Medicare Fraud Strike Force, 412 individuals allegedly participated in schemes involving almost $1.3 billion in false billings. The Department of Justice (DOJ) and HHS noted that the charges were levied against the individuals across 41 federal districts and included 115 doctors, nurses, and other licensed medical professionals. Over 120 defendants were named, including doctors for their roles in prescribing and distributing opioids and other dangerous narcotics. Thirty state Medicaid Fraud Control Units participated in the arrests. HHS also initiated suspension actions 295 providers, including doctors, nurses and pharmacists.

The Medicare Fraud Strike Force cases are being prosecuted and investigated by U.S. Attorney’s Offices in the states of Florida, Michigan, New York, Texas, California, Louisiana, and Illinois, along with Medicare Fraud Strike Force teams from the Criminal Division’s Fraud Section, the FBI, DEA, and various state fraud entities. In addition to the Strike Force locations, enforcement actions included cases and investigations brought by an additional 31 U.S. Attorney’s Offices.


The charges focus on Medicare, Medicaid, and TRICARE billing schemes for medically unnecessary prescription drugs and compounded medications that often were never purchased or distributed to beneficiaries. According to court documents, patient recruiters, beneficiaries and other co-conspirators were allegedly paid cash kickbacks in return for supplying beneficiary information to providers, so that the providers could then submit fraudulent bills to Medicare for services that were medically unnecessary or never performed. The fraud schemes also involved medical professionals who unlawfully distributed opioids and other prescription narcotics.

For example, in the Southern District of Florida, a total of 77 defendants were charged with offenses relating to their participation in various fraud schemes involving over $141 million in false billings for services including home health care, mental health services, and pharmacy fraud. The DOJ highlighted one case where the owner and operator of a purported addiction treatment center and home for recovering addicts and one other individual were charged in a scheme involving the submission of over $58 million in fraudulent medical insurance claims for purported drug treatment services. The allegations included recruiting patients to move to South Florida in order to bill insurance companies. Patients were provided kickbacks in the form of gift cards, free airline travel, casino trips, and drugs.

Seven defendants in Louisiana were charged in connection with health care fraud, wire fraud, and kickback schemes involving more than $207 million in fraudulent billing. In another instance, a pharmacist was charged with submitting and causing the submission of $192 million in false and fraudulent claims to TRICARE and other health care benefit programs for dispensing compounded medications that were not medically necessary and often based on prescriptions induced by illegal kickback payments

Highlight on Oregon: Medicaid fraud control unit gets report card from OIG

A 2016 study by the HHS Office of Inspector General (OIG) of Oregon’s Medicaid Fraud Control Unit (MFCU) found that for fiscal years (FYs) 2013 through 2015, the Oregon Unit reported 92 criminal convictions, 34 civil judgments and settlements, and combined criminal and civil recoveries of nearly $33 million.

The OIG study also found that while the Oregon Unit was generally in compliance with applicable laws, regulations, and policy transmittals, it identified three areas where the Unit should improve its adherence to performance standards and its compliance with applicable federal requirements. Specifically, the Unit: (1) did not fully secure its case files; (2) part of the Unit’s memorandum of understanding (MOU) with two of its state partners was inconsistent with the federal regulation governing Medicaid payment suspensions; and (3) the Unit did not report some convictions and adverse actions to federal partners within the appropriate timeframes.

MFCU program

The mission of MFCUs is to investigate and prosecute Medicaid provider fraud and patient abuse or neglect under state law. Section 1902(a)(61) of the Social Security Act requires each state to operate a MFCU, unless the Secretary of HHS determines that operation of a Unit would not be cost-effective because minimal Medicaid fraud exists in a particular state and the state has other adequate safeguards to protect Medicaid beneficiaries from abuse and neglect. Currently, 49 states and the District of Columbia have MFCUs.

Section 1903(a)(6)(B) gives the HHS Secretary the authority to delegate the administration of the MFCU grant program. The authority to administer the MFCU grant program has been delegated to the OIG. To receive federal reimbursement, each Unit must submit an initial application to OIG for approval and be recertified each year thereafter. In annually recertifying the Units, OIG evaluates Unit compliance with federal requirements and adherence to performance standards.

Study details

Of the Unit’s 92 convictions over the three-year period, the OIG found that 78 involved provider fraud and 14 involved patient abuse or neglect. Of the Unit’s 34 civil judgments and settlements, 33 were from “global” cases and one was from a state-only civil case. “Global” cases are civil False Claims Act (FCA) cases that are litigated in federal court by the U.S. Department of Justice and involve a group of MFCUs. According to Unit management, the Unit prioritizes the investigation of cases that will result in a criminal conviction and thus pursues few state-only civil cases.

Global cases accounted for $24 million of the $33 million in total recoveries. Of the approximately $8 million in recoveries from nonglobal cases, $2 million were from criminal cases and $6 million were from a state-only civil case in FY 2013.

Unsecured case files

During the onsite review, the OIG observed that the Unit’s paper case files were not secured from access by non-Unit staff. The OIG observed that the Unit stored case files for closed cases in cabinets without locks, located in general office space. And although individuals must use a coded access card to enter the Unit’s general office space, non-Unit staff could access the space without supervision during non-business hours. In addition, the Unit did not have policies or procedures in place for securing paper case files from unauthorized access.

MOU inconsistent with federal regulations

The OIG found that in its MOU with the Oregon Health Authority (OHA) and the Department of Human Services (DHS), the Unit requested that in all cases in which a credible allegation of fraud is referred to the Unit, the Medicaid agency find good cause not to impose a payment suspension. Such a “blanket” request pertaining to all referrals is inconsistent with the federal regulation governing Medicaid payment suspensions, which requires that a Medicaid agency suspend payments to a provider when there is a credible allegation of fraud against the provider, unless the Medicaid agency determines that good cause exists not to suspend payments. Unit management reported to the OIG that they were aware that the MOU needed to be revised to remove the blanket request and stated that they planned to make revisions in 2017. Unit management also told the OIG that although it had not updated the MOU to reflect the change, in January 2015 the it began making case-by-case determinations on whether to request that the Medicaid agency not impose payment suspensions for each referral.

Late reporting of convictions/adverse actions 

The study found that although the Unit reported nearly all convictions to the OIG and all adverse actions to the National Practitioner Data Bank (NPDB), it did not report some within the appropriate 30 day timeframes.

Specifically, out of 92 convictions, the Unit reported 14 convictions to the OIG more than 90 days after sentencing, 12 within 61 to 90 days after sentencing, and 28 within 31 to 60 days after sentencing. According to the OIG, late reporting of convictions could delay the initiation of the program exclusion process, resulting in improper payments to providers by Medicare or other federal health care programs, or possible harm to beneficiaries.

In addition, the OIG found that while the Unit reported 95 adverse actions to the NPDB, it reported 67 of these more than 30 days after the adverse action. Specifically, the Unit reported 21 adverse actions more than 90 days after the action, 8 within 61 to 90 days after the action, and 38 within 31 to 60 days after the action. The NPDB is designed to restrict the ability of physicians, dentists, and other health care practitioners to move from state to state without disclosure or discovery of previous medical malpractice and adverse actions. As with program exclusions, late reporting of adverse actions to the NPDB could result in improper payments or beneficiary harm.

OIG recommendations

The OIG report recommended that the Unit: (1) implement procedures for securing case files; (2) revise its MOU with state partners to be consistent with federal regulation; and (3) implement processes to ensure it reports convictions and adverse actions to federal partners within the appropriate timeframes. The Unit concurred with all three recommendations.

Kusserow on Compliance: OIG reports on fraud and abuse actions for the first half of 2016

The HHS Office of Inspector General (OIG) issued its Semi-Annual Report for first half of fiscal year (FY) 2016 (October-March), summarizing key accomplishments, significant problems, abuses, deficiencies, and investigative outcomes relating to the administration of HHS programs and operations that were disclosed during the reporting period.

428 criminal actions, 1662 exclusions

The OIG reported 428 criminal actions against individuals or entities that engaged in crimes against HHS programs and 383 civil actions, which include false claims and unjust-enrichment lawsuits filed in federal district court, civil monetary penalties (CMP) settlements, and administrative recoveries related to provider self-disclosure matters.  In addition, the OIG reported the exclusions of 1,662 individuals and entities from participation in federal health care programs. Recoveries from CMP were reported to have increased five-fold over the past three years, and likely will exceed the prior year’s results by the end of FY 2016.

Recoveries of $2.77 billion

The reported expected recoveries of more than $2.77 billion consisting of nearly $554.7 million in audit receivables and about $2.22 billion in investigative receivables, which include about $336.6 million in non-HHS investigative receivables resulting from our work in areas such as the states’ shares of Medicaid restitution.

100 criminal actions by the Health Care Strike Force

The Health Care Fraud Strike Force teams brought charges against 87 individuals or entities, 100 criminal actions and $116.8 million in recoveries through investigations. The OIG also reported 1,662 individuals and entities barred from participating in federal healthcare programs during the first half of FY 2016, the report said.

1,553 criminal actions by state Medicaid Fraud Control Units (MFCUs)

In 2015, MFCUs reported conducting 17,665 investigations that resulted in 1,553 criminal actions, of which 1,097 were related to Medicaid fraud and 456 were related to patient abuse and neglect. Civil judgments and settlements totaled 795, and monetary recoveries in civil cases totaled over $397 million.  Many of these cases were joint actions with the OIG.  However, what may not be generally known is that the OIG has oversight responsibility for MFCUs and administers grants that provide Federal funding for their operations. The federal government reimburses 75 percent of the costs of operating a Unit; the States contribute the remaining 25 percent.

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 © 2016 Strategic Management Services, LLC. Published with permission.

DOJ recovers almost $2B in health care false claims

The Department of Justice (DOJ) obtained more than $3.5 billion in False Claims Act settlements and judgments in fiscal year (FY) 2015, more than half of which—$1.9 billion in federal losses—came from companies and individuals in the health care industry. These cases included companies and individuals that allegedly provided unnecessary or inadequate care, paid kickbacks to health care providers to induce the use of certain goods and services, or overcharged for goods and services paid for by Medicare, Medicaid, and other federal health care programs.


The False Claims Act (FCA) (31 U.S.C. §3729 et seq.) is the federal government’s primary civil remedy to redress false claims for government funds and property under government contracts and programs including Medicare and Medicaid. Most false claims actions are filed under the FCA’s whistleblower, or qui tam, provisions that allow individuals to file lawsuits alleging false claims on behalf of the government. Section 1313 of the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148) provided additional inducements and protections for whistleblowers and strengthened the provisions of the federal health care Anti-Kickback Statute (AKS) (42 U.S.C. §1320a-7b). If the government prevails in the action, the whistleblower, also known as the relator, receives up to 30 percent of the recovery. In fiscal year 2015, whistleblowers filed 638 qui tam suits leading to $2.8 billion in DOJ recoveries, with awards to relators totaling $597 million.

Health care fraud

In addition to recovering losses from health care fraud that has already occurred, the DOJ says that its continuing pursuit of fraud deters individuals who might otherwise cheat the system and prevents billions of additional lost dollars. The DOJ’s focus on health care fraud is a priority of the Obama Administration, which created the Health Care Fraud Prevention and Enforcement Action Team (HEAT), an interagency task force to increase coordination and optimize criminal and civil enforcement. Additional information on the government’s efforts in this area is available at StopMedicareFraud.gov, a webpage jointly established by the DOJ and HHS.

Largest recoveries

The largest health care recoveries in FY 2015—October 1, 2014, through September 30, 2015—were from DaVita Healthcare Partners, Inc., the nation’s largest dialysis provider. DaVita entered into an agreement with the DOJ to pay $350 million to settle claims that it violated the AKS by soliciting and entering into joint venture agreements with physicians who had large renal patient bases, and agreed to a civil forfeiture of $39 million, totaling $389 million (see DaVita filters $350M to feds in dialysis scheme, Health Law Daily, October 23, 2014; DaVita to pay $389M in largest kickback-only case in healthcare history, Health Law Daily, October 27, 2014). A few months later, DaVita agreed to pay $450 million to resolve claims that it for knowingly created unnecessary waste in administering the drugs Zemplar® and Venofer® to dialysis patients (see Another day, another DaVita settlement; $450M this time, Health Law Daily, June 25, 2015).

Among the other health-care-related FCA recoveries were $330 million in settlements and judgments involving hospitals (see Whistleblowers rake in heart-stopping $38M in cardiac device FCA settlements, Health Law Daily, November 2, 2015), several Stark Law (42 U.S.C. §1395nn) settlements involving financial relationships between hospitals and doctors that could improperly influence patient referrals, $96 million in settlements and judgments involving the pharmaceutical industry., and many civil fraud and false claims actions against skilled nursing homes and rehabilitation facilities. The DOJ also made note of actions it successfully pursued against individual providers or facility owners and operators.

Other recoveries

Following health care fraud and abuse, the next largest recoveries were in connection with government contracts. This is the fourth year in a row that the DOJ has recovered more than $3.5 billion in FCA claims. Since January 2009, the DOJ has recovered $26.4 billion under the FCA, nearly $16.5 billion of which is attributed to health care fraud. Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division, said, “The False Claims Act has again proven to be the government’s most effective civil tool to ferret out fraud and return billions to taxpayer-funded programs. The recoveries announced today help preserve the integrity of vital government programs that provide health care to the elderly and low income families, ensure our national security and defense, and enable countless Americans to purchase homes.” Overall, the DOJ collected $23.1 billion in civil and criminal cases in FY 2015.