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

Kusserow on Compliance: Largest health care fraud takedown on record; $900M in false billing, 301 individuals charged

The Department of Justice and HHS announced the results of a nationwide sweep led by the Medicare Fraud Strike Force in 36 federal districts that resulted in a record number of individuals being charged. The DOJ-led Strike Force combines investigative resources of the Federal government that includes the HHS Office of Inspector General (OIG) and the Federal Bureau of Investigation (FBI). In addition, 23 state Medicaid Fraud Control Units also participated in the arrests. The DOJ noted this coordinated takedown was the largest in history, both in terms of the number of defendants charged and loss amount. The defendants were charged with various health care fraud-related crimes, including conspiracy to commit health care fraud, violations of the anti-kickback statutes, money laundering, and aggravated identity theft. The charges are based on a variety of alleged fraud schemes involving various medical treatments and services, including home health care, psychotherapy, physical and occupational therapy, durable medical equipment (DME), and prescription drugs. More than 60 of the defendants arrested are charged with fraud related to the Medicare prescription drug benefit program known as Part D, which is the fastest-growing component of the Medicare program overall. The schemes involved submitting fraudulent claims to Medicare and Medicaid and the defendants in these cases involved doctors, nurses, licensed medical professionals, health care company owners, and others.

The Medicare Fraud Strike Force operations are part of the Health Care Fraud Prevention & Enforcement Action Team (HEAT) that has been operating since 2007 as a joint initiative between the DOJ and HHS to focus their efforts to prevent and deter fraud and enforce current anti-fraud laws around the country. They operate in nine locations and since its inception has charged over 2,900 defendants who collectively have falsely billed the Medicare program for over $8.9 billion. A summary of where actions were taken in the “Takedown” announced by the DOJ include the following:

  • Southern District of Florida: 100 charged involving $220 million in false billings.
  • Southern District of Texas: 24 charged involving $146 million in fraud.
  • Northern District of Texas: 11 charged involving $47 million in fraud.
  • Central District of California: 22 charged involving $162 million.
  • Eastern District of Michigan: 19 charged involving $114 million in false claims.
  • Middle District of Florida: 15 charged involving $17 million in fraudulent billing.
  • Northern District of Illinois: six charged involving $12 million in fraud.
  • Eastern District of New York: 10 charged involving $86.
  • Eastern District of Louisiana: three charged with a health care fraud and wire fraud conspiracy.
  • Northern District of Georgia: nine charged involving $7 million in fraudulent billings.
  • Middle District of Alabama: two charged involving $246,000 in fraudulent billings.
  • Middle District of Tennessee: doctor charged in kickback with DME company.
  • Western District of Kentucky: charge of a business entity a health care fraud scheme.
  • Southern District of Ohio: two charged involving a $7.5 million fraud scheme.
  • Western/Eastern Districts of Pennsylvania: three charged for drug diversion and embezzlement.
  • Southern District of New York: pharmacist charged involving $51 million in fraud.
  • Districts of Maine, Alaska, Kansas, Connecticut and Vermont: five charged for Medicaid-related schemes.
  • Eastern District of Missouri: four charged involving $3 million in billings.
  • Southern District of California: eight charged involving $27 million in fraudulent claims.
  • District of New Mexico: two charged in a Medicaid fraud scheme.
  • Northern District of Iowa: a corporate settlement agreement for health care fraud scheme.
  • District of Oregon: one charged involving $1.7 million fraud scheme.
  • District of Puerto Rico: six received civil demand letters for their roles in a Medicaid fraud.
  • Florida, Iowa, South Dakota, Indiana, New York, Michigan, Oklahoma, Rhode Island, Louisiana, Pennsylvania, New Hampshire, Oregon, Kentucky, and Alaska: 49 charged with defrauding the Medicaid program by each state’s respective Medicaid Fraud Control Units.

The court documents for each case will posted online, as they become available, here: https://www.justice.gov/opa/documents-and-resources-june-22-2016-medicare-fraud-strike-force-press-conference.

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.

Connect with Richard Kusserow on Google+ or LinkedIn.

Subscribe to the Kusserow on Compliance Newsletter

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