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412 charged in record health care fraud ‘takedown’

Jaclyn Jaeger | July 18, 2017

Compliance officers in the healthcare industry take note: a nationwide “takedown” by the Medicare Fraud Strike Force has resulted in charges against a record 412 healthcare professionals—the largest ever health care fraud enforcement action—for their alleged participation in health care fraud schemes involving approximately $1.3 billion in false billings. Moreover, the Department of Justice has warned it is just warming up.

Thirty state Medicaid Fraud Control Units participated in the arrests, announced July 13. In addition, 295 health care providers—including doctors, nurses, and pharmacists—are now in the process of being suspended or banned from participation in federal health programs by the Department of Health and Human Services (HHS).

Over 120 of the defendants, including doctors, were charged for their roles in prescribing and distributing opioids and other dangerous narcotics, “making this also the largest opioid-related fraud take-down in American history,” Attorney General Jeff Sessions said in remarks announcing the take-down.

For example, one group of defendants, including six doctors, allegedly operated a scheme to prescribe patients with unnecessary opioids, billing Medicare for $164 million in false and fraudulent claims. In another example, a fake rehab facility for drug addicts allegedly recruited addicts with gift cards, visits to strip clubs, and even drugs, enabling the company to bill for over $58 million in false treatments and tests.

“Another illegal clinic in Houston allegedly gave out prescriptions for cash,” Sessions said. “Just one doctor at this clinic allegedly gave out 12,000 opioid prescriptions for over two million illegal painkiller doses.”

Court documents stated that the defendants allegedly participated in schemes to submit claims to Medicare, Medicaid, and TRICARE (a health insurance program for members and veterans of the armed forces and their families) for treatments that were medically unnecessary and often never provided. In many cases, 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.

Sessions and Secretary Tom Price were joined in the announcement by Acting Assistant Attorney General Kenneth Blanco of the Justice Department’s Criminal Division, Acting Director Andrew McCabe of the FBI, Acting Administrator Chuck Rosenberg of the Drug Enforcement Administration (DEA), Inspector General Daniel Levinson of the HHS Office of Inspector General (OIG), Chief Don Fort of IRS Criminal Investigation, Administrator Seema Verma of the Centers for Medicare and Medicaid Services (CMS), and Deputy Director Kelly Mayo of the Defense Criminal Investigative Service (DCIS).

The enforcement actions were led and coordinated by the Criminal Division, Fraud Section’s Health Care Fraud Unit in conjunction with its Medicare Fraud Strike Force partners, a partnership between the Criminal Division, U.S. Attorney’s Offices, the FBI and HHS-OIG.  In addition, the operation includes the participation of the DEA, DCIS, and State Medicaid Fraud Control Units. 

Similar actions. This is not the first massive health care fraud enforcement action led by the Medicare Fraud Strike Force. In June 2016, a similar nationwide sweep resulted in criminal and civil charges against 301 healthcare professionals for their alleged participation in health care fraud schemes involving approximately $900 million in false billings

In June 2012, too, the Medicare Fraud Strike Force charged 107 healthcare professionals for their alleged participation in Medicare fraud schemes that collectively resulted in approximately $452 million in fraudulent billing, a record enforcement action at the time.

The Medicare Fraud Strike Force operates in nine locations nationwide. Since its inception in March 2007, the Medicare Fraud Strike Force has charged over 3,500 defendants who collectively have falsely billed the Medicare program for over $12.5 billion.

Sessions said the Department of Justice is only just warming up as it pertains to healthcare fraud. “While today is a historic day, the Department's work is not finished,” he said. “In fact, it is just beginning.”

“We will continue to find, arrest, prosecute, convict, and incarcerate fraudsters and drug dealers wherever they are,” Sessions added. “We are continuing to work hard to develop even more techniques to identify and prosecute wrongdoers.”