Government Snags 301 People in Nationwide Health-Care Fraud Sweep

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By James Swann

June 22 — The government June 22 charged 301 individuals with allegedly participating in various health-care fraud schemes that led to roughly $900 million in fraudulent Medicare claims.

National Health Care Fraud Takedown by the Numbers

The nationwide operation was led by Medicare Fraud Strike Force teams, which combine representatives from local and federal enforcement agencies, and covered 36 federal judicial districts.

The Department of Justice began announcing the so-called fraud takedowns in 2010, and the annual announcements compile unrelated health-care fraud cases. The latest takedown, announced at a DOJ briefing, sets records for the number of individuals charged, the amount of fraudulent claims and the number of districts covered by the investigations.

Last year's takedown charged 243 defendants for their alleged participation in fraud schemes that led to $712 million in fraudulent claims (118 HCDR, 6/19/15).

Data-Driven Investigations

The use of real-time data played a key role in the takedowns, Tom O'Donnell, assistant inspector general for investigations at the Health and Human Services Office of Inspector General, told Bloomberg BNA June 22.

O'Donnell said that in 2007 it took months to get claims data, while now it's available in real time, almost as soon as a claim is submitted.

“We're getting better with real-time analytics, which is why the takedowns keep getting bigger,” O'Donnell said.

O'Donnell said the takedown represented a change from years past, in that it covered 36 judicial districts, compared to last year's 17.

“We wanted to bring everyone to the party,” O'Donnell said.

O'Donnell said that as Medicare Part D grows, more loopholes will pop up for fraudsters to exploit.

O'Donnell also identified home health and hospice fraud as areas the OIG will watch more closely.

Lack of Deterrence

Eric Fader, an attorney with Day Pitney LLP in New York, said he questions the purpose of the takedown announcement and its effectiveness as a fraud deterrent.

Fader told Bloomberg BNA June 22 that while a DOJ press release on the takedown provides information on many of the charges, the information is buried at the bottom of a very long document and doesn't include specific names or details.

“I'm afraid that many fraudsters have short attention spans so they won't even read down that far,” Fader said.

Fader said the government could do a better job of deterring fraud on a sustained basis by putting out a series of more detailed press releases, each highlighting a different type of fraud and putting a face on each one, a practice he said the HHS Office for Civil Rights has been doing for years with settlement announcements related to the Health Insurance Portability and Accountability Act.

While the DOJ will post court documents for each case online, Fader said, that won't help discourage fraudsters.

“I think the home health and prescription drug worlds are really rife with fraud, and one splashy announcement isn’t going to magically fix that, so we should expect continued focus on these areas,” Fader said.

Strengthened Enforcement

On the other hand, Danielle Sloane, an attorney with Bass, Berry & Sims in Nashville, Tenn., told Bloomberg BNA June 22 that the announcement is a confirmation “that the government's enforcement team is deep, far reaching and has no plans to reduce their focus on the health-care community.”

Sloane said the announcement highlights that the government is continuing to put significant resources into removing fraud and waste from the health-care system. That said, Sloane acknowledged that the takedown announcements can instill fear in the health-care industry that stifles growth and the creation of new businesses.

“The takeaway is that health-care providers and suppliers, whether big or small, need to carefully ensure they are following the litany of complex rules that apply to them, because the consequences can be unforgiving,” Sloane said.

Kirk Ogrosky, an attorney with Arnold & Porter, Washington, told Bloomberg BNA June 22 the announcement marks a key turning point for government enforcement efforts due to the number of judicial districts that were involved.

Ogrosky said that over the past 20 years, only one-third of U.S. judicial districts have been active in bringing health-care fraud cases, and cities like Miami have been responsible for almost a quarter of all criminal cases.

The takedown announcement is unique because almost 40 percent of the judicial districts (36 out of 94) unsealed Medicare fraud cases, Ogrosky said.

“This should send a powerful message to health-care providers across the nation that the DOJ is spreading the Strike Force model,” Ogrosky said.

Since its inception in 2007, the Strike Force has brought criminal cases against more than 2,900 people who have been accused of submitting over $8.9 billion in fraudulent Medicare fraud schemes, the DOJ said.

Ogrosky said that while there was no precise way to calculate the overall impact of the criminal cases resulting from Strike Force investigations, it wouldn't be surprising if Medicare savings were five to 10 times the amount of the identified fraud, or up to $90 billion.

“Given that the cost to operate the Strike Forces is still under $10 million a year, this return on investment makes the Strike Force model the most effective law enforcement program ever implemented in health care,” Ogrosky said.

Medicare Part D

Speaking at the DOJ briefing, U.S. Attorney General Loretta Lynch said charges were filed against the 301 defendants over the past three days, and there was an increase in charges related to the Medicare Part D program as well as compound pain creams.

For example, approximately 60 defendants were charged for Medicare Part D fraud, compared with only 50 in last year's announcement.

Lynch said a number of the Part D cases involved identity theft, in which a doctor's identity was stolen and used to write up fraudulent prescriptions.

As for compound pain creams, Assistant Attorney General Leslie Caldwell said the DOJ has noticed a spike in the prices of compound pain creams, which can often be an indicator of fraud.

Caldwell said TRICARE, the military's health-care program, pays for many of the pain cream prescriptions, and noted that the pain cream is largely marketed to veterans.

Preventive Measures

While the briefing was mainly focused on the various fraud-related charges that were filed, two HHS officials said tools authorized by the Affordable Care Act may help reduce future fraud.

For example, HHS Secretary Sylvia Mathews Burwell said the agency is working to perform risk-based screening for all providers enrolling in Medicare Part D by next year. The automated risk-based screening program assigns newly enrolling providers to one of three categories—limited, moderate and high—based on their risk of fraud, waste and abuse.

Shantanu Agrawal, the Centers for Medicare & Medicaid Services' deputy administrator and director of its Center for Program Integrity, also said the CMS is applying advanced predictive analytics on the Medicare Part D program to identify potential fraud.

To contact the reporter on this story: James Swann in Washington at

To contact the editor responsible for this story: Kendra Casey Plank at

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