Yesterday the Department of Justice along with their multi-agency enforcement partners announced a massive coordinated takedown of individuals for their alleged participation in health care fraud schemes involving approximately $900 million in false billings to Medicare.  Approximately 300 individuals, including doctors, nurses, pharmacists and other licensed medical professionals were swept up in the raids. This unprecedented action, led by the Medicare Fraud Strike Force, was conducted in 36 federal districts.  Enforcement partners include twenty-three state Medicaid Fraud Control Units, HHS-OIG, FBI, DCIS and CMS. 

Reminiscent of the June 18, 2015 nationwide takedown of 243 individuals alleged to have submitted more than $712 in false claims to the federal government, yesterday’s action was the largest takedown in history, both in terms of number of defendants charged and loss amount to federal payor programs.

“As this takedown should make clear, health care fraud is not an abstract violation or benign offense – It is a serious crime,” said Attorney General Lynch. 

The defendants in this year’s sweep are charged with health care related crimes including, violations of the Anti-kickback Statute, money laundering, identity theft, and conspiracy to commit health care fraud.  As noted last year, authorities continue to see an increase in fraudulent billing related to prescription drugs provided through Medicare Part D, the program's fastest-growing component overall.  Yesterday more than 60 of those arrested are charged with fraud related to the Medicare prescription drug program.  Other charges are based on alleged fraud by home health care, psychotherapy, physical therapy and occupational therapy, and durable medical equipment. 

The majority of the defendants allegedly participated in schemes to submit claims for treatments and prescriptions that were medically unnecessary and often never provided.  Marketers and patient recruiters allegedly paid beneficiaries and providers cash kickbacks in return for supplying beneficiary information to providers so they could submit false claims to Medicare and Medicaid. 

The government has increasingly used technology to aid in its investigations.  Billing and claims volume along with a high number of orders from an individual doctor are often the first indication the government looks for in targeting health care fraud.  Electronic fund transfers and forensics of computers and mobile devices can yield significant incriminating data. 

“The Medicare Fraud Strike Force is a model of 21st-Century data-driven law enforcement, and it has had a remarkable impact on health care fraud across the country,” said Assistant Attorney General Caldwell in her remarks.  “As the cases announced today demonstrate, the Strike Force’s strategic approach keeps us a step ahead of emerging fraud trends, including drug diversion, and fraud involving compounded medications and hospice care.”

In terms of jurisdiction statistics of the takedown, Florida leads the country with more than $200 million worth of fraud.  California, Texas and Michigan have defendants alleged to have committed more than $100 million worth of fraud in each state.  New York tallied out at $86 million followed by Illinois at $12 million. 

In one of the cases, a physical therapist and an occupational therapist were two of five arrested in Brooklyn, accused of scamming Medicare and Medicaid for $86 million.  Those charged allegedly paid kickbacks to patients who then received unnecessary physical and occupational therapy.  The group netted more than $38 million in reimbursements through several New York shell companies that purported to provide consulting, marketing and advertising services but were actually intended to hide the money from the IRS and avoid taxes.

In Florida, the owner of several infusion clinics is accused by the federal government of defrauding Medicare out of over $8 million for a scheme involving the reimbursement for expensive intravenous drugs that were never actually purchased and never given to patients.

To view the complaints and indictments that have been unsealed by the Department of Justice, click here.

The Department of Justice and the government agencies responsible for administering health care programs are committed to combatting fraud, waste and abuse in federal payor programs.  Yesterday’s events were certainly jolting and we expect to see more coordinated enforcement in the future. 

Secretary Burwell concluded yesterday’s press conference with the following statement, “We are continuing to put new tools and additional resources to work, including $350 million from the Affordable Care Act, for health care fraud prevention and enforcement efforts.  Thanks to the hard work of the Medicare Fraud Strike Force, we are making progress in addressing and deterring fraud and delivering results to help ensure Medicare remains strong for years to come.”

Strict regulation, heavy government oversight, and aggressive enforcement actions currently define the healthcare industry and will for many years to come.  Implementing and maintaining an effective compliance program is an organization’s best deterrent to mitigate risk and liability that can be caused by the actions of others.  Healthcare providers must implement written policies and procedures, conduct regular audits of high risk areas, and train all personnel on healthcare laws and regulations in order to create and sustain an effective and efficient compliance program.