The United States Department of Justice (DOJ) and the Department of Health and Human Services (HHS) jointly announced yesterday a new and muscular initiative to identify and prevent health care fraud and to ramp up efforts with enhanced resources to aggressively bring prosecutions. As a result, individual and business medical providers are expected to come under increased scrutiny. In addition, medical practices, practitioners, and durable medical equipment (DME) and pharmaceutical manufacturers and suppliers receiving government payment or reimbursement can be expected to risk increased criminal and civil liability if they run afoul of health care laws and regulations. The government also declared yesterday that it was committed to prosecuting "corporate wrongdoers" and equipment suppliers and all other providers and practitioners who commit health care fraud.

As part of the new initiative, born in part of the Administration's touted mission to stanch the hemorrhaging of billions of dollars in fraud and waste, Attorney General Eric Holder and HHS Secretary Kathleen Sebelius have formed a Cabinet-level priority task force of senior-level officials from the two Departments, the Health Care Fraud Prevention and Enforcement Action Team (HEAT), to meet bi-monthly as part of a joint effort to prevent fraud and enforce current anti-fraud laws nationwide. Conduct subject to prosecution of the anti-fraud laws would include claims for medically unnecessary medical surgeries and in-office procedures and services, home health care services, prescription medicines or DME items and supplies; excessive or other compensation in consulting agreements with physicians deemed to be kickback payments; kickbacks for referred medical services; false billing or claims; and false statements made in connection with delivering medical services or receiving government monies.

In additional actions, the government announced its expanded roll-out plan of Medicare Strike Force team operations, immediately in Houston and Detroit, and later in other targeted metropolitan areas to build on a "data-driven" approach of identify questionable billing patterns and target both criminal and civil investigations of health care fraud. To bolster its efforts, the DOJ and HHS will also apply new technology, increase funding for contractor monitoring of Medicare Parts C &D compliance; increase compliance training; and expand the Medicaid audit provider audit program.

In testimony yesterday before a Senate Judiciary subcommittee, Lanny Breuer, Assistant Attorney General (AAG) for the Criminal Division, reaffirmed that health care fraud enforcement is a "top department priority" and highlighted the Department's use and heavy reliance on both Strike Forces and civil remedies through "whistleblower" lawsuits under the False Claims Act to protect public funding. AAG Breuer specifically referred to pharmaceutical and device manufacturers in his testimony, and stated that the government recovered more than $9.2 billion from them in the last decade in connection with criminal and civil cases involving fraud. Other areas of increased prosecutorial attention can be expected for violations of the Federal Food, Drug, and Cosmetic Act (FDCA), including the illegal marketing of drugs and devices for unapproved uses. A global settlement with Eli Lilly, in connection with its conviction for illegal marketing of Zyprexa, approved by the FDA for schizophrenia and limited other uses, totaled more than $1.4 billion, including up to $800 million in civil recoveries under the federal and state False Claims Acts. Based on AAG Breuer's statements, we can expect another focus to be on practices involving the Nation's senior and infirm population, with the practices of nursing homes and other long term care providers under review to determine whether the services are viewed as so substandard as to constitute "worthless" and "complete 'failures of care.'"

To support its enforcement and recovery efforts, the Administration is asking Congress in its FY 2010 budget for an additional $311 million in two-year funding to protect program integrity and for anti-fraud enforcement work, including $29.8 million for the DOJ.

The government's enforcement initiatives follow the DOJ and HHS's announcement in March of a specific focus of health care fraud investigations: the targeting of physicians to determine whether their financial arrangements with drug and device manufacturers constitute a violation of the federal anti-kickback laws.

Especially in light of the high priority that the DOJ and HHS are placing on enforcement and civil recovery for violation of the health care laws, drug and device manufacturers, medical suppliers and medical practices would be well advised to review their existing billing practices, vendor and consulting agreements and overall compliance programs to ensure compliance with current health care laws.