On June 28, 2018, the Department of Justice (DOJ) announced the largest ever national health care fraud enforcement action in American history. This is the fourth consecutive record-breaking criminal roundup. The DOJ, with assistance from the U.S. Department of Health and Human Services Office of Inspector General (OIG) and several other state and federal agencies, charged 601 defendants across 58 federal districts with health care related fraud schemes costing taxpayers over $2 billion in losses. Of particular note, 165 of the 601 individuals charged were licensed medical professionals. The majority of the fraud schemes were directed at federal health care programs, including Medicare, Medicaid, and TRICARE.

The focus of the DOJ and OIG was clearly centered on medical professionals and entities within the pharmacy supply chain engaged in the unlawful distribution or dispensing of prescription drugs. Numerous compounding pharmacies, pharmacy owners, pharmacists, physicians, physician assistants, and nurses were indicted for their alleged participation in the various fraud schemes.

The following are some of the key takeaways from the most recent takedown:

The Government Focus on Illicit Prescribing/Dispensing of Opioids Continues

Attorney General Jeff Sessions again underscored the DOJ’s commitment to ending the nation’s opioid epidemic through enforcement. The DOJ continues to direct its health care fraud units to prosecute individuals in the opioid supply chain who fraudulently prescribe and dispense prescription narcotics. “In many cases, doctors, nurses, and pharmacists take advantage of people suffering from drug addiction in order to line their pockets,” said Sessions. “These are despicable crimes. That’s why this Department of Justice has taken historic new steps to go after fraudsters, including hiring more prosecutors and leveraging the power of data analytics.” FBI Deputy Director David Bowdich reinforced this enforcement priority notion that, “we have seen medical professionals putting greed above their patients’ well-being and trusted doctors fanning the flames of the opioid crisis.” Over one-quarter of the individuals charged in the takedown allegedly had a role in distributing and dispensing opioids or other narcotics, including 76 doctors. The government also highlighted that over the past year a total of 587 individuals and entities were excluded from federal health care program participation for their role in opioid diversion and abuse matters, including 402 nurses, 67 doctors, and 40 exclusions relating to pharmacy services.

Pharmacies and Prescribers are in the Crosshairs

In January, Sessions announced that the Drug Enforcement Agency (DEA) would direct agents to investigate pharmacies that dispense an unusual amount of drugs. The recent takedown highlights the emphasis on pharmacy-related fraud. For example, in the Southern District of Texas, a pharmacy chain owner and two other people were charged for allegedly using fraudulent prescriptions to fill bulk orders for more than 1 million hydrocodone and oxycodone pills, which the pharmacy eventually sold to drug couriers. Similarly, another case charged three pharmacy owners and a nurse practitioner with conspiracy to unlawfully dispense controlled substances and defraud TRICARE and private insurance companies out of $12 million.

Other investigations involving health care professionals resulted in charges alleging:

  • An attorney/marketer provided kickbacks in the form of prostitutes and expensive meals in exchange for prescriptions on behalf of a compounding pharmacy
  • Twelve individuals, including four physicians, engaged in various schemes relating to the unlawful distribution of a controlled substance
  • A physician/owner of a pain management clinic unlawfully prescribed more than 2 million dosage units of oxycodone products
  • Twelve individuals, including two physicians, engaged in health care fraud, drug diversion, and pharmacy fraud resulting in over $13.5 million in fraudulent billings
  • Two pharmacists/pharmacy owners and a physician’s assistant prescribed medically unnecessary compounded drugs and billed Medicare for drugs never dispensed or not dispensed as prescribed.

Looking Ahead

Coordinated enforcement takedowns will continue to be part of government anti-fraud enforcement arsenal. The allocation of more than 350 OIG special agents, and more than 1,000 law enforcement personnel is a clear indication of the DOJ’s and OIG’s commitment to combating fraud in the federal health care programs.;

Providers should take note that: (1) data analytics will continue to be the driver for health care fraud investigations; and (2) the government will continue to focus on medical professionals they believe are responsible for fraud. This focus is particularly true for pharmacies, pharmacists, and prescribers. While these criminal investigations are intended to identify the most egregious examples of fraud, providers must understand that any successful data analytic program requires the use of all data to identify outliers. Providers should take notice of the way the government uses billing data as an enforcement tool and take steps to avoid being a statistic in next year’s “record breaking” takedown.