Contributed by Frank E. Sheeder, Carolyn F. McNiven, and Rebecca Jones McKnight as part of our ongoing Fraud & Abuse Matter series.
According to a recent clearinghouse report, federal criminal prosecutions of health care fraud are up—way up—this year. According to an analysis that Transactional Records Access Clearinghouse (TRAC) conducted on statistics released by the U.S. Department of Justice (DoJ), in 2011 federal prosecutors initiated prosecution of 904 new health care fraud cases as of August. This means that before the end of the summer of 2011, DoJ had initiated more health fraud cases than it did in all of 2010.
That is quite a stunning statistic. Moreover, if DoJ continues at this rate, it is on pace to reach 1,350 health care fraud cases by the end of 2011: approximately 85% more than in 2010. (For more information regarding these statistics, see the TRAC analysis.)
Temperatures may be starting to dip as we head into fall, but DoJ shows no signs of turning down the heat on the health care industry.
On September 7th, DoJ announced a massive nationwide health care takedown in which DoJ charged 91 defendants—including physicians, nurses, and other health care professionals—for alleged participation in Medicare fraud schemes involving approximately $295 million in false billing. (Read more here.) The charges stem from a greatly expanded Medicare Fraud Strike Force, which now operates in most major metropolitan areas.
Who are the targets of DoJ’s stepped up efforts in the health care sector? The bottom line is that the targets are as diverse as the sector itself. In addition to massive False Claims Act settlements with pharmaceutical and medical device manufacturers, DoJ has also focused on hospital emergency rooms and revenue recognition, home health care, occupational and physical therapy, mental health services, durable medical equipment (DME), and HIV infusion therapy cases. This sample of August 2011 DoJ case activities provides a window into the wide angle of DoJ’s lens:
- On August 25th, the owner of three Detroit-area clinics was sentenced to 48 months in prison for his role in schemes attempting to defraud the Medicare program of more than $15 million.
- On August 24th, two sisters who owned a Detroit-area medical clinic and who are former “Most Wanted” health care fugitives pleaded guilty for their roles in a $9.1 million Medicare fraud scheme. At sentencing, they face a maximum of 10 years in prison for each count of conspiracy to commit health care fraud, and 20 years in prison for each count of conspiracy to commit money laundering.
- On August 23rd, the president of a Florida DME company was sentenced to 12 1/2 years in federal prison for conspiracy to commit health care fraud, health care fraud, and submitting false claims. He was ordered to pay $7 million in restitution, a $3 million fine, and a $1,000 special assessment. The court also entered a money judgment in the amount of $5,800,000, representing the proceeds of the health care fraud.
- On August 23rd, a the owner of a Miami-area mental health care company was convicted of 24 felony counts, including conspiracy to commit health care fraud, health care fraud, conspiracy to pay and receive illegal health care kickbacks, conspiracy to commit money laundering, money laundering, and structuring to avoid reporting requirements. Her assets were frozen at the time of her arrest and will remain frozen through civil forfeiture proceedings. At sentencing, she faces a maximum of:
- 10 years in prison for each count of conspiracy to commit health care fraud and each count of health care fraud,
- five years in prison for each count of conspiracy to pay and receive health care kickbacks,
- 20 years in prison for each count of conspiracy to commit money laundering,
- 10 to 20 years in prison for each count of money laundering, and
- 10 years in prison for each count of structuring to avoid reporting requirements.
- On August 10th, a Maryland medical center agreed to pay $1.8 million to settle False Claims Act allegations that it was aware of, but failed to take action to prevent, medically unnecessary cardiac stent procedures by a cardiologist who formerly had privileges at the medical center.
The joint DoJ and HHS Health Care Fraud Prevention and Enforcement Action Team (HEAT), which makes the fight against health care fraud “a Cabinet-level priority” has also been active. On September 1st, a California medical billing company agreed to pay $4.6 million to resolve False Claims Act allegations tied to coding and billing practices. HEAT reports this resolution as being “part of the government’s emphasis on combating health care fraud and another step for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative.”
These trends are likely to make anyone in the health care industry break into a sweat. The government has made health care fraud enforcement a top priority. Prudent organizations anticipate government contacts and have comprehensive and well-communicated policies and procedures for dealing with them. You may contact Frank E. Sheeder or Carolyn F. McNiven, partners in DLA Piper's Health Care Compliance and Enforcement practice, for additional information on how to mitigate legal and regulatory risks in the current enforcement environment and to discuss the best approaches to dealing with government inquiries.