Deeper Than the Headlines: 2018 Fraud Takedown

The DOJ and OIG recently announced the 2018 Fraud Takedown which resulted in charges against 601 individuals responsible for over $2 Billion in fraud, according to the federal government

Each year the government seems to set records in the fraud takedowns and this year is no different. According to the DOJ, this year’s enforcement action was the largest in DOJ history. It included charges against 76 doctors (and 90 more licensed professionals including nurses) as well as 84 opioid cases which involved more than 14 million illegal doses of opioids. Thirty state Medicaid Fraud Control Units also participated in the arrests which were announced on June 28, 2018. In addition, HHS announced that from July 2017 to the present, it has excluded 2,700 individuals from participation in Medicare, Medicaid, and all other Federal healthcare programs, which includes 587 providers excluded for conduct related to opioid diversion and abuse.

The announcement was made with many government officials present, including Attorney General Sessions and HHS Secretary Azar along with Acting Assistant Attorney General John P. Cronan of the Justice Department’s Criminal Division, Deputy Director David L. Bowdich of the FBI, Assistant Administrator John Martin of the Drug Enforcement Administration (DEA), Deputy Inspector General Gary Cantrell of the HHS Office of Inspector General (OIG), Deputy Chief Eric Hylton of IRS Criminal Investigation (CI), Centers for Medicare and Medicaid Services (CMS) Deputy Administrator and Director of the Center for Program Integrity Alec Alexander and Director Dermot F. O’Reilly of the Defense Criminal Investigative Service (DCIS).The charges which they announced aggressively targeted schemes billing Medicare, Medicaid, TRICARE, and private insurance companies for medically unnecessary prescription drugs and compounded medications that often were never even purchased and/or distributed to beneficiaries. The charges also involved individuals contributing to the opioid epidemic, with a particular focus on medical professionals involved in the unlawful distribution of opioids and other prescription narcotics. According to the CDC, approximately 115 Americans die every day of an opioid-related overdose.

“Health care fraud is a betrayal of vulnerable patients, and often it is theft from the taxpayer,” said Attorney General Sessions. “In many cases, doctors, nurses, and pharmacists take advantage of people suffering from drug addiction in order to line their pockets. 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. Today the Department of Justice is announcing the largest health care fraud enforcement action in American history. This is the most fraud, the most defendants, and the most doctors ever charged in a single operation—and we have evidence that our ongoing work has stopped or prevented billions of dollars’ worth of fraud.”

HHS Secretary Azar added, “Every dollar recovered in this year’s operation represents not just a taxpayer’s hard-earned money—it’s a dollar that can go toward providing healthcare for Americans in need.”

An important aspect of this national fraud takedown announcement is the work that the Medicare Fraud Strike Force performs. Its operations are part of a joint initiative between the Department of Justice and HHS to focus their efforts to prevent and deter fraud and enforce current anti-fraud laws around the country. The Medicare Fraud Strike Force operates in 10 locations nationwide. Since its inception in March 2007, the Medicare Fraud Strike Force has charged over 3,700 defendants who collectively have falsely billed the Medicare program for over $14 billion.
These strike forces work in many population centers where Medicare beneficiaries are located.

For example, in the Southern District of Florida, 124 defendants were charged with offenses relating to their participation in various fraud schemes involving over $337 million in false billings for services including home health care and pharmacy fraud. In one case, an owner, medical director, and two employees of a sober living facility were charged with conspiracy to commit health care. The indictment alleged a scheme that illegally recruited patients, paid kickbacks, and defrauded health care benefit programs for widespread fraudulent urine testing. During the course of the fraudulent scheme, the facility submitted more than $106 million in claims for substance abuse treatment services.
In the Central District of California, 33 defendants were charged for their roles in schemes to defraud insurance programs out of more than $660 million.

For example, one indictment in a compounding pharmacy fraud case alleged an attorney/marketer paid kickbacks and offered incentives such as prostitutes and expensive meals to two podiatrists in exchange for prescriptions written on pre-printed prescription pads, regardless of the medical need for the prescriptions. Once the prescriptions were filled, members of the conspiracy submitted approximately $250 million in fraudulent claims to federal, state, and private insurers for the compounded drugs.

In the Southern District of Texas, 48 individuals were charged in cases involving more than $291 million in alleged fraud. Among these defendants are a pharmacy chain owner, managing partner, and lead pharmacist charged with a drug and money laundering conspiracy. According to the indictment, the co-conspirators used fraudulent prescriptions to fill bulk orders for over one million pills of hydrocodone and oxycodone, which the pharmacy, in turn, sold to drug couriers for millions of dollars.

In the Eastern District of New York, 13 individuals were charged with participating in a variety of schemes including kickbacks, services not rendered, identity theft and money laundering involving over $38 million in fraudulent billings. For example, the owner of a Brooklyn ambulette company was charged in a $7 million conspiracy stemming from the alleged payment of kickbacks for the referral of patients, who subjected themselves to purported physical and occupational therapy and other services, and were transported by the ambulette company.

The list of examples goes on and on. Compliance programs should review these cases and confirm their organization’s compliance program is designed effectively to prevent, detect and correct similar non-compliance from occurring within their organizations.