U.S. federal government recovers $2.6 billion in FY 2019 from healthcare fraud

Topics: Compliance, Criminal Enforcement, Financial Crime, Fraud, Government, Government Fraud, Medicare Fraud, Risk Management

healthcare fraud

The U.S. Department of Health and Human Services (HHS) and U.S. Department of Justice (DOJ) released their annual report to Congress related to stopping healthcare fraud showed substantial recoveries for the 2019 fiscal year.

Most notably, the federal government recovered more than $2.6 billion in judgments and settlements in healthcare fraud cases and civil proceedings during this period. As a result, $2.5 billion was returned to the Medicare Trust fund and an additional $148.6 million of federal Medicaid money was returned to the U.S. Treasury.

The federal government’s return on investment for federal prosecution of healthcare fraud is more than 4-times its expenditures.

Fraudulent medical testing, telemedicine & more

This annual report, released in June, primarily addresses healthcare fraud enforcement activities, whereas the semi-annual reports to Congress from the Office of Inspector General (OIG) include not only healthcare fraud recoveries from criminal and civil activities but also enforcement in all HHS programs, as well as potential savings from the OIG’s audit and evaluation recommendations in those programs.

Highlights of enforcement actions in the latest annual report include:

  • One of the largest healthcare fraud schemes ever — Charges relating to fraudulent genetic testing were brought against 35 individuals, including nine doctors, responsible for more than $2.1 billion in alleged losses in one of the largest healthcare fraud schemes ever charged.
  • Durable medical equipment schemes The arrest of 24 defendants — including the CEOs and COOs from five telemedicine companies, the owners of dozens of durable medical equipment (DME) companies, and three medical professionals — who were charged in a telemedicine and DME scheme with $1.2 billion in alleged losses.
  • Illegally dispensing controlled substances — Three regional enforcement takedowns resulted in charges against more than 345 individuals who allegedly billed the federal government more than $1 billion and prescribed or dispensed 50 million controlled substance pills across several states. More than 100 of the defendants were charged with opioid-related offenses.

High-value prosecutions

The federal government also secured convictions in multiple high-value prosecutions. Some of these involved so-called “pill mills,” pain clinics and money laundering. Here are a few highlights:

  • Marketing opioid addiction treatment — Consumer products maker Reckitt Benckiser Group (RB Group) agreed to pay $1.4 billion to resolve criminal and civil liability related to the marketing of the opioid addiction treatment medication Suboxone. RB Group is a British multinational firm that bases its U.S. operations out of Parsippany, N.J. The company agreed to forfeit $647 million, repay $500 million to resolve False Claims Act (FCA) allegations, pay $200 million to resolve state Medicaid liability and $50 million to resolve claims on unfair competition in violation of the Federal Trade Commission Act. It also agreed not to manufacture, market, or sell Schedule I, II or III controlled substances in the U.S. for three years.
  • Kickback payments — Insys Therapeutics agreed to pay $225 million to resolve criminal and civil liability relating to its marketing of the opioid drug Subsys. Insys agreed to pay $195 million to settle FCA allegations that it paid kickbacks to induce physicians and nurse practitioners to prescribe Subsys to their patients. Insys also agreed to pay a $2 million fine and $28 million in forfeiture.
  • Illicit distribution of oxycodone pills — An owner and the medical director of a Kentucky pain clinic were sentenced to 25 years and 21 years in prison, respectively, following a month-long trial. The two were convicted of operating the pain clinic as a pill mill and for money laundering the proceeds. Another co-owner was also convicted. The three were responsible for the illicit distribution of more than 1.6 million oxycodone pills and hundreds of thousands of other narcotic and sedative pills.

Opioid fraud continues to soar

Prosecutors cracked down on the opioid epidemic through the DOJ’s Opioid Fraud and Abuse Detection Unit, which focuses specifically on opioid-related healthcare fraud using data to identify and prosecute individuals contributing to the prescription opioid epidemic.

In FY 2019, the unit achieved high success in both prison sentences and monetary damage recoveries in relation to prescription opioid healthcare fraud. Some highlights from this unit include:

  • A Michigan doctor pleaded guilty to engaging in an $18 million healthcare fraud scheme involving the illegal distribution of prescription drugs. The doctor wrote medically unnecessary prescriptions for highly addictive controlled substance prescriptions in exchange for cash payments. The doctor prescribed more than 2.7 million controlled substance doses. The doctor was sentenced to 11 years, 3 months in prison. Six co-conspirators were previously sentenced to a combined 8 years, 4 months in prison.
  • A California physician’s assistant prescribed drugs to five different patients, knowing the prescriptions did not have a legitimate medical purpose. The physician’s assistant also doubled the prescriptions, falsified medical records, and coached the patients on how to avoid pharmacy and law enforcement scrutiny. The physician’s assistant was sentenced to 10 years in prison after being found guilty of 39 counts of unlawful distribution of controlled substances.
  • A marketer was sentenced to 51 months in prison for creating fraudulent prescriptions for oxycodone using a physician’s stolen prescription template and then selling the pills. This scheme resulted in the diversion of at least 10,000 oxycodone pills (30mg) on the black market in Louisiana.

Fiscal year 2019 healthcare fraud roundup

Overall, federal prosecutors filed criminal charges in 485 cases involving 814 defendants with 528 defendants convicted of healthcare fraud-related crimes in FY 2019. The DOJ also opened more than 1,100 new civil healthcare fraud investigations.

HHS also excluded more than 2,600 individuals from participating in federal healthcare programs as a result of criminal convictions, patient abuse or neglect, and state medical license revocations.