DEVELOPING: Feds Announce Charges in Historic Healthcare Fraud Takedown

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Original story posted on: June 22, 2016

Federal authorities on Wednesday announced what they described as the culmination of an “unprecedented” multi-jurisdiction healthcare fraud investigation resulting in approximately 300 arrests tied to $900 million in fraudulent billing.

Both totals were records for the federal Medicare Fraud Strike Force, which led the way in making arrests in 36 federal districts, U.S. Attorney General Loretta E. Lynch and Department of Health and Human Services (HHS) Secretary Sylvia Mathews Burwell said in a U.S. Department of Justice (DOJ) press release.

The 301 defendants slapped with civil and criminal charges included 61 doctors, nurses, and other licensed medical professionals accused of participating in the various healthcare fraud schemes. Twenty-three state Medicaid Fraud Control Units also participated in making the arrests, authorities said, and in addition, the Centers for Medicare & Medicaid Services (CMS) suspended payment to a number of providers using its suspension authority provided in the Patient Protection and Affordable Care Act.  

Attorney General Lynch and Secretary Burwell were joined in making the announcement by Assistant Attorney General Leslie R. Caldwell of the DOJ’s Criminal Division, FBI Associate Deputy Director David Bowdich, Inspector General Daniel Levinson of the HHS Office of Inspector General (OIG), Acting Director Dermot O’Reilly of the Defense Criminal Investigative Service (DCIS), and Deputy Administrator and Director of CMS Center for Program Integrity Shantanu Agrawal, M.D. 

The defendants in the case were charged with crimes including conspiracy to commit healthcare fraud, violations of the federal anti-kickback statutes, money laundering, and aggravated identity theft, among others, authorities said. The charges were based on a variety of alleged fraud schemes involving various medical treatments and services, including home health care, psychotherapy, physical and occupational therapy, durable medical equipment (DME), and prescription drugs. 

More than 60 of the defendants arrested are charged with fraud related to the Medicare Part D, the federal prescription drug benefit program, which the DOJ described in its press release as the fastest-growing component of the Medicare program overall. 

“As this takedown should make clear, healthcare fraud is not an abstract violation or benign offense – It is a serious crime,” Lynch said. “The wrongdoers that we pursue in these operations seek to use public funds for private enrichment. They target real people – many of them in need of significant medical care. They promise effective cures and therapies, but they provide none. Above all, they abuse basic bonds of trust – between doctor and patient; between pharmacist and doctor; between taxpayer and government – and pervert them to their own ends. The Department of Justice is determined to continue working to ensure that the American people know that their healthcare system works for them – and them alone.”

“Millions of seniors depend on Medicare for essential health coverage, and our action shows that this administration remains committed to cracking down on individuals who try to defraud the program,” Burwell added. “We are continuing to put new tools and additional resources to work, including $350 million from the (Patient Protection and) Affordable Care Act, for healthcare fraud prevention and enforcement efforts. Thanks to the hard work of the Medicare Fraud Strike Force, we are making progress in addressing and deterring fraud and delivering results to help ensure Medicare remains strong for years to come.”

Authorities said the defendants allegedly participated in schemes to submit claims to Medicare and Medicaid for treatments that were medically unnecessary – and often, never provided. In many cases, officials allege, patient recruiters, Medicare beneficiaries, and other co-conspirators were paid cash kickbacks in return for supplying beneficiary information to providers so that the providers could then submit fraudulent bills to Medicare for such treatments. 

The Medicare Fraud Strike Force, founded in March 2007, is made up of a variety of federal, state, and local enforcement groups that use data analysis and community policing to combat healthcare fraud in a wide range of forms. 

“The … Strike Force is a model of 21st-Century, data-driven law enforcement, and it has had a remarkable impact on healthcare fraud across the country,” Caldwell said. “As the cases announced today demonstrate, the Strike Force’s strategic approach keeps us a step ahead of emerging fraud trends, including drug diversion, and fraud involving compounded medications and hospice care.”

“While it is impossible to accurately pinpoint the true cost of fraud in federal healthcare programs, fraud is a significant threat to the programs’ stability and endangers access to healthcare services for millions of Americans,” Levinson said. “As members of the joint Strike Force, OIG will continue to play a vital role in tracking down these criminals and seeing that justice is done.”

The Strike Force operations are also part of the Health Care Fraud Prevention & Enforcement Action Team (HEAT), a joint initiative involving DOJ and HHS that was created in May 2009 to organize investigative efforts to prevent and deter fraud and enforce current anti-fraud laws around the country. The Strike Force operates in nine locations, and since its inception in March 2007 has charged nearly 3,000 defendants who collectively falsely billed the Medicare program for over $8.9 billion.

Wednesday’s enforcement efforts included the following, authorities said: 

  • In the Southern District of Florida, a total of 100 defendants were charged with offenses relating to their alleged participation in various fraud schemes involving approximately $220 million in false billings for home health care, mental health services, and pharmacy fraud. In one case, nine defendants were charged with operating six different Miami-area home health companies for the purpose of submitting false and fraudulent claims to Medicare, including for services that were not medically necessary and that were based on bribes and kickbacks. In total, Medicare paid the six companies over $24 million as a result of the scheme.
  • In the Southern District of Texas, 24 individuals were charged in cases involving over $146 million in alleged fraud. One of the defendants is a physician with the highest number of referrals for home health services in the District. This physician has been charged with participating in separate schemes to bill Medicare for medically unnecessary home health services that were often not provided. Numerous companies that submitted claims to Medicare using the fraudulent home health referrals from the physician were paid over $38 million by Medicare.
  • In the Northern District of Texas, 11 people were charged in cases involving over $47 million in alleged fraud. In one scheme, a physician allowed unlicensed individuals to perform physician services and then billed Medicare as if he performed them. Additionally, the physician certified patients for home health care that was often medically unnecessary. Home health companies submitted approximately $23.3 million in billings to Medicare based on the physician’s fraudulent certifications.    
  • In the Central District of California, 22 defendants were charged for their roles in alleged schemes to defraud Medicare of approximately $162 million. In one case, a doctor was charged with causing almost $12 million in losses to Medicare through his own fraudulent billing, including performing medically unnecessary vein ablation procedures on Medicare beneficiaries.  
  • In the Eastern District of Michigan, 19 defendants face charges for their alleged roles in fraud, kickback, money laundering, and drug distribution schemes involving approximately $114 million in false claims for services that were medically unnecessary or never rendered. Among these are owners of a physical therapy clinic who allegedly lured patients through the payment of cash kickbacks and medically unnecessary prescriptions for Schedule II medications for the purpose of stealing more than $36 million from Medicare.    
  • In Tampa and elsewhere in the Middle District of Florida, 15 individuals were charged with participating in a variety of alleged schemes, including compounding pharmacy fraud and intravenous prescription drug fraud involving $17 million in fraudulent billing. In one case, the owner of several infusion clinics allegedly defrauded the Medicare program of over $8 million through a scheme involving reimbursement claims for expensive intravenous prescription drugs that were never purchased and never administered to patients. 
  • In the Northern District of Illinois, six individuals were charged in cases related to three different schemes involving bribery and false and fraudulent claims for home health services and disability benefits. The charged defendants include individuals who owned or co-owned the fraudulent providers and a medical doctor. In total, these schemes resulted in over $12 million being paid to the defendants and their companies.  
  • In the Eastern District of New York, 10 individuals were charged in six different cases, including five individuals who were charged for their roles in a scheme involving over $86 million in physical and occupational therapy claims to Medicare and Medicaid. In that case, the defendants are alleged to have filled a network of Brooklyn clinics that they controlled with patients by paying bribes and kickbacks. Once at the clinics, these patients were subjected to medically unnecessary therapy. The defendants then laundered the proceeds of the fraud through over a dozen shell companies. 
  • In the Eastern District of Louisiana, three defendants were charged in connection with an alleged healthcare fraud and wire fraud conspiracy involving a defunct home health care provider. This scheme centered on the payment of kickbacks through patient recruiters in exchange for patients who often never received nor qualified for home health care as billed. Once admitted, patient medical records were allegedly routinely fabricated and altered to support false and fraudulent claims to Medicare.

In addition to involving the Strike Force, the enforcement actions included cases brought by 26 U.S. Attorney’s Offices, including the unsealing of search warrants in investigations being conducted by the Eastern District of North Carolina, Southern District of Georgia, District of Columbia, Eastern District of Texas, Southern District of West Virginia, Middle District of Louisiana, District of Minnesota, and the Northern District of Alabama.

The court documents for each case will posted online as they become available here: https://www.justice.gov/opa/documents-and-resources-june-22-2016-medicare-fraud-strike-force-press-conference.

 

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Mark Spivey is a national correspondent for RACmonitor.

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Mark Spivey

Mark Spivey is a national correspondent for ICDmonitor.com, RACmonitor and ICD10monitor who has been writing on numerous topics facing the nation’s healthcare system (and federal oversight of it) for eight years.

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