Federal investigators recoup $2.2B in healthcare-fraud prosecutions

Federal investigators recouped $2.2 billion during fiscal 2006 by prosecuting companies and individuals who allegedly defrauded government healthcare programs, an interdepartmental task force announced this week.

A report, issued by the Department of Health and Human Services (HHS) Office of Inspector General (OIG) and the Department of Justice, details efforts by investigators and prosecutors from both departments to root out scams and reclaim money improperly paid out under programs such as Medicare and Medicaid.

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The OIG-Justice Health Care Fraud and Abuse Control Program has channeled $10.4 billion into the Medicare trust fund since 1997, the agencies reported.

That includes $1.5 billion put back into the Medicare trust fund as a result of these joint efforts in fiscal 2006. The remainder of the $2.2 billion recouped in 2006 goes to the agencies that were allegedly defrauded, primarily the Centers for Medicare and Medicaid Services. HHS claimed more than $378.4 million.

The departments are required to offer an annual report to Congress on their progress in recouping funds lost through fraud, an ongoing problem for government health programs.

The results for 2006, the most recent fiscal year reviewed by OIG and Justice, surpass those from the previous fiscal year:

In 2005, task force investigators and prosecutors won $1.47 billion from healthcare fraud and abuse cases.

Authorities began 836 new investigations during the year, raising the total number of actions to 1,677; in 355 of those cases, charges have been filed. During fiscal 2006, prosecutors won convictions against 547 defendants.

In addition to the criminal cases, Justice has more than 2,000 open civil cases involving healthcare fraud, 915 of which were launched in 2006, according to the report.

The cases ranged considerably in scope and scale. The largest recovery came from a settlement with Tenet Healthcare Corp., one of the largest for-profit hospital chains in the United States. In a well-publicized case, whistleblowers from inside the company alerted federal authorities, which uncovered evidence that Tenet was manipulating Medicare’s payment system to boost revenue and paid kickbacks to physicians who sent their patients to Tenet facilities. To settle the charges and avoid a court judgment on the accusations, Tenet agreed to pay the government $900 million over the course of four years.

Other hospital companies also coughed up millions to the federal government in fraud and abuse cases in fiscal 2006, including St. Barnabas Health Care System in New Jersey ($265 million), Beth Israel Medical Center in New York ($73 million), the Chattanooga-Hamilton County Hospital Authority in Tennessee ($37 million), University Hospitals Health System in Ohio ($13.8 million), Our Lady of Lourdes Regional Medical Center in Louisiana ($3.8 million) and the Milton S. Hershey Medical Center in Pennsylvania ($2.9 million).

In addition, prosecutors scored convictions against several hospital managers, such as two former psychiatric hospital executives in San Diego who were convicted of defrauding Medicare and ordered to pay more than $15.7 million to the government.

Hospitals weren’t the only sector of the healthcare industry forced to pay up over fraud and abuse allegations. The pharmaceutical company Serono paid $704 million to settle charges that it illegally advised doctors to prescribe an AIDS medicine called Serostim for uses not approved by the Food and Drug Administration (FDA), paid kickbacks to cooperative physicians, and conspired with the diagnostic device maker RJL Sciences to market a device not approved by the FDA. RJL Sciences pleaded guilty to its role.

Schering-Plough, another drug company, is on the hook for $435 million as a result of several charges, including allegedly giving false information to the FDA, which was investigating whether the company’s marketing practices violated the law.

Other cases outlined in the report involved nursing homes, physicians, medical equipment suppliers, power-wheelchair retailers, ambulance companies, dentists and others.