Feds Announce Record-Breaking Recoveries From Efforts to Combat Health Care Fraud

healthcare_fraud_imageWASHINGTON – Attorney General Eric Holder and Health and Human Services Secretary Kathleen Sebelius yesterday released a new report showing that for every dollar spent on health care-related fraud and abuse investigations in the last three years, the government recovered $7.90. This is the highest three-year average return on investment in the 16-year history of the Health Care Fraud and Abuse Program.

The government’s health care fraud prevention and enforcement efforts recovered a record $4.2 billion in taxpayer dollars in Fiscal Year (FY) 2012, up from nearly $4.1 billion in FY 2011, from individuals and companies who attempted to defraud federal health programs serving seniors and taxpayers or who sought payments to which they were not entitled. Over the last four years, the administration’s enforcement efforts have recovered $14.9 billion, up from $6.7 billion over the prior four-year period. Since 1997, the HCFAC Program has returned more than $23 billion to the Medicare Trust Funds.

These findings, released today in the annual HCFAC Program report, are a result of President Obama making the elimination of fraud, waste and abuse, particularly in health care, a top priority for the administration.

“This was a record-breaking year for the Departments of Justice and Health and Human Services in our collaborative effort to crack down on health care fraud and protect valuable taxpayer dollars,” said Attorney General Holder. “In the past fiscal year, our relentless pursuit of health care fraud resulted in the disruption of an array of sophisticated fraud schemes and the recovery of more taxpayer dollars than ever before. This report demonstrates our serious commitment to prosecuting health care fraud and safeguarding our world-class health care programs from abuse.”

“Our historic effort to take on the criminals who steal from Medicare and Medicaid is paying off: We are gaining the upper hand in our fight against health care fraud,” said Secretary Sebelius. “This fight against fraud strengthens the integrity of our health care programs and helps us fulfill our commitment to our seniors.”

The administration is also using tools authorized by the Affordable Care Act to fight fraud, including enhanced screenings and enrollment requirements, increased data sharing across the government, expanded recovery efforts for overpayments and greater oversight of private insurance abuses.

The strike force teams use advanced data analysis techniques to identify high-billing levels in health care fraud hot spots so that interagency teams can target emerging or migrating schemes as well as with chronic fraud by criminals masquerading as health care providers or suppliers. In July, Attorney General Holder and Secretary Sebelius announced the launch of a groundbreaking partnership among the federal government, state officials, leading private health insurance organizations and other health care anti-fraud groups to share information and best practices to improve detection of and prevent payments to scams that cut across public and private payers.

In FY 2012, the Justice Department opened 1,131 new criminal health care fraud investigations involving 2,148 potential defendants, and a total of 826 defendants were convicted of health care fraud-related crimes during the year. The department also opened 885 new civil investigations.

The strike force coordinated a takedown in May 2012 that involved the highest number of false Medicare billings in the history of the strike force program. The takedown involved 107 individuals, including doctors and nurses, in seven cities, who were charged for their alleged participation in Medicare fraud schemes, involving about $452 million in false billings. As a part of the May 2012 takedown, HHS also suspended or took other administrative action against 52 providers using authority under the health care law to suspend payments until an investigation is complete.

Strike force operations in the nine cities where teams are based resulted in 117 indictments, informations and complaints involving charges against 278 defendants who allegedly billed Medicare more than $1.5 billion in fraudulent schemes. In FY 2012, 251 guilty pleas and 13 jury trials were litigated, with guilty verdicts against 29 defendants, in strike force cases. The average prison sentence in these cases was more than 48 months.

The new authorities under the Affordable Care Act granted to HHS and the Centers for Medicare & Medicaid Services (CMS) were instrumental in clamping down on fraudulent activity in health care. In FY 2012, CMS began the process of screening all 1.5 million Medicare-enrolled providers through the new Automated Provider Screening system that quickly identifies ineligible and potentially fraudulent providers and suppliers prior to enrollment or revalidation to verify the data. As a result, nearly 150,000 ineligible providers have already been eliminated from Medicare’s billing system.

CMS also established the Command Center to improve health care-related fraud detection and investigation, drive innovation and help reduce fraud and improper payments in Medicare and Medicaid.

From May 2011 through the end of 2012, more than 400,000 providers were subject to the new screening requirements and nearly 150,000 lost the ability to bill the Medicare program due to the Affordable Care Act requirements and other proactive initiatives.

The Department of Justice and HHS also continued their successes in civil health care fraud enforcement during FY 2012. The Justice Department’s Civil Division Fraud Section, with their colleagues in U.S. Attorneys’ offices throughout the country, obtained settlements and judgments of more than $3 billion in FY 2012 under the False Claims Act (FCA). These matters included unlawful pricing by pharmaceutical manufacturers, illegal marketing of medical devices and pharmaceutical products for uses not approved by the Food and Drug Administration, Medicare fraud by hospitals and other institutional providers, and violations of laws against self-referrals and kickbacks. This marked the third year in a row that more than $2 billion has been recovered in FCA health care matters.

Some notable instances of home health fraud and abuse during FY 2012 was addressed in the report, including the $374 million fraud case involving a Dallas physician and more than 500 home healtg agencies. Included in the report:

• In August 2012, the owner and operator of a Miami health care agency pleaded guilty for his participation in a $42 million home health Medicare fraud scheme. According to plea documents, the defendant conspired with patient recruiters for the purpose of billing the Medicare program for unnecessary home health care and therapy services. The defendant and his co-conspirators paid kickbacks and bribes to patient recruiters in return for these recruiters providing patients and other necessary documentation to the home health care agency for medically unnecessary therapy and home health services for Medicare beneficiaries. The defendant and his co-conspirators also paid kickbacks and bribes directly to physicians in exchange for home health and therapy prescriptions, plans of care, and medical certifications. The defendant used these documents to fraudulently bill the Medicare program for home health care services. The defendant is currently awaiting sentencing.

• In April 2012, the U.S. District Court in Miami sentenced the three owners of a Miami health care agency to 120 months, 87 months and 87 months respectively for their participation in a $60 million Medicare home health care fraud scheme. The defendants pleaded guilty to one count of conspiracy to commit health care fraud. The defendants admitted that, from about January 2006 to about November 2009, they operated a home health care agency that paid illegal kickbacks to recruiters to obtain Medicare beneficiaries, which they then billed to Medicare for home health care services that were not medically necessary, and in many cases, never provided at all.

• In January 2012, an office administrator at a home health care provider was sentenced to 78 months of incarceration after she pleaded guilty to charges of conspiracy to commit health care fraud. In all, the defendant and two co-conspirators were ordered to pay $15.3 million, $118,000, and $395,000, respectively, in restitution, jointly and severally, for their roles in the fraud scheme. The trio was affiliated with two home health companies that purported to provide home health and physical therapy services to Medicare beneficiaries. The home health companies fraudulently billed Medicare for home health services provided to beneficiaries who were not restricted to their homes and who had no medical need for the services.

• In January 2012, a Detroit-area home health agency owner pleaded guilty for his leading role in a $13.4 million Medicare home health care fraud and money-laundering scheme. The owner, who was charged along with nineteen other defendants in the original and superseding indictments, admitted to paying kickbacks to beneficiaries, billing Medicare for services never rendered and laundering the proceeds of the fraud. Nine defendants charged in the scheme have pleaded guilty, and three are fugitives.

• In June 2012, the U.S. District Court in Houston sentenced the former co-owners of a home health care company to 9 years in prison for their participation in a $5.2 million Medicare fraud scheme. The owners paid co-conspirators to recruit Medicare beneficiaries for the purpose of filing claims with Medicare for care that was medically unnecessary, or not provided. To date, nine individuals, including nurses and patient recruiters, have been sentenced related to the scheme.

• In February 2012, a Federal grand jury indicted a Dallas-area doctor and owner of an association of health care providers, along with five others, in a $374 million home health care fraud scheme, the largest fraud case ever indicted in terms of the amount of loss charged against a single doctor. The indictment charges the defendant with fraudulently certifying or directing the certification of more than 11,000 individual patients from more than 500 home health agencies for home health services over five years. These certifications allegedly resulted in more than $350 million being fraudulently billed to Medicare and more than $24 million being fraudulently billed to Medicaid.

• In December 2011, four owners of a Dallas home health agency, and one patient recruiter pled guilty to charges related to their participation in a scheme to defraud Medicare and Medicaid of approximately $1 million. The agency submitted fraudulent claims to Medicare for home health services purportedly provided to Medicare beneficiaries. The defendants falsified Medicare documentation and skilled nursing notes indicating that the patients were homebound and eligible for home health care services. They also falsified time sheets and patient visit logs for services that were not adequately rendered or were never provided at all, but then billed Medicare as if the services were adequately provided.

• In December 2011, the U.S. District Court sentenced a patient recruiter for a home health agency to 33 months in prison for her role in a scheme to defraud Medicare and Medicaid of approximately $1 million. This defendant recruited Medicare beneficiaries and agreed to pay patients kickbacks of $100 per month so that they would continue to use the home health agency. In August 2012, a co-defendant and owner of the home health agency was sentenced to 37 months in prison. This defendant admitted that she submitted fraudulent claims to Medicare for home health services for Medicare beneficiaries who were not homebound and, therefore, ineligible for home health care services.

• In August 2012, a home health care agency in suburban Chicago, two nurses who are part owners of the company and a third nurse affiliated with them, along with two marketers, were indicted on Federal charges for allegedly participating in a conspiracy to pay and receive kickbacks in exchange for the referral of Medicare patients for home health care services. The part owners of the home health care agency and three other defendants allegedly conspired to pay and receive approximately $400,000 in kickbacks to themselves, nurses, marketers and others for the referral and retention of Medicare patients that enabled the home health care agency to bill Medicare approximately $5 million.

• In June 2012, 10 defendants, including the owners of two Chicago home health care companies and three physicians, were indicted for allegedly participating in two separate schemes to pay and receive cash kickbacks in exchange for the referral of Medicare patients for home health care services. In one case, the owners of the home health care company, and seven other defendants allegedly engaged in a fraud scheme involving payment of more than $1.1 million in cash kickbacks to doctors, social workers, and a registered nurse in exchange for the referral of Medicare patients. In the second case, the owner was charged alone with allegedly paying at least $500,000 in cash kickbacks to doctors in exchange for Medicare patient referrals.

• In March 2012, two physicians and four registered nurses were among 11 defendants who were added to an indictment against a suburban Chicago man who operated two home health care businesses for allegedly swindling Medicare of at least $20 million over five years. Nine co-defendants allegedly conspired with the lead defendant to submit millions of dollars in false claims for reimbursement of home health care services purportedly provided to Medicare beneficiaries, which were never provided or were not medically necessary so that they could profit from the fraudulently-obtained funds. These co-schemers allegedly used the proceeds for various purposes, including: using cash to gamble at casinos in the Chicago area and Las Vegas; purchasing automobiles, jewelry and real estate in the United States and the Philippines and, paying kickbacks to others in exchange for patient referrals.

• In August 2012, the president and an employee of a home health services supplier in Florida were sentenced for their participation in a multi-million dollar fraud scheme. According to court documents, between February 2005 and April 2011, the president and her coconspirators paid kickbacks and bribes to patient recruiters in return for the recruiters providing patients to the home health supplier, as well as prescriptions, plans of care (POC), and certifications for medically unnecessary therapy and home health services. Employees of the home health company then falsified patient files for Medicare beneficiaries to appear as though they qualified for the services. The president then used these prescriptions, POCs, and medical certifications to fraudulently bill Medicare for home health care services. The two individuals were sentenced to 9 years and 3 years and 10 months of incarceration, respectively. In addition, the president was ordered to pay $14 million in restitution, jointly and severally, and the employee was ordered to pay over $2 million in restitution.

• In February 2012, a personal care attendant and her daughter were sentenced for their roles in a Medicaid fraud scheme. A relative of the pair was a Medicaid beneficiary and received attendant care services from the attendant pursuant to the Medicaid Commerce Waiver Program. An initial investigation by the Pennsylvania MFCU revealed that the beneficiary suffered from ulcers, bed sores, dehydration, and malnutrition and had missed numerous medical appointments. A doctor who examined him in June 2009 recommended that the beneficiary be immediately transported to an emergency room. On a number of the attendant’s timesheets, the attendant’s daughter signed on behalf of the beneficiary, verifying the hours and services provided. Numerous timesheets and claims submitted to Medicaid included hours that the attendant allegedly provided care when in fact the attendant was employed elsewhere or was out of town or when the beneficiary was hospitalized or was in a nursing home. The attendant was sentenced to between 11.5 months to 23 months of incarceration and ordered to pay $128,000 in restitution. Her daughter was ordered to pay $38,614 of this amount, jointly and severally with the attendant, and was sentenced to a 7-year term of probation. This was a joint investigation with the MFCU of the Pennsylvania Attorney General’s Office and the Montgomery County District Attorney’s Office.

• In January 2012, the owner/operator of a Minnesota home health facility was sentenced to 24 months of incarceration and ordered to pay $656,876 in restitution to Medicaid for claims submitted for personal care assistant (PCA) services. Between May 2007 and March 2008, the owner/operator submitted false claims with respect to the number of PCA service hours provided to Medicaid beneficiaries. The owner/operator also submitted false claims to Medicaid for services that were not rendered, were provided by an unqualified individual, and were not medically necessary. This case was jointly investigated with the Minnesota MFCU.

• In August 2012, the president and an employee of a home health services supplier in Florida were sentenced for their participation in a multi-million dollar fraud scheme. According to court documents, between February 2005 and April 2011, the president and her coconspirators paid kickbacks and bribes to patient recruiters in return for the recruiters providing patients to the home health supplier, as well as prescriptions, plans of care (POC), and certifications for medically unnecessary therapy and home health services. Employees of the home health company then falsified patient files for Medicare beneficiaries to appear as though they qualified for the services. The president then used these prescriptions, POCs, and medical certifications to fraudulently bill Medicare for home health care services. The two individuals were sentenced to 9 years and 3 years and 10 months of incarceration, respectively. In addition, the president was ordered to pay $14 million in restitution, jointly and severally, and the employee was ordered to pay over $2 million in restitution.

South Florida Fraud Hot Line

CMS also continued a successful initiative aimed at increasing fraud reporting in South Florida. As part of a two-year infusion therapy demonstration, CMS established a special fraud hotline in 2007 to protect Medicare beneficiaries in South Florida from fraudulent providers of infusion therapy. As a result of the hotline’s success in FY 2009, CMS expanded the scope of this infusion therapy fraud hotline to handle all Medicare fraud-related calls in South Florida. The fraud hotline number is included on monthly Medicare Summary Notices (MSNs) sent to beneficiaries in Miami-Dade, Broward and Palm Beach counties.

Trained, bilingual, or trilingual staff fielded and routed calls, and acknowledged receipt of complaints in writing. A rapid response team at the ZPIC investigated the highest priority leads received from the fraud hotline within 48 hours of receipt of the call and then collaborated with CMS and law enforcement to pursue appropriate follow up action(s). CMS worked with its partners to conduct beneficiary outreach and education to ensure beneficiaries understood the types of fraud that may occur and how to read their MSNs to detect potential fraudulent billings.

As of August 31, 2012, the hotline has received more than 86,535 calls leading to 954 new fraud investigations. In addition, the ZPIC has placed 191 providers on prepayment review saving $14 million, revoked or deactivated 157 provider numbers, referred 42 cases to law enforcement, and sent 133 Immediate Advisements to the HHS/OIG. Additionally, law enforcement has seized $3 million in provider bank accounts.

Click here to download the HCFAC annual report. For more information on the joint DOJ-HHS Strike Force activities, visit www.StopMedicareFraud.gov.

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