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Health Care Fraud Enforcement Trends Highlighted at American Bar Association Conference

Update
05.18.2011

The government is mounting an unprecedented war on health care fraud, according to panelists at the recently convened ABA Health Care Fraud Conference. Health care fraud costs taxpayers billions of dollars every year and the government is devoting significantly greater resources to attack the problem. The government’s ramped-up enforcement efforts have targeted individuals, hospitals, pharmaceutical manufacturers and medical device companies, in order to uncover and bring civil and criminal charges as quickly as possible. At the annual Health Care Fraud Conference, held this year in Miami from May 11-13, high level officials from both the Department of Justice (“DOJ”) and the Department of Health and Human Services (“HHS”) described the wide array of weapons they are using in their reinvigorated campaign against fraud: 

  • Hank Walther, assistant chief of the Fraud Section at DOJ, confirmed that they have significantly increased the number of agents and attorneys dedicated to investigating health care fraud. Additional agents are also being assigned to the newly established Healthcare Fraud Prevention and Enforcement Action Team (“HEAT”) units across the country, most recently in Dallas and Chicago. The HEAT units' mission is to not only increase the number of health care fraud prosecutions, but also to develop cases in a more focused manner, reducing the time from the initiation of an investigation to its conclusion. 

  • The number of DOJ Criminal Division prosecutors dedicated to health care fraud has nearly doubled in an effort to keep up with the increased workload. DOJ is placing a higher priority on the investigation of large corporate health care cases by involving DOJ Criminal Division attorneys at an earlier stage in the investigations. 

  • DOJ is paying particular interest to any possible violations of the Foreign Corrupt Practices Act (“FCPA”) committed by pharmaceutical companies and medical device manufacturers doing business abroad. These companies often have extensive interactions with foreign government officials, including government-employed physicians, and any improper payments or benefits provided to these foreign officials could subject companies to prosecutions for FCPA violations. 

  • Daniel Anderson, deputy director of the Commercial Litigation Branch of the Civil Division at DOJ, noted that over 78% of False Claims Act (“FCA”) cases handled by DOJ are health care cases, and the largest cases involve pharmaceutical and medical device companies. 

  • The number of health care FCA cases brought by private relators (“qui tam” plaintiffs) has increased significantly in recent years. The Civil Division at DOJ currently has 180 FCA matters alleging improper conduct by pharmaceutical companies. These matters typically involve more than one manufacturer and a large number involve alleged violations of the Anti-Kickback Statute. The Civil Division is also handling an increasing number of cases involving private insurers. 

  • The government is making a concerted effort to decrease the time it takes to decide whether to intervene in qui tam actions. According to Deputy Director Anderson, the multi-year delay that sometimes accompanied these actions in the past will be a rarity in the future. 

  • Spencer Turnbull, HEAT initiative administrator for HHS-OIG, indicated that HHS is serious about using an exclusion from the Medicare program as a sanction for executives of companies that commit health care fraud. Turnbull noted that HHS will exercise its permissive exclusion authority consistent with the guidelines that were promulgated by HHS in October 2010. 

  • Representatives from DOJ and HHS agreed that data analytics ("data mining") continues to be a very valuable tool for ferreting out health care fraud, though such data is primarily used to develop leads. Cases are not usually pursued solely on the basis of data analytics. 

  • Several speakers at the conference noted that under the Patient Protection and Affordable Care Act of 2010 , health care providers generally must report and return any overpayment of Medicare or Medicaid funds within 60 days from the date that the overpayment was “identified.” Any overpayment not reported within 60 days becomes an “obligation” under the FCA, making the provider potentially liable for three times the amount of the overpayment. 

With the government dedicating greater resources to the detection and investigation of health care fraud, it is incumbent on providers to develop robust compliance programs that provide guidance to employees on permissible conduct and that also detect violations as early as possible. When a billing discrepancy is discovered, providers must act quickly to determine whether an overpayment has occurred to avoid the serious consequences that accompany a failure to report in a timely fashion. In addition, when misconduct is uncovered, a company's prompt actions will not only limit the potential financial repercussions, but will also put the company and its executives in a better position when HHS-OIG considers whether to seek permissive exclusion of responsible corporate officials. 

© 2011 Perkins Coie LLP