DoJ report uncovers healthcare fraud settlements, actions in 2009

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According to the 13th annual Department of Justice (DoJ) Health Care Fraud and Abuse Control Program report for fiscal year 2009, the federal government won or negotiated approximately $1.63 billion in judgments and settlements and U.S. attorneys' offices opened 1,014 new criminal healthcare fraud investigations involving 1,786 potential defendants.

The program--under the joint direction of the Attorney General and the secretary of the Department of Health and Human Services (HHS)--seeks to identify and prosecute the most egregious instances of healthcare fraud, to prevent future fraud or abuse, and to protect program beneficiaries, according to the DoJ.

In terms of monetary results for 2009, HHS Secretary Kathleen Sebelius and Attorney General Eric Holder certified $266.4 million in mandatory funding as necessary for the program and Congress appropriated $198 million in discretionary funding. The report stated that in addition to the settlements won, the government attained additional administrative impositions in healthcare fraud cases and proceedings.

As a result of these efforts, the Medicare Trust Fund received transfers of approximately $2.576 billion during this period from the Department of the Treasury and the Centers for Medicare & Medicaid Services, in addition to more than $441 million in federal Medicaid money similarly transferred separately to the treasury.

In the 2009 fiscal year, federal prosecutors reported 1,621 healthcare fraud criminal investigations pending, involving 2,706 potential defendants and filed criminal charges in 481 cases involving 803 defendants. In terms of enforcement actions taken during the course of the year, a total of 583 defendants were convicted for healthcare fraud-related crimes and the DoJ said that 886 new civil health care fraud investigations were opened, with 1,155 civil healthcare fraud matters pending.

“In addition to these enforcement actions, numerous audits, evaluations and other coordinated efforts yielded recoveries of overpaid funds, and prompted changes in federal healthcare programs that reduce vulnerability to frauds," according to the report.

Among the fraud noted in the report by pharmaceutical manufacturers, the largest healthcare fraud settlement in the history of the DoJ and HHS involved Pfizer, which agreed to pay $2.3 billion to resolve criminal and civil liability arising from the illegal promotion of its anti-inflammatory drug, Bextra. In addition to this company, other companies noted in the report included:

  • Eli Lilly entered an approximately $1.4 billion global criminal, civil and administrative settlement to resolve allegations that it illegally marketed its antipsychotic drug Zyprexa.
  • Bayer HealthCare agreed to pay $97.5 million plus interest to settle allegations that it paid kickbacks to several DME mail order suppliers and diabetic supply distributors to induce them to provide Bayer diabetic supplies to Medicare beneficiaries.
  • Abbott Laboratories agreed to pay the state of Texas and the federal government a total of $28 million in a Medicaid fraud settlement to resolve its civil liabilities related to the false pricing of certain intravenous drugs and blood products.
  • Kindred Healthcare and its successor PharMerica Healthcare Pharmacy agreed to pay $1.3 million to settle allegations in a qui tam complaint that Kindred billed Medicaid for a higher number of drugs than were actually administered.
  • Aventis Pharmaceutical, a wholly owned subsidiary of Sanofi-Aventis U.S, paid $95.5 million to resolve False Claims Act allegations that, from 1995 through 2000, it gave certain HMOs secret discounts.
  • Endoscopic Technologies paid $1.4 million to resolve civil qui tam allegations that it marketed its surgical ablation devices to treat atrial fibrillation, a use that is not approved by the FDA.

In addition to fraud by pharmaceutical companies, other frauds noted in the report were by physicians and other practitioners, pharmacies, hospitals, laboratories, clinics, nursing homes, mental healthcare facilities and medical equipment suppliers. The report also noted fraud in regard to kickbacks and other types of Medicare and Medicaid fraud.