Fraud Management & Cybercrime

Feds Charge 412 in $1.3 Billion Healthcare Fraud Bust

Authorities Call Takedown a Record Enforcement Action
Feds Charge 412 in $1.3 Billion Healthcare Fraud Bust
HHS OIG agents prepare for fraud takedown operation. (Photo: HHS)

Federal authorities have charged 412 individuals allegedly responsible for $1.3 billion in billing fraud in a takedown that federal officials are calling the largest healthcare fraud enforcement action to date.

In a joint statement issued Thursday, the Department of Justice and the Department of Health and Human Services said the Medicare Fraud Strike Force bust involved charging defendants - including 115 doctors, nurses and other licensed medical professionals across 41 federal districts - for their alleged participation in healthcare fraud schemes.

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"Healthcare fraud is not only a criminal act that costs billions of taxpayer dollars - it is an affront to all Americans who rely on our national healthcare programs for access to critical healthcare services and a violation of trust," said HHS Secretary Tom Price.

More than 120 defendants were charged for their roles in prescribing and distributing opioids and other dangerous narcotics. In addition, HHS says it has initiated suspension actions against 295 providers, including doctors, nurses and pharmacists.

The strike-force operation also involved multiple other DOJ and HHS units, including the HHS Office of Inspector General, U.S. Attorney's Office, the FBI and the Drug Enforcement Agency.

"The charges ... aggressively target schemes billing Medicare, Medicaid, and TRICARE - a health insurance program for members and veterans of the armed forces and their families - for medically unnecessary prescription drugs and compounded medications that often were never even purchased and/or distributed to beneficiaries," the statement says. "The charges also involve individuals contributing to the opioid epidemic, with a particular focus on medical professionals involved in the unlawful distribution of opioids and other prescription narcotics, a particular focus" for the departments.

Those Charged

Among the more than 400 individuals charged are:

  • Some 77 defendants in South Florida charged with alleged offenses relating to their participation in various fraud schemes involving over $141 million in false billings for services including home healthcare, mental health services and pharmacy fraud. The allegations include a case in which an owner and operator of a purported addiction treatment center recruited addicted patients to move to South Florida so that co-conspirators could bill insurance companies for fraudulent treatment and testing, in return for which the co-conspirators offered kickbacks to patients in the form of gift cards, free airline travel, trips to casinos and strip clubs, and drugs.
  • Ten individuals in the middle district of Florida charged with participating in a variety of schemes involving almost $14 million in alleged fraudulent billing. In one case, three defendants were charged in a $4 million scheme to defraud the TRICARE program.
  • Twenty-six individuals in Texas charged in cases involving over $66 million in alleged fraud. Defendants include a physician and a clinic owner who were indicted for conspiracy to distribute and dispense controlled substances and other charges in connection with a purported pain management clinic that is alleged to have been the highest prescribing hydrocodone clinic in Houston, where 60 to 70 people were seen daily.
  • Ten individuals in New York charged with allegedly participating in a variety of schemes including kickbacks, services not rendered, and money laundering involving over $151 million in fraudulent billings to Medicare and Medicaid. Most of those billings were allegedly part of a scheme in which five healthcare professionals paid illegal kickbacks in exchange for patient referrals to their own clinics.
  • Seventeen defendants in California charged for their alleged roles in schemes to defraud Medicare out of approximately $147 million. Two of the defendants were indicted for their alleged involvement in a $41.5 million scheme to defraud Medicare and a private insurer by submitting fraudulent claims and receiving payments for prescription drugs that were not filled by the pharmacy nor given to patients.

Previous Busts

Each year, federal takedowns of healthcare fraud appear to grow. In June 2016, in what was dubbed at the time as the largest healthcare fraud takedown to date, federal authorities charged 301 individuals for $900 million in false Medicare and Medicaid billings (see Feds Charge 301 Individuals in $900 Million Healthcare Fraud Sweep).

In 2015, federal authorities announced the arrest of 243 people on fraud charges totaling $712 million (see 243 Charged in Medicare Fraud Schemes).

Also among other large Medicare busts was the May 2014 arrest of 90 individuals in six states who were allegedly tied to Medicare fraud schemes responsible for $260 million worth of false billings (see 90 Charged in Medicare Fraud Schemes).

Growing Trend?

Keith Fricke, principle consultant at tw-Security, says despite the pattern of escalating healthcare fraud enforcement actions annually, "I don't think the feds are trying to break any records; rather, they are trying to enforce laws and seeing that criminals serve time for crimes committed. In addition, reducing further fraud stems the financial burden on the government and the country's taxpayers. In this case, it also serves to reduce loss of life due to opioid abuse and overdoses while criminals profit from it."

Nonetheless, the trend of bigger takedowns indicates at least two issues, he says. "First, it means that criminals see more opportunity to make larger profits from these types of illegal activities. It also means that law enforcement recognizes the growing trends and are putting more resources on the problem to tackle the trend."

Lessons for Others

Fricke says other healthcare entities and healthcare professionals can learn lessons from the recent takedown.

"The government is serious about healthcare providers committing crime in the name of illegal profit and that regulations will continue to govern how healthcare organizations need to comply with Medicare/Medicaid audits, in order to uncover fraudulent activity," he says.

Healthcare entities can also play a role in efforts to fight fraud, he notes.

"Educate the workforce about [fraud busts] such as this one," he says. "Investing in user behavior analytics can help identify anomalous activities potentially leading to the discovery of fraud taking place."

About the Author

Marianne Kolbasuk McGee

Marianne Kolbasuk McGee

Executive Editor, HealthcareInfoSecurity, ISMG

McGee is executive editor of Information Security Media Group's media site. She has about 30 years of IT journalism experience, with a focus on healthcare information technology issues for more than 15 years. Before joining ISMG in 2012, she was a reporter at InformationWeek magazine and news site and played a lead role in the launch of InformationWeek's healthcare IT media site.

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