Health-care fraud cases yield $4.2 billion

Posted: February 13, 2013

In an era when pharmaceutical executives - like their brethren in banking - are under fire for paying fines too often instead of going to prison to settle allegations of wrongdoing, health care fraud investigations returned $4.2 billion to the nation's coffers last year, the U.S. government said Monday.

For every $1 spent on investigations, the government got back $7.90 over the last three years, which is $2.50 higher than the rolling three-year average since the Health Care Fraud and Abuse Control Program began in 1997, according to a joint report released by the Department of Justice and Department of Health and Human Services.

Settlements produced nearly $4.1 billion in 2011.

"This fight against fraud strengthens the integrity of our health care programs and helps us fulfill our commitment to our seniors," HHS Secretary Kathleen Sebelius said in a statement.

HHS runs federal health insurance programs such as Medicare and Medicaid, and the Food and Drug Administration.

With government budgets tight, hospitals, doctors, home-care service providers, wholesalers, device and drug makers have all been targets of fraud investigations. A big slice of the total was a $3 billion settlement with drugmaker GlaxoSmithKline P.L.C. for marketing practices and withholding safety information. The company, though no individuals, pleaded guilty to three misdemeanors related to conduct before 2008.

The U.S. Attorney's Office in Philadelphia has prosecuted big companies and individuals, including Temple doctor Joseph J. Kubacki, who went to prison in March 2012 for billing Medicare and other insurers $1.8 million for patients he didn't see.

Nationally, 826 defendants were convicted of health care fraud-related crimes last year, according to the report.

Zane Memeger, U.S. Attorney in Philadelphia, said more individuals go to jail from small operations than large companies because it is sometimes easier to identify culprits and gather jury-convincing evidence in a small setting before the five-year statute of limitations expires. In a large corporation, Memeger said, top executives "can insulate themselves from the people doing the dirty work. We try to peel away the layers."

Taxpayers can help by notifying the government as soon as they see potential fraud, Memeger said.

Last year, 3,131 people or entities were "excluded" from being reimbursed by federal health care programs because of fraud allegations, which effectively puts them out of business. That tool hasn't been used against a big drugmaker, at least partly because patients then might not have access to a company's medicine.

"The next weapon to load is the death sentence of not paying for drugs or devices from companies that repeatedly defraud the government," said University of Michigan business school professor Erik Gordon, who follows the pharmaceutical industry. "It would take only one major company being sent into bankruptcy to get the attention of the rest of them."


Contact staff writer David Sell at dsell@ phillynews.com or 215-854-4506. Read his blog at www.philly.com/phillypharma and on Twitter @phillypharma.

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