Healthcare Fraud Prevention – A Medicare Fraud Enforcement Roadmap Under the Affordable Care Act

In a Youtube address just over a year ago, President Obama cryptically alluded to his administration’s acknowledgment of the healthcare fraud epidemic with phrases like “rooting out waste” and “unnecessary spending” and promises to “make drug makers pay their fair share,” calling on doctors and hospitals to cease “unnecessary treatments and tests-but like most politicians he offered no concrete plan for a solution. On March 21 of this year, he signed the Patient Protection and Affordable Care Act, H.R. 3590 – which contains a number of potential fraud-fighting measures-but still there was no stated benchmark and no roadmap from the White House to eradicate fraud and abuse in the healthcare system.

On June 8, however, a letter was sent by two of the President’s top cabinet members – Attorney General Eric Holder and Secretary of Health and Human Services (HHS) Kathleen Siebelius – unequivocally stating the first benchmark in the fight against healthcare fraud: cut the Medicare improper payment rate in half. The letter was sent to the attorney generals in every state, inviting them to coordinate healthcare fraud enforcement efforts and promising to use every weapon available to meet the goal. “Building on our record of aggressive action, we will use the new tools and resources provided by the Affordable Care Act to further crack down on fraud,” said Holder and Siebelius. “These include new criminal and civil penalties, enhanced information technology to track and prevent fraud in the first place, and new authorities to prevent bad actors from billing Medicare and Medicaid.”

Accordingly, we can expect to see efforts to combat healthcare fraud doubled and more regular cooperation among federal and state authorities. To that end, on July 16, the first in a series of fraud prevention summits will take place in Miami, co-hosted by the Department of Justice (DoJ) and HHS and designed to integrate state health care fraud enforcement with actions by the federal Health Care Fraud Prevention Enforcement Teams (HEAT), a program established a year ago as a joint task force between DoJ and HHS and rolled out in certain high-fraud areas throughout the country.

Likewise, DoJ has directed all 93 U.S. Attorneys to convene regular “health care fraud task force meetings” exchanging information with both private and public sector anti-fraud partners. The first such meeting in each federal judicial district is to take place by August 16, 2010. Presumably these meetings will include state Medicaid Fraud Control Units, state attorneys general, and members of the health care fraud bar.

This directive comes on the heels of the delegation of authority for issuing Civil Investigative Demands (CID) to the 93 U.S. Attorneys – a powerful tool that can, among other things, force the targets of civil fraud investigations to respond to document requests, interrogatories, and appear for deposition. The majority of state attorneys general in states with false claims acts already have CID authority, but such authority is a new arrow in the quiver of local federal law enforcement. CID authority is empowered through the federal and various state false claims acts, arguably the most effective statutory scheme in the fight against healthcare fraud.

Under the respective federal and state false claims acts, whistleblowers may file actions on behalf of the federal government to recoup Medicare false claims and on behalf of certain state governments to recoup Medicaid false claims. Most false claims act statutory schemes require that treble damages be paid for fraudulent billing and up to $11,000 per false bill be levied as a penalty. Actions brought by whistleblowers are known as qui tam lawsuits and result in a whistleblower award of between 15-25% of any recovery based on credible, first-hand knowledge by the whistleblower. In cases where the whistleblower is permitted to proceed alone against the fraudfeasor, the whistleblower share can be as high as 30%.

In the last 18 months, nearly $6 billion has been recovered in state and federal False Claims Act cases (including criminal penalties). As federal and state enforcement officials coordinate and redouble their efforts and commit to work together to fight health care fraud, we can expect to see more and more healthcare fraud litigation and larger and larger Medicare and Medicaid false claims act recoveries.

© 2010 James F. Barger, Jr.

Jim Barger, Jr. is a nationally recognized trial lawyer who handles complex federal litigation, particularly qui tam cases under the False Claims Act. Jim achieved his first seven-figure civil result within two years of practice and his first eight-figure civil result within five years of practice. One of the most often cited legal scholars on qui tam and False Claims Act litigation, Jim’s writing in some cases has actually shaped the law itself. He has been cited by state legislators in adopting state False Claims Acts, by other attorneys in court pleadings litigating False Claims Act cases, and by scholars in legal treatises and law reviews such as Alabama Law Review, Boston University Law Review, Cardozo Law Review, Columbia Law Review, and others. In 2009, Jim Barger represented nurse whistleblower Nancy Romeo in the largest Medicare Hospice case in U.S. history resulting in a record return of nearly $25 million.