Fort Lauderdale, FL
~ Thursday, May 18, 2017
Good morning, and many thanks for that very kind
introduction. Thanks for having me here today. Thank you for the invitation to
address you today, and congratulations for hosting the 27th Annual American Bar
Association National Institute on Health Care Fraud.
Before I begin, I want to say a couple of things. One, when
I take the time to give a speech, I want to make sure that I am clear about
what I say and the position being taken. Two, I want to make sure also that I
address any current matter that I think needs to be clarified or addressed.
Given that, let me be clear: health care fraud is a priority
for the Department of Justice. Attorney General Sessions feels very strongly
about this. I can tell you that he has expressed this to me personally. The
investigation and prosecution of health care fraud will continue; the
department will be vigorous in its pursuit of those who violate the law in this
area.
For so many reasons, health care fraud is particularly
egregious, and frankly, in my view, despicable. Greed resulting in the
depravation of medical care for those in need is cruelty. Many people focus on
the money stolen, which is important. I focus on the impact it has on those in
need, and on our great nation.
People typically seek medical care when they are most
vulnerable, when they are in need, sometimes helpless. Sometimes it is not just
for them personally. Even more heart-wrenching, it is for their children or an
elderly parent – people who they feel they need to protect either through obligation,
duty, morality or just plain love. Health care fraud deprives many people of
access to medical care, even the most basic forms of care, because fraud
increases the costs for all of us, and shuts out those who are the most needy
or those in society who are just making it; and even those who are doing well
but could be crippled financially by a medical situation requiring extensive
care.
Health care fraud, and the resulting increase in costs, robs
our nation and all of us of our right as citizens to determine how we as a
nation choose to structure our society as it relates to how we care for our
people.
These points I just shared with you over the last several
minutes serve as the lens from which I view health care fraud.
As we all know, there is a lot of money in the health care
industry. The Centers for Medicare & Medicaid Services (CMS) estimate that
the total health care spending in the United States in 2015 reached $3.2
trillion, or 17.8 percent of the gross domestic product. That is eye-popping in
my view.
As a general matter, and unfortunately, we see time and time
again that industries with large amounts of money are susceptible to high
levels of fraud. Health care is no exception. Under their own standards, health
care professionals have a fiduciary duty to their patients – a duty that is
shattered when those professionals exploit patients’ vulnerabilities for
financial gain. Certainly, there are various checks in place to disallow health
care fraud on the front end, some ethical and some legal. Unfortunately,
however, there are many outliers and others in the health care industry who
engage in fraudulent schemes.
We at the Department of Justice’s Criminal Division are
focused on conduct that defrauds the U.S. government and its health care
programs – programs that aim to provide access to care for those who qualify
for them. The amount of loss to the American tax payer per year due to
healthcare fraud is in the billions. Some estimates put the number close to $100
billion per year. In the wake of an alarming rate of fraud in the health care
sector, and growing complexity and seriousness of those fraudulent schemes, the
Justice Department has been bringing some of the most impactful health care
fraud cases yet.
My remarks today focus on what the Justice Department is
doing in this area and how our efforts are making a difference. To that end, I
will begin by providing an overview of our Health Care Fraud Unit and explain
the Strike Force model we employ. Then I will explain our data-driven approach.
Finally, I will highlight some of our recent prosecutions.
The Health Care Fraud Unit is housed within the Fraud
Section of the Criminal Division of the Department of Justice. It employs about
56 prosecutors focused solely on prosecuting complex health care fraud cases
throughout the United States. Their work is both complex and sophisticated,
identifying and responding to emerging fraud trends across the country, from
large corporate providers to smaller scale medical practices and health care
providers.
Since 2007, the Health Care Fraud Unit has employed the
Medicare Fraud Strike Forces model – the first of which began 30 miles south of
here in Miami. Health Care Fraud Unit attorneys work in Washington, D.C., and
in a total of nine Medicare Fraud Strike Forces across the country. These “hot
spot” cities, or ones with high levels of billing fraud, include: Miami, Tampa,
Baton Rouge, New Orleans, Chicago, Detroit, Houston, Brooklyn and Los Angeles.
As such, they are formed with a cross-agency collaborative approach made up of
investigators and prosecutors that focus on the worst offenders engaged in
fraud in the highest intensity regions. This model brings together the
prosecutorial, investigative and analytical resources of many Department of
Justice components including the Criminal Division, the U.S. Attorney’s
Offices, the FBI, as well as other agencies such as the Health and Human
Services Office of the Inspector General (HHS-OIG), CMS and state and local law
enforcement partners.
The list of cities keeps growing, and it will continue to
grow, particularly given that we will begin focusing even more attention to
other current issues plaguing our country, such as the opioid abuse epidemic.
We are always looking for new and effective ways to hold health care
professionals and institutions accountable when they willfully provide opioids
to addicts who do not actually require such medication, or drug dealers and
traffickers who illegally sell the drugs.
Since its inception in March 2007, the Medicare Fraud Strike
Force has charged nearly 3,200 defendants who have collectively billed the
Medicare program for more than $11 billion. To give you a sense of how this
looks during a shorter timeframe: between the beginning of 2016 and February of
this year, the Medicare Strike Force program, the Health Care Fraud Unit, and
partner U.S. Attorney’s Offices, charged 482 individuals with a total loss
amount of nearly $2.8 billion. During this period, 180 defendants were convicted,
and the Medicare Fraud Strike Force reached resolutions totaling $512 million
paid to U.S. and state authorities. These resolutions vary in amounts from
thousands of dollars to one corporate resolution resulting in a U.S. penalty of
$144 million.
I cannot overemphasize the importance of the cooperative
partnerships between the Strike Forces, U.S. Attorney’s Offices, and several
investigative agencies. Let me give you an example of the kind of results we
have achieved by working hand-in-hand. Last year, the Criminal Division
organized the largest national health care fraud takedown in history, both in
terms of individuals charged and the loss amount. This nationwide sweep was led
by the Medicare Fraud Strike Force with the collaboration of 36 U.S. Attorney’s
Offices and the largest number ever of participating Medicaid Fraud Control
Units (MFCUs). This effort resulted in charges against 301 individuals,
including 60 doctors, nurses and other licensed medical professionals, for
their alleged participation in Medicare and Medicaid fraud schemes involving
approximately $900 million in false billings. This example drives home our
commitment, capabilities, our nimbleness and our level of coordination.
To achieve these impressive results, the Strike Forces use a
wide array of investigative and prosecutorial tools. In addition to many
traditional methods for developing information and evidence, the Strike Forces
are using highly advanced data analysis to identify aberrant billing levels in
order to target suspicious billing patterns and emerging schemes. More
specifically, the Medicare Fraud Strike Force is obtaining billing data from
CMS in close to real time.
We now have an in-house data analytics team headed by some
of the best and brightest. Analyzing billing data from CMS has become a key
part of our investigations because it permits us to focus on the most
aggravated cases and to identify quickly emerging schemes and new types of
Medicare fraud. Access to CMS billing data in close to real time permits us to
remain a step ahead. We have the opportunity to halt schemes as they develop.
This cutting-edge method has truly revolutionized how we investigate and
prosecute health care fraud.
What’s more is that we are pushing out the data we develop
to U.S. Attorney’s Offices and investigative agencies across the country, not
just our Strike Force cities. Doing so empowers other prosecutors whether or
not they are in a city with a Strike Force by providing key data to fuel their
investigations and prosecutions.
This approach is proving to be very successful. Not only
are violators being punished, often with steep fines and long prison sentences,
but we are deterring further conduct. Specifically, our prosecutions have
significantly reduced Medicare fraud and lowered payments for certain
Medicare-reimbursed goods and services. For example, prior to the creation of
the Medicare Fraud Strike Force, Medicare payments for home health care
increased each year from 2006 until 2010. In 2009, following federal law
enforcement actions initiated by the Medicare Fraud Strike Force in Miami and
the resulting report from the HHS-OIG regarding home health outlier payments,
CMS changed Medicare’s Home Health Agency (HHA) outlier coverage policy to curb
fraudulent HHA payments. Since 2010, payments for HHAs in Miami decreased by
$100 million per quarter since its peak in 2009, and continued to decline,
totaling an aggregate savings of over $1 billion. In the Detroit Medicare Fraud
Strike Force location, HHA payments are down by over $25 million per quarter,
respectively, since 2010.
This data indicates that the Medicare Fraud Strike Force
home health fraud initiatives and convictions not only eliminated some of the
bad actors but also deterred other fraudsters from exploiting the outlier
coverage policy. Similar patterns of decreased Medicare payments exist for
durable medical equipment and community mental health services following
concentrated law enforcement initiatives and administrative fraud prevention
efforts.
I would like to share with you a number of significant and
impactful matters on which the Health Care Fraud Unit has been working.
I will begin with the Esformes matter. In July 2016, three
individuals were charged in what was a massive Miami-area health care fraud and
money laundering scheme involving approximately $1 billion in false and
fraudulent claims to Medicare and Medicaid that started in 2002. The indictment
charges three individuals for their roles in the scheme: (1) the owner of a
dozen skilled nursing facilities and assisted living centers; (2) a hospital
administrator who allegedly facilitated kickbacks and bribes; and (3) a
physician’s assistant who allegedly received kickbacks and bribes in exchange
for making medically unnecessary referrals.
In early 2017, a superseding indictment was returned, which
alleges that the owner and his co-conspirators facilitated the scheme by
bribing state regulators in order to obtain advance notice of inspections at
certain facilities. As I mentioned earlier, fraud on this scale is a blow to
the patients who allegedly received unnecessary care and to the American
taxpayers who were defrauded and Americans in general because of the increase
cost of health care.
In October 2016, Tenet Healthcare Corporation entered into a
global resolution with the government. Tenet is a publicly-traded company and
the third largest hospital chain in the United States. Tenet agreed to resolve
an investigation of a corporate bribery and fraud scheme at four Tenet-owned
hospitals in Georgia and South Carolina. As part of that scheme, the hospitals
paid over $12 million in bribes to a chain of prenatal care clinics in exchange
for the referral of Medicaid patients.
The owners and operators of the clinics and others made
false statements and representations to these vulnerable expectant mothers,
including that Medicaid would only cover the costs associated with their
delivery and the care of their newborn baby if the expectant mother delivered
at one of the Tenet hospitals or that they were required to deliver their baby
at one of the Tenet hospitals, leaving expectant mothers with the false and
mistaken belief that they could not select the hospital of their choice. As a
result, many expectant mothers traveled long distances from their homes to
deliver at the Tenet hospitals, placing their health and safety and that of
their newborn babies, at risk.
Under the global resolution: two Tenet subsidiaries pleaded
guilty to conspiracy to defraud the United States and pay kickbacks and bribes
in violation of the Anti-Kickback Statute, and forfeited over $146 million,
representing the gross Medicaid and Medicare proceeds traceable to the offense;
Tenet Health System Medical, Inc. entered into a non-prosecution agreement
requiring, among other things, an independent compliance monitor for a period
of three years over all entities owned, in whole or in part by Tenet; and Tenet
and its subsidiaries entered into a civil settlement agreement and paid $368
million to the United States, the State of Georgia and the State of South
Carolina.
To date, two individuals have pleaded guilty, and on Jan.
24, 2017, the Criminal Division’s Fraud Section at the Department of Justice
charged John Holland, a former senior executive of Tenet and former CEO of
North Fulton Hospital, who is alleged to have participated in the scheme. This
settlement and these indictments should send a clear signal to hospitals and
health care institutions around the country that they and their management will
be held accountable for fraudulent misconduct.
Next, let me discuss a matter that is at the heart of our
work for vulnerable victims. In April of this year, we indicted two Detroit
doctors and one co-conspirator for their alleged participation in a scheme to
perform female genital mutilation (FGM) on minors. Our Detroit Strike Force has
been working together with the United States Attorney’s Office for the Eastern
District of Michigan on this matter. To be clear, federal law criminalizes this
heinous conduct. This is the first prosecution brought under 18 U.S.C. § 116,
which criminalizes this conduct and protects minors.
I could go on and on about all the cases that the Department
of Justice is bringing against institutions, medical professionals,
administrators and others, who have chosen to commit Medicare fraud to make
money. I think that these three cases highlight the kind of important, complex
health care fraud cases we are pursuing and will continue to pursue. Our
prosecutors and investigators are committed and dedicated; they are working
very hard every day, every night, on weekends, on holidays and during family
gathers, for all of us. They go beyond the call of duty, and it is admirable by
any measure. And, I am proud to work with them.
In closing, I want to thank you again for having me here
today to address such an important issue. I hope that I have been helpful in
making clear the Justice Department’s position on health care fraud.
Have a wonderful rest of the day.
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