Medicare Compliance Professionals, Medicare Coders, Medicare Reimbursement Managers, and other health care professionals are coming forward as the original source of specialized knowledge of Medicare Billing Fraud and blowing the whistle on fraudulent Medicare Billing schemes.  These Medicare billing fraud schemes include several different types of fraud including upcoding and unbundling schemes, double and triple billing fraud, phantom billing fraud, and illegal kickback schemes.

Upcoding Fraud and Unbundling Schemes: Hospitals and health care providers inflate medical bills by using billing codes that indicates the patient needs expensive procedures.  This Medicare fraud scheme and Medicaid fraud scheme allow health care providers and hospitals to charge higher rates to Medicare or Medicaid.

Double and Triple Billing Fraud: Hospitals and health care providers also can use double and triple billing fraud schemes that allows them to bill multiple times for the same procedures.

Phantom Billing Fraud: Hospitals and other health care providers can also fraudulently bill Medicare for unnecessary procedures, or procedures that were never performed including unnecessary medical tests and procedures or tests and procedures that were never performed.  

Illegal Kickback Schemes: Sometimes patients or subcontractors can be in on the scam by providing Medicare numbers in exchange for kickbacks. The provider bills Medicare and the patient or subcontractor verifies the false billing.

Hospital Outpatient Prospective Payment System Fraud Schemes: These Hospital Outpatient Prospective Payment System Fraud Schemes occur when a hospital or health system intentionally and systematically commits false billing under the Outpatient Prospective Payment System (OPPS).  These Hospital Outpatient Prospective Payment System Fraud Schemes can be extremely elaborate and contact elements of upcoding, phantom billing, double billing, and illegal kickbacks. 

By coming forward with evidence of these fraudulent schemes, Medicare Billing Fraud Whistleblowers become eligible to receive large economic rewards for being the first to file on these Medicare billing fraud scams and can avoid potential criminal liability for not reporting Medicare billing fraud.

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Medicare Fraud Strike Force Operations Lead to Charges Against 53 Doctors, Health Care Executives and Beneficiaries for More Than $50 Million in Alleged False Billing in Detroit Early Morning Takedown Leads to Arrests in Detroit, Miami and Denver

WASHINGTON – Fifty-three people have been indicted for schemes to submit more than $50 million in false Medicare claims in the continuing operation of the Medicare Fraud Strike Force in Detroit, Attorney General Eric Holder, Department of Health and Human Services (HHS) Secretary Kathleen Sebelius and FBI Director Robert Mueller announced today. The Strike Force in Detroit is the third phase of a targeted criminal, civil and administrative effort against individuals and health care companies that fraudulently bill the Medicare program.

While the indictments were returned by a grand jury in Detroit, individuals were arrested today in Detroit, Miami and Denver as a result of phase three operations of the Strike Force. The joint DOJ-HHS Medicare Fraud Strike Force is a multi-agency team of federal, state and local investigators designed to combat Medicare fraud through the use of Medicare data analysis techniques and an increased focus on community policing.

"As demonstrated by today’s charges and arrests, we will strike back against those whose fraudulent schemes not only undermine a program upon which 45 million aged and disabled Americans depend, but which also contribute directly to rising health care costs that all Americans must bear," said Attorney General Holder. "The vast majority of doctors, patients, and medical companies do the right thing and work with the Medicare program to provide access to medical services. To those who work diligently and ethically to provide medical care through the Medicare program, we will work with you to root out the few who corrupt the system and taint the good reputations of health professionals everywhere."

"The Obama Administration is committed to turning up the heat on Medicare fraud and employing all the weapons in the federal government’s arsenal to target those who are defrauding the American taxpayer," said HHS Secretary Kathleen Sebelius. "Thanks to cooperation from across the government and some of the best law enforcement professionals in the country, today we were able to save millions of dollars from being lost to criminals and send a powerful message to those who seek to defraud the system, that we are coming after them. But our joint efforts on HEAT don’t just stop at the jailhouse door. Our Medicare program is working closely in partnership with our own and other law enforcement operations to prevent fraud from happening in the first place. Every dollar we can save by stopping fraud can be used to strengthen the long-term fiscal health of Medicare, bring down costs and deliver better service to Medicare beneficiaries."

The Strike Force operations in Detroit are part of the Health Care Fraud Prevention & Enforcement Action Team (HEAT), a renewed effort announced in May 2009 between the Department of Justice and HHS to focus their joint efforts to prevent fraud and enforce current anti-fraud laws around the country. The HEAT taskforce, co-chaired by Deputy Attorney General David Ogden and Deputy Secretary Bill Corr, is made up of top-level law enforcement agents, prosecutors and staff from both Departments and their operating divisions. In the May 2009 announcement, Attorney General Holder and Secretary Sebelius announced the expansion of the Strike Force into Detroit and Houston to build upon existing partnerships between the agencies in a heightened effort to reduce fraud and recover taxpayer dollars.

Today, federal agents from the FBI and the HHS Office of Inspector General (HHS-OIG) began executing arrest warrants in Detroit, Miami and Denver as part of a concentrated effort to address fraud in the metro-Detroit area. Charges were unsealed today against 53 individuals who are accused of various Medicare fraud offenses, including conspiracy to defraud the Medicare program, criminal false claims and violations of the anti-kickback statutes. The Strike Force operations in Detroit have identified two primary areas – infusion therapy and physical/occupational therapy providers – in which schemes were allegedly orchestrated to defraud the Medicare program.

According to the indictments, the defendants charged today participated in schemes to submit claims to Medicare for treatments that were in fact medically unnecessary and oftentimes, never provided. In many cases, indictments allege that beneficiaries accepted cash kickbacks in return for allowing providers to submit forms saying they had received the unnecessary and not provided treatments. Collectively, the physicians, medical assistants, patients, company owners and executives charged in the indictments are accused of conspiring to submit more than $50 million in false claims to the Medicare program.

"We will continue to work together in the months to come to identify and stop those who would line their own pockets with taxpayer money – those who seek to benefit at the expense of our health care system, our economy and our collective well-being," said FBI Director Mueller.

"Today’s landmark series of arrests in Detroit and across the country demonstrates that health care fraud can happen anywhere in America," said Daniel R. Levinson, Inspector General of the Department of Health & Human Services. "We will continue to detect and respond rapidly to emerging fraud schemes to protect our federal health care programs and conserve scarce health care dollars so critically needed for the care of our beneficiaries."

The work of the Detroit Strike Force is another important step in the multi-phase enforcement and regulatory HEAT initiative designed to reduce the potential for Medicare and Medicaid fraud. Since its inception in March 2007 with phase one in South Florida and expansion to phase two in Los Angeles in May 2008, the Strike Force has obtained indictments of more than 250 individuals and organizations that collectively have billed the Medicare program for more than $600 million. In addition, HHS’s Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, is taking steps to increase accountability and decrease the presence of fraudulent providers.

Each of the three Detroit Strike Force teams is led by a federal prosecutor supervised by the Justice Department’s Criminal Division’s Fraud Section in Washington, D.C., and the U.S. Attorney’s Office for the Eastern District of Michigan. Each team has four to six agents, with at least one agent from the FBI and HHS-OIG.

The cases are being prosecuted by attorneys from the Fraud Section in the Justice Department’s Criminal Division, including Deputy Chief Kirk Ogrosky and Trial Attorneys John K. Neal and Benjamin D. Singer as well Special Assistant U.S. Attorney Thomas W. Beimers in the U.S. Attorney’s Office for the Eastern District of Michigan, on detail from HHS-OIG.

An indictment is merely an allegation, and defendants are presumed innocent until and unless proven guilty.

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Medicare Coding Whistleblower Lawsuit Information, Medicare Reimbursement Whistleblower Lawsuit Information, Medicare Compliance Whistleblower Lawsuit Information, and Medicare Marketing Fraud and Kickback Lawsuit Information

Pharmaceutical representative whistleblowers, medical device sales representative whistleblowers, and drug marketing executive whistleblowers are stepping up and exposing Medicare marketing fraud that is costing taxpayers billions.  The economic incentive for these pharmaceutical representative whistleblowers, medical device sale representative whistleblowers, and drug marketing executive whistleblowers is that if they are an original source with special knowledge of fraud and are the first to file, they receive a portion of the money that the government recovers.  Depending on the extent of the fraud, qui tam recoveries for the government can be in the billions of dollars and whistleblower recoveries can be in the hundreds of millions of dollars.

There are several keys to a successful False Claims Act Qui Tam Whistleblower action including 1) obtaining original and specialized information of the fraud, 2) being the first to file regarding the specific fraud, and 3) protecting the whistleblower for retaliation. 

Original and Specialized Information of Fraud is Essential for Medicare Coding Whistleblower Lawsuits, Medicare Reimbursement Whistleblower Lawsuits, Medicare Compliance Whistleblower Lawsuits, and Medicare Marketing Fraud and Kickback Lawsuits

As insiders it is common for pharmaceutical representative whistleblowers, medical device sales representative whistleblowers, drug marketing representative whistleblowers, and other marketing executives to specialized knowledge of marketing fraud and fraudulent marketing schemes.  As such, it is important for the pharmaceutical representative whistleblower, medical device sales representative whistleblower, drug marketing representative whistleblower, or other marketing executive whistleblower to obtain and preserve evidence of the marketing fraud.  Whether this evidence is in e-mail messages, memos, marketing plans, marketing materials, recordings, or other documents, it is important for the whistleblower to have evidence of the marketing fraud.  It is also often helpful to have fellow whistleblowers that can help build the Medicare Fraud or Off-Label Marketing Fraud case.

Being the First to File on the Fraud is Essential for Recovery Under the False Claims Act and can Prevent Potential Criminal Liability in Medicare Coding Fraud Scams, Medicare Reimbursement Fraud Scams, Medicare Compliance Fraud Scams, and Medicare Marketing Fraud and Kickback Scams

It is also essential to not delay in coming forward with a False Claim Act Qui Tam Action as the first whistleblower to file is eligible to be a relator and make a large recovery for exposing the fraud.  Additionally, when the fraudulent scheme is exposed, the people that kept the fraud secret can sometimes be found liable for criminal activity for not exposing the fraud that was being committed and further be held liable for continuing criminal activity.

Medicare Coding Whistleblower Protection, Medicare Reimbursement Whistleblower Protection, Medicare Compliance Whistleblower Protection, and Medicare Hospital Executive Whistleblower Protection under the Federal False Claims Act

It is also important to understand potential whistleblower protections under the False Claims Act and to discuss with an attorney how to prepare for potential retaliation or aggressive attacks by the employer or contractor.  For more information on this topic please go to the following web page on False Claims Act Lawsuit Whistleblower Protections. 

Medicare and Medicaid billing fraud scams are costing the United States an estimated one hundred billion dollars ($100,000,000,000.00) each year and with approximately 7,000 new people gaining Medicare benefits each day, the cost of Medicare billing scams including upcoding, double billing, unnecessary services, and billing for services not needed is predicted to continue to increase.  To combat Medicare Billing Fraud Scams and Medicaid Billing Fraud Scams, the United States government has amended the Federal False Claims Act to encourage more Medicare Fraud whistleblowers to step up and blow the whistle on Medicare Fraud.  Medicare Billing Fraud Whistleblowers and Medicare Payment Fraud Whistleblowers that are the original source of specialized knowledge of Medicare Fraud can make substantial recoveries if they are the first to file a successful qui tam claim under the Federal False Claims Act. 

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  Health Care Fraud Prevention and Enforcement Efforts Recover Record $4 Billion; New Affordable Care Act Tools Will Help Fight Fraud Joint Justice Department & HHS Efforts Result in Largest Sum Ever Recovered in Single Year

WASHINGTON – Associate Attorney General Tom Perrelli and Department of Health and Human Services (HHS) Secretary Kathleen Sebelius today released a new report showing that the government’s health care fraud prevention and enforcement efforts recovered more than $4 billion in taxpayer dollars in Fiscal Year (FY) 2010. This is the highest annual amount ever recovered from people who attempted to defraud seniors and taxpayers, or from those who sought payments to which they were not entitled. In addition, HHS today announced new rules authorized by the Affordable Care Act that will help the department prevent and fight fraud, waste and abuse in Medicare, Medicaid and the Children’s Health Insurance Program (CHIP).

These findings, released today, in the annual Health Care Fraud and Abuse Control Program (HCFAC) report, are a result of President Obama making the elimination of fraud, waste and abuse a top priority in his administration. The success of this joint Department of Justice and HHS effort would not have been possible without the Health Care Fraud Prevention & Enforcement Action Team (HEAT), created in 2009 to prevent waste, fraud and abuse in the Medicare and Medicaid programs, and to crack down on the fraud perpetrators who are abusing the system and costing American taxpayers billions of dollars. These efforts to reduce fraud will continue to improve with the new tools and resources provided by the Affordable Care Act, including the new rules announced today.

“Our aggressive pursuit of health care fraud has resulted in the largest recovery of taxpayer dollars in the history of the Justice Department,” said Associate Attorney General Perrelli. “These actions are in large part because of the great work being led by the Health Care Fraud Prevention and Enforcement Action Team. Through this initiative, we are working in partnership with government, law enforcement and industry leaders, and the public to protect taxpayer dollars, control health care costs, and ensure the strength and integrity of our most essential health care programs.”

“President Obama has made it very clear that fraud and abuse of taxpayers’ dollars are unacceptable. And for too long, our fraud prevention efforts have focused on chasing after taxpayer dollars after they have already been paid out,” said Secretary Sebelius. “Thanks to the President’s leadership and the new tools provided by the Affordable Care Act, we can focus on stopping fraud before it happens.”

HCFAC Report

More than $4 billion stolen from federal health care programs was recovered and returned to the Medicare Health Insurance Trust Fund, the Treasury and others in FY 2010. This is an unprecedented achievement for HCFAC, a joint effort of the two departments to coordinate federal, state and local law enforcement activities to fight health care fraud and abuse.

The Affordable Care Act provides additional tools and resources to help fight fraud that will help boost these efforts, including an additional $350 million for HCFAC activities. The administration is already using tools authorized by the Affordable Care Act, including enhanced screenings and enrollment requirements, increased data sharing across government, expanded overpayment recovery efforts and greater oversight of private insurance abuses.

The Departments of Justice and HHS have enhanced their coordination through HEAT and have expanded Medicare Fraud Strike Force teams since 2009. The departments hosted a series of regional fraud prevention summits around the country, and sent letters to state attorneys general urging them to work with HHS and federal, state and local law enforcement officials to mount a substantial outreach campaign to educate seniors and other Medicare beneficiaries about how to prevent scams and fraud. During FY 2010, HEAT and the Medicare Fraud Strike Force expanded local partnerships and helped educate Medicare beneficiaries about how to protect themselves against fraud.

In FY 2010, the total number of cities with strike force prosecution teams was increased to seven, all of which have teams of investigators and prosecutors dedicated to fighting fraud. The strike force teams use advanced data analysis techniques to identify high-billing levels in health care fraud hot spots so that interagency teams can target emerging or migrating schemes along with chronic fraud by criminals masquerading as health care providers or suppliers. Strike force enforcement accomplishments in all seven cities during FY 2010 include:

· 140 indictments involving charges filed against 284 defendants who collectively billed the Medicare program more than $590 million;

· 217 guilty pleas negotiated and 19 jury trials litigated, winning guilty verdicts against 23 defendants; and

· 146 defendants were sentenced to prison during the fiscal year, averaging more than 40 months of incarceration.

Including strike force matters, federal prosecutors opened 1,116 criminal health care fraud investigations as of the end of FY 2010, and filed criminal charges in 488 cases involving 931 defendants. A total of 726 defendants were convicted for health care fraud-related crimes during the year.

In addition to these criminal enforcement successes, 2010 was a record year for recoveries obtained in civil health care matters brought under the False Claims Act—more than $2.5 billion, which is the largest in the history of the Department of Justice.

The HCFAC annual report can be found here, oig.hhs.gov/publications/hcfac.asp . For more information on the joint DOJ-HHS Strike Force activities, visit: www.StopMedicareFraud.gov/ .

New Affordable Care Act Rules to Fight Fraud

Today, HHS also announced new rules authorized by the Affordable Care Act which will help stop health care fraud. The provisions of the Affordable Care Act implemented through this final rule include new provider screening and enforcement measures to help keep bad actors out of Medicare, Medicaid and CHIP. The final rule also contains important authority to suspend payments when a credible allegation of fraud is being investigated.

“Thanks to the new law, CMS now has additional resources to help detect fraud and stop criminals from getting into the system in the first place,” said Centers for Medicare and Medicaid Services (CMS) Administrator Donald Berwick, M.D. “The Affordable Care Act’s new authorities allow us to develop sophisticated, new systems of monitoring and oversight to not only help us crack down on fraudulent activity scamming these programs, but also help us to prevent the loss of taxpayer dollars across the board for millions of American health care consumers.”

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Intercare Health Systems (Ex-Owner of City of Angels Medical Center) Agrees to $10 Million Consent Judgment for Medicare and Medi-Cal Fraud Scheme in Los Angeles

WASHINGTON – The United States has obtained a $10 million consent judgment against Intercare Health Systems Inc., formerly doing business as City of Angels Medical Center, for a Medicare and Medi-Cal fraud scheme in Los Angeles, the Justice Department announced today. The consent judgment, which the state of California also joined, resolves a civil lawsuit filed against Intercare by the United States and California in the U.S. District Court for the Central District of California. Also named in the lawsuit were the former owners of Intercare, Robert Bourseau and Rudra Sabaratnam, who entered into $10 million consent judgments in January 2010. The United States is entitled to recover a total of $10 million as a result of the three joint and several consent judgments

The government’s complaint alleged that City of Angels paid "recruiters" employed at homeless shelters in the skid row area of Los Angeles to deliver their homeless clients by ambulance to the hospital for medical treatment regardless of whether their clients in fact needed or requested such treatment. City of Angels would then bill the Medicare and Medi-Cal programs for a variety of medical services allegedly rendered to the homeless patients, many of which were not medically necessary. This scheme violated the False Claims Act.

The complaint further alleged that payments City of Angels made to its recruiters constituted illegal inducements, or kickbacks. This scheme violated the federal Anti-Kickback Statute, which prohibits certain types of remuneration intended to induce the referral of patients for health services paid for by the federal government.

"Performing unnecessary medical services on homeless people who are struggling to survive is particularly egregious and will not be tolerated," said Tony West, Assistant Attorney General of the Civil Division of the Department of Justice. "Companies, institutions and individuals will be held accountable for fraudulent conduct that takes money from taxpayers and undermines the integrity of the health care system."

The investigation and civil lawsuit were handled collaboratively by the Justice Department’s Civil Division, the U.S. Attorney’s Office for the Central District of California, the Attorney General’s Office of the State of California and the Office of Inspector General of the U.S. Department of Health and Human Services.

This resolution is part of the government’s emphasis on combating health care fraud. One of the most powerful tools in that effort is the False Claims Act, which the Department of Justice has used to recover more than $2.7 billion since January 2009 in cases involving fraud against federal health care programs. The Justice Department’s total recoveries in False Claims Act cases since January 2009 have topped $3.7 billion.

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Department of Justice Office of Public Affairs FOR IMMEDIATE RELEASE Tuesday, January 4, 2011 Seven Hospitals in Six States to Pay U.S. More Than $6.3 Million to Resolve False Claims Act Allegations Related to Kyphoplasty

WASHINGTON – Seven hospitals located in Florida, Mississippi, Texas, South Carolina, North Carolina and Alabama have agreed to pay the United States a total of more than $6.3 million to settle allegations that the health care facilities submitted false claims to Medicare, the Justice Department announced today.

The settlements resolve allegations that these hospitals overcharged Medicare between 2000 and 2008 when performing kyphoplasty, a minimally-invasive procedure used to treat certain spinal fractures that often are due to osteoporosis. In many cases, the procedure can be performed safely as a less costly out-patient procedure, but the government contends that the hospitals performed the procedure on an in-patient basis in order to increase their Medicare billings.

"Hospitals that participate in the Medicare program must bill for their services accurately and honestly," said Tony West, Assistant Attorney General for the Department’s Civil Division. "The Department of Justice is committed to ensuring that Medicare funds are expended appropriately."

"These settlements show the continuing commitment by the U.S. Attorney’s Office to investigate and recover any improper billings for kyphoplasty procedures which the hospitals inappropriately classified as inpatient, rather than outpatient," said William J. Hochul Jr., U.S. Attorney for the Western District of New York. "These actions not only protect taxpayers and the integrity of the Medicare program in the short term, they will in the long run help ensure optimal care for Medicare beneficiaries, by insisting that medicine, and not money, be used to determine the best course medical decision for a given case."

The settling facilities include the following: Lakeland Regional Medical Center, Lakeland, Fla. ($1,660,134.49); The Health Care Authority of Morgan County – City of Decatur dba Decatur General Hospital, Decatur, Ala. ($537,892.88); St. Dominic-Jackson Memorial Hospital, Jackson, Miss. ($555,949.35); Seton Medical Center, Austin, Texas ($1,232,955.91); Greenville Memorial Hospital, Greenville, S.C. ($1,026,764.01); Presbyterian Orthopaedic Hospital, Charlotte, N.C.($637,872.57); and The Health Care Authority of Lauderdale County and the City of Florence, Ala., dba the Coffee Health Group, fka Eliza Coffee Memorial Hospital ($676,038.00).

The settlements with these facilities follow the settlements that the government reached in May 2009, September 2009, and May 2010 with 18 other hospitals for kyphoplasty-related Medicare claims, as well as the government’s May 2008 settlement with Medtronic Spine LLC, corporate successor to Kyphon Inc. Medtronic Spine paid $75 million to resolve allegations that the company defrauded Medicare by counseling hospital providers to perform kyphoplasty procedures as an in-patient procedure, even though the minimally-invasive procedure should have been done in many cases as an out-patient procedure.

All of the settling facilities were named as defendants in a lawsuit filed under the False Claims Act in 2008 in federal district court in Buffalo, New York by Craig Patrick and Charles Bates. The qui tam, or whistleblower, provisions of the Act permit private citizens, called "relators," to file lawsuits on behalf of the United States and share in any recovery. Mr. Patrick of Hudson, Wis., is a former reimbursement manager for Kyphon, and Mr. Bates was formerly a regional sales manager for Kyphon in Birmingham, Ala. The relators will receive a total of approximately $1.1 million as their share of the settlement proceeds.

"Hospitals overcharging Medicare take critically needed resources necessary to provide quality care and drive up health care costs," said Daniel R. Levinson, Inspector General for the U.S. Department of Health and Human Services. "When Medicare and taxpayers' dollars are threatened, OIG and its federal partners will hold perpetrators accountable."

Assistant Attorney General West noted that the settlements with these hospitals were the result of a coordinated effort among the Justice Department’s Civil Division, the U.S. Attorney’s Office for the Western District of New York, and the Department of Health and Human Services’ Office of Inspector General and Office of Counsel to the Inspector General.

This resolution is part of the government’s emphasis on combating health care fraud and another step for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced by Attorney General Eric Holder and Kathleen Sebelius, Secretary of the Department of Health and Human Services in May 2009. The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation. One of the most powerful tools in that effort is the False Claims Act, which the Justice Department has used to recover approximately $4.2 billion since January 2009 in cases involving fraud against federal health care programs. The Justice Department's total recoveries in False Claims Act cases since January 2009 have topped $6.8 billion.

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Southern California Medical Center to Pay U.S. $2.2 Million to Resolve Fraud Allegations

WASHINGTON – The El Centro Regional Medical Center in Imperial County, Calif., has agreed to pay the United States $2.2 million, plus interest, to settle allegations that it defrauded Medicare, the Justice Department announced today.

The government alleges that the 165-bed acute care hospital fraudulently inflated its charges to Medicare patients to obtain larger reimbursements from the federal health care program. The settlement covers claims submitted by the hospital for short inpatient admissions, usually of one day or less, when the services should have been billed on an outpatient “observation” basis or as emergency room visits.

“Hospitals that participate in the Medicare program must bill for their services accurately and honestly,” said Tony West, Assistant Attorney General for the Civil Division of the Department of Justice. “We will take action to ensure that taxpayers do not pay the costs of health care providers’ fraudulent practices.”

“Our office will aggressively work with investigative partners to protect healthcare funds from fraud and abuse,” said Laura Duffy, U.S. Attorney for the Southern District of California. “Today’s settlement demonstrates our commitment to holding health care providers who receive federal funds and knowingly defraud or overcharge federal health care programs accountable.”

The allegations arise from a lawsuit that was brought under the qui tam, or whistleblower, provisions of the False Claims Act (FCA), which permit private citizens with knowledge of fraud against the government to bring an action on behalf of the United States and to share in any recovery. The whistleblower in this case, Pietro Ingrande, a former employee of El Centro Regional Medical Center, will receive $375,000 as his share of the recovery.

The United States has agreed to dismiss the lawsuit as a result of the settlement announced today. In addition, as a condition of continued participation in federal health care programs, the Office of Inspector General of the U.S. Department of Health and Human Services (OIG-HHS) has required El Centro Regional Medical Center to enter into a Corporate Integrity Agreement. The agreement subjects the hospital to strict policies and procedures to ensure future compliance with applicable statutes and regulations that govern the use of federal health care funds.

“Whistleblowers are critical to ensuring that Medicare dollars are not siphoned off, but find their way to those who most need them,” said Glenn R. Ferry, Special Agent in Charge for the Los Angeles Region of the OIG-HHS. “Office of Inspector General special agents and our law enforcement partners have forged a powerful team that will work with private citizens who come forward to protect the Medicare Trust Fund and defend it from fraud and abuse.”

“The Medicare system attempts to deliver much needed medical services to many Americans,” said San Diego FBI Special Agent in Charge Keith Slotter. “Anyone who purposely defrauds the system, therefore, misappropriating its funds, and takes away resources from those who need Medicare’s services will be investigated by the FBI. We are committed to helping preserve the system’s integrity by vigorously pursuing those who attempt to steal the funds that help keep our fellow Americans in good health.”

The investigation and settlement of this case are the result of the collaborative effort of the Justice Department’s Civil Division, the U.S. Attorney’s Office for the Southern District of California, OIG-HHS, and the FBI.

This settlement is part of the government’s emphasis on combating health care fraud and another step for the HEAT initiative, which was announced by Attorney General Holder and Secretary Sebelius in May 2009. The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid fraud through enhanced cooperation. One of the most powerful tools in that effort is the FCA, which the Justice Department has used to recover $3.391 billion since January 2009 in cases involving fraud against federal health care programs. The Justice Department’s total recoveries in FCA cases since January 2009 are $ 4.4691billion.

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More Than $1 Billion Recovered by Justice Department in Fraud and False Claims in Fiscal Year 2008 More Than $21 Billion Recovered Since 1986

WASHINGTON – The United States secured $1.34 billion in settlements and judgments in the fiscal year ending Sept. 30, 2008, pursuing allegations of fraud against the federal government, the Justice Department announced today. This brings total recoveries since 1986, when Congress substantially strengthened the civil False Claims Act, to more than $21 billion.

"Now, more than ever, it is crucial that taxpayer dollars aren't lost to fraud," said Gregory G. Katsas, Assistant Attorney General for the Department’s Civil Division. "The billion dollars collected this year is only part of the story. By rooting out fraud and vigorously pursuing it, the Department, with the help of concerned citizens who report fraud in hotline calls and in qui tam complaints, undoubtedly saves the country many times that amount in aborted schemes and misconduct."

Assistant Attorney General Katsas also paid tribute to Senator Charles Grassley of Iowa and Representative Howard L. Berman of California who sponsored the 1986 amendments to the False Claims Act, the government's primary weapon to fight government fraud. "Without this important legislation strengthening the Act and, in particular, the qui tam provisions which encourage private citizens to uncover government fraud, such recoveries would not have been possible."

Almost 78 percent of this year’s recoveries are associated with suits initiated by private citizens (known as "relators") under the False Claims Act's qui tam provisions. These provisions authorize relators to file suit on behalf of the United States against those who have falsely or fraudulently claimed federal funds. Such cases run the gamut of federally funded programs from Medicare and Medicaid to defense procurement contracts, disaster assistance loans and agricultural subsidies. Persons who knowingly make false claims for federal funds are liable for three times the government’s loss plus a civil penalty of $5,500 to $11,000 for each claim.

Relators recover 15 to 25 percent of the proceeds of a successful suit if the United States intervenes in the qui tam action, and up to 30 percent if the government declines and the relator pursues the action alone. In fiscal year 2008, relators were awarded $198 million. (This figure does not include relator shares awarded after Sept. 30, 2008.)

As in the last several years, health care accounted for the lion's share of fraud settlements and judgments–$1.12 billion. This number includes both qui tam claims and those initiated by the United States. The Department of Health and Human Services reaped the biggest recoveries, largely attributable to its Medicare program and the federal/state Medicaid program which funds health care for the needy. Recoveries were also made by the Office of Personnel Management which administers the Federal Employees Health Benefits Program, the Department of Defense for its TRICARE insurance program, the Department of Veterans Affairs and others.

The largest health care recoveries came from pharmaceutical companies and related entities. Settlements with Cephalon Inc., Merck & Co. and CVS Caremark Corp. accounted for more than $640 million. In addition to federal recoveries, these pharmaceutical fraud cases returned $430 million to state Medicaid programs.

The Civil Division’s investigation of the pharmaceutical industry is part of a Department-wide effort. Typical allegations include "off-label" marketing, which is the illegal promotion of drugs or devices that are billed to Medicare and other federal health care programs, for uses that were neither found safe and effective by the Food and Drug Administration nor supported by the medical literature; paying kickbacks to physicians, wholesalers and pharmacies to induce drug or device purchases; establishing inflated drug prices knowing that federal health care programs use these prices to reimburse providers, then marketing the "spread" between the federal reimbursement and the provider’s lower cost to induce drug purchases; and knowingly failing to report the company’s true "best price" for a drug to reduce rebates owed to the Medicaid program.

The Department also collected $133 million in defense procurement fraud. Defense contract recoveries included a $53 million settlement with Pratt & Whitney, a division of United Technologies Corporation, and PCC Airfoils LLC, a subsidiary of Precision Castparts Corporation. The settlement resolved allegations that Pratt & Whitney and PCC Airfoils knowingly submitted false claims to the Air Force for defective turbine blades sold to the government to retrofit the F100-PW-220 engines in F-16 and F-15 aircraft. This case was pursued as part of a National Procurement Fraud initiative, launched in October 2006, to promote the early detection, identification, prevention and prosecution of procurement fraud.

FACT SHEET: SIGNIFICANT RECOVERIES IN FISCAL YEAR 2008

Among the Department’s most significant settlements and judgments in fiscal year 2008 were:

* $361.5 million from Merck & Company to resolve allegations that the pharmaceutical manufacturer knowingly failed to pay proper rebates to Medicaid and other government health care programs, and paid kickbacks to health care providers to induce them to prescribe the company’s products. The settlement resulted from two lawsuits brought under the qui tam provisions of the False Claims Act.

In the first, which accounted for $221.9 million of the $361.5 settlement, a former Merck employee alleged that the company violated the Medicaid Rebate Statute by providing deep discounts to hospitals that used its drugs Zocor and Vioxx in place of competitors’ brands, without reporting those discounts and other cost information to reflect its "best price," as required by the statute to ensure that Medicaid obtains the benefit of the same price concessions other purchasers enjoy. This suit also alleged that Merck paid kickbacks to physicians, disguised as fees for training, consultation, and market research, to induce them to prescribe its drugs, also contrary to law. The United States paid the relator $46.6 million as his share of the settlement under the False Claims Act’s qui tam provisions. In addition to the federal recovery, Merck paid $162 million to state Medicaid programs.

In the second lawsuit, which accounted for the remaining $139.6 million of the settlement, a physician alleged that Merck provided deep discounts to hospitals to induce them to administer its antacid, Pepcid, as a means to boost sales through continued use after the patient’s discharge. The suit went on to allege, similar to the first suit, that Merck knowingly failed to report these discounts as required by the Medicaid Rebate Statute, which resulted in illegal and inflated claims to federal and state Medicaid programs. In addition to paying the United States $139.5 million in federal claims, Merck paid $114 million to settle state Medicaid claims. The relator received $24 million as his federal share of the settlement and an additional sum for the state recoveries. Merck also entered into a Corporate Integrity Agreement with the Inspector General of the Department of Health and Human Services (HHS) to ensure compliance with federal health insurance programs in the future.

For the original press release, see:

http://www.usdoj.gov/opa/pr/2008/February/08_civ_094.html

http://www.usdoj.gov/usao/pae/News/Pr/2008/feb/steinkrelease.pdf

* $258 million from Cephalon Inc. to resolve claims that the company marketed three drugs for uses not approved by the Food and Drug Administration (FDA). By promoting the drugs for so-called "off label" uses, Cephalon caused providers to charge federal health insurance programs such as Medicare, Medicaid, TRICARE and the Federal Employees Health Benefits Program for unapproved uses of the drugs not covered by the programs. The settlement resolved four lawsuits, three of which were brought by former Cephalon sales representatives under the qui tam provisions of the False Claims Act. Consistent with those provisions, the relators who filed the suits will share $46.7 million as their part of the settlement. In addition to the $258 million recovered for federal programs, the United States recovered $116 million for the Medicaid programs in 14 states and the District of Columbia. Cephalon also pleaded guilty to related criminal charges, paid $50 million in fines and forfeitures and entered into a five-year Corporate Integrity Agreement with the Inspector General of HHS to ensure strict compliance in the future.

For the original press release, see:

http://www.usdoj.gov/opa/pr/2008/September/08-civ-860.html

* $225 million from Amerigroup Corporation to settle both federal and state allegations that Amerigroup, together with its Illinois subsidiary, systematically avoided enrolling pregnant women and other high-cost patients in the company’s managed care program in Illinois. The program was funded by Medicaid, which required open enrollment to all eligible beneficiaries. By excluding pregnant women and other high-cost patients, Amerigroup increased its profits in conflict with the law. The United States and Illinois jointly brought suit under the federal False Claims Act and the Illinois Whistleblower Reward and Protection Act. In October 2006, following a lengthy trial, the court entered judgment for $334 million. Amerigroup appealed and the parties entered negotiations leading to settlement. The relator received $56.25 million as his share of the federal and state recoveries. In conjunction with the settlement, Amerigroup entered into a Corporate Integrity Agreement with the Inspector General of HHS to ensure future compliance.

For the original press release, see:

http://www.usdoj.gov/opa/pr/2008/August/08-civ-723.html

* $75 million to settle claims that Kyphon Inc., now Medtronic Spine LLC, violated the False Claims Act by knowingly causing the submission of false claims to Medicare for its kyphoplasty procedure–a minimally-invasive surgery used to treat compression fractures of the spine. The settlement resolved a lawsuit filed by two former Kyphon employees under the qui tam provisions of the False Claims Act. The suit alleged that Kyphon engaged in a seven-year marketing scheme that resulted in certain hospitals billing Medicare for kyphoplasties performed on an inpatient basis rather than for less costly and clinically appropriate outpatient kyphoplasty treatment. This conduct resulted in the Medicare program paying more for inpatient kyphoplasty procedures. The relators received a total of $14.9 million as their share of the settlement. In conjunction with the settlement, Kypon entered into a Corporate Integrity Agreement with the Inspector General of HHS to ensure future compliance.

For the original press release, see:

http://www.usdoj.gov/opa/pr/2008/May/08-civ-455.html

* $74 million from Staten Island University Hospital (SIUH) to resolve two False Claims Act qui tam suits and two other matters. In the first action, a physician and former SIUH Director of Chemical Dependency Services, filed suit alleging that SIUH fraudulently billed Medicare and Medicaid for substance abuse and alcohol detoxification services provided to inpatients in unlicensed beds, in violation of state law, between 1994 and 2000. SIUH paid the United States $11.8 million in settlement of this qui tam action, with the relator receiving $2.3 million as his share of the government’s recovery. In related allegations of inflated Medicaid billings asserted under New York State’s false claims statute, SIUH paid New York $14.88 million, with the relator receiving $2.97 million as his share of the state’s recovery.

In the second action, the widow of an SIUH cancer patient filed suit alleging that between 1996 and 2004, SIUH submitted false claims to Medicare and TRICARE using incorrect codes for cancer treatments not covered by the programs. SIUH paid the United States $25 million, including a relator share award of $3.75 million. In the third matter, the United States alleged that SIUH deliberately inflated the number of residents it employed to fraudulently increase Medicare reimbursement between 1996 and 2003. SIUH paid the United States $35.7 million in settlement of this matter. Lastly, SIUH paid the United States $1.47 million to settle allegations that it billed Medicare and Medicaid for treating psychiatric patients in unlicensed beds from 2003-2005. In conjunction with the settlement, SIUH also entered into a Corporate Integrity Agreement with the Inspector General of HHS to ensure future compliance.

For the original press release, see:

http://www.usdoj.gov/usao/nye/pr/2008/2008sep15.html

* $60 million from Lester E. Cox Medical Centers, a health care system headquartered in Springfield, Mo., to settle claims that it violated the False Claims Act, the Anti-Kickback Statute and the Stark Statute between 1996 and 2005. The United States alleged that Cox entered into illegal financial relationships with referring physicians at a local physician group and engaged in improper billing practices with respect to Medicare. Under the Stark Statute, providers such as Cox are prohibited from billing Medicare for referrals from doctors with whom the providers have a financial relationship, unless that relationship falls within certain exceptions. The United States contended that Cox and the referring physicians ran afoul of the Stark Statute, as well as the Anti-Kickback Statute, which prohibits offering inducements to providers in return for patient referrals. The settlement also resolves claims that Cox included non-reimbursable costs on its Medicare cost reports and improperly billed for dialysis services. In conjunction with the settlement, Cox entered into a Corporate Integrity Agreement with the Inspector General of HHS to ensure future compliance.

For the original press release, see:

http://www.usdoj.gov/opa/pr/2008/July/08-civ-638.html

http://www.usdoj.gov/usao/mow/news2008/cox.settlement.htm

* $53 million from Pratt & Whitney, a division of United Technologies Corporation, and PCC Airfoils LLC, a subsidiary of Precision Castparts Corporation, to resolve allegations that the companies knowingly submitted false claims for defective turbine blades purchased by the Air Force to retrofit the F100-PW-220 engines found in F-16 and F-15 aircraft. The settlement includes corrective action to replace defective blades and inspection of potentially serviceable blades to ensure their integrity. The case was pursued as part of a National Procurement Fraud Initiative launched in October 2006, to promote the early detection, identification, prevention and prosecution of procurement fraud.

For the original press release, see:

http://www.usdoj.gov/opa/pr/2008/August/08-civ-675.html

* $26 million from St. Joseph’s Hospital of Atlanta to resolve allegations that the hospital falsely claimed Medicare reimbursement for inpatient admissions that were, in fact, less costly outpatient visits. A registered nurse, formerly employed by the hospital, initiated suit under the False Claims Act’s qui tam provisions. The complaint alleged that the hospital improperly billed for short inpatient admissions, usually of one day or less, when the service should have been billed as an outpatient "observation" or emergency room visit. Medicare reimburses hospitals a higher rate for inpatient admissions than it does for observation care or emergency room visits. The nurse who triggered the investigation received $4.94 million as her share of the recovery. St. Joseph’s entered into a Corporate Integrity Agreement with the Inspector General of HHS in conjunction with the settlement, to ensure future compliance.

For the original press release, see:

http://www.usdoj.gov/usao/gan/press/2007/12-21-07.pdf

* $23.2 million from Bechtel Infrastructure Corp. and PB Americas Inc. to settle allegations of false claims for federal highway funds in connection with the firms’ failure to provide adequate management and quality assurance services during the construction of the Central Artery Tunnel, known as the Big Dig, in Boston. The recovery, part of a $458 million settlement of state and federal claims, resolved parts of a qui tam lawsuit, a related federal investigation and additional claims that Bechtel and PB Americas violated federal and state criminal and civil laws in connection with their services on the Big Dig. In addition to the federal recovery, the companies paid $40 million in state claims and $335 million into a state warranty fund for future repairs to the Big Dig. The private citizen who filed the suit received $54,000 and $96,000 as his share of the federal and state recoveries, respectively.

For the original press release, see:

http://www.usdoj.gov/opa/pr/2008/January/08_crt_048.html

http://boston.fbi.gov/dojpressrel/pressrel08/govtclaimsettlement012308.htm

* $21.1 million from CVS Caremark Corp. to settle claims that from 2000-2006, the company illegally switched patients from the tablet version of the drug Ranitidine (generic Zantac) to a more expensive capsule version for the sole purpose of increasing Medicaid reimbursement. For example, CVS pharmacies in Illinois would charge Medicaid $79.80 for 60 Ranitidine capsules, rather than $17.10 for the tablets prescribed, increasing reimbursement by $62.70 on a single prescription. CVS Caremark is headquartered in Rhode Island and operates more than 6,000 pharmacies nationwide. The settlement resolves qui tam claims under federal and state false claims statutes. In addition to the federal recovery, CVS Caremark paid $15.6 million to 23 states and the District of Columbia. The qui tam plaintiff received $4.3 million as his share of the federal and state settlements. CVS Caremark also entered into a Corporate Integrity Agreement with the Inspector General of HHS to ensure future compliance.

For the original press release, see:

http://www.usdoj.gov/opa/pr/2008/March/08_crt_214.html