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Enforcement Trends: New Fraud Takedown Focuses on Opioid Drugs & Sophisticated Financial Schemes

The 2016 health care fraud takedown was the biggest in history; the 2017 version surpassed it; and the June 2018 reprise nearly doubled the 2017 effort, at least in terms of the false claims dollars involved. Here are the numbers, courtesy of a new OIG report:

National Health Care Fraud Takedown Results, 2016 to 2018

Metric 2018 Takedown 2017 Takedown 2016 Takedown
Federal districts participating 58 41 36
State Medicaid Fraud Control Units participating 30 30 23
Doctors, nurses and other health professionals charged 165 (including 32 doctors) 115 61
Total individuals charged 601 412 301
Total false billings involved $2 billion $1.3 billion $900 million

Enforcement Trends
The focus of this year’s takedown was drugs and money. Drugs as in the opioid epidemic, which commanded the lion’s share of attention, with enforcers focusing on physicians, pharmacists, hospitals, home health agencies, pain clinics and other providers involved in illegal distribution of opioids and other prescription narcotics. Labs providing urine drug testing in connection with these prescriptions were caught up in the dragnet.  

While money is a perennial theme, the modern fraud scheme has become bigger and much more sophisticated carried out by elaborate financial networks that extend to not just run of the mill Medicare/Medicaid/TRICARE fraud but also identity theft and money laundering. Of course, the usual suspects—kickbacks, billing of services that weren’t medically necessary or performed, upcoding and such—were also amply represented in this year’s takedown results.

Local Results

  • Southern District of Florida: Total of 124 defendants charged for over $337 million in false billings, including the owner of a South Florida sober living facility indicted for a kickback and patient recruitment scheme allegedly generating $106+ million worth of medically unnecessary drug urine tests;
  • Central District of California: 33 defendants charged in alleged schemes to defraud Medicare out of more than $660 million, including the attorney/marketer indicted in a compounding pharmacy fraud case for allegedly paying kickbacks and offering incentives such as prostitutes to podiatrists in exchange for prescriptions written on pre-printed prescription pads issued regardless of medical need;
  • Southern District of Texas: 48 individuals charged in cases involving over $291 million, including the pharmacy chain owner, managing partner and lead pharmacist involved in an alleged drug and money laundering conspiracy;
  • Eastern District of Michigan: 35 defendants face charged in fraud, kickback, money laundering and drug diversion schemes involving approximately $197 million in false claims for services that were medically unnecessary or never rendered;
  • Northern District of Illinois: 21 individuals charged for over $54 million in fraudulent billing schemes;
  • Eastern District of New York: 13 individuals charged for kickbacks, services not rendered, identity theft, money laundering and other schemes worth over $38 million;
  • Middle District of Florida: 21 individuals charged in schemes involving more than $21 million;
  • Middle and Eastern Districts of Louisiana and Southern District of Mississippi: 42 defendants charged in connection with health care fraud, drug diversion and money laundering schemes involving more than $16 million in fraudulent billings.

U.S. Attorney’s Actions
In addition to the state Strike Force locations, 46 U.S. Attorney’s Offices from across the country participated in the takedown. Key results:

  • Northern and Southern Districts of Alabama: 15 defendants charged in eight health care fraud schemes involving compounding pharmacy fraud and unlawful distribution of controlled substances;
  • Eastern District of California: Four charged for their roles in two schemes, one involving forged prescriptions;
  • Southern District of California: Seven defendants, including a physician, were charged in three health care fraud and one identity theft scheme;
  • District of Connecticut: Three defendants, including two medical professionals, charged for in two schemes involving compounding drugs and unlawful distribution of Schedule II and IV controlled substances;
  • District of Delaware: Physician/owner of a pain management clinic charged with illegally prescribing more than two million dosage units of Oxycodone products;
  • District of Idaho: Three medical professionals, were charged in separate controlled substances fraud schemes;
  • Northern District of Iowa: Two medical professionals charged for their roles in opioid-related schemes;
  • District of Kansas and Northern and Western Districts of Oklahoma: 12 defendants, including four physicians, charged in unlawful distribution of controlled substances schemes;
  • Eastern and Western Districts of Kentucky:12 defendants, including five medical professionals, charged with health care fraud, unlawful distribution of controlled substances, aggravated identity theft and money laundering, including one case involving the operation of false-front medical clinics;
  • District of New Jersey: Eight defendants, including a New York doctor, Philadelphia hospital anesthesiology technologist and owner of a medical billing company charged in five schemes to defraud private insurance companies of over $16 million;
  • Western District of Pennsylvania: Four physicians charged in various health care fraud and drug diversion schemes, including one involving 32,000 dosage units of buprenorphine; and
  • Eastern District of Washington: Dentist and another individual indicted for distributing hydrocodone and tramadol without a legitimate medical purpose.
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