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Legal & Regulatory Feature


Biggest Health Care Fraud Bust, Ever

Walter Eisner • Wed, July 19th, 2017

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On July 13, 2017, the government announced the largest ever health care fraud bust by the Medicare Fraud Strike Force.

412 Arrested

The Department of Justice (DOJ) said it arrested 412 defendants across 41 federal districts, including 115 doctors, nurses and other licensed medical professionals, for their alleged participation in health care fraud schemes involving approximately $1.3 billion in false billings. Of those charged, over 120 defendants, including doctors, were charged for their roles in prescribing and distributing opioids and other dangerous narcotics. Thirty states participated in the arrests.

U.S. Attorney General Jeff Sessions said the country is in the "midst of the deadliest drug crisis in our history." He said one American dies of a drug overdose every 11 minutes and more than 2 million Americans are addicted to prescription painkillers. Anyone who prescribes and distributes medication to alleviate pain is in the government's cross hairs.

The bust was a coordinated effort between the DOJ Criminal Division, U.S. Attorneys' Offices, Health and Human Services and more than 1,000 state and federal law enforcement agents.

As a result of the operation, 295 health care providers are now in the process of being suspended or banned from participation in federal health programs.

Unnecessary Prescriptions

Generally, the defendants were charged with aggressively targeting schemes to bill Medicare, Medicaid, and TRICARE for "medically unnecessary prescription drugs and compounded medications that often were never even purchased and/or distributed to beneficiaries. The charges also involve individuals contributing to the opioid epidemic, with a particular focus on medical professionals involved in the unlawful distribution of opioids and other prescription narcotics, a particular focus for the Department."

Many of the charges related to home health and rehab services.

Facet Joint Injections

However, in Michigan, 32 defendants were charged “with fraud, kickback, money laundering and drug diversion schemes involving approximately $218 million in false claims for services that were medically unnecessary or never rendered.”

In one case, the government said, nine defendants, including six physicians, were charged with “prescribing medically unnecessary controlled substances, some of which were sold on the street, and billing Medicare for $164 million in facet joint injections, drug testing, and other procedures that were medically unnecessary and/or not provided.”

In Texas, 26 individuals were charged in cases involving over $66 million in alleged fraud. Among these defendants are a physician and a clinic owner who were indicted on one count of conspiracy to distribute and dispense controlled substances and three substantive counts of distribution of controlled substances.

The pair was connected to a “purported pain management clinic that is alleged to have been the highest prescribing hydrocodone clinic in Houston, where approximately 60-70 people were seen daily, and were issued medically unnecessary prescriptions for hydrocodone in exchange for approximately $300 cash per visit.”

Attorney General Sessions said just one doctor at this clinic allegedly gave out 12,000 opioid prescriptions for over 2 million illegal painkiller doses.

The biggest bust was in the Southern District of Florida, where a total of 77 defendants were charged with offenses relating to their participation in various fraud schemes involving over $141 million in false billings for services including home health care, mental health services and pharmacy fraud.

In New York, ten individuals were charged with participating in a variety of schemes including kickbacks, services not rendered, and money laundering involving over $151 million in fraudulent billings to Medicare and Medicaid. Approximately $100 million of those fraudulent billings were allegedly part of a scheme in which five health care professionals paid illegal kickbacks in exchange for patient referrals to their own clinics.

Fraud Strike Force

Sessions said, "While today is a historic day, the Department's work is not finished. In fact, it is just beginning. We will continue to find, arrest, prosecute, convict, and incarcerate fraudsters and drug dealers wherever they are.”

The Medicare Fraud Strike Force operates in nine locations nationwide. Since its inception in March 2007, the Force has charged over 3,500 defendants who collectively have falsely billed the Medicare program for over $12.5 billion. In the past fiscal year, the feds have collectively won or negotiated over $2.5 billion in judgements and settlements

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