Health care fraud and abuse enforcement overview 2018

Category: healthcare fraud, Department of Health and Human Services, Department of Justice, Anti-Kickback Statute, Stark Law

Health care fraud and abuse enforcement overview 2018


The Department of Health and Human Services (HHS) and the Department of Justice (DOJ) recently released the Health Care Fraud and Abuse Control Program Annual Report. The 2018 Report highlighted key enforcement areas and policy considerations.

The Health Insurance Portability and Accountability Act of 1996 established a national Health Care Fraud and Abuse Control Program (the Program) under the direction of the Attorney General and the Secretary of HHS. Acting through the Inspector General, the Program was designed to coordinate federal, state, and local law enforcement efforts to combat health care fraud and abuse.

The Program has obtained large recoveries over the last two decades, and fiscal year 2018 was no exception, as the government won or negotiated over $2.3 billion in judgments and settlements. Notably, the return on investment for the Program over the last three years (2016-2018) is $4.00 returned for every $1.00 spent. The DOJ opened 1,139 new criminal health care fraud investigations, and federal prosecutors filed charges in 572 cases involving 872 defendants. The Department of Health and Human Services - Office of the Inspector General (HHS-OIG) also issued numerous audits and evaluations with recommendations to correct program vulnerabilities and save Medicare and Medicaid funds from waste, fraud, and abuse.

The 2018 Report highlights significant criminal and civil investigations against a wide range of providers, such as hospitals, home health agencies, and physical therapy clinics.

Notable investigations with respect to hospitals and health systems included the following:

  • In August 2018, William Beaumont Hospital, based in the Detroit, Michigan area, agreed to pay $82.7 million to resolve civil False Claims Act (FCA) allegations that it had improper relationships with referring physicians, resulting in the submission of false claims to federal and state programs. Beaumont allegedly provided compensation in excess of fair market value and free or below fair market value office space in violation of the Anti-Kickback Statute (AKS) and the Stark Law. The settlement also resolves claims that the hospital misrepresented that a CT radiology center qualified as an outpatient department of Beaumont.
  • In September 2018, Kalispell Regional Healthcare and 6 subsidiaries agreed to pay $24 million to resolve allegations that they violated the FCA by paying physicians more than fair market value and conspiring to enter into arrangements that improperly induced referrals. The entities also allegedly paid excessive full-time compensation to physicians working less than full-time.

Notable investigations of home health and physical therapy providers included the following: 

  • A registered nurse was sentenced to 120 months in prison and ordered to pay $17.1 million in restitution for his involvement in a scheme to recruit patients to receive home health services that were not medically necessary, not provided, or both. The nurse also paid kickbacks to physicians who would falsely certify that Medicare beneficiaries were under the physician’s care when in actuality they were not. The nurse pled guilty in April 2017.
  • In August and September 2018, two physicians and the owner of a home health agency were ordered to pay $6.5 million in restitution and sentenced to 132, 27, and 42 months in prison respectively. The defendants paid and received kickbacks in exchange for patients and billed Medicare more than $8.9 million for services that were medically unnecessary, never provided, or otherwise not reimbursable. Additionally, defendants provided opioid prescriptions to induce patient participation in the scheme.
  • In June 2018, the CEO of a clinic in Texas was sentenced to approximately 19 years in prison associated with submitting false claims for physical therapy services. The government alleged that up to 30 to 60 patients a day went to the clinic, but the employees did not know what the patients were doing in the main treatment area because they were performing massages, electrical stimulation treatments, and ultrasound treatments in other parts of the clinic.

As evidenced by several of the above actions against providers and companies, there is a continued focus by the government on senior executives, with individuals increasingly being held criminally and civilly liable for corporate misconduct. Recent policy changes suggest this trend will continue, as the DOJ has begun to review all civil qui tam complaints for corollary criminal actions and the fact that, absent extraordinary circumstances, a settlement will not protect individuals from criminal liability.

In 2018, the Centers for Medicare and Medicaid Services and HHS-OIG published requests for information regarding potential reforms to the AKS and Civil Monetary Penalties (CMP) provisions. It appears that the federal government’s overarching policy is to simplify the regulatory environment for health care organizations and providers. While those requests may reflect the enforcement agencies’ desire to reform the regulatory framework, the 2018 Report shows that the federal government remains focused on combating alleged unlawful conduct in the health care industry. Ultimately, only time will tell whether the contemplated regulatory reforms will actually come to fruition and how that will affect the government’s approach to enforcement over the next several years.

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