 GAO:
$45 Billion in Improper Payments -- and We're Just Beginning to
Count
The GAO says
there are over $45 billion in improper payments by the Federal
Government, and that this number will rise in the years ahead
since no one is even bothering to estimate the amount of
improper payments in some of the biggest federal agencies such
as Medicaid
(outlays exceeding $175 billion annually), or the Department of
Education's Title I Program (outlays of over $10 billion
annually).
>> To read the
report |
 Is
the FBI Ripping-off HCFAC Money?
The GAO reports
that a significant portion of the $114 million a year earmarked
by Congress for investigating health care fraud may have been
shifted to other purposes such as fighting terrorism. Sen.
Charles Grassley (R-IA), who requested the study, said, "It's
inexcusable that the government cannot account for millions of
dollars set aside to fight health care fraud." >>
To read the report
|
 OfficeMax
Pays $9.8 Million
OfficeMax, Inc. will pay
$9.8 million to settle charges the company submitted false claims
when it sold office supply products to the U.S. Government that were
not permitted by a General Services Administration (GSA) contract
that required all covered office products to be made in countries
covered by the Trade Agreements Act. >>
To read more
|
 Surgery
Center Kickbacks
Resurgens Surgery Center of
Atlanta has agreed to pay $3.8 in a case involving Medicare and
Medicaid kickbacks. Doctors paid kickbacks to the surgery
center for using the Center's Medicare provider number.
The kickbacks were steered to a lockbox at an Atlanta bank.
>>
To read more
|
 Oracle
Pays $8 Million
ORACLE has agreed to pay $8 million to resolve a False
Claims Act case in which a whistleblower alleged that the
company pocketed millions of dollars in unused funds advanced
for computer training. The whistleblower in the case
will receive $1.58 million of the $8 million settlement. >>
To read more
|
 Fast
Facts:
üOver
500 drugs are now under investigation by the U.S. Department of
Justice.
üSettlement
of just 10 drug manufacturing cases (all those resolved to date)
has returned over $2.4 billion to the U.S. Government and the 50
states. |
 A
Marketing-the-Spread
Medicaid Con
On January 3, 2003 a California False Claims Act case against
Abbott Laboratories and Wyeth came out from under seal.
The case was originally filed in July 1998, and charged the two
pharmacy companies with systematically defrauding
California’s Medicaid program
by inflating prices for
various drugs in order to "market
the spread" -- a common
"business plan fraud" in which drug companies report an
entirely fictitious "Average Wholesale Price" to Medicaid while
selling the drugs to WalMart, CVS, Walgreens and other national
chains at deeply discounted prices.
How big are the spreads?
One only has to look at the
example of
Vancomycin, an antibiotic sold by Abbott
and named in the California False Claims Act suit.
Between January 5, 2001 and June 1,
2002, the Direct
Price (supposedly
the
manufacturer's direct price to the pharmacy)
reported by Abbott and paid by the
California Medicaid program
dropped from $64.35
to $5.76,
while the "spread" dropped from $56.95 to just $1.40.
What was the
cause of this price adjustment? It is speculated that
the rapid collapse in the price reported to Medicaid was due to
the fact that Abbott got wind of the California False Claims Act
lawsuit and decided to "run clean" rather than incur more
liability. To learn more about marketing-the-spread fraud
scams, see TAF's publication >>
Reducing Medicare
and Medicaid Fraud by Drug Manufacturers
by Andy Schneider.
|
 Abbott
Markets the Spread on Atavin
Along with Vancomycin (see table, above), Abbott is accused of
"marketing the spread" on Atavin through it's Wyeth subsidiary.
Ativan is an antianxiety drug used for
the management of anxiety disorders, and alcoholism.
Wyeth’s reported "Direct Price" to be paid
for Medi-Cal Reimbursement is $70.19 for a 2mg/ml 10ml vial, but
in fact the drug is sold to drug stores for $11.20 -- a "spread"
of $58.99 per prescription which is pocketed by pharmacies from
Wal-Mart and CVS to WalGreens and Eckard. Wyeth
Ativan sales in the U.S. are about $50 million a year according
to BioBusiness magazine.
|
 Texas Team Fights Pharma Fraud
Working on a
budget of less than $500,000 per year, eight lawyers in the
Texas fraud control unit are winning huge settlements from drug
makers that have been gaming the Medicaid system. The key to
their success? A series of strong Attorney Generals (one of whom
is now a Senator from Texas), and a close alliance with
whistleblowers and their attorneys. >> To read more
|
 NY
Pharmacies Pay $6.75 Million
A number of New York
pharmacies have agreed to pay $6.7 million to resolve
allegations of Medicaid over-billing in New York. The
State, along with the Federal Government, will recover
approximately $6.7 million in restitution to the Medicaid
program. >>
To read more
|
 |
 Hillcrest
Horrors
Hillcrest Healthcare in Connecticut has agreed to pay $750,000
to settle allegations it delivered substandard care to Medicare
and Medicaid patients.
"Hillcrest was truly a health-care
atrocity -- abusing its most vulnerable elderly patients, as
well as the public trust," said Conn. Attorney General Richard
Blumenthal. Problems at Hillcrest were so severe they led
to the death of one resident who had
bedsores
"so bad you could see down to his spine." >>
To read more |
 N.Y.
Hospital Pays $76.5 M
Staten Island University
Hospital has agreed to pay $76.5 million to the State and the
Federal Government to settle Medicaid false-billing charges
involving Disproportionate Share payments.
According to New
York Attorney General Elliot Spitzer, the hospital launched the
scheme even as it was negotiating with his office to settle
another billing charge that resulted in $45 million in
restitution and $39 million in promised free care.
>>
To read more
|
 HealthSouth
Settles for $325 Million
HealthSouth has
agreed to pay $325 million to settle civil fraud charges brought
under the False Claims Act. The case was filed by
James J. Devage, a patient at a HealthSouth facility in Texas.
When Mr. Devage got a copy of his physical therapy bill, he was
taken aback to see that Medicare was being billed for individual
physical therapy which is not what he had received.
Assuming there was a mistake, he called HealthSouth and Medicare
to report the irregularities, but neither party was
interested. Mr. Devage then filed a False Claims Act lawsuit. To
read the citizen complaint
>> Click here. To read the
DoJ Complaint in Intervention >>
Click here. |
|
 First
Iraq Civil Fraud Case
Gets Green Light from DoJ
In a major development,
the U.S. Department of Justice says contracts presented to the
Coalition Provisional Authority are subject to the False Claims
Act: "[T]he United States believes that Custer Battles's
claims presented to the Coalition Provision Authority under the
Baghdad International Airport and ICE contracts violate the
False Claims Act if the claims are shown to have been knowingly
false because those claims were for funds in which the U.S. had
an interest or exercised certain dominion and were to be paid
out, provided or approved by the United States and they were
ultimately presented to an officer or employee of the United
States government." >>
To read DOJ brief (47-page PDF)
|
The
Speedy Bankers of the Cayman Islands |
"Custer Battles now
employs around 700 people and is expanding beyond Iraq's
war zone, with plans to get into shrimp farming and home
loans. It expects to garner revenue of $200 million next
year." - Wall Street Journal, Aug. 13, 2004
|
"Custer Battles had
operations in Fairfax and Rhode Island, but Sauber said
the company is no longer operational because it was
prohibited last year from receiving government
contracts. 'The Air Force suspension has effectively put
them out of business,' he said. 'They have lost all
their contracts and all their assets.' -
Washington Post, April 2, 2005
|
|
 The
Custer Battles Defense
Custer Battles' lawyers continue to
put the best face forward on their clients activities in Iraq.
"Did these guys do things based on their inexperience that were
stupid? No question," attorney Richard Sauber told The
Washington Post, but he says it did not matter since Custer
Battles was operating under a fixed price contract. Except
that it wasn't. Air Force Maj. Darwin Kirby says Custer
Battles was paid under a time-and-materials contract. >>
To read more
|
 Northrop to Pay
$62 Million
Northrop Grumman
has agreed to pay $62 million to settle a False Claims Act case
dealing with vastly inflated scrap metal claims. By fraudulently
inflating scrapping claims, Northrop Grumman inflated total
contract prices for the B2 bomber billed to the Department of
Defense. During the 16 years it took to settle this case,
Northrop paid no interest on the "borrowed" money. The fraud was
brought to the government by James Holzrichter, a former auditor
for Northrop, and Rex Robinson, a Northrop engineer who died in
2003 >>
To read more
|
 SAIC Settles Air Force Fraud Case
Science
Applications International Corp. has agreed to pay $2.5
million to settle a lawsuit alleging the company
defrauded the Air Force by padding its bills on $24
million in contracts. At the time the lawsuit was
filed SAIC claimed bill padding (what it calls
"quantitative risk analysis") is common practice in its
industry and was standard operating procedure. >>
To read the DoJ
press release
|
 The
Fleecing of America
NBC's Nightly News'
"Fleecing of America" segment for May 4 featured the SAIC False
Claims Act case recently settled for $2.5 million. NBC
noted that Lockheed Martin, Northrop Grumman and Raytheon had
also settled whistleblower lawsuits alleging bill padding.
Charles Tiefer of the U. of Baltimore Law School told NBC, "The
contractors have found that if they inflate their costs and they
keep their cards face down, they're just not caught.... We're
talking about billions of dollars in contracts every year."
>> To
read the transcript
|
|
 Comparative
Resources: Florida
Florida has 158
investigators, analysts and attorneys working on health care
fraud cases, and is happy that it recovers less than $30
million. Florida Governor Jeb Bush is asking for 50 more
investigators, reports Florida Attorney General Charlie Crist
who says Florida "will continue pursuing those who would defraud
the system to feed their own craven greed. Stealing from the
taxpayers while harming Florida’s neediest citizens is something
we simply cannot, and will not, tolerate." |
 Comparative
Resources:
United States of America
In their FY 2006 budget request, the Civil Division of the U.S.
Department of Justice has asked for $2 million for 26 positions
(17 attorneys) "to handle more than 125 separate health care
fraud matters involving numerous pharmaceutical manufacturers
and other related entities." The U.S. Attorneys are also
asking for $3 million for 32 positions (13 attorneys) "to
supplement U.S. Attorney resources in the aggressive burgeoning
criminal and civil prosecutions of pharmaceutical -health care
fraud..."
In the first 6 months of FY 2005, over $872 million in
False Claims Act settlements were won.
|
 Sen.
Grassley & Sen. Cornyn Expect DOJ Results in False Claims Arena
In a statement affirming his support for Alberto
Gonzales for Attorney General, Sen. Charles Grassley (R-IA),
Chairman of the Senate Finance Committee, said he expects
changes in the management of FCA cases: "I want to make one
point clear: I expect results. I strongly encourage
the new Attorney General not to allow the current bureaucrats at
DOJ to derail such an effort ... Many of the problems I see with
DOJ’s FCA program can be traced back to careerists who lack a
strategic vision ... and who don’t like whistleblowers ...."
Senator John Cornyn also sent a letter to nominee Gonzales,
formally associating himself with Sen. Grassley's earlier letter
and affirming that he too expected the Attorney General to
"bolster the efforts of the Department of Justice to enforce the
False Claims Act."
>> To read
Sen. Grassley's letter to Gonzales
>> To read
Sen. Cornyn's letter to Gonzales
|
 Grassley
Seeks
DoJ Fraud
Fighter Data
Sen. Charles
Grassley (R-IA), Chairman of the Senate Finance Committee, has
introduced legislation that would require the Department of
Justice to submit semi-annual reports about fraud settlements
under the False Claims Act. The legislation is prompted by a
lack of clear reporting on the amount and nature of False Claims
Act settlements from the U.S. Department of Justice. Notes Jim
Moorman, President of Taxpayers Against Fraud Education Fund:
"It's a bit odd that it takes an Act of Congress to get the
Department of Justice to report out meaningful numbers on what
it is doing to combat fraud. DoJ numbers in the False
Claims Act arena are presented without context. DoJ says
it has collected over $12 billion in fines and settlements since
1986 from companies committing fraud against the U.S.
Government, but we really have no idea at all if we are making
progress in the war against fraud. We don't know how these
recoveries compare with the amount of fraud against government
programs. In fact, we don't even know what percentage was
recovered of the money stolen in the very cases that were
settled." >>
To
read more
|
|
 Gambro to
Pay $350 Million
Gambro Healthcare, the nation's third-largest operator
of renal-dialysis clinics, has agreed to pay $350 million to
settle charges it defrauded Medicare. The case was brought to
the U.S. Government by Dr. Steven Bander, a former Gambro
medical officer. The fraud included Gambro paying kickbacks to
physicians for referrals to the company's clinics, Gambro
setting up a sham company to feed inflated bills to Medicare,
and the falsification of billing and statements to patients
justifying unnecessary tests and services. >> To read more
|
 Kidney Care
Frauds Continue
Fresenius Medical Care, the world's largest provider of
kidney dialysis care, has been subpoenaed by U.S. prosecutors,
as have the Renal Care Group, Gambro, Quest Diagnostics, Bone
Care International, and DaVita Inc. Combined, the six firms
operate thousands of dialysis centers across the U.S. In all
cases, prosecutors want information about testing patients'
parathyroid hormone levels and delivering vitamin D therapies.
>> To read more
|
|
 The
Seeds of Fraud
Ninety-five staffers at
the Centers for Medicare and Medicaid Services (CMS)
are being “redeployed” out of audit and program
integrity (i.e. anti-fraud) roles to work as
“relationship managers” whose job it will be to smooth
over the rough edges in the drug benefit transition.
|
 The
Harvest of Fraud
The
Department of Justice has indicted 10 people in Southern
California in a $24 million Medicare fraud case in which elderly
Vietnamese immigrants were targeted and prescribed motorized
wheelchairs and liquid nutritional supplements that they did not
need. Authorities say the owner of a Huntington Beach
medical supply business used his proceeds to buy a Rolls-Royce,
a Lamborghini, a $185,000 yacht and to pay a $120,000 tab at a
Las Vegas casino. |
Construction
Co. to Pay $6.6 M