The Justice Department recovered $2.3 billion from alleged healthcare fraud schemes in fiscal 2014, down slightly from the $2.6 million it collected the year before, it announced Thursday morning.
It was, however, the fifth consecutive year the Justice Department recovered more than $2 billion from cases alleging fraud against Medicare, Medicaid and Tricare. Justice attributed the continued recovery of dollars to the creation of an interagency task force, the Health Care Fraud Prevention and Enforcement Action Team, in 2009.
Most false claims cases are brought by whistle-blowers, who are allowed to file lawsuits on behalf of the government. The government can later decide whether to intervene. In successful lawsuits, whistle-blowers are entitled to a percentage of the money recovered, leading to large rewards in some cases. In fiscal 2014, more than 700 whistle-blowers filed cases in healthcare and other areas, and reaped $435 million.
Much of the cash recovered this year was from the pharmaceutical industry. Johnson & Johnson and its subsidiaries Janssen Pharmaceuticals and Scios agreed to pay $1.1 billion in November 2013 to settle allegations that Johnson & Johnson promoted the drugs Risperdal, Invega and Natrecor for uses not approved by the FDA, causing providers to submit hundreds of millions of dollars in false claims to federal healthcare programs.
Janssen ultimately pleaded guilty to a single misdemeanor violation of the Food, Drug and Cosmetic Act for past promotional practices of Risperdal but otherwise Johnson & Johnson noted that the “settlement of the civil allegations is not an admission of any liability or wrongdoing, and the company expressly denies the government's civil allegations.”
Pharmaceutical supplier Omnicare also agreed in October 2013 to pay a $116 million settlement in response to allegations that it paid kickbacks to skilled-nursing facilities to get them to choose Omnicare as their pharmacy provider, in violation of the Anti-Kickback Statute. In the settlement agreement, Omnicare denied any wrongdoing.
Cases involving hospitals brought in $333 million this past year. Community Health Systems, the nation's largest operator of acute-care hospitals, paid $98.15 million to settle allegations that it billed Medicare, Medicaid and Tricare for inpatient services that should have been provided on an outpatient basis or in an observation setting.
In the settlement, CHS denied any wrongdoing, and in a statement released in August, CEO Wayne Smith said: “The question of when a patient should be admitted to a hospital is, and always has been, a matter of medical judgment by the individual physician responsible for a patient's care. Unfortunately, shifting and often ambiguous standards make it extremely difficult for physicians and hospitals to consistently comply with the regulations. We are committed to doing our best, despite these challenges.”
Also Halifax Hospital Medical Center, Daytona Beach, Fla., and Halifax Staffing paid $85 million in a settlement over allegations that it illegally paid doctors to refer Medicare patients to the hospital. Halifax did not admit any wrongdoing in the settlement.
The government also recovered $150 million from Amedisys, a provider of home health services, in a settlement reached in April over allegations that it billed Medicare for unnecessary services, for services to patients who were not homebound and for violating the Anti-Kickback Statute. The government alleged that the company's management pressured nurses and therapists to provide care based on how it would affect the company's finances rather than patients' needs.
Amedisys disputed the allegations but decided to settle to avoid the uncertainty and expense of litigation.
The cash recovered from healthcare fraud cases represented about 40% of all the money the Justice Department collected in fiscal 2014 from settlements and judgments from civil cases involving all types of fraud and false claims. In all, the Justice Department recovered $5.69 billion, the first time it's collected more than $5 billion from False Claims Act cases. Of that total amount, $3.1 billion was from banks and other financial institutions involved in false claims for federally insured mortgages and loans.
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