The Health Insurance Portability and Accountability Act of 1996 established a national Health Care Fraud and Abuse Control Program, under the direction of the Attorney General and the Secretary of the Department of Health and Human Services, acting through the HHS Inspector General, to coordinate federal, state and local law enforcement activities with regard to public and private health care fraud and abuse.
The Act requires that recoveries from health care investigations, including criminal fines, forfeitures, civil settlements and judgments, and administrative penalties, but excluding restitution, compensation to the victim agency, and Whistleblower's shares, be deposited in the Medicare Trust Fund.
The Act appropriates monies from the Trust Fund to an expenditure account, called the Health Care Fraud and Abuse Control Account, in amounts that the Secretary and Attorney General certify as necessary to finance anti-fraud activities. The maximum amounts available are specified in the Act. Certain of these sums are to be used only for activities of the HHS/OIG, with respect to Medicare and Medicaid programs. In FY 2005, the Secretary and the Attorney General certified $240.558 million for the Account.
During FY 2005, the Federal government took in approximately $1.47 billion in judgments and settlements, and attained additional administrative impositions in health care fraud cases. In comparison, during 2004, the government won or negotiated less than half that amount at approximately $605 million, in judgments and settlements. Since the inception of the program in 1997, the HCFAC has returned over $8.85 billion to the Medicare Trust Fund.
In FY 2005, the US Attorney's Offices (USAOs) were allocated $30.4 million to support civil and criminal health care fraud and abuse litigation. The 93 US Attorneys and their assistants, are the principal prosecutors of federal crimes, including those committed by health care providers.
In FY 2005, the Criminal Division was allocated $1.58 million to support criminal health care fraud litigation. The Fraud Section of the Criminal Division develops and implements white collar crime policy and provides support for the federal white collar enforcement community, which includes the Division's health care fraud and abuse responsibilities.
In FY 2005, US Attorneys' Offices opened 935 new criminal health care fraud investigations involving 1,597 potential defendants. Federal prosecutors had 1,689 criminal investigations pending, involving 2,670 potential defendants, and filed criminal charges in 382 cases involving 652 defendants. A total of 523 defendants were convicted for health care fraud related crimes during the year.
In one major case that ended a Department of Justice investigation that began in 1998, Boston Scientific paid $74 million to settle charges related to the company's illegal distribution of the Nir ON Ranger with Sox coronary stent delivery system. Boston recalled the device less than two months after its commercial launch because of a defect that affected its safety and effectiveness.
The government alleged that Boston shipped more than 30,000 adulterated and misbranded devices to hospitals throughout the country and accused further Boston of continuing to ship the devices for weeks after an internal investigation had determined that a large number of the devices were not functioning properly.
Back on October 5, 1998, Boston notified the FDA that it was immediately stopping shipments of the device and was pulling the product off the market, but later that same day, Boston shipped an additional 833 units to hospitals across the country. According to the reports to the FDA, the defect was responsible for 26 injuries, including several surgeries to remove a dislodged stent.
Civil attorneys in the USAOs are responsible for bringing civil cases to recover funds that federal health care programs have paid as a result of fraud, waste, and abuse, with support designated by the Civil Division. USAOs also handle most criminal and civil appeals at the federal appellate level.
The USAOs use civil litigation to recover monies wrongfully taken from Medicare and other taxpayer funded programs, and to ensure that the federal programs are fully compensated for the losses and damages resulting from such thefts.
The False Claims Act is one of the most valued tools available for these purposes. The FCA subjects those who knowingly present false claims for payment to the government, to treble damages and civil penalties including $5,500 to $11,000 for each false or fraudulent claim filed.
USAOs receive civil fraud referrals from a variety of sources, including the federal investigative agencies that refer criminal cases, and qui tam complaints. Under the FCA, a qui tam plaintiff (a relator) must file his or her complaint under seal in a US District Court, and serve a copy of the complaint upon the USAO for that district, as well as the Attorney General. USAOs routinely assign civil assistant US attorneys to every qui tam case filed in their districts, as well as all cases referred by a law enforcement agency.
In order to maximize resources, Civil Division attorneys may become actively involved in qui tam cases that involve more than one district and potential recoveries substantially over one million dollars.