Health care fraud: DOJ recovers $1.8B in false claims cases in 2023

The health-care industry led the way as a record 543 False Claims Act settlements and judgments were reported in fiscal year 2023. More than $1.8 billion of the $2.68 billion total involved matters related to managed care providers, hospitals, pharmacies, laboratories, long-term acute-care facilities and physicians.

“As the record-breaking number of recoveries reflects, those who seek to defraud the government will pay a high price,” said Brian Boynton, principal deputy assistant attorney general and head of the U.S. Justice Department’s Civil Division. “The American taxpayers deserve to know that their hard-earned dollars will be used to support the important government programs and operations for which they were intended.”

The amounts included in the $1.8 billion reflect recoveries arising only from federal losses, but in many of these cases, the department was instrumental in recovering additional amounts for state Medicaid programs. The recoveries in fiscal year 2023 also reflect the department’s focus on key enforcement priorities, including fraud in pandemic relief programs and alleged violations of cybersecurity requirements in government contracts and grants.

The False Claims Act imposes triple damages and penalties on those who knowingly and falsely claim or knowingly fail to pay money owed to the United States. In 1986, Congress strengthened the act by increasing incentives for whistleblowers to file lawsuits on behalf of the government alleging false claims. These whistleblower actions comprise a significant percentage of the False Claims Act cases that are filed.

Whistleblowers filed 712 lawsuits in fiscal year 2023, and this past year the Justice Department reported settlements and judgments exceeding $2.3 billion in these and earlier filed suits.

“The statistics once again show that whistleblowing works,” sad attorney Stephen Kohn of Kohn, Kohn & Colapinto in Washington, D.C. “Whistleblowers are the government’s number one source of fraud detection. Year after year, whistleblowers recover billions of dollars for taxpayers.”

Health-care fraud remained a leading source of False Claims Act settlements and judgments. These recoveries restore funds to federal programs such as Medicare, Medicaid and TRICARE, the health-care program for service members and their families. But just as importantly, enforcement of the False Claims Act deters others who might try to cheat the system for their own gain, and in many cases, also protects patients from medically unnecessary or potentially harmful actions. As in years past, the act was used to pursue matters involving a wide array of health-care providers, goods and services.

Settlements and judgments covered a number of fraud types:

Medicare Advantage

The Justice Department continued to pursue cases alleging false claims in the Medicare Advantage program, including allegations that organizations participating in the program knowingly submitted or caused the submission of inaccurate information or knowingly failed to correct inaccurate information about the health status of beneficiaries enrolled in their plans to increase reimbursement. Because Medicare Part C is now the largest component of Medicare, both in terms of federal dollars spent and the number of beneficiaries, the work of the Justice Department in this area is of critical importance.

The Cigna Group agreed to pay $172 million in a case brought by a whistleblower to resolve allegations that it knowingly submitted and failed to withdraw inaccurate and untruthful diagnosis codes for its Medicare Advantage Plan enrollees to increase its payments from Medicare.

Unnecessary services and substandard care

The department also pursued and resolved matters in which providers billed federal health-care programs for medically unnecessary services and substandard care. The provision of such medical services not only wastes taxpayer funds but also can expose patients to harmful procedures and treatments or cause them to forego other potentially more effective treatments.

Cornerstone Hospital Medical Center agreed to pay $21.6 million to resolve allegations that the former long-term acute care facility knowingly submitted claims for services performed by unlicensed and unauthorized students, and services that were not provided or effectively worthless.

Opioid epidemic

The department has continued its pursuit of health-care providers, pharmaceutical companies, pharmacies and other entities that have played a role in contributing to and exacerbating the opioid crisis. The Justice Department filed a complaint in intervention in a whistleblower lawsuit against Rite Aid alleging that it filled unlawful prescriptions for controlled substances in violation of the False Claims Act and the Controlled Substances Act.

Unlawful kickbacks

Kickbacks paid or received by health-care providers undermine the integrity of federal health-care programs by tainting medical decision-making, increasing health-care costs and adversely affecting competition. Federal law prohibits the willful solicitation or payment of illegal remuneration to induce the purchase of a good or service paid for by a federal health-care program.

Cardiac Imaging agreed to pay $85.5 million to resolve allegations that the company paid kickbacks to cardiologists in the form of above-fair market value supervision fees, to induce those doctors to refer their patients to Cardiac Imaging for PET scans. Carter Healthcare agreed to pay $22.9 million to resolve allegations that the company improperly paid renumeration to physicians under the guise of medical directorships to induce referrals of home health patients.

Other health-care fraud

The Justice Department continued to pursue claims arising from alleged fraud in California’s Medicaid program in connection with coverage of the previously uninsured “Adult Expansion” population under the Affordable Care Act. BioTelemetry and its subsidiary CardioNet LLC, agreed to pay nearly $45 million to resolve allegations that they submitted claims for heart monitoring tests that were evaluated, in part, outside the United States, in violation of federal law.

Related: Health care fraud: DOJ recovered $1.7B in false claims cases in 2022

“Protecting taxpayer dollars from fraud and abuse is of paramount importance to the Department of Justice — and these enforcement figures prove it,” said Brian Mizer, acting associate attorney general. “The False Claims Act remains one of our most important tools for rooting out fraud, ensuring that public funds are spent properly, and safeguarding critical government programs.”