Government

Settlement amounts up in health care fraud cases

Doctors are rarely the subject of False Claims Act inquiries.

By David Glendinning — Posted May 9, 2005

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Washington -- Investigations into health care fraud continue to recover substantial amounts of money for the federal government, which is on track to collect significantly more money this year than it did last year.

In the first six months of fiscal 2005 alone, settlements and judgments under the False Claims Act totaled nearly $900 million, according to the Dept. of Justice and the watchdog group Taxpayers Against Fraud. That figure is almost as much as enforcement of the act produced in all of fiscal 2004.

Although the act allows federal officials to prosecute any kind of fraudulent government billing, health care fraud remains the largest single chunk. Out of the 43 cases that resulted in a settlement or judgment since the fiscal year began last October, 30 involved Medicare or Medicaid billing.

In these cases, the federal investment is paying off in spades, according to health care economist Jack Meyer, who recently conducted a study of recoveries under the act for Taxpayers Against Fraud. Using data from fiscal years 1999 through 2003, Meyer estimated that every dollar the government spends pursuing civil health care fraud results in $13 in net recoveries, up from $8 two years ago.

"Civil health care fraud is surely one area of the federal budget where the government is running a substantial surplus," said Meyer, president of the Economic and Social Research Institute, a nonpartisan research organization in Washington, D.C.

Health care fraud recoveries experienced a relatively slower period in fiscal 2004 after a record year in which the hospital chain HCA and drug firms Abbott Labs, AstraZeneca and Bayer settled fraud claims for hundreds of millions each. With settlements of more than $300 million against both HealthSouth and Gambro Healthcare in December 2004, the current fiscal year is sizing up to be another big one when it comes to Medicare fraud.

Settlements under the False Claims Act are seldom against physicians.

In fiscal 2004, four individual physicians settled with the government over charges that they defrauded Medicare or Medicaid, according to Taxpayers Against Fraud. Another three doctors settled False Claims Act charges in the past six months.

But not only are these numbers small when compared with the total number of settlements and judgments that occurred over the same time, the dollar levels involved are near the bottom of the list in terms of size. None of the physician payouts since the beginning of fiscal 2004, for example, involved more than $300,000.

While these figures represent a lot of money to a small practice, they are insignificant enough that the government does not often find it worthwhile to pursue smaller-scale fraud operations. These efforts can take several years and hundreds of thousands of dollars in legal costs to produce a result, said Taxpayers Against Fraud spokesman Patrick Burns. This also helps ensure that honest billing mistakes by physicians do not make them the target of fraud hunters, he said. The AMA and other groups have fought to prevent such mistakes from being pursued as fraud.

"We have hundreds of millions of claims a year being processed by Medicare and Medicaid," Burns said. "If the government's going after you under the False Claims Act, that means that you have risen up through the pile for some reason."

Doctors have a positive role to play at the other end of enforcement -- that of whistle-blower against a dishonest third party, such as a hospital chain or a drug manufacturer.

"Doctors are some of the best whistle-blowers," Burns said. "They're smart, they're articulate, they know health care, and they know what good, ethical behavior is. They know what good practice is."

Congress approved revisions to the act in the mid-1980s that provide whistle-blowers with financial incentives for filing a suit on behalf of the government, as well as protections against retribution for those who decide to do so. Doctors who are able to dedicate the extraordinary time and energy necessary to help bring a legitimate suit to a settlement or judgment are entitled to a cut of the recoveries that can total 15% or more.

Because as much as 80% of False Claims Act cases are prompted by whistle-blowers, doctors who can detect the perpetration of criminal activity will continue to be some of the best weapons in the government's antifraud arsenal, Burns said.

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External links

Taxpayers Against Fraud report, "Fighting Medicare Fraud: More Bang for the Federal Buck," April, in pdf (link)

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