DOJ: healthcare fraud recoveries totaled $1.6 billion in FY09

November 19, 2009 by MassDevice staff

Settlements and recoveries from Medicare fraud, off-label marketing and the illegal promotion of drugs and devices add up more than two-thirds of the total nut of false claims recoveries for the Federal watch dogs

DOJ: healthcare fraud recoveries totaled $1.6 billion in FY09

The Dept. of Justice is making hay from crackdowns on healthcare fraud, according to new numbers indicating that about two-thirds of the $2.4 billion recovered from false claims prosecutions this year were healthcare-related.

The department said it collected $1.6 billion from busts of Medicare and Medicaid fraud rings, off-label marketing and illegal promotion of drugs and devices during fiscal 2009. That's about 66 percent of the total the feds recovered from fraud cases during the year. This year's haul is the second-highest-grossing year ever, according to a DOJ press release.

Officials said more than $2 billion of the funds recovered were the result of lawsuits filed under the False Claims Act's "qui tam" provisions. These cases, also known as "whistle-blower" cases, typically result in a 15 percent to 25 percent payout of awarded penalties to the tipsters. The DOJ said it paid out $255 million in rewards to whistle-blowers in 2009.

In healthcare, the largest recoveries came from crackdowns on the pharmaceutical and medical device industries, which accounted for $866.7 million in settlements. The agency said the largest hits were from Aventis Pharmaceuticals Inc. (REGN), Bayer HealthCare LLC (BAY), Eli Lilly & Company (LLY), Quest Diagnostics Inc. (DGX) and its subsidiary, Nichols Institute Diagnostics Inc.

The DOJ said its civil division is especially aggressive in pursuing any allegations of "off-label" marketing, physician kickbacks and marketing the "spread," in which companies highlight the difference between the federal reimbursement rate and providers' lower cost, a practice that Boston Scientific (BSX), Medtronic (MDT) and five other companies were accused of in a lawsuit filed last July.

And it doesn't appear that the crackdown will slow in 2010, the Feds having labeled cracking down on healthcare fraud as a "top priority." In May, 2009, the Dept. of Health and Human Services created a new division called the Health Care Fraud Prevention and Enforcement Team (HEAT), to increase coordination and optimize criminal and civil enforcement. There are nearly 1,000 pending civil cases involving healthcare fraud pending with the DOJ, a more than 33 percent increase in just two years, according to the Wall Street Journal.