Consumer Fraud

Returns on healthcare fraud cases climbing, U.S. officials say

osha whistle Returns on healthcare fraud cases climbing, U.S. officials sayFor every one dollar the U.S. prosecutors spent on pursuing cases of healthcare-related fraud in the past three years, it has recovered $7.90, according to a report jointly released by the U.S. Justice Department and Department of Health and Human Services. These efforts have returned $4.2 billion to Medicare, Medicaid, and other vital programs funded by U.S. taxpayers, the report states – a record high return in the 16-year history of the Health Care Fraud and Abuse Program.

The Obama Administration has made the elimination of fraud, waste, and abuse a top priority, especially in the health care industry, the report says. Efforts to reduce fraud and prevent waste are expected to yield bigger returns to U.S. taxpayers in the future, as new tools and resources provided by the Affordable Care Act are introduced.

“This fight against fraud strengthens the integrity of our health care programs and helps us fulfill our commitment to our seniors,” HHS Secretary Kathleen Sebelius said in a statement.

Last year alone, the Justice Department opened 1,131 new criminal health care fraud investigations involving 2,148 potential defendants, and a total of 826 defendants were convicted of health care fraud-related crimes. Additionally, 885 new civil investigations were opened by U.S. attorneys.

Since November 2010, three giant drug companies have accounted for two-thirds of all the financial penalties collected by the U.S. government – GlaxoSmithKline (GSK), Johnson & Johnson, and Abbott Laboratories. Yet fraud, waste, and abuse still take place every day, usually in the form of the illegal marketing and selling of drugs and fraudulent overbilling of taxpayer-funded health care programs such as Medicare and Medicaid.

GSK recently settled the largest health care fraud case in U.S. history when it agreed to pay $3 billion in fines for criminal and civil violations for fraudulently marketing and selling 10 prescription drugs for off-label and unapproved purposes, including the antidepressant Paxil and the type 2 diabetes drug Avandia. The company told doctors that Paxil could be used to treat depression in children and teenagers, but it was never approved for people younger than age of 18, and a clinical trial found the drug put adolescents at risk for suicidal behavior.

Yet while individuals from smaller health care operations may receive prison time for defrauding U.S. taxpayers, giant pharmaceutical companies seldom, if ever, do. That’s because top executives “can insulate themselves from the people doing the dirty work,” one attorney told the Philadelphia Inquirer, explaining that prosecutors have to “peel away the layers” when building a case against a giant health care conglomerate.

However, the difficulty in bringing giant drug corporations to justice for knowingly committing fraud and abuse underscores the important role that whistleblowers play, and why the U.S. government should do everything it can to shield them from retaliation, including toughening whistleblower protection laws under the False Claims Act. Because it’s impossible for the U.S. regulators to effectively police the actions of drug companies, it must rely on employees who witness wrongdoing within their company to report the fraudulent activity to U.S. officials.

In 2009, U.S. legislators beefed up whistleblower protections and incentives in the False Claims Act by introducing tougher penalties to companies that punish whistleblowers while providing whistleblowers a percent of the funds successfully recovered.


U.S. Department of Health and Human Services
Philadelphia Inquirer