White Collar Alert

This guest post was authored by Mara Smith, a  summer associate with Montgomery McCracken.

Last week, Federal agents arrested 243 individuals across the country for their alleged participation in Medicare fraud schemes that purportedly involved $712 million in false billings. The coordinated arrests, which occurred across 17 cities – including Houston, Dallas, Los Angeles, Miami, Tampa, Brooklyn, and New Orleans – are part of the largest criminal healthcare fraud takedown in U.S. Department of Justice history, both in number of arrests and amount of money allegedly lost.  More than 900 law enforcement agents were involved in the arrests which were coordinated by the Medicare Fraud Strike Force.

At the press conference, Attorney General Loretta Lynch stated:

The defendants charged include doctors, patient recruiters, home health care providers, pharmacy owners, and others.  They are accused of an array of serious crimes ranging from conspiracy to commit health care fraud to wire fraud to money laundering.  They billed for equipment that wasn’t provided, for care that wasn’t needed, and for services that weren’t rendered. 

Overall, 73 arrests were made in Miami for alleged offenses related to various health care fraud schemes involving more than $250 million in supposedly  false billings.  The administrators of one mental health clinic were charged for accruing nearly $64 million in allegedly false billings between 2006 and 2012 for “intensive care treatment” which actually only involved moving patients, some of whom had severe dementia, to different facilities.  The government has alleged that, as part of this particular scheme, the defendants paid kickbacks to both patient recruiters and assisted living facility owners.

In another case, the government has alleged that a Michigan-based physician prescribed unnecessary narcotics to patients in exchange for their identification information that was used by the physician for false billings.  The government has further alleged that although some patients tried to separate themselves from the scheme, the physician threatened to cut off the now-addicted patients from the unnecessary, prescribed narcotics.

The Medicare Fraud Strike Force operates as a part of the Health Care Fraud Prevention & Enforcement Action Team (HEAT), a joint initiative between the DOJ and HHS that the government introduced in May 2009.  Under Attorney General Eric Holder, who had promised to make health care fraud a top priority for the DOJ, the Strike Force and HEAT were particularly active.  A recently-released list of Holder’s accomplishments states:

Since announcing HEAT in May 2009, the Medicare Fraud Strike Forces have conducted seven nationwide takedowns resulting in charges against almost 700 individuals with schemes involving nearly $2.2 billion in fraudulent billings.  Strike Force operations since their inception in 2007 have charged more than 2,000 defendants who collectively have falsely billed the Medicare program for more than $6 billion.

Last week’s historic takedown certainly suggests that Lynch, who has an impressive history of fighting healthcare fraud as the U.S. Attorney for the Eastern District of New York, is picking up right where Holder left off and that combating healthcare fraud will remain a top federal priority.