The federal government recovered some $4 billion in fiscal 2010 from people who tried to defraud Medicare and Medicaid, Department of Health and Human Services Secretary Kathleen Sebelius and Associate Attorney General Tom Perrelli announced Monday.
In releasing the results of an annual report, the officials cited the Justice Department and HHS led-Health Care Fraud Prevention & Enforcement Action Team (HEAT) in May 2009 and the accomplishments of the teams located throughout seven cities that enforced Medicare fraud recovery efforts. In the fiscal year that ended Sept. 30, 2010, the teams imprisoned 146 defendants and indicted 140 individuals involving charges filed against 284 defendants who collectively billed Medicare more than $590 million.
DOJ opened more than 2,000 criminal and civil health care fraud investigations, the highest number initiated in a single year, according to Perrelli.
An example of those recoveries was the Astra Zeneca case. In April 2010, Astra Zeneca LP and its subsidiary paid $520 million to resolve false claims act allegations that they illegally marketed the anti-psychotic drug Seroquell for uses not approved as safe and effective by the FDA.
DOJ alleged that between 2001 and 2006, Astra Zeneca promoted Seroquell to psychiatrists and doctors for certain uses not approved as safe and effective including Alzheimer’s disease, Attention Deficit Hyperactivity Disorder, depression and other conditions.
From day one, President Barack Obama has made it clear that particularly in these difficult financial times, eliminating fraud, waste and abuse can’t be the job of one agency or department; it needs to be the focus of every single one of us in government, Sebelius said.
HHS also announced new rules authorized by the Affordable Care Act that will aim to proactively prevent and fight fraud, waste and abuse in Medicare, Medicaid and the Children’s Health Insurance Program (CHIP).
The new rules will create a screening process for providers and suppliers in Medicare, Medicaid and CHIP to keep fraudulent providers out of the programs; require a new enrollment process that will mandate states to screen Medicaid and CHIP providers; the power to temporarily stop enrollment of potentially high-risk, new providers and suppliers; and the power to temporarily stop payments to providers and suppliers in cases of suspected fraud.
Perrelli and Sebelius were joined by the Centers for Medicare and Medicaid Services Administrator Donald Berwick, Assistant Director of the FBI’s Criminal Investigative Division Kevin Perkins, Deputy HHS Inspector General Gerald Roy and Executive Director of the Coalition Against Insurance Fraud Dennis Jay.
U.K.-based drug maker AstraZeneca PLC will pay about $520 million to resolve allegations the company promoted off-label uses for the antipsychotic Seroquel, the Justice Department said.
The drug maker disclosed in October that it had set aside $520 million for the resolution, which includes a civil settlement and corporate integrity agreement.
Attorney General Eric Holder and Health and Human Services Secretary Kathleen Sebelius announced the settlement Tuesday, along with Tony West, Assistant Attorney General of the Civil Division, and acting U.S. Attorney Michael Levy of Pennsylvania’s Eastern District.
Drug makers are barred from marketing off-label, or for uses not approved by the U.S. Food and Drug Administration. Seroquel, whose sales reached $4.9 billion in 2009, is approved to treat schizophrenia, bipolar disorder and depression.
According to the department, AstraZeneca promoted Seroquel to psychiatrists and other physicians for unapproved uses, including aggression, Alzheimer’s disease, anger management, anxiety, attention deficit hyperactivity disorder, bipolar maintenance, dementia, depression, mood disorder, post-traumatic stress disorder and sleeplessness.
The company targeted doctors who did not typically treat patients for its approved uses, such as primary care physicians, and pediatric and adolescent physicians, according to the department.
The drug maker was also accused of enlisting doctors to give speeches promoting off-label uses of the drug, and recruiting them as authors of ghostwritten articles on studies the doctors did not conduct. AstraZeneca then brandished the articles in promotional messages about unapproved uses of Seroquel, the department alleged.
The drug maker allegedly submitted false claims for payment to a variety of federal insurance programs, including Medicaid, Medicare and TRICARE programs, and to the Department of Veterans Affairs, the Federal Employee Health Benefits Program and the Bureau of Prisons.
“Illegal acts by pharmaceutical companies and false claims against Medicare and Medicaid can put the public health at risk, corrupt medical decisions by health care providers, and take billions of dollars directly out of taxpayers’ pockets,” Holder said. ”We will not let such actions stand.”
Under the terms of the agreement, AstraZeneca made no admission of wrongdoing.
The federal government will receive about $302 million and state Medicaid programs and the District of Columbia will share the remaining $218 million.
The investigation spawned from whistleblowers’ complaints filed in 2004 and 2006 in federal court in Philadelphia. One of the whistleblowers, James Wetta, was also a relator in the government’s investigation of Eli Lilly & Co. for off-label marketing of its antipsychotic Zyprexa. The drug maker agreed to pay $1.4 billion to resolve the allegations last year.
In a record-breaking settlment last year, Pfizer Inc. agreed to pay $2.3 billion to resolve allegations it improperly promoted pain reliever Bextra.
Allergan, Inc., which makes the wrinkle-remover Botox, filed a lawsuit against the FDA in October challenging the ban on off-label marketing on First Amendment grounds. The company claims the practice infringes commercial free speech and free speech in general.
The AstraZeneca settlement agreement is embedded below.
The $29.2 billion Justice Department budget for fiscal 2011 proposed by President Barack Obama on Monday includes $237 million to purchase and upgrade a prison in Illinois to house detainees now housed at the Guantánamo Bay military prison in Cuba, reports The Chicago Sun-Times.
According to The Sun-Times, the State of Illinois and the federal government are currently negotiating over the purchase price of the state-owned, but now vacant, Thomson Correctional Center in northwest Illinois.
Reports The Sun-Times:
In a briefing with reporters on Sunday afternoon previewing the budget — the contents were embargoed until 6 a.m. Eastern time on Monday — White House Office of Management and Budget Director Peter Orszag said the acquisition of Thomson by the federal government would be “warranted” even in the absence of Guantánamo detainees, because more space was needed to house federal maximum security prisoners.
On the call, the briefers used two numbers to discuss the Thomson purchase and security upgrading needed — $250 million and $270 million. Asked to clarify, the Chicago Sun-Times was told the Justice Department fiscal 2011 request will include “$237 million to purchase, modify, and operate Thomson for a full year.
“This should not be viewed as the purchase price alone — it includes the cost of modifying and operating the facility for a year. The negotiation process with the State of Illinois regarding the purchase price is ongoing, and this number builds in flexibility depending on the final appraisals and final negotiated price with the state.”
Here are some of the other highlights from the president’s budget request, which is about $1.5 billion more than the budget that was enacted for fiscal 2010:
- A $233 million increase for the FBI for national security work, intelligence gathering, technology, information sharing and infrastructure improvements.
- A $302 million increase for retaining or hiring police officers.
- A $120 million increase for combating violence against women.
- $104 million for additional FBI and DOJ employees to investigate major financial fraud.
- A $91 million increase for the Organized Crime Drug Enforcement Task Forces and the Drug Enforcement Administration to fight drug trafficking on the Southwest border.
- A $90.3 million increase for national security, infrastructure improvements, and curbing violent and international organized crime.
- $73 million for transferring, prosecuting and incarcerating Guantánamo Bay detainees.
- $60 million for more Department of Health and Human Services and DOJ task forces. There are seven task forces now and the budget request calls for 20.
- A $23.5 million increase for the U.S. Attorneys to combat economic crimes, “preserve justice through civil enforcement,” E-Discovery and International Organize Crime initiatives.
- A $17.8 million increase to better combat civil rights crimes.
A briefing with reporters about the budget is scheduled at Justice Department headquarters in Washington this afternoon.
Andrew Ramonas contributed to this report.
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On the heels of President Obama’s call for government belt-tightening, Attorney General Eric Holder on Thursday pledged to apply more pressure on health-care fraudsters who siphon billions of dollars from the federal fisc each year.
Holder, speaking at a health-care fraud summit at the National Institutes of Health, said he would push to strengthen a Cabinet-level team devoted to the effort, as well as beef up anti-fraud strike forces around the country. Holder also said he would ask Congress for more funding and legislation targeting fraud, and reach out to the private sector — one of the aims of Thursday’s summit.
The Attorney General said more than $60 billion in public and private health-care spending was lost to fraud each year. Holder, joined by Secretary of Health and Human Services Kathleen Sebelius, brought the oft-cited estimate to life with a bit of pop-culture.
“That is a staggering amount of money,” Holder said in prepared remarks. “It’s half the entire economy of Secretary Sebelius’s home state of Kansas. It’s more than the net worth of America’s eight largest private foundations. And it’s 33 times the amount of money that Avatar — now the highest-earning movie of all time — has made at the box office.”
Holder and Sebelius lead the Health Care Fraud Prevention and Enforcement Action Team, known as HEAT, which supports the efforts of seven health-care fraud strike forces around the country. Thursday’s summit, attended by representatives from the insurance industry and health care-provider community, was intended to ally the public and private sectors in HEAT’s mission.
“There’s no question that our ability to protect taxpayer dollars, to ensure the viability of our government health care programs, and to strengthen our national health care system depends on our ability to expand the discussion beyond the federal government,” Holder said.
In his State of the Union speech to Congress on Wednesday, Obama said he was prepared to freeze government spending for three years, starting in 2011, and urged Congress to pass a “pay as you go” law. And anti-fraud efforts have also taken on new urgency as Congress tussles over health-care legislation that could cost north of a trillion dollars if enacted.
Holder noted that the department recovered more than $2 billion in 2009 under the False Claims Act. On the criminal enforcement front, the department charged more than 800 people for health-care fraud and related crimes and won more than 580 convictions, he said.
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A dental management company has agreed to pay $24 million to settle allegations it performed unnecessary services on children — including root canals, placing crowns and pulling teeth — to boost its Medicaid reimbursements, the Justice Department said on Wednesday.
An federal investigation also uncovered evidence that staff in “Small Smiles Centers,” which are managed by FORBA Holdings LLC, administered anesthesia and x-rays without proper licenses or certifications, and used restraints, such as a device known as the papoose board, in a way that could cause children undue pain.
The government alleged that the misconduct in the Sara Smiles clinics, which operate in 21 states and the District of Columbia, stemmed from FORBA practices deigned to maximize corporate profit.
“We have zero tolerance for those who break the law by exploiting needy children,” said Tony West, Assistant Attorney General for the Civil Division, in a news conference in the Justice Department’s Washington headquarters.
While the settlement releases the company from further liability, West said an investigation of individual dentists is ongoing. They could face sanctions by state dental boards, exclusion from Medicaid, or criminal prosecution.
The investigation, dubbed “Operation Bite Back,” was handled by the FBI, the Department of Health and Human Service’s Office of the Inspector General, the Justice Department’s Civil Division, and U.S. Attorneys’ Offices for the District of Maryland, Western District of Virginia, the District of South Carolina and the District of Colorado. Several state Medicaid Fraud Control Units also participated.
HHS Inspector General Daniel Levinson said FORBA entered into a corporate integrity agreement with his office, under the terms of which the company agreed to retain independent monitors, appoint a patient advocate, and fire staff and dentists who violate professionally recognized standards of care.
Of the $24 million, the federal government will receive $14.3 million, and the states $9.7 million. Three lawsuits filed under the whistleblower provision of the False Claims Act sparked the government investigation. The whistleblowers will receive a total of $2.4 million, from the federal government’s share.
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The world’s largest drug maker, Pfizer Inc., will pay $2.3 million in a settlement with the government over charges that it illegally marketed several of its drugs, The Associated Press reports.
In financial filings, the New York-based company disclosed in January that it was putting aside $2.3 billion for an expected settlement over allegations that it promoted the pain reliever Bextra and other products for unapproved uses. It is the largest health care fraud settlment in the Justice Department’s history.
In March, a regional manager pleaded guilty to promoting the drug Bextra for uses and dosages that were not approved by the Food and Drug Administration.
The Justice Department will announce the terms of the deal in a news conference this morning.
UPDATE (10:41 a.m.) See the department’s release below:
JUSTICE DEPARTMENT ANNOUNCES LARGEST HEALTH CARE FRAUD SETTLEMENT IN ITS HISTORY
Pfizer To Pay $2.3 Billion For Fraudulent Marketing
WASHINGTON – American pharmaceutical giant Pfizer Inc. and its subsidiary Pharmacia & Upjohn Company Inc. (hereinafter together “Pfizer”) have agreed to pay $2.3 billion, the largest health care fraud settlement in the history of the Department of Justice, to resolve criminal and civil liability arising from the illegal promotion of certain pharmaceutical products, the Justice Department announced today.
Pharmacia & Upjohn Company has agreed to plead guilty to a felony violation of the Food, Drug and Cosmetic Act for misbranding Bextra with the intent to defraud or mislead. Bextra is an anti-inflammatory drug that Pfizer pulled from the market in 2005. Under the provisions of the Food, Drug and Cosmetic Act, a company must specify the intended uses of a product in its new drug application to FDA. Once approved, the drug may not be marketed or promoted for so-called “off-label” uses – i.e., any use not specified in an application and approved by FDA. Pfizer promoted the sale of Bextra for several uses and dosages that the FDA specifically declined to approve due to safety concerns. The company will pay a criminal fine of $1.195 billion, the largest criminal fine ever imposed in the United States for any matter. Pharmacia & Upjohn will also forfeit $105 million, for a total criminal resolution of $1.3 billion.
In addition, Pfizer has agreed to pay $1 billion to resolve allegations under the civil False Claims Act that the company illegally promoted four drugs – Bextra; Geodon, an anti-psychotic drug; Zyvox, an antibiotic; and Lyrica, an anti-epileptic drug – and caused false claims to be submitted to government health care programs for uses that were not medically accepted indications and therefore not covered by those programs. The civil settlement also resolves allegations that Pfizer paid kickbacks to health care providers to induce them to prescribe these, as well as other, drugs. The federal share of the civil settlement is $668,514,830 and the state Medicaid share of the civil settlement is $331,485,170. This is the largest civil fraud settlement in history against a pharmaceutical company.
As part of the settlement, Pfizer also has agreed to enter into an expansive corporate integrity agreement with the Office of Inspector General of the Department of Health and Human Services. That agreement provides for procedures and reviews to be put in place to avoid and promptly detect conduct similar to that which gave rise to this matter.
Whistleblower lawsuits filed under the qui tam provisions of the False Claims Act that are pending in the District of Massachusetts, the Eastern District of Pennsylvania and the Eastern District of Kentucky triggered this investigation. As a part of today’s resolution, six whistleblowers will receive payments totaling more than $102 million from the federal share of the civil recovery.
The U.S. Attorney’s offices for the District of Massachusetts, the Eastern District of Pennsylvania, and the Eastern District of Kentucky, and the Civil Division of the Department of Justice handled these cases. The U.S. Attorney’s Office for the District of Massachusetts led the criminal investigation of Bextra. The investigation was conducted by the Office of Inspector General for the Department of Health and Human Services (HHS), the FBI, the Defense Criminal Investigative Service (DCIS), the Office of Criminal Investigations for the Food and Drug Administration (FDA), the Veterans’ Administration’s (VA) Office of Criminal Investigations, the Office of the Inspector General for the Office of Personnel Management (OPM), the Office of the Inspector General for the United States Postal Service (USPS), the National Association of Medicaid Fraud Control Units and the offices of various state Attorneys General.
“Today’s landmark settlement is an example of the Department of Justice’s ongoing and intensive efforts to protect the American public and recover funds for the federal treasury and the public from those who seek to earn a profit through fraud. It shows one of the many ways in which federal government, in partnership with its state and local allies, can help the American people at a time when budgets are tight and health care costs are increasing,” said Associate Attorney General Tom Perrelli. “This settlement is a testament to the type of broad, coordinated effort among federal agencies and with our state and local partners that is at the core of the Department of Justice’s approach to law enforcement.”
“This historic settlement will return nearly $1 billion to Medicare, Medicaid, and other government insurance programs, securing their future for the Americans who depend on these programs,” said Kathleen Sebelius, Secretary of Department of Health and Human Services. “The Department of Health and Human Services will continue to seek opportunities to work with its government partners to prosecute fraud wherever we can find it. But we will also look for new ways to prevent fraud before it happens. Health care is too important to let a single dollar go to waste.”
“Illegal conduct and fraud by pharmaceutical companies puts the public health at risk, corrupts medical decisions by health care providers, and costs the government billions of dollars,” said Tony West, Assistant Attorney General for the Civil Division. “This civil settlement and plea agreement by Pfizer represent yet another example of what penalties will be faced when a pharmaceutical company puts profits ahead of patient welfare.”
“The size and seriousness of this resolution, including the huge criminal fine of $1.3 billion, reflect the seriousness and scope of Pfizer’s crimes,” said Mike Loucks, acting U.S. Attorney for the District of Massachusetts. “Pfizer violated the law over an extensive time period. Furthermore, at the very same time Pfizer was in our office negotiating and resolving the allegations of criminal conduct by its then newly acquired subsidiary, Warner-Lambert, Pfizer was itself in its other operations violating those very same laws. Today’s enormous fine demonstrates that such blatant and continued disregard of the law will not be tolerated.”
“Although these types of investigations are often long and complicated and require many resources to achieve positive results, the FBI will not be deterred from continuing to ensure that pharmaceutical companies conduct business in a lawful manner,” said Kevin Perkins, FBI Assistant Director, Criminal Investigative Division.
“This resolution protects the FDA in its vital mission of ensuring that drugs are safe and effective. When manufacturers undermine the FDA’s rules, they interfere with a doctor’s judgment and can put patient health at risk,” commented Michael L. Levy, U.S. Attorney for the Eastern District of Pennsylvania. “The public trusts companies to market their drugs for uses that FDA has approved, and trusts that doctors are using independent judgment. Federal health dollars should only be spent on treatment decisions untainted by misinformation from manufacturers concerned with the bottom line.”
“This settlement demonstrates the ongoing efforts to pursue violations of the False Claims Act and recover taxpayer dollars for the Medicare and Medicaid programs,” noted Jim Zerhusen, U.S. Attorney for the Eastern District of Kentucky.
“This historic settlement emphasizes the government’s commitment to corporate and individual accountability and to transparency throughout the pharmaceutical industry,” said Daniel R. Levinson, Inspector General of the United States Department of Health and Human Services. “The corporate integrity agreement requires senior Pfizer executives and board members to complete annual compliance certifications and opens Pfizer to more public scrutiny by requiring it to make detailed disclosures on its Web site. We expect this agreement to increase integrity in the marketing of pharmaceuticals.”
“The off-label promotion of pharmaceutical drugs by Pfizer significantly impacted the integrity of TRICARE, the Department of Defense’s healthcare system,” said Sharon Woods, Director, Defense Criminal Investigative Service. “This illegal activity increases patients’ costs, threatens their safety and negatively affects the delivery of healthcare services to the over nine million military members, retirees and their families who rely on this system. Today’s charges and settlement demonstrate the ongoing commitment of the Defense Criminal Investigative Service and its law enforcement partners to investigate and prosecute those that abuse the government’s healthcare programs at the expense of the taxpayers and patients.”
“Federal employees deserve health care providers and suppliers, including drug manufacturers, that meet the highest standards of ethical and professional behavior,” said Patrick E. McFarland, Inspector General of the U.S. Office of Personnel Management. “Today’s settlement reminds the pharmaceutical industry that it must observe those standards and reflects the commitment of federal law enforcement organizations to pursue improper and illegal conduct that places health care consumers at risk.”
“Health care fraud has a significant financial impact on the Postal Service. This case alone impacted more than 10,000 postal employees on workers’ compensation who were treated with these drugs,” said Joseph Finn, Special Agent in Charge for the Postal Service’s Office of Inspector General. “Last year the Postal Service paid more than $1 billion in workers’ compensation benefits to postal employees injured on the job.”
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Assistant Attorney General Lanny Breuer said at a Senate Judiciary subcommittee hearing today that combating health care fraud is a top priority of the Justice Department.
Breuer’s testimony before the Senate Judiciary crime and drugs subcommittee — chaired by Sen. Arlen Specter (D-Pa.) for the first time — comes on the heels of the recently-announced partnership between Main Justice and Health and Human Services Department to fight Medicare fraud. The assistant attorney general said between 3 and 10 percent of the more than $2.2 trillion spent on national health care in 2007 was lost to fraud.
“We must, must stop the bleeding and we are committed to doing so,” Breuer.
Sen. Jeff Sessions (R-Ala.) criticized the amount of work the Justice Department has done to fight health care abuse. He said they handled only 238 health care cases in 2003 and 261 health care cases in 2007.
“Everybody promises to do better,” Sessions said. He added: “But that’s not a whole lot of cases nationwide.”
Breuer said the Justice Department has had success with the Medicare Fraud Strike Forces — in operation in South Florida since 2007 and in Los Angeles since 2008 — which have netted millions in restitution to Medicare.
“We have done well, but we need to do better,” he said.
Breuer will appear before the House Judiciary crime, terrorism, and homeland security subcommittee tomorrow to discuss the cocaine and crack sentencing disparity.
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Attorney General Eric Holder and Health and Human Services Secretary Kathleen Sebelius just announced a new initiative to combat Medicare fraud. The interagency effort, the Health Care Fraud Prevention and Enforcement Action Team (HEAT), will coincide with an expansion of Strike Force team operations to Detroit and Houston. Medicare Fraud Strike Forces, currently in operation in South Florida and Los Angeles, fight Medicare fraud on a targeted local level. The first Strike Force team was established in South Florida in 2007 and has brought in $186 million in criminal ines and civil recoveries. The Los Angeles team, created about a year ago, over $55 million has been ordered in restitution to the Medicare program.
“With this announcement, we raise the stakes on health care fraud by launching a new effort with increased tools, resources and a sustained focus by senior-level leadership,” said Holder. “Every year we lose tens of billions of dollars in Medicare and Medicaid funds to fraud. Those billions represent health care dollars that could be spent on medicine, elder care or emergency room visits, but instead are wasted on greed. This is unacceptable, and the Justice Department is committed to working with the Department of Health and Human Services to eradicate it.”
“Today, we are turning up the heat on perpetrators who steal from the taxpayers and threaten the future of Medicare and Medicaid,” said Secretary Sebelius. “Most providers are doing the right thing and providing care with integrity. But we cannot and will not allow billions of dollars to be stolen from Medicare and Medicaid through fraud, waste and serious abuse of the system. It’s time to bring the fight against fraud into the 21st century and put the resources on the streets and out into the community to protect the American taxpayers and lower the cost of health care.”
“We know these strike forces work. I believe a targeted civil and criminal enforcement strategy in these locations will have a substantial impact on deterring fraud and abuse, protecting patients and the elderly from scams, and ensuring that taxpayer funds are not stolen,” said Holder.
The team will build on demonstration projects by the HHS Inspector General and the Centers for Medicare & Medicaid Services that focus on suppliers of durable medical equipment (DME). These projects increase site visits to potential suppliers to prevent imposters from posing as legitimate DME providers. Other initiatives include:
- Increasing training for providers on Medicare compliance, offering providers the resources and the knowledge they need to help identify and prevent fraud.
- Improving data sharing between the Centers for Medicare & Medicaid Services and law enforcement so we can identify patterns that lead to fraud.
- Strengthening program integrity activities to monitor and ensure Medicare Parts C (Medicare Advantage plans) and D (prescription drug programs) compliance and enforcement.
You can visit the website here: www.hhs.gov/stopmedicarefraud
Fraud prevention efforts are also strengthened in President Obama’s proposed Fiscal Year 2010 budget. The President’s budget invests $311 million – a 50 percent increase from 2009 funding – to strengthen program integrity activities within the Medicare and Medicaid programs. Combined, the anti-fraud efforts in the President’s budget could save $2.7 billion over five years by improving oversight and stopping fraud in the Medicare and Medicaid programs, including the Medicare Advantage and Medicare prescription drug programs.