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Analysis

Top 5 Healthcare Sector Fraud Settlements for 2018

By John Commins  
   December 26, 2018

The federal government collected $2.8 billion in False Claims Act settlements across all sectors of the economy in 2018, but the bulk of it came from the healthcare sector.

Healthcare fraud accounted for $2.5 billion in fraud recoveries for the federal government in 2018, and it came from a variety of sources within the healthcare sector, including drug and medical device manufacturers, managed care providers, hospitals, pharmacies, hospice organizations, laboratories, and physicians, DOJ said.

It's the ninth straight year that DOJ's civil healthcare fraud settlements and judgments have exceeded $2 billion.  The recoveries reflect only federal losses but additional millions of dollars for state Medicaid programs. Recoveries since 1986, when Congress substantially strengthened the civil False Claims Act, now total more than $59 billion, DOJ said.

"Every year, the submission of false claims to the government cheats the American taxpayer out of billions of dollars," Principal Deputy Associate Attorney General Jesse Panuccio said in media release.

"In some cases, unscrupulous actors undermine federal healthcare programs or circumvent safeguards meant to protect the public health. Such fraud will not be tolerated by the Department of Justice," Panuccio said. "The nearly three billion dollars recovered by the Civil Division represents the Department’s continued commitment to fighting fraudsters and cheats on behalf of the American taxpayer."

Here are five of the big settlements in 2018:  

  1. AmerisourceBergen Corp. and some subsidiaries paid $625 million to resolve civil claims that the drug wholesaler improperly repackaged cancer drugs into pre-filled syringes and sent them to physicians treating cancer patients. Federal prosecutors said the drug wholesaling giant profiteered by skimming drug "overfill" contained in the original FDA-approved sterile vials and creating pre-filled syringes through a subsidiary, the now-shuttered Medical Initiatives Inc., that ABC claimed was a pharmacy.
     
  2. Actelion Pharmaceuticals US, Inc. paid $360 million to resolve claims that it illegally paid the copays of thousands of Medicare patients who used the drug maker's hypertension drugs. Prosecutors said the San Francisco-based Actelion used Caring Voice Coalition Inc., a tax-exempt patient financial assistance charity as an illegal conduit to pay the copays for a number of expensive pulmonary arterial hypertension drugs, including Tracleer, Ventavis, Veletri, and Opsumit. 
     
  3. A DaVita Inc. subsidiary paid $270 million to resolve claims it provided inaccurate information about patients that caused Medicare Advantage plans to get inflated payments from the government.
     
  4. Health Management Associates paid more than $260 million to settle fraud charges that included paying kickbacks to physicians and ripping off Medicare and other federal healthcare programs. Prosecutors said HMA, which was acquired by the for-profit hospital Community Health Systems in 2014, paid physicians in exchange for patient referrals and submitted inflated claims for emergency department fees to federal health insurance programs, prosecutors said.
     
  5. Detroit-based William Beaumont Hospital paid $84.5 million to resolve kickback allegations levelled by four former employees in whistleblower lawsuits. Prosecutors alleged that, between 2004 and 2012, Beaumont hospitals in Royal Oak, Troy, and Grosse Pointe compensated eight physicians with free or substantially discounted office space and employees in exchange for patient referrals, violating the Anti-Kickback Statute and Stark Law.
     

Also-rans include medical device maker Alere Inc. paid $33.2 million to settle False Claims Act allegations that it knowingly sold "materially unreliable point-of-care diagnostic testing devices" to hospitals. Federal prosecutors allege that, from 2006 through 2012, Alere sold hospitals its Triage devices, which are used in emergency departments for the diagnosis of acute coronary syndromes, heart failure, drug overdose, and other serious condition.

Pfizer paid approximately $23.85 million to resolve claims that it used a foundation as a conduit to pay the co-pays of Medicare patients taking Pfizer drugs. The government alleged that Pfizer raised the price of one of those drugs by 40% in just three months.

“Unscrupulous actors undermine federal healthcare programs or circumvent safeguards meant to protect the public health. Such fraud will not be tolerated by the Department of Justice.”

John Commins is a senior editor at HealthLeaders.


KEY TAKEAWAYS

AmerisourceBergen Corp. and some subsidiaries accounted for the largest settlement in 2018, with $625 million paid to resolve allegations that it improperly repackaged cancer drugs.

It's the ninth straight year that the federal government has recovered $2 billion or more from the $3.5 trillion healthcare sector.


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