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HHS announces 'largest fraud takedown in history', charging 400 defendants in schemes involving $1.3 billion in false billings

OIG also issued exclusion notices to 295 doctors, nurses, and other providers related to opioid diversion and abuse.

Beth Jones Sanborn, Managing Editor

The Department of Health and Human Services Office of Inspector General, state and federal law enforcement executed a massive fraud takedown this month that charged more than 400 defendants in connection with healthcare fraud schemes that involved roughly $1.3 billion in fraudulent billings to government payers including Medicare and Medicaid, the OIG announced.

The takedown is being called the largest in history, both for the number of defendants charged and the amount of money lost, OIG said.

Additionally, OIG issued exclusion notices to 295 doctors, nurses, and other providers related to opioid diversion and abuse. The notices ban participation in or claim submissions to, all Federal healthcare programs.Those who got the notices include 57 doctors, 162 nurses, and 36 pharmacists.

[Also: Alabama physician will pay $1.4 million over alleged payment enhancement fraud scheme]

"Takedowns protect Medicare and Medicaid and deter fraud -- sending a strong signal that theft from these taxpayer-funded programs will not be tolerated. The money taxpayers spend fighting fraud is an excellent investment: For every $1.00 spent on health care-related fraud and abuse investigations in the last three years, more than $5.00 has been recovered," OIG said in a statement.

The schemes spanned the entire nation, from Washington to Puerto Rico, and 115 of those charged are medical professionals, specifically doctors and nurses. Among the fraud schemes, a Texas provider was charged with overprescribing narcotics to patients who had no medical need for them, and some of whom died from drug overdoses. The doctor allegedly fraudulently billed Medicare, netting more than $1.2 million in reimbursement. Another scheme involved seven Michigan defendants, including five physicians, who allegedly perpetrated illegal kickbacks and billing for medically unnecessary joint injections, drug screenings, and home health services. One of the defendants owned multiple health-related businesses and allegedly billed Medicare $126 million as part of the fraud scheme.

[Also: Running list of notable 2017 healthcare frauds]

Another notable fraud case recently announced by the Department of Justice involved a landmark settlement with historically unique requirements. Pharmaceutical manufacturer Mallinckrodt, one of the largest manufacturers of generic oxycodone, agreed to pay $35 million to settle allegations that it violated the Controlled Substances Act when it failed to report "suspicious orders" for controlled substances, as well as record-keeping infractions. The DOJ said that from 2008 until 2011, Mallinckrodt supplied distributors an "increasingly excessive quantity" of oxycodone pills but didn't notify the DEA of these suspicious orders. The distributors then supplied various U.S. pharmacies and pain clinics.

[Also: Physicians plead guilty in massive test referral scheme that doled out millions in bribes, fraudulent lab business]

The DOJ called the settlement groundbreaking for a couple reasons. First, it involves requiring a manufacturer to utilize chargeback and similar data to monitor and report suspicious sales of its oxycodone at the next level in the supply chain. This typically means sales from distributors to independent and small chain pharmacy and pain clinic customers. Also, it requires a parallel agreement with the DEA through which the company will analyze data it collects on orders from customers down the supply chain to identify suspicious sales.

[Also: Texas provider Union Treatment Center to pay $3 million over fraud scheme, banned from all federal healthcare programs]

It is clear government agencies and law enforcement are increasingly zeroing in on healthcare fraud, with other notable settlements in recent months with well-known providers related to False Claims Act violations. Those systems include Carolinas Healthcare, Freedom Health, Los Angeles hospital Pacific Alliance Medical Center, Genesis Healthcare, and even Walmart.

Twitter: @BethJSanborn

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