DOJ/OIG Issue FY2014 Report: Health Fraud Recoveries and Case Filings Decline

In an annual report required by Congress and issued today, the Department of Health and Human Services (HHS-OIG) and Department of Justice (DOJ) detailed their FY 2014 results under their coordinated Health Care Fraud and Abuse Control Program (HCFAC Program).

In FY 2014, approximately $3.3 billion was recovered by the federal government in health care fraud and enforcement proceedings, with $369 million of this being paid out to private whistleblowers under the False Claims Act. DOJ opened 924 new criminal health fraud investigations, leading to criminal charges in 496 cases involving 805 defendants. 734 defendants were convicted of health fraud-related crimes.

On the civil side, DOJ opened 782 new investigations and had 957 civil health care fraud cases pending at year-end. HHS-OIG excluded 4,017 individuals and entities from Medicare, Medicaid and other federal health care programs in 2014—the largest category for license revocation, but a sizable number (1,310) for crimes relating to Medicare or Medicaid.

Overall, the Agencies report that the HCFAC Program has returned over $28.8 billion to the Medicare Trust Funds since it began operations in 1997. The Program boasts an ROI of $7.70 returned for every $1.00 spent over the last three years, which largely explains its popularity with Congress.

Those in the health care and life sciences industry are accustomed to hearing reports of ever-increasing enforcement activity with larger and larger dollars involved. In actuality, this year’s report marks a decline in federal health fraud recoveries in nearly every category, including number of new cases (civil and criminal) and the amount of total recoveries (compare $4.3 billion in FY 2013). Number-watchers may recall that 2013 had been the fifth consecutive year of increased total recoveries (up slightly from $4.2 billion in 2012)—a string that is now broken. Nevertheless, given the landmark pharma settlements of 2013, including the $1.5 billion settlement with Abbott Laboratories over Depakote, some decline in total dollar recoveries might have been expected in 2014.

More notable is DOJ’s nearly 300-case decline in new civil health fraud filings in 2014 compared to the prior year—more than a 30 percent decrease. This has already produced a 12% decrease in pending civil health fraud matters, and those numbers will fall further as pending proceedings wend their way to settlement or trial. We’ll leave the causes of these trends for a future blog, but for now, suffice it to say this is still no time to slacken support or funding to corporate compliance programs.

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