The Department of Justice announced that in 2017 it recovered $2.4 billion from federal healthcare fraud cases. According to Health Payer Intelligence, this total added up to well over half of all the money recovered by the DOJ fraud investigations.
Healthcare fraud investigations account for 64% of the $3.7 billion recovered by DOJ across all industries, including housing and mortgage sectors, small business contracts, military contracts, and additional areas of oversight that fall under the False Claims Act.
Growing Healthcare Fraud Cases
This is the second year in a row that healthcare fraud accounted for over $2 billion in recovered money for the Department of Justice. The fraud cases included a wide range of healthcare-related industries, including, drug companies, hospitals, pharmacies, health IT vendors, laboratories, and physicians.
The DOJ’s Acting Assistant Attorney, General Chad A. Readler, said in a statement, “Every day, dedicated attorneys, investigators, analysts, and support staff at every level of the Justice Department are working to root out fraud and hold accountable those who violate the law and exploit critical government programs.”
Notable Healthcare Fraud Investigations
Mylan Pharmaceuticals of Canonsburg, PA, paid $435 million to settle allegations of healthcare fraud. The DOJ claims they massively inflated the cost of EpiPen while misclassifying it to avoid paying Medicaid rebates.
According to the article, Mylan reported EpiPen as a generic drug, even though there was no therapeutic equivalent. The Department of Justice also alleged that Mylan moved to make massive price increases in the private market while avoiding its rebate obligations to Medicaid.
In just the course of 6 years, Mylan increased the price of EpiPen by 400% but only paid a fixed 13% rebate to Medicaid. The low fixed rate is only available to generic/therapeutic alternative drugs. EpiPen does not fall within those limits.
Also, notable about this healthcare fraud case, Sanofi-Aventis US, the pharmaceutical manufacturer of EpiPen, used the whistleblower provisions of the False Claims Act to sue Mylan on behalf of the government. Sanofi-Aventis received $37 million for being the whistleblower in this case.
This company is based out of Lexington, MA. The DOJ found that they used kickbacks to get providers to use a product called Dermagraft. This medicine is used to treat diabetic foot ulcers. After the investigation, Shire Pharmaceuticals settled for $350 million. They faced allegations that Dermagraft sales people used unlawful techniques to sell the product.
The settlement also included claims that Shire unlawfully marketed Dermagraft for uses not approved by the FDA and made false statements to inflate the price of Dermagraft. The company was also accused of false coding, verification, and certification of Dermagraft claims to federally funded healthcare programs.
Shire Pharmaceuticals has agreed to cooperate with law enforcement agencies to protect patients in the future.
The healthcare software company, eClinicalWorks, paid $155 million for misleading consumers about its EHR software. The company was also alleged to have paid kickbacks to some customers to promote the product.
The DOJ claims that eClinicalWorks fraudulently received an HHS certification for its EHR software by hiding its faults. The article points out that eClinicalWorks’ software could not automatically find a drug code from a complete database and could not record a user’s actions in an audit log.
The whistleblower, software technician Brendan Delaney, filed a lawsuit in the District of Vermont under whistleblower protections of False Claims Act. Delaney received $30 million for his involvement.
The Justice Department released a statement saying they will continue their aggressive pursuit of healthcare fraud throughout 2018.
Jeffrey A. Newman represents whistleblowers: 1-800-682-7157