The US Department of Justice (DOJ) reported in late November that it recovered a record $5.69 billion from settlements and judgments in civil False Claims Act (FCA) cases in fiscal year 2014. This marks the first time that recoveries have exceeded $5 billion, and brings the total recoveries since 2009 to $22.75 billion.
False claims against federal health care programs, such as Medicare and Medicaid, accounted for $2.3 billion of that recovery. This amount was second only to the $3.1 billion that financial institutions paid for false claims related to federally insured mortgages and loans.
The $2.3 billion in health care fraud recoveries from alleged health care fraud marks the fifth straight year that the DOJ has recovered more than $2 billion in cases involving false claims against federal health care programs. According to the DOJ, since 2009, the FCA has been used to recover $14.5 billion in federal health care dollars.
The large health care fraud settlements in 2014 fall into several categories:
- Pharmaceutical Industry. Johnson & Johnson and its subsidiaries, Janssen Pharmaceuticals and Scios (collectively, J&J), paid DOJ $1.1 billion to resolve civil FCA claims relating to the prescription drugs Risperdal, Invega and Natrecor. The DOJ alleged that J&J promoted the drugs for unapproved uses and that J&J’s promotion of the drugs caused physicians and other health care providers to submit hundreds of millions of dollars in alleged false claims to federal healthcare programs. J&J also paid more than $600 million to state regulators for civil claims stemming from state Medicaid programs and $485 million in criminal fines and forfeitures.
- Hospitals. Cases involving hospitals accounted for $333 million of the $2.3 billion in recoveries. Community Health Systems Inc. paid $98.15 million to settle allegations that it billed government healthcare programs for inpatient services that should have been provided in less costly outpatient or observation settings. Halifax Hospital Medical Center and Halifax Staffing Inc., hospital service providers in Florida, paid $85 million to resolve allegations that they violated the Stark Law, which prohibits hospitals from billing Medicare for certain services when referred by physicians who have a financial relationship with the hospital. Alabama-based Infirmary Health System Inc. and affiliated clinics agreed to pay $24.5 million to resolve allegations that they were paying a percentage of Medicare payments to obtain referrals for tests and procedures.
- Home Health Services. Amedisys Inc., a home health services provider, paid $150 million to resolve allegations that it billed Medicare for medically unnecessary services, for services to non-homebound patients and for violations of the Anti-Kickback Statute. The DOJ alleged that Amedisys management pressured nurses and therapists to provide care based on the financial benefits to Amedisys as opposed to the needs of patients.
- Medical Procedures. Two Kentucky hospitals, King’s Daughters Medical Center and Saint Joseph Health System Inc., also settled with DOJ based on allegations that they billed Medicare and Medicaid for unnecessary coronary procedures. King’s Daughters paid $39 million in federal claims and $2 million in state Medicaid claims. St. Joseph’s paid $16 million in federal claims and $366,000 in state Medicaid claims.
The DOJ also reported that of the $5.69 billion it recovered, nearly $3 billion related to lawsuits filed under the qui tam provisions of the FCA; in 2014 alone, the government paid out $435 million to whistleblowers who filed qui tam lawsuits.