Federal Efforts to Combat Healthcare Fraud Growing in Scope

While healthcare cyberattacks have dominated the news lately, healthcare fraud has quietly emerged as an equally concerning issue.

You may remember last year’s Operation Nightingale, whereby almost 8,000 fake nursing diplomas were found to have been issued by three Florida nursing schools. Over two dozen people were charged for their participation in the scheme, and each faced up to 20 years in prison. Prosecutions are ongoing, but recently three of the defendants received their sentences after a three-week jury trial, and now face a combined 147 months in prison.

This week, the U.S. Department of Justice (DOJ) announced criminal charges against 193 people – 76 of them healthcare providers – for their alleged participation in fraud schemes totaling $1.6 billion in actual losses. The schemes related to amniotic wound grafts, the distribution of controlled substances by a digital technology company, adulterated and misbranded HIV meds, addiction treatment, telemedicine and laboratory fraud, and opioids.

Let’s look into a couple of these instances.      

One of the more concerning schemes was related to adulterated and mislabeled HIV drugs, whereby owners of a wholesale drug distributor allegedly purchased HIV meds off the black market and resold them to pharmacies around the country.  Some patients ended up receiving bottles labeled as their prescription when in fact it was an entirely different drug.

The controlled substances scheme made the news a bit earlier in the month, when the CEO and clinical director of the California digital technology company Done was accused of distributing over 40 million pills of Adderall and similar stimulants to patients over the Internet. The company’s business model allowed for the provision of these drugs in exchange for a monthly subscription fee. At the center of the charges was one nurse practitioner (NP) who prescribed over 1.5 million pills across the country, allegedly without any follow-up encounters. The DOJ alleges that the company used deceptive advertising on social media and specifically targeted drug users. Because of Done’s auto-refill policy, the NP allegedly continued to write prescriptions for patients who were deceased – some due to  overdoses.

Several other states saw their own citizens charged in the sweep as well. Healthcare workers in Indiana were charged for stealing drugs and credit and bank information from patients. A provider in Michigan illegally acquired Medicare beneficiary information and submitted claims to Medicare for over-the-counter COVID-19 tests, regardless of whether the patient requested them. A single provider in Wisconsin allegedly received $1.4 million in funds from the Centers for Medicare & Medicaid Services (CMS) for staffing that was not provided.

The DOJ noted that prior to this large enforcement action, the Health Care Fraud Strike Force has charged more than 5,400 defendants who illegally billed over $27 billion since its inception in 2007. 

When promising additional future action, Attorney General Merrick Garland stated that “it does not matter if you are a trafficker in a drug cartel…or a medical professional employed by a healthcare company… you WILL be held accountable.” I think we can certainly expect continued attention on fraud foreseeable future.