Healthcare Enforcement Actions and Trends: 2013 Overview


The Department of Justice (DOJ) and the Office of Inspector General for the U.S. Department of Health and Human Services continued aggressive enforcement of the healthcare industry in 2013. Officials employed a variety of tactics to secure compliance with federal healthcare laws, including the use of measures generally used to combat financial and organized crime. Charges — including Medicare fraud, securities fraud, violations of anti-corruption laws and money laundering — led to significant criminal fines and penalties, restitution and prison sentences, together with a number of multi-million dollar civil settlements and Corporate Integrity Agreements.

New Methods Employed To Combat Medicare Fraud

The Medicare Fraud Strike Force brought a number of high-impact cases in 2013, many of which targeted home healthcare providers, durable medical equipment companies and Partial Hospitalization Programs. Charges included healthcare fraud for submitting false and fraudulent Medicare claims, violations of the anti-kickback provisions of the False Claims Act (FCA) and recent charges of money laundering.

Interestingly, there was an increase in the government's use of techniques traditionally used to combat organized crime and — more recently — financial crimes like insider trading. For example, the use of a strike-force approach led to the government's sixth nationwide takedown, resulting in the arrest of 89 individuals for healthcare-related offenses in a $223 million Medicare fraud scheme. Additionally, the use of electronic surveillance helped lead to convictions in a $77 million Medicare fraud scheme connected to a Brooklyn, New York clinic. Finally, DOJ has been more open to the use of deferred prosecution and non-prosecution agreements with corporate defendants, while pursuing prosecutions of individuals.

FCPA Enforcement Efforts

The SEC entered into a $13.2 million settlement in October 2013 with Stryker Corporation — a Michigan-based manufacturer of medical devices — to resolve charges of improper payments to foreign officials that were then marked as legitimate legal, travel and charitable expenses. The government's assumption that doctors employed by state-owned hospitals and healthcare organizations are "foreign officials" under the Foreign Corrupt Practices Act (FCPA) makes for significant risks when approaching these foreign doctors with any direct or indirect sales or marketing activities.

Foreign governments can also bring anti-corruption charges under such laws as the UK Bribery Act or Canada's Corruption of Foreign Public Officials Act. However, Chinese authorities drew the most attention in 2013 by initiating an investigation of individual executives of GlaxoSmithKline in connection with an alleged bribery and corruption scheme.

Significant Resolutions

Four whistleblower — or qui tam — lawsuits led to combined criminal and civil charges resulting in the largest healthcare-fraud settlement of 2013. Two major pharmaceutical companies were charged with violations of both the criminal provisions of the Food, Drug, and Cosmetic Act and the civil requirements of the False Claims Act (FCA) for illegally marketing drugs for non-FDA approved uses. The federal government used a variety of measures to secure compliance and resolve these cases, including injunctions and Corporate Integrity Agreements, leading to criminal guilty pleas, fines and forfeitures.

The government also aggressively pursued civil matters, many of which resulted in multi-million dollar settlements. In July 2013, the DOJ announced a settlement with 55 hospitals across 21 states for over $34 million to settle allegations of false Medicare claims. Additionally, a Florida dermatologist agreed to pay $26 million to resolve kickback and false claims allegations, representing the DOJ's largest settlement in history with an individual under the FCA.


A wide range of federal and state laws and regulations, actively enforced, govern the healthcare industry. Compliance programs need to be attuned to the current enforcement environment and ensure employees understand applicable laws to avoid violations.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Thomson Reuters Compliance Learning | Attorney Advertising

Written by:


Thomson Reuters Compliance Learning on:

Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:

Sign up to create your digest using LinkedIn*

*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.