HHS Heat Initiative Continues Fraud Crackdown

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A number of recent cases demonstrate Health and Human Services’ (“HHS”) Health Care Fraud Prevention and Enforcement Action Team’s (“HEAT”) continued success in cracking down on healthcare provider fraud. Since 2009, the federal government has recovered more than $12 billion dollars under the False Claims Act from cases involving health care programs. Through the HEAT initiative, HHS has brought a number of False Claims Act cases against hospitals and physician groups resulting in several large settlements and verdicts. These cases typically arise in one of three ways: (1) the physician group or hospital self-reports the problem, (2) violations are discovered in the course of an investigation into another matter or entity, or (3) a person or entity brings a “qui tam” whistleblower suit against the group or hospital.

Typically, physician groups that self-report a violation receive more favorable treatment than those groups that wait until a whistleblower or other investigation brings the violation to light. This was seen in a recent settlement involving a Montana hospital that provided improper financial incentives to individual physicians and physician groups. The incentives were discovered by an internal audit conducted by the hospital, which then reported the violation to the government. The hospital and government settled the matter for $3.85 million.

Situations might also arise where the government discovers certain improprieties when investigating other entities or potential legal violations. One example of this would be a recent Ohio case involving a cardiologist and a medical corporation run by the cardiologist. In that case, the government was investigating a hospital for alleged violations of the Stark Law when it discovered that the cardiologist group caused the hospital to submit fraudulent claims to Medicare. The case was settled for $1 million before it could be brought to trial.

Physician groups and hospitals that wait until a whistleblower suit is brought will often receive the harshest penalties and judgments. This was seen in the Tuomey Healthcare case, which involved a hospital entering into a number of contracts with local physicians that provided financial incentives for physicians referring patients to the hospital. One of the outside physicians eventually blew the whistle on the scheme and brought a qui tam suit against the hospital under the False Claims Act. The hospital took the case to trial, where it eventually received a verdict against it for $237 million. Another recent example would be the Health Dimension Rehabilitation case, where a rival company brought a whistleblower action against a national physical therapy company for paying local companies for Medicare referrals. In that case, the physical therapy company settled the matter after the U.S. D.O.J. took over the case for approximately $30 million.

Topics:  False Claims Act, Fraud, Healthcare Fraud, Healthcare Providers, HHS, Stark Law

Published In: Government Contracting Updates, Health Updates

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.

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