FBI to Focus More on Health Care Fraud

Law enforcement authorities are stepping up an attack on health-care fraud that they say costs taxpayers more than $60 billion each year.^[1] FBI officials yesterday reinforced their commitment to crack down on medical companies that send phony bills or provide excessive treatments, pointing to 2,400 investigations in 2006 and warning that a fresh spate of cases is on the way.^[2]

National health-care expenditures last year surpassed $2 trillion, according to government estimates, and they are likely to grow even larger as aging baby boomers require more medical treatments; that is spurring federal officials to renew their focus on health-care fraud.^[3]

"There are literally millions of ways to defraud the health-care system, and they devise new ones every day," said Joseph L. Ford, associate deputy FBI director who asserts that the problem is found mostly in urban hotspots such as Los Angeles, Houston, and Miami, where a federal jury yesterday convicted Nelson Valdes of conspiracy to defraud the Medicare program in connection with drugs that were manufactured at two pharmacies he owned.^[4]

Valdes continued to provide unnecessary medicine to elderly and disabled patients even after he was arraigned on criminal charges a few months ago, according to District-based Assistant U.S. Attorney Kirk Ogrosky, who prosecuted the case.^[5] Valdes, who owns Florida Pharmacy and Discount and F&M Medical Rentals, faces up to 30 years in prison when he is sentenced later this year.^[6]

"Focusing our energy on combating the most prevalent Medicare fraud schemes will help protect patients from unnecessary medication and help protect the financial viability of the health-care program," Assistant Attorney General Alice S. Fisher said in a written statement.^[7] Sometimes, patients can be prompted to share their medical information in exchange for cash and gifts; for example, during Valdes's five-day trial in Miami, a Medicare recipient testified that Valdes paid him $150 a month for the use of his health-care data.^[8] The patient testified that on his behalf, Valdes charged the government health-care program for such items as incontinence supplies and a $500 penis pump. The patient said he never used any of the products.^[9]

Health Care Fraud
Under 18 U.S.C. § 1347, it is a crime for a person to execute a scheme or artifice to defraud a health care benefit program^[10]or to obtain money from a health care program by false pretenses.^[11]The punishment for a violation of section 1347 is a fine, imprisonment for up to 10 years, or both. If the violation results in substantial bodily injury, the person can be imprisoned for up to twenty years, and if death results, he can be sentenced to life in prison.

Federal criminal attorney Douglas McNabb has also previously discussed health care fraud in his blog, here.

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^[1] Carrie Johnson, U.S. Targets Health-Care Fraud, Abuse, Washington Post, July 19, 2007, Page D01, also available at http://www.washingtonpost.com/wp-dyn/content/article/2007/07/18/AR2007071802461.html?hpid=sec-business (last visited July 19, 2007).
^[2] Id.
^[3] Id.
^[4] Id.
^[5] Id.
^[6] Id.
^[7] Id.
^[8] Id.
^[9] Id.
^[10] 18 U.S.C. § 1347(1).
^[11] Id. § 1347(2).