Remarks as prepared for delivery:
Thank you, Kathleen, for that kind introduction. I am delighted to be here today, and to join you and your colleagues in the health care regulatory and compliance profession on the occasion of this important conference. Fraud is a significant problem in the health care industry, as it is in many other sectors. So coming together, as you are doing this week, to discuss compliance and share best practices, is, I believe, important work, and an essential piece of ensuring that you and your organizations do not run afoul of the many rules that govern your industry.
As the Assistant Attorney General of the Department of Justice’s Criminal Division, I am privileged to lead nearly 600 lawyers who enforce the nation’s federal criminal laws and help to develop and implement our criminal law policy. Prosecutors in the Criminal Division face an extremely broad array of threats – from violence along the Southwest Border and cybercrime, to financial fraud, international narcotics trafficking, and child exploitation. We work hand-in-hand with the 94 U.S. Attorneys’ Offices across the country, including here in Baltimore. My friend, Rod Rosenstein, the U.S. Attorney for the District of Maryland, is a tremendous public servant and prosecutor, and I’m honored that our offices collaborate as frequently as they do on investigations and prosecutions. Just last week, for example, the last defendant in a multi-defendant investigation of the Latin Kings gang in Maryland was sentenced to 22-and-a-half years in prison in one of our joint cases.
As health care compliance professionals, you are fortunate not to have to face the Latin Kings or other violent organizations in your work. At least I hope you don’t have to. But you do face the no less important foe of health care fraud.
In the Criminal Division, and throughout the U.S. Attorneys’ Offices, we devote substantial resources to investigating and prosecuting fraud of all kinds – investment fraud, bank fraud, mortgage fraud, procurement fraud, and, of course, fraud in the health care industry.
As you know, certainly as well as any other group I have had the privilege of speaking with, health care fraud is a significant law enforcement problem. Most doctors, nurses, pharmaceutical companies, and other health care providers are, like you, diligent about complying with the rules and following the law. As we in the Justice Department see every day, however, many others go to extraordinary lengths to commit fraud on government and other health care programs, or on consumers. In every way, we are aggressively fighting back.
In May 2009, Attorney General Eric Holder and Department of Health and Human Services Secretary Kathleen Sebelius announced the creation of the Health Care Fraud Prevention and Enforcement Action Team, or HEAT. With HEAT, the fight against health care fraud has become a Cabinet-level priority. And the results have been extremely strong – both in terms of financial recoveries and criminal convictions. In Fiscal Year 2010, we collectively recovered a record $4 billion on behalf of taxpayers. That amount represented an approximately 57 percent increase over the amount recovered in Fiscal Year 2009, which was itself a record at the time. Also in Fiscal Year 2010, we brought criminal health care fraud charges against 931 defendants – the most ever in a single fiscal year – and we secured 726 convictions, also a record.
At the Justice Department, we have many tools available to us for holding companies and individuals to account in the fight against health care fraud. Together with the U.S. Attorneys’ Offices, the Civil Division, the Civil Rights Division, and the Criminal Division bring dozens of important health care fraud cases every year. And, through its hundreds of personnel dedicated solely to health care fraud investigations, the Federal Bureau of Investigation provides our prosecutors with critical investigative support.
The Civil Division aggressively pursues civil enforcement actions aimed at rooting out waste, fraud, and abuse in the health care industry, often, by its Fraud Section, through use of the False Claims Act. Through its Consumer Protection Branch, or CPB, the Civil Division also frequently invokes the Food, Drug and Cosmetic Act, which authorizes both civil and criminal actions. CPB pursues, among other violations, the unlawful marketing of drugs and medical devices, fraud on the Food & Drug Administration, and the distribution of adulterated products. As one example of the Civil Division’s work, the Department reached settlements last December with multiple pharmaceutical manufacturers, who agreed to pay more than $700 million to resolve False Claims Act allegations that they had reported false and inflated prices for many of their products, knowing that federal health care programs such as Medicare and Medicaid relied on those reported prices to set payment rates. As another example, the pharmaceutical manufacturer GlaxoSmithKline agreed last year to pay $750 million in criminal penalties and civil recoveries to resolve an investigation concerning a GSK subsidiary. The subsidiary, SB Pharmco Puerto Rico Inc., pleaded guilty to charges relating to the manufacture and distribution of certain adulterated drugs made in GSK’s now-closed plant in Cidra, Puerto Rico.
The Civil Rights Division is responsible for enforcing the Civil Rights of Institutionalized Persons Act, or CRIPA. CRIPA authorizes the investigation of conditions of confinement at state and local residential institutions and the initiation of civil actions for injunctive relief to remedy a pattern or practice of constitutional or federal statutory violations at such institutions. In Fiscal Year 2010, the Civil Rights Division’s Special Litigation Section opened or continued formal investigations, entered remedial agreements, or monitored existing remedial agreements, in connection with 71 health care facilities in 25 states, the District of Columbia, the Territory of Guam, and the Commonwealth of Puerto Rico.
Both the Civil and Civil Rights Divisions, which are doing such important work in this area, have the benefit of being led by extraordinarily talented lawyers and leaders – my friends Tony West in the Civil Division and Tom Perez in the Civil Rights Division.
Finally, the Criminal Division is primarily responsible for the Department’s Medicare fraud prosecutions, which have been extraordinarily aggressive in recent years. In 2007, the Criminal Division, together with the U.S. Attorney’s Office in Miami and the Miami Divisions of the FBI and HHS’s Office of Inspector General, launched the Medicare Fraud Strike Force, to root out fraud and abuse among durable medical equipment suppliers and HIV infusion therapy providers in South Florida. The Strike Force uses data analysis techniques to identify aberrational billing patterns in Strike Force cities, permitting law enforcement teams to target emerging or migrating schemes, along with chronic fraud by criminals operating as health care providers or suppliers. In 2008, the Strike Force expanded to Los Angeles; and in 2009, when Attorney General Holder and Secretary Sebelius announced the HEAT initiative, we expanded the Strike Force to Houston and Detroit. Today, we have Strike Force teams in nine cities around the country.
The Strike Force has been relentless in its efforts. Over the past 14 months, we have carried out the three largest Medicare fraud takedowns in history. In July 2010, we announced criminal charges against 94 defendants, in five Strike Force cities. These defendants were charged with submitting more than $251 million in false claims to the Medicare program.
In February of this year, we announced charges against more than 110 defendants, in all nine Strike Force cities. These defendants were charged with defrauding Medicare of over $240 million.
And, earlier this month, we announced charges against 91 defendants in eight Strike Force cities; we alleged that these defendants collectively submitted approximately $295 million in fraudulent billings to the Medicare program. This was the largest Medicare fraud takedown ever, as measured by the amount of fraudulent billings.
You might like to think that the defendants in these cases are unsophisticated criminals. But, as we have found time and again, they cover nearly the entire spectrum of healthcare providers. For example, in connection with this month’s takedown, we charged a doctor in Detroit with allegedly billing Medicare for performing psychotherapy treatments more than 24 hours per day. He is also charged with billing the Medicare program for services provided to dead beneficiaries. We also charged a supervisor at a community mental health center in Miami with threatening to evict residents of a boarding house he also managed, unless they attended the center. A registered nurse, mental health counselors, and other healthcare professionals were charged with participating in the same scheme, which allegedly resulted in the submission of over $50 million in fraudulent billings to Medicare.
These are serious crimes. People who defraud Medicare and other government health care programs are not only stealing from American taxpayers, but they are also often jeopardizing the health of patients in need. As we have increased our enforcement, courts have begun to respond in kind. Ten days ago, for example, the owner of a mental health care company in Miami, who pleaded guilty to orchestrating a $205 million Medicare fraud scheme, was sentenced to 50 years in prison. Fifty years. Three days later, the company’s co-owner was sentenced to 35 years in prison. In June, a Miami doctor was sentenced to nearly 20 years in prison for his participation in a multi-million dollar HIV injection and infusion Medicare fraud scheme. In that case, the physician ordered unnecessary tests, signed medical analysis and diagnosis forms, and authorized treatments to make it appear that patients were receiving services reimbursable by Medicare when, in fact, they were not. He signed patient charts indicating that infusion treatments were medically necessary, when, in fact, they were not. In many cases, he had not even seen the patient whose chart he was signing. For his efforts to cheat Medicare out of millions of dollars in this way, he received $3,000 per week from one of his co-conspirators.
The criminal sanction is not appropriate in every circumstance. Every time that we decide to indict someone – and therefore potentially take away his or her liberty – we must be able to prove beyond a reasonable doubt that the defendant committed a crime. In Medicare fraud cases, we must be able to prove that the defendant intended to defraud the Medicare program. Negligence, and even recklessness, are not enough. Our system of justice does not permit us to bring criminal charges against a defendant whom we do not like, or because we believe that he or she exhibited excessive greed or took excessive risks. But – and this you can be sure of – in the area of Medicare fraud, as in every other area to which we devote prosecutorial resources, if we have the evidence, we will bring the charges.
To take just the most recent example, you can see this in our relentless efforts to eliminate traditional organized crime. This past Friday, I was in Rhode Island, where I announced, along with the U.S. Attorney in Providence, charges against four members and associates of the New England La Cosa Nostra – what people more commonly refer to as the mafia. That announcement followed several earlier indictments this year, including the largest enforcement action ever taken against La Cosa Nostra in the United States, in January, when we arrested over 125 people in four districts on charges ranging from racketeering and murder to extortion and drug trafficking. You can also see it in our financial fraud prosecutions, which have resulted in hundreds, if not thousands of people going to prison for defrauding investors, mortgagees, banks, and others.
And, of course, you can see it in the Medicare fraud context. Indeed, if there is one message I want to leave you with today, it is that the era of getting away with Medicare fraud is over. With the HEAT initiative, we have adopted an inter-agency approach that calls upon the expertise of HHS, including the investigative strengths of its Inspector General’s Office, and on the civil and criminal prosecutorial abilities of the Justice Department. The government as a whole is coordinating like never before to take on the problem of health care fraud. I know that Attorney General Holder and Secretary Sebelius are committed to rooting out health care fraud wherever it lurks. As the head of the Justice Department’s Criminal Division, I am personally committed to holding individuals and institutions that defraud the Medicare program to account for their crimes. By your presence here, I know that you, too, are committed to minimizing fraud in the health care industry. I commend you for that, and urge us to continue this important fight together. Thank you.