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Acting Deputy Attorney General Gary G. Grindler Delivers Remarks at the National Institute on Health Care Fraud
Miami ~ Thursday, May 13, 2010

Thank you for that kind introduction and to all of you for inviting me to speak with you today about one of the most important priorities for the Department of Justice and the Obama Administration: health care; specifically, healthcare fraud.   

Every year, hundreds of billions of dollars are spent to provide health care for millions of American seniors, children and the disabled.  And each year billions of these dollars, taxpayer dollars, are stolen through fraudulent schemes. 

Combined federal and state spending on Medicaid and Medicare is projected to exceed 800 billion per year in 2010.  While there is no official federal estimate of the level of fraud in Medicare, Medicaid or the healthcare sector more generally, external estimates project the amount at three to ten percent of total spending, that could correlate to $27 to $80 billion in 2010 alone, if left unchecked.

Not only does healthcare fraud threaten the economic stability of the healthcare system, it also drives up the cost of health care, insurance premiums and taxes for all Americans. 

Further, healthcare fraud threatens the health of our citizens.  Healthcare fraud corrupts the medical decisions health care providers make with respect to their patients, and thereby threatens the health of those who are most in need of care in this country. 

For all these reasons, we must be -- and we will be -- vigilant in fighting health care fraud.

I’d like to spend my time with you this afternoon talking about the department’s strategy for combating this problem. 

Last May, Attorney General Holder and Secretary Sebelius announced the creation of the Health Care Fraud Prevention and Enforcement Action Team (HEAT) which is a senior-level, joint task force, that I oversee along with my HHS counterpart, Deputy Secretary of HHS William Corr.  HEAT was created to marshal the combined resources of both agencies in new ways to combat all facets of the health care fraud problem. 

The high-level goals of the HEAT initiative are clear: 

  • To prevent and detect fraud;
  • To strengthen enforcement efforts;
  • To leverage partnerships through private sector outreach and better coordination with state and local anti-fraud efforts; and
  • To provide more effective legal authorities by identifying and eliminating statutory and regulatory impediments to our health care fraud prevention and enforcement efforts. 

We have had some remarkable successes thus far in working towards each of these goals.  In fact, later this afternoon in Washington D.C., HHS and DOJ will be releasing the most recent HCFAC Report which details the results of our health care fraud prevention and enforcement efforts for Congress.  The 2009 Report shows that:

  • During Fiscal Year 2009 alone, the Department of Justice won or negotiated approximately $1.63 billion in judgments and settlements.
  • Opened over 1000 new criminal health care fraud investigations.
  • And convicted more than 580 defendants for health care fraud related crimes.

With the passage of the healthcare reform legislation we are confident that we will be even more successful in the future. 

I’d like to briefly share with you some of our recent successes in attaining the goals of the HEAT initiative in the battle against healthcare fraud.

1. Prevention and Detection of Fraud & Leveraging Partnerships

First, the importance of prevention and detection cannot be stressed enough and this is directly tied to the leveraging of partnership through private sector outreach.  For that reason, I think it is appropriate to talk about these two goals in combination.

We know it is not enough just to prosecute and punish health care fraud after it occurs.  We know that we must target it before it happens through aggressive pre-screening, auditing and prevention techniques.  And we need to leverage our civil, criminal and administrative enforcement authorities along with building effective public-private partnerships with people just like many of you in the audience today. 

With that in mind, the department and HHS hosted a National Health Care Fraud Summit in January that brought together federal and state policy officials, private sector leaders including insurance companies and providers, law enforcement, beneficiary advocates and other key stakeholders. 

The purpose of the summit was to gather experts from both the public and private sectors to share their experiences and expertise so that we can more effectively prevent, detect and prosecute health care fraud. 

We plan to hold additional regional summits in the future to help our law enforcement partners and the private sector be better educated on how they can detect and prevent fraud.

For now, we are taking the lessons learned from the summit and applying them.  For example, by using data analysis to flag claims that have certain risk factors, we can, and have, cut down on the funds that are stolen through fraud and abuse. 

In addition, we have increased compliance training for providers to prevent honest mistakes and help stop potential fraud before it happens.  We also are actively engaged in efforts to educate the public about ways they can assist us to detect, prevent and prosecute fraud.  HEAT’s website – www.stopmedicarefraud.gov – is an easy way for beneficiaries to report suspected fraud to the HEAT task force.

The old saying that the best offense is a good defense is an excellent mantra for all of us to keep in mind because it is better for the American taxpayers for the money not to be stolen or lost through lax standards in the first place rather than having to work twice as hard to recover the money once it is out the door. 

2. Strengthening Law Enforcement Efforts

However, once the money is stolen, the department and our HHS investigators have proven especially dedicated and talented in targeting fraudsters and recovering the money.  The second goal of the HEAT initiative is to strengthen law enforcement efforts, and one of the department’s best strategies to achieve this goal and to combat healthcare fraud, is the use of “strike forces.” 

The strike forces are a group of investigators and prosecutors that include agents from both DOJ and HHS and also state and local law enforcement agencies.  These groups go to targeted locations to focus exclusively on healthcare fraud. 

In other words, rather than waiting for people to tell us fraud is happening, we’re going to the criminals and stopping fraud as it occurs.

We do this by using data analysis to identify “hot spots” for Medicare fraud.  Once this is done, we can target resources and deploy the strike forces where it can most effectively supplement the efforts already underway by U.S. Attorneys’ Offices around the country. 

Although the Medicare data gives us an idea where to go, the data analysis is just the beginning of the process. Once a strike force is up and running in a city, they use traditional law enforcement techniques to build the cases and bring them as quickly as possible - to stop ongoing fraud in its tracks. This includes the arrest of dozens of defendants simultaneously. 

The defendants range from the patients that agree to bill for fictitious services they didn’t receive, to the administrators that process the claims, to the nurses, doctors and medical professionals, and clinic owners and executives that knowingly bill for the nonexistent, unnecessary, and sometimes dangerous work. 

And, make no mistake, these strike forces have achieved success by any standard of measure. 

  • Since it started two and a half years ago, the strike force teams have indicted hundreds of individuals that have collectively billed the Medicare program more than 1 billion dollars.
  • The teams have secured more than 250 guilty pleas and more than 20 trial convictions.
  • Nearly 200 defendants in our strike force cases have been sentenced to prison.
  • The average sentences for these defendants exceeds 45 months – that’s more than 20 percent higher than the overall national average sentence in federal health care fraud cases over the last five years.
  • Furthermore, the strike forces have sought court-ordered restitution to the Medicare program for actual losses exceeding $420 million in fraudulent payments made by Medicare.

Moreover, not only have the strike forces had tremendous success prosecuting the fraudsters, the strike forces have had a clear impact at deterring other would-be criminals.  One big success story is here in Miami.  Twelve months after we launched a Medicare Fraud Strike Force operation in the Miami area in 2007 – our very first strike force operation – there was an estimated reduction of $1.75 billion in durable medical equipment (DME) claim submissions and a reduction of $334 million in DME claims paid by Medicare compared to the preceding 12-month period.

In this regard, the Strike Forces actually add to our arsenal of ways to create a good “offense” with a “good defense” because the strike forces are preventing fraud in the first place.

The President has committed substantial resources in support of the HEAT Initiative’s criminal enforcement strategy and a large part of those resources will be devoted to expanding our Medicare Strike Forces from the current 7 jurisdictions to a total of 20 cities. 

The HEAT initiative also has an important civil fraud enforcement component which I know Assistant Attorney General Tony West discussed with you in his remarks this morning.  And although I am sure Tony mentioned this, but in case he was feeling modest, the work of his Division along with our U.S. Attorneys’ Offices in Fiscal Year 2009 resulted in over $1.6 billion recovered for False Claims Act health care cases. 

These and other results underscore the success and dedication of the criminal and civil prosecutors and investigators that are working to recover your taxpayer dollars.

3. Improving Legislation

The final goal of the HEAT imitative is to provide more effective legal authorities by identifying and eliminating statutory and regulatory impediments to our health care fraud prevention and enforcement efforts.  The new health care reform legislation got us a long way to actually attaining this goal.  I’ll just briefly mention a few key provisions of the bill that should be of interest to you:

  • The Affordable Care Act provides new authorities for stepped-up oversight of providers and suppliers participating in Medicare and Medicaid, including mandatory licensure checks.  
  • For the first time, the Secretary of HHS may impose a moratorium on the enrollment of providers and suppliers.  The legislation also authorizes the Secretary to withhold payment under Medicare or Medicaid to providers of services or suppliers for claims pending an investigation of fraud. 
  • The legislation requires providers and suppliers to establish compliance plans as a condition of enrollment in Medicare or Medicaid and to submit claims to Medicare within 12 months of the date of service.  And,
  • Providers, suppliers, and Part D health plans must self-report and return Medicare and Medicaid overpayments within 60 days of identification.

In addition, I want to highlight a few aspects of the legislation that are particularly relevant to criminal and civil enforcement including: 

  • A provision directing the Sentencing Commission to increase the federal sentencing guidelines for health care fraud offenses, by 20-50% for crimes that involve more than $1 million in losses.  And,
  • A provision clarifying that a violation of the anti-kickback statute constitutes a violation of the False Claims Act.  This will ensure that all claims resulting from illegal kickbacks can be considered false, even if the claims are submitted by an innocent third-party and not directly by the wrongdoers themselves.

All of these provisions provide excellent means through which the department can, and will, increase prosecutions, seek increased penalties for criminals, and recovery more American taxpayers’ dollars.

Other Department Initiatives

Finally, in addition to the work the department is doing as a part of the HEAT initiative, I think it is also important to mention other ways the department is seeking to combat crimes relating to the healthcare and pharmaceutical industries. 

First, in the months ahead, you can expect to see the department increasingly using the Foreign Corrupt Practices Act to prosecute kickbacks and bribes paid to foreign government officials by pharmaceutical companies.  As the drug companies do more and more of their business overseas where so much of the health care business is government run, we unfortunately see the opportunities for FCPA violations proliferating.  In some foreign countries, nearly every aspect of the approval, manufacture, import, export, pricing, sale and marketing of a drug product may involve a “foreign official” within the meaning of the FCPA. 

The department will not hesitate to charge pharmaceutical companies and their senior executives under the FCPA if warranted to root out foreign bribery in the industry. 

Second, you should know that the department is focused on intellectual property theft that involves industries such as the pharmaceutical industry.   In February, the Attorney General announced the formation of a new Department of Justice Task Force on Intellectual Property, that I chair, as part of a department-wide initiative to confront the growing number of domestic and international intellectual property, (“IP”), crimes. 

As it relates to this group, as you well know, the use of counterfeit drugs that are intended to treat serious illnesses and health conditions can undermine the foundations of public health and safety in our country and around the world and poses a substantial risk to consumers. This is simply unacceptable. 

As a part of the IP Task Force, the department plans to increase our cooperation with foreign law enforcement partners and leverage existing partnerships to combat the sale of these counterfeit and dangerous drugs.

Efforts that the Private Sector Can Undertake

Now that I have provided you some information on what we, the department and federal government are doing, here are a few thoughts on a few simply steps you can take to help join us in this fight:

First, you can work with us to share information about emerging fraud schemes and best practices for anti-fraud efforts.  We want to partner with you whether you are in here from state law enforcement or the private sector.  We can learn from each other’s experience and work together because the people perpetrating the fraud schemes do not recognize boundaries between Medicare and Medicaid or private and public sector health care funding.

Second, you can institute effective compliance and anti-fraud programs. 

Third, you can encourage your clients to make voluntary disclosures when they learn of fraud and abuse.

*       *       *       *       *

We share a common goal – to make sure that health care dollars are being spent wisely and for the benefit of those who need medical care.  The Department of Justice is committed to this goal and we have a comprehensive strategy with our partners at HHS to achieve that goal.  We welcome the opportunity to work with any and all of you in this endeavor.

Thank you again for inviting me to speak with you this afternoon.

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