FOR IMMEDIATE RELEASE                                         CIV
FRIDAY, JUNE 16, 1995                              (202) 514-2008
                                               TDD (202) 514-1888


          Latest Step in Health Care Fraud Initiative
               Involved Numerous Federal Agencies

     WASHINGTON, D.C.  --  After an extensive multi-agency
investigation led by the Inspector General of the U.S. Department
of Health and Human Services and the FBI, the Department of Justice
today announced a criminal and civil settlement with Caremark Inc.,
a subsidiary of Caremark International, the Illinois based health
care corporation.  Caremark Inc. will plead guilty and pay
approximately $161 million in criminal fines, civil restitution and
damages for kickbacks and fraud in its home infusion, oncology,
hemophilia and human growth hormone businesses.  

     The amount is one of the largest ever obtained in a health
care fraud case, said Attorney General Janet Reno, who announced
the settlement this morning.  The settlement is the latest step in
the Justice Department's anti-health care fraud initiative
announced in the fall of 1993.  Reno praised the efforts of the
federal agencies that participated in the investigation.  

     "Health care fraud robs from all of us," Reno added, "by
distorting medical judgments, boosting health care premiums, and
increasing the cost of taxpayer supported government health care
plans."  The General Accounting Office estimates that health care
fraud costs tens of billions of dollars each year.

     In papers filed today in U.S. District Courts in Minneapolis,
Minnesota, and Columbus, Ohio, Caremark agreed to plead guilty to
two one-count informations charging that it defrauded federal
health care programs by making improper payments to induce doctors
and other professionals to refer patients to Caremark. 

     "Today's settlement sends a clear message to anyone engaged in
health care fraud," Reno added.  "The government is coordinated,
and it will pursue wrongdoing.  We will investigate.  We will
prosecute if necessary.  We will do what we must to protect
consumers from health care fraud."  

     HHS Inspector General June Gibbs Brown, stated that her office
"has no more challenging or important task than instilling
confidence in the American taxpayer that the vast sums expended by
HHS each year on Medicare and Medicaid are managed with integrity
and responsibility.  This office is dedicated to the vigorous
investigation of allegations of fraud by unscrupulous health care

The Settlement Terms

     Caremark agreed to pay a criminal fine of $9 million in
connection with the information filed in Minneapolis and a criminal
fine of $20 million in connection with the information filed in
Columbus.  Caremark also agreed to contribute $2 million to the
Public Health Service, to be used to fund the treatment of HIV/AIDS
in young people.  

     The District Courts will determine whether to accept the plea
agreements in each of the criminal matters.

     On the civil side of the case, Caremark has agreed to pay
approximately $81,750,000 in restitution, damages and penalties for
the harm it caused to the federal funding of government medical
insurance programs.  The agreement resolves claims stemming from
various fraudulent practices at Caremark, including improper
payments to induce referrals, submission of inflated bills to the
state Medicaid Programs, and waiver of copayments.  Additionally,
Caremark has agreed in principle to pay approximately $45 million
to the states for their share of Medicaid and other state health
care programs, after negotiations with the National Association of
Medicaid Fraud Control Units. 

     Caremark has also agreed to pay $3.5 million in civil
penalties for its failure to keep accurate records at its
pharmacies, as is required by the Controlled Substances Act.

     Caremark has sold its home infusion business and canceled
contracts with doctors and other referral sources.  As part of the
settlement, Caremark agreed that its remaining businesses will take
part in a "corporate integrity plan" that spells out measures to
assure future compliance with health care laws and regulations. 
This plan was negotiated by the Office of the Inspector General of
the Department of Health and Human Services.

     Under the plea agreement, Caremark agreed to cooperate with
ongoing criminal and civil investigations of other individuals and
entities, including the cases filed in Minnesota and Columbus. 
Today's agreements only resolve Caremark's criminal and civil
liability.  Government prosecutors are continuing to investigate
other individuals, including former officers and employees of
Caremark as well as doctors and others who were paid to refer
business to Caremark.

The Investigation

     Reno praised the efforts of the HHS Inspector General's
Office, the FBI, and of a variety of other law enforcement agencies
for their role in the investigation.  "This settlement is the fruit
of a long, complicated multi-agency investigation that shows how
well many different government agencies and offices can work

     In August of 1994, a grand jury in the District of Minnesota
returned an indictment against Caremark, three of its employees
including two vice presidents, a vice president of Genentech, Inc.,
and a doctor in connection with the payment of moneys to the doctor
to induce referrals to Caremark.  If the courts accept the plea
agreement, and Caremark pleads guilty to the new informations, the
United States will dismiss the charges pending against Caremark. 
The trial of the remaining defendants in the Minnesota case is
scheduled for July 10, 1995.  In September 1994, a doctor in
Columbus, Ohio, was indicted for accepting money from a home
infusion company in return for referring patients to that company.

     Today's action was the result of significant efforts that
brought together the Fraud Section of the Criminal Division and the
Commercial Litigation Branch of the Civil Division of the
Department of Justice, the U.S. Attorney's offices in Minnesota and
in the Southern District of Ohio and in nine other federal
districts, the Office of the Inspector General of the Department of
Health and Human Services, the FBI, the DEA, the Defense Criminal
Investigative Service (the investigative arm of the Inspector
General, Department of Defense), the Internal Revenue Service, the
Office of the Inspector General of the Office of Personnel
Management, the Railroad Retirement Board, the Veterans
Administration, the National Association of Medicaid Fraud Control
Units, and state law enforcement agencies.

     In addition to the local investigations conducted by United
States Attorneys in Minneapolis and Columbus, other U.S. Attorneys
also provided assistance, in Oklahoma City, Oklahoma; Cleveland,
Ohio; Hartford, Connecticut; Detroit, Michigan; Denver, Colorado;
Washington, D.C.; Atlanta, Georgia; Buffalo, New York; Raleigh,
North Carolina; Boston, Massachusetts; and Houston, Texas.  

The Health Care Fraud Initiative

     In 1993 the Attorney General named health care fraud
enforcement her number two new initiative, behind violent crime. 
The Department's coordinated program involves increased resources,
increased investigations and prosecutions, greater cooperation
among investigative and regulatory agencies, and coordinated use of
all available sanctions -- criminal, civil, and administrative.  

     The numbers of health care fraud investigations and cases
handled by federal prosecutors has risen dramatically over the last
few years.  The FBI estimated that monetary recoveries in fiscal
year 1994 exceeded $500 million. The General Accounting Office
estimates that fraud accounts for 10 percent of all health care
dollars spent in the United States.