Compliance | False Claims Act

$2.6 Billion Collected by Feds From Compliance Cheats. ROI Makes Warren Buffet Look Like an Amateur.

Even Warren Buffet can’t get you this return: 420% over three years.

And, it’s 100% leveraged. OPM.

Well, not OPM as in “other people’s money,” but OPM as in “our public money.”

That’s the return on investment that the Feds generated from 2015 to 2017 as a result of coordinated Department of Health and Human Services and Department of Justice healthcare anti-fraud operations.

In total, their efforts returned $2.6 billion.

And, as icing on the compliance cake, the Feds also obtained some non-monetary rewards (especially for those who count convictions as wins): In 2017 alone, the DOJ opened 967 new criminal healthcare fraud investigations, leading to criminal charges against 720 defendants. 639 defendants were convicted of health care fraud-related crimes during the year.

But that’s just the DOJ. The joint DHHS/DOJ Medicare Fraud Strike Force brought charges against an additional 478 defendants, negotiated 290 guilty pleas and obtained convictions against another 40 defendants. 305 individuals went off to prison for an average sentence of more than 50 months behind bars.

If you previously wondered why we have laws such as the federal Anti-Kickback Statute and Stark, and questioned whether they are based on fact or fiction, you might as well give up your queries. After all, it’s a big business. No, that’s incorrect. It’s a big bureaucracy.

In the vernacular, them’s the facts. So, we have to deal with them.

Compliance is not just a punch card list. It’s not just a plan. It’s not just a program. It’s a target, the one that’s painted on your back. There’s hotlines and whistleblowers and strike forces and postal inspectors and Assistant U.S. Attorneys looking to make their stripes. You have to assume that they’re all looking at you.

There’s baseline self-inspections, there are red teams to privately ferret out your weaknesses, there’s active compliance versus passive time wasting. If you need help, get in touch fast.

Get moving. Now.

Comment or contact me if you’d like to discuss this post.

Mark F. Weiss

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Greasy Kickback Residue Is All That’s Left of Pain Cream Fraud

This past week, the U.S. Department of Justice announced the arrest of ten additional defendants – doctors, pharmacy owners, and marketers – charged in connection with an alleged $100 million compounded pain and scar cream scam on TriCare.

The ten join two other defendants charged in the same scheme earlier this year.

The government alleges that the scheme involved the payment of kickbacks by the owners of a marketing/compounding pharmacy business to TriCare beneficiaries, to prescribing physicians, and to marketers.

The illegal payments to TriCare beneficiaries were said to be disguised as “grants” for participating in a (nonexistent) medical study. The government reported that the true purpose of the “study” was to compile a list of TriCare beneficiaries who had filled prescriptions so that the defendants could calculate how much to pay the beneficiaries.

A physician defendant served as the “Chief Medical Officer” for the marketing company and designed the so-called study. Another physician defendant was alleged to have been paid to prescribe compounded drugs to the TriCare beneficiaries. He wrote thousands of prescriptions for compounded drugs for patients he never met in person and for whom he conducted only a cursory consultation via telephone.

The government alleges that the compounding pharmacies paid kickbacks, disguised as employee wages, to individual defendants involved in the scheme in return for the referral of the pain and scar cream prescriptions.

Each of the defendants is charged with one count of conspiracy to commit health care fraud, which carries a maximum statutory penalty of 10 years in federal prison and a $250,000 fine.

Two of the defendants were also each charged with 14 counts of payment and/or receipt of illegal remuneration. Most of the remaining defendants were charged with at least one count of payment and/or receipt of illegal remuneration. The maximum statutory penalty, upon conviction for each of those counts is five years in federal prison and a $250,000 fine.

The court also has the power to order restitution of ill-gained profits, and the government has alleged the right to cause the defendants, upon conviction, to forfeit to the U.S. any property traceable to the offense, including real estate, funds in bank and investment accounts, numerous vehicles, boats and recreational vehicles, firearms, jewelry and artwork.

With lots of money at play (the government claims that more than $100 million was lost to the scamsters) it’s not hard to see how many who might otherwise have legitimate business and medical practice interests become attracted to fast and easy money.

With lots of money at play, it’s not hard to see why the government is motivated to investigate and prosecute in order to obtain huge fines and the benefit of the forfeiture (generally to the investigating agency) of scores of millions of dollars.

The take-away for you:

There are many legitimate ways for physicians to increase their practice income. They include, depending on state law, investments in compounding pharmacies and the direct dispensing of pharmaceuticals.

But any deal must be structured in compliance with the federal Anti-Kickback Statute, Stark, and various state law counterparts and other restrictions.

Go ahead, I encourage you, think entrepreneurially. But please be smart about it.

Comment or contact me if you’d like to discuss this post.

Mark F. Weiss

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