by Deb Cupples | People wonder why health care costs so much. One contribution to skyrocketing costs is private contractor waste, fraud or abuse. Seriously: $10 million wasted here, $100 million stolen there -- it all adds up.
Every dollar that goes toward waste or fraud is one less dollar for actual health care services.
Last week, the U.S. Justice Department (DoJ) described the most recent of the numerous examples of health care contractor fraud that I've read about over the last few years (about 20 of which examples are listed after the jump). First, a few paragraphs of the DoJ's statement about the instant indictment:
"Carmen Lourdes del Cueto, M.D., 65, Roberto Rodriguez, M.D., 54, Carlos Garrido, M.D., 69, Gonzalo Nodarse, 38, Alexis Carrazana, 41, and Alexis Dagnesses, 44, were all indicted by a grand jury in Miami on Feb. 12, 2009, for conspiracy to commit health care fraud. Del Cueto, Rodriguez, Garrido and Nodarse were also charged with conspiracy to launder health care fraud proceeds, as well as three counts each of substantive money laundering. The indictment seeks the forfeiture of assets from all named defendants.
"According to the indictment, the three physicians, del Cueto, Rodriguez and Garrido, were part-owners of Midway Medical. Midway Medical purported to be an infusion clinic that specialized in providing infusions and injections to HIV-positive patients. The indictment alleges that the physicians ordered medically unnecessary infusions and injections, and falsified medical records to make it appear that the HIV services were necessary. The indictment also alleges that many of the infusions or injections were never actually provided.
"The indictment also alleges that medical assistants Nodarse and Carrazana assisted the physicians in falsifying the medical records to make it appear that the services were needed. As part of the scheme, Dagnesses is alleged to have manipulated HIV-positive blood samples in order to obtain laboratory reports indicating that the patients had illnesses that they in fact did not have.
Yes, that does seem to mean that clinic staff created non-existent HIV patients. The DoJ continues:
"The indictment alleges that the physicians at Midway Medical billed more than $10 million to the Medicare program for services that were medically unnecessary and not actually provided between September 2002 and June 2005...."
Think of how much money could be freed up to pay for actual health care services if our government officials would simply insist on 1) better contract negotiation and drafting, and 2) better monitoring of contractors.
Not only does the underlying waste or fraud or abuse contributes to skyrocketing health-care costs, but also the civil and criminal settlements likely increase the already-skyrocketing costs by being treated as the "cost of doing business" (i.e., they're likely passed onto consumers).
I hate to be the bearer of bad news, but it's a habit that I cannot shake when blogging about private contractor waste, fraud, and abuse. Alleged health-care contractor fraud neither new nor uncommon.
The DoJ once said that health care contractors' settlements were the "lion's share" of fraud-suit settlements from 2000-2003 (even larger than defense contractors' settlements). Contractors tend to settle fraud suits without admitting guilt, because if contractors are found guilty of fraud, the government can bar them from receiving contracts.
Below are 20+ examples of health care contractors (large and small) that faced lawsuits or prosecution, their alleged conduct, and the outcomes.
Hospitals
In 2006, Tenet Healthcare (America's second largest for-profit hospital chain) settled DoJ suits for $900 million after allegedly false billing of Medicare and other federal programs. The alleged conduct included: "upcoding" patient diagnoses (billing for more expensive treatment than was done or called for), unreasonable inflation of charges, and illegal kickbacks to doctors.
In 2005, Health South settled DoJ suits for $327 million after allegedly charging for false claims for outpatient physical therapy, over-billing Medicare for hospital costs, and billing Medicare for un-allowable costs (like employee travel, entertainment, and an administrator's meeting at Disney World).
By 2003, HCA (America's largest hospital chain) had agreed to pay $1.7 billion to settle DoJ suits. The alleged conduct included: falsifying hospital-cost reports, charging Medicare for unallowable costs, and giving doctors illegal kickbacks for patient referrals. Some of the alleged conduct dated back to the 1980s.
Drug Companies & Pharmacies
In 2005, GlaxoSmithKline settled a DoJ suit for $140 million after allegedly submitting false claims to federal programs by falsely reporting inflated drug prices -- "knowing that those prices would be used by federal programs to set reimbursement rates."
Retail pharmacies Wal-Mart (2004) Rite Aid (2004), Eckerd (2002), and Walgreen (1999) settled unrelated DoJ suits for a combined $23.4 million after allegedly charging federal healthcare programs full price for partially filled prescriptions. Federal programs including Medicare, Medicaid and TRICARE (military health) were affected.
In 2003, AstraZeneca settled DoJ suits for $280 million after, among other things, allegedly conspiring with healthcare providers to charge federally funded insurance programs for free samples of a prostate cancer drug.
Laboratories
In 2003, Abbott Laboratories settled DoJ suits for $382 million after getting snared in a federal undercover investigation called “Operation Headwaters." Apparently, a division of Abbot had offered kickbacks to federal agents to buy the company’s products, then “advised them how to fraudulently bill the government for those items.”
In 2002, four individuals in Florida were sentenced to prison and ordered jointly to pay a total of $11.7 million after conspiring to defraud Medicare and Medicaid by submitting false claims for laboratory tests that were not actually performed.
In 1997, SmithKline Beecham laboratories settled a DoJ fraud suit for $325 million after allegedly over-billing Medicare and other federal programs by: double billing for tests for kidney dialysis patients; paying illegal kickbacks to doctors; and billing for tests that weren’t done, weren’t medically necessary, or weren’t ordered by a doctor.
HMOs & Insurance Companies
In 2002, General American Life settled a Medicare-fraud case for $76 million after allegedly failing to perform its contractual duties to the Centers for Medicare and Medicaid Services (CMS). The duties included assessing eligibility and processing claims submitted by Medicare beneficiaries and healthcare providers. General American allegedly failed to process claims, submitted false information to CMS, failed to report errors, and disguised true error rates by deleting claims selected for CMS-review.
In 2002, PacifiCare Health Systems agreed to pay $87 million to settle allegations that it (and its predecessor companies) had inflated insurance claims while contracted to provide government-employee benefits under the Federal Health Benefits Program.
In 2004, Lovelace Health Systems, (a Cigna-owned hospital and HMO) settled a DoJ suit for $24.5 million after allegedly falsifying Medicare cost reports for ten years. Among other tactics, the company reportedly shifted the costs of its HMO patients to Medicare.
Equipment Suppliers
In 2000, an Ohio medical supplier was ordered to pay $15.1 million and sentenced to 70 months in prison after pleading guilty to defrauding Medicare by billing for urinary incontinence supplies that were not provided and by falsifying paperwork to hide the schemes from Medicare.
In 1997, Olympus of America settled a DoJ suit for $22.8 million after allegedly overcharging the Department of Veterans Affairs (VA) for medical-imaging equipment. After the VA negotiated to receive the best discount that Olympus offered to private businesses, Olympus reportedly told the VA that it gave no discounts to private businesses (when Olympus did give discounts), thereby overcharging the VA according to the contract's terms.
Doctor Fraud
In 2004, a Connecticut pediatrician pleaded guilty to fraud and agreed to pay back $548,000 after billing Medicaid and other insurance programs for childhood vaccines that the doctor had received free-of-charge via the joint federal/state Vaccines For Children program. The doctor reportedly carried out the scheme from 1997-2002.
In 2000, a Texas doctor and his lawyer brother were convicted and sentenced to prison after carrying out a "sophisticated scheme to defraud local, state and federal heath programs and private insurers of over $46 million from 1986 to 1998." In the process, the doctor upcoded his services, falsified medical reports and engaged in multiple billing. During 1994, he would have had to work for 90 hours a day to accomplish the number of office visits he'd billed for. The scheme's other participants included an accountant, a physician's assistant, a physical therapist, and multiple office managers.
In 2001, a U.S. doctor was sentenced to 10+ years' prison after conspiring to dispense/distribute controlled substances, committing Medicare fraud, and taking illegal kickbacks. He was also ordered to pay $229,384 in restitution. Reportedly, the doctor routinely wrote large quantities of prescriptions for highly addictive pain medication, billed Medicare for services not provided, and upcoded office visits. A pharmacy owner was also convicted, sentenced to 16 years' imprisonment and fined $56,400.
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In 2004, four California defendants were convicted after participating in a scheme to defraud Medicare of $2.6 million for equipment -- including motorized wheelchairs, accessories, and hospital beds -- that were not medically necessary or were not delivered. The defendants included a doctor, a wheelchair store owner, and a wheelchair repair-shop owner.
Related Buck Naked Politics Posts:
* A Different Angle on the Tax-Cut-Equals-Growth Myth
* Insurance Companies Get Away with Over-billing Medicare
* AT&T to Pay $8.2 Million to Settle False Claims Act Case
* Investigators Look into Bribery by Senior Military Officers but Should Look Higher
* KBR to Pay $579 Million to Settle Bribery Charges
* High Cost of Private Contacting
* Inspector General Blocked Investigations into Waste & Fraud?
* Have U.S. Officials Protected Blackwater?
* Time to Get Really Serious about Contractor Fraud
* Billions over Baghdad: Poor Accounting Allowed Waste & Fraud
* Yet Another Contractor Bilks Taxpayers
* Contractor Fraud: Driving Up Healthcare Costs?
* How the Energy Dept. Incinerated Tax Dollars
* New Orleans Still Suffering after 2 Years and Billions of Tax Dollars
* How the Defense Dept. Flushes Dollars Down Latrine
* U.S. Embassies: Still More Examples of Contractor Problems
* Contractors Offering Bribes to Army Personnel?
* Taxpayers Losing Money to Engorged Contractors
* Audit Red-Flags Contractor in Iraq
* Defense Dept. Rewarding Bad Contractor Performance?
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