The One Promise Obama Kept

Under Obama, the False Claims Act has run riot.  There's nothing like taking an existing law, pumping it up on steroids, and turning it into a weapon against the very people it was intended to protect.

But Obama’s early threat to crack down on fraud in industries doing business with the federal government has been one of the few promises he has kept.  And the results are taking their toll on private-sector businesses, especially in the health care industry.

The Department of Justice just announced another multimillion-dollar settlement, this time against  Community Health Services (CHS) involving alleged “medically unnecessary” inpatient stays.  After settling for $97 million plus interest, CHS CEO Wayne Smith said that “shifting and often ambiguous standards make it extremely difficult for physicians and hospitals to consistently comply with regulations.”

Smith is right.  In addition to complying with a  2,400-page health care law, hospital systems and other providers have been under increased scrutiny from an interagency task force created by Attorney General Eric Holder and former Health and Human Services Secretary Kathleen Sebelius in 2009.

The Health Care Fraud Prevention and Enforcement Action Team (HEAT) is designed to ”optimize criminal and civil enforcement” under the False Claims Act.  The Act has enabled the Justice Department to recover an all-time record $17 billion from 2009 to 2013 in civil settlements and judgments, with $12.2 billion coming from the health care sector alone.  Twenty-fourteen is proving to just as lucrative for the feds.  The DOJ has announced nine FCA settlements for the first quarter of fiscal year 2014, intervening in at least another two FCA suits against a background investigation service and a national hospitalist physician group, in addition to bringing its own suit against a construction company and its owner.

In March 2010, Obama signed an order calling on all federal agencies to hire auditors to scour the health insurance industry for waste and fraud.  Auditors are paid based on how many abuses or errors they uncover.  In addition, a 1986 amendment to the False Claims Act increased incentives for whistleblowers to file lawsuits on behalf of the government, leading to more investigations and greater recoveries.  If the United States prevails, the whistleblower receives up to 30 percent of the loot.  In 2012, Justice saw a record 647 qui tam, or whistleblower, suits and recovered $3.3 billion.

To get an idea on the scope of the Justice Department’s squeeze on businesses under the FCA in 2013 alone, here’s a partial list (citations omitted, other light edits – ed.):

On November 4, 2013, a pharmaceutical company agreed to pay a total of $2.2 billion (including $1.72 billion in civil damages and penalties) to resolve claims that it engaged in off-label marketing and paid kickbacks to boost sales of two pharmaceutical products.  The qui tam whistleblowers who assisted the government will receive a total of $167.7 million as their relators’ share.  

On July 2, 2013, the DOJ announced that 55 hospitals, located in 21 states, agreed to pay more than $34 million to settle allegations that the hospitals submitted false claims to Medicare for kyphoplasty procedures.

On July 3, 2013, a medical device manufacturer agreed to a settlement with the U.S. government in which it will pay $6 million to resolve allegations that it caused health care providers to submit false claims to Medicare and other federal care programs for minimally invasive spine surgeries.  The U.S. government alleged that the defendant knowingly caused health care providers to submit claims with incorrect diagnoses or procedure codes. 

On July 3, 2013, a medical firm agreed to pay $14.5 million to settle allegations that it overbilled Medicare and other federal health care programs.  The government alleged that the firm, which provides physicians to hospitals and other medical facilities, submitted inflated claims to federal health benefits programs on behalf of its physicians for higher and more expensive levels of service than were documented.

On July 3, 2013, the DOJ announced that a scientific, engineering, and technical services company agreed to pay $5.75 million to settle claims, without admitting or denying liability, that it submitted claims under a contract with the General Services Administration (GSA) in violation of federal procurement regulations. 

On July 10, 2013, a hospital and cardiology practice agreed to pay $4 million to settle a lawsuit alleging that medically unnecessary cardiology procedures were performed on patients and billed to Medicare and Medicaid.  The civil suit was brought by a whistleblower who worked as a cardiologist.

On July 12, 2013, a global design and construction company agreed to pay $3.5 million to settle allegations that it submitted false claims in connection with the U.S. Agency for International Development (USAID) contracts for the construction of water and wastewater infrastructure projects in Egypt in the 1990s.

On July 15, 2013, the DOJ announced a settlement with a polling and market research firm, in which the firm agreed to pay $10.5 million to settle allegations that it violated the FCA and the Procurement Integrity Act for conduct involving several of its federal government contracts and subcontracts.

On July 26, 2013, a health care system and hospital paid $8 million to settle allegations that they submitted false claims to Medicare. 

On July 30, 2013, a pharmaceutical company agreed to pay $490 million to resolve criminal and civil liability arising from allegations that it marketed a prescription drug for uses not approved as safe and effective by the FDA.

On July 30, 2013, the DOJ announced that the U.S. District Court for the District of Columbia had entered judgment for more than $17 million against a health care provider and two related companies.  The provider and companies were accused of submitting false claims to federal and state health care programs, including double-billing for certain medical tests, billing under codes that did not apply, and billing for services that were not provided.

On August 6, 2013, a Texas businessman agreed to pay $400,000 to settle allegations that he defrauded the Federal Communications Commission’s E-rate program, which subsidizes eligible equipment and services to make internet access and internal networking more affordable for public schools and libraries. 

On August 19, 2013, the DOJ announced that a group of health care providers agreed to settle a qui tam lawsuit for $26 million.  Six of the group’s health care facilities were accused of submitting false claims to Medicare, Medicaid, and other federal health care programs for inpatient procedures that should have been billed as outpatient services.

On August 28, 2013, a construction product manufacturing and marketing company and one of its subsidiaries paid over $60 million to settle allegations that the subsidiary filed false claims in connection with two supply and services contracts with the GSA.  The subsidiary allegedly failed to provide the GSA price discounts it provided to non-federal government customers. 

On September 13, 2013, a group of radiation oncology providers agreed to pay $3.5 million to the U.S. government and the State of Florida to resolve allegations that they billed Medicare, Medicaid, and other federal health programs for medical services that were unsupervised and ineligible for government reimbursement. 

On September 25, 2013, a California-based medical diagnostics company agreed to pay $17.5 million. … The DOJ alleged the company charged nursing facilities in California discounted rates for inpatient services paid by Medicare in exchange for the facilities’ referral of outpatient business. 

On October 28, 2013, a software provider agreed to pay $6.2 million to settle allegations that it provided the GSA with defective pricing information that allowed it to sell software licenses and services to the government at inflated prices. 

On November 18, 2013, the DOJ announced that a San Antonio-based health care provider has paid $3,675,000 to settle allegations that it filed false Medicare claims for reimbursement.  The provider allegedly failed to disclose that a patient receiving treatment had another insurance policy that covered the care.  The qui tam plaintiff who filed the case will receive $661,500 from the settlement.

On December 2, 2013, one of the largest pharmacy benefit management companies in the country agreed to pay the government and five states a total of $4.25 million.

In his March 2010 speech promising the “transformation” of the broken health care system, Obama predicted that his aggressive efforts would yield a “couple of billion dollars over the next few years.”  He and his DOJ have exceeded that goal by more than $10 billion to date.  When Obama sets his mind to tightening the noose around American business, nothing can stop him.

While Obama leaves no stone unturned going after hospital  systems, medical device companies, oncologists, and pharmaceutical companies, he ignores the abuse and waste by many individual Medicaid/Medicare recipients, whose aberrant behavior costs the taxpayers billions in treatment.  Obama appears to have no quarrel with them – only with businesses.  If he’s really interested in curbing abuse, why doesn’t he federally mandate drug testing for those on the government dole?  That should cut out a sizeable chunk of wasted funds.

Fraud and waste exist in the health care industry, as they do in all sectors.  But when  measured against this administration’s record on waste and spending – like the disastrous $1-billion Obamacare rollout, the nearly $7 trillion added to the debt in six years, the 70% increase in food stamp recipients, a 20% jump in Social Security disability claims, the trillion-dollar Affordable Care Act, Michelle Obama’s $4.5-billion anti-obesity campaign and lavish personal vacations on the taxpayers’ dime – the foxes are indeed guarding the henhouse.

As for Community Health Systems, now out $100 million, when the DOJ made the announcement of “no finding of improper conduct by Community Health Systems or its affiliated hospitals, and the Company has denied any wrongdoing,” CEO Smith asserted that the question of when a patient should be admitted to a hospital is a complicated one and a matter of medical judgment by the individual physician responsible for a patient’s care.

But Obama doesn’t care about whining CEOs; he made a promise.  Whichever way the businessman turns, the State will be there, ready to pounce.  Using the FCA, Obama, Holder, and the commissioned fraud-finders will hold businesses accountable.

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