U.S. Departments of Justice and Health and Human Services Issue FY 2014 Health Care Fraud and Abuse Control Program Report

By on March 24, 2015
Posted In Uncategorized

Last week, the U.S. Departments of Justice (DOJ) and Health and Human Services (HHS) announced that the Health Care Fraud and Abuse Control (HCFAC) Program has recovered over $27.8 billion since its inception in 1996.  In FY 2014 alone, with a collective budget of $571.7 million, HCFAC efforts recovered $3.3 billion from individuals and companies facing allegations of fraud related to health care.  Jointly directed by the Attorney General and Secretary of HHS, HCFAC seeks to:

  • Coordinate federal, state and local law enforcement efforts relating to health care fraud and abuse with respect to health plans;
  • Conduct investigations, audits, inspections and evaluations relating to the delivery of and payment for health care in the United States;
  • Facilitate enforcement of all applicable remedies for such fraud; and
  • Provide education and guidance regarding compliance with current health care law.

Over the past three years, for each dollar spent on health care-related fraud and abuse investigations the government has recovered $7.70.  In other words, HCFAC efforts since 2012 have given the United States a staggering 770 percent return on investment.

Utilizing a two-pronged approach to combat fraud and abuse, ushered in with new authorities granted by the Affordable Care Act (ACA), the United States is increasingly implementing cross-departmental preventative measures to curtail health care fraud and abuse, and reduce “pay and chase” efforts initiated after payments are made on claims that are identified as potentially fraudulent.  For example, the Health Care Fraud Prevention and Enforcement Action Team (HEAT)—a program jointly initiated in 2009 by DOJ and HHS—now investigates cases using real-time data analysis to identify fraudulent claims before payments are made to the provider.  This real-time analysis could replace lengthy subpoena, production and account assessment; correspondingly, investigators are moving much faster from fraud identification, to arrest and prosecution.  The HEAT program is charged with the following:

  • Marshaling significant resources across government to prevent waste, fraud and abuse in the Medicare and Medicaid programs;
  • Reducing “skyrocketing” health care costs and improving the quality of care;
  • Highlighting best practices by providers and public sector employees; and
  • Building upon existing partnerships between DOJ and HHS, like HCFAC’s Medicare Fraud Strike Force.

As a complement to the HEAT program’s efforts on the civil side, the Medicare Fraud Strike Force program utilizes investigative and analytical resources from the HHS Office of the Inspector General (HHS-OIG), the Federal Bureau of Investigation (FBI), and DOJ’s Criminal Division’s Fraud Section.  Initially launched as a pilot program in selection regions, Strike Forces now operates in nine geographic areas—Brooklyn, NY; Chicago, IL; Dallas, TX; Detroit, MI; Houston, TX; Los Angeles, CA; Miami, FL; Southern Louisiana; and Tampa, FL.  Strike Force prosecutors have filed over 963 cases, obtained 1,443 guilty pleas and 191 jury trial convictions, and sent 1,197 defendants to an average imprisonment of 47 months.  In FY 2014, DOJ opened 924 new criminal health care fraud investigations so this trend will continue in years to come.

DOJ Continues to Pursue False Claims Act Litigation to Combat Health Care Fraud

Armed with the False Claims Act (FCA), the United States has pursued criminal and civil investigations implicating nearly every facet of the health care industry, including:

HCFAC’s efforts translated into $2.3 billion in settlements and judgments in FY 2014, generating a total of $15.2 billion in recoveries resulting from health care fraud allegations since January 2009.

HHS-OIG Coordinates with Medicare Strike Force and Other Enforcement Actions

With a FY 2014 budget of approximately $213 million, HHS-OIG investigations resulted in 867 criminal actions against individuals or entities and 529 civil actions, including FCA and unjust-enrichment lawsuits filed in Federal district court, civil monetary penalties settlements, and administrative recoveries resulting from provider self-disclosures.  HHS-OIG also excluded 4,017 individuals and entities from Medicare, Medicaid and other federal programs in California, Louisiana, North Carolina, Pennsylvania and Texas.  Finally, HHS-OIG engaged in audits and evaluations to identify focus areas where there is a high incidence of questionable or improper conduct in Medicare and Medicaid.  In FY 2014, HHS-OIG identified dozens of issues, including:

  • Beneficiaries not lawfully present in the United States;
  • Improper payments for evaluation and management (E&M) services;
  • Ambulatory surgical services payment differential in Medicare; and
  • Electronic Health Record fraud vulnerabilities.

CMS Continues to Promulgate Program Integrity Strategy for Medicare, Medicaid and the Children’s Health Insurance Program

In support of its strategic goal of improving program integrity for Federal health care programs, CMS is guided by four major principles—prevention, detection, transparency and accountability, and recovery.  With just over $250 million in FY 2014 funding, CMS engaged extensively in each focus area.

In support of its prevention efforts, CMS utilized its ACA-established authority to enact moratoria on new home health and ambulance enrollments in fraud “hot spot” areas of the country.  In FY 2014, the moratoria were focused on Broward County, FL and several counties in Michigan and Texas and were extended to ground ambulance suppliers in the Philadelphia area.  CMS also utilized the following prevention tools:

CMS’ detection efforts included strengthened program integrity activities in Medicare Advantage and Medicare Part D.  These efforts were complemented by marketing surveillance activities, including secret shopping and compliance actions.

The Secretary of HHS’ key initiative to improve transparency and accountability, is the Healthcare Fraud Prevention Partnership, which works to bring together public and private, federal and state-level individuals, and organizations combatting health care fraud across all payers.

With regard to recovery efforts, CMS continued to use its authority to suspend payments to providers during investigations of “credible allegations of fraud” and may also suspend payments if “reliable information of an overpayment exists.”  Among several other efforts, CMS has also designated field offices in the HEAT cities of Brooklyn, Los Angeles and Miami to coordinate with law enforcement, facilitate data analysis and expedite suspension requests.


This latest report from HCFAC re-emphasizes the continued and ever-growing threat to providers and other companies involved in the delivery of health care in the United States.  As we first reported last month, DOJ and HHS will continue to obtain high returns on the United States’ investment in prosecutorial resources, so the health care industry should prepare for increasingly innovative investigation and enforcement activity in the coming year.


Amandeep S. Sidhu
Amandeep (Aman) S. Sidhu focuses his practice on complex commercial disputes with an emphasis on regulated industries, including health care-related investigations and litigation. He represents hospitals and health care companies in investigations and defense of qui tam whistleblower litigation involving federal False Claims Act (FCA), Stark Laws and Anti-Kickback Statute in federal district courts throughout the United States. Aman regularly supports settlement negotiations with the US Department of Justice for clients in multiple jurisdictions, including negotiation of corporate integrity agreements with the US Department of Health and Human Services Office of Inspector General. Aman also represents health care and life sciences companies in the navigation of state and federal investigations, including responding to congressional inquiries. Aman serves on the Firm's Diversity/Inclusion Committee, Pro Bono and Community Service Committee and Associate Development Committee. Read Amandeep Sidhu's full bio.