Transcript Delaware Fraudulent Acts

Healthcare Fraud &
Prescription Drug Diversion
Kathleen Vavala
Deputy Attorney General
Delaware Department of Justice
Medicaid Fraud Control Unit
Overview
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Types of Healthcare Fraud
Scope of the Problem
Prevention
Selected Statutes & Cases
Prescription Drug Diversion
DOJ Resources/Assistance
Healthcare Fraud
Types of Fraud
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Up-coding (simple visit/procedure is billed as
more extensive visit/procedure)
Unbundling (series of procedures performed at
one time are billed separately to increase
payment)
Lack of medical necessity (no medical need for
visit/procedure/medication)
Failure to provide adequate care/staffing
Off Label Marketing
Price Fixing (Best Price)
Clinical Trial Fraud
The Scope of the Problem
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Experts indicate between 3% and 10% of
all health care spending is fraudulent
With expansion of Medicare drug coverage
(CMS estimates doubling of drug
payments by 2013), fraud is expected to
increase
Pharmaceutical Fraud is the Biggest
Component
Why should you
get involved?
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Preventing patient harm and distrust in systems
Insiders are uniquely knowledgeable about
industry practices
Ethical Duties/Medical and Licensing Boards
Fraud affects insurance rates/taxes
Conspiracy issues
Qui Tam (Whistleblower) Laws
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Permit individuals to bring suit against an entity
believed to be defrauding the government
Individual Receives Portion of Recovery
Fraud Laws
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Delaware Heathcare Fraud – 11 Del. C. § 913A
Delaware Fraudulent Acts – 31 Del. C. § 1001 et seq.
(includes kickbacks)
Accomplice Liability– 11 Del. C. §§ 271-274
Conspiracy – 11 Del. C. §§ 511-513
Corporate Liability – 11 Del. C. §§ 281-284
Falsifying Business Records – 11 Del. C. § Sec. 871
Forgery – 11 Del. C. § 861
Insurance Fraud – 11 Del. C. § 913
Drug Offenses – Title 16 of the Delaware Code
Federal False Claims Act – 31 U.S.C. Sec. 3729 et seq.
Delaware False Claims Act – 6 Del. C. § 1201 et seq.
Delaware Health Care Fraud
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11 Del. C. §913A – Class G, E or C Felony
depending on amount of $ taken.
CRIMINAL statute. Anyone who:
 Knowingly presents or causes to be
presented a fraudulent health care claim to a
health care benefit program or
 Knowingly engages in a pattern (three or
more instances) of presenting false claims
PENALTIES = Fines up to 5x pecuniary loss plus
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Under 50K - Class G Felony - up to 2 years jail
Loss of 50-100K – Class E Felony– up to 5 years jail
Loss of 100K – Class C Felony– up to 15 years jail
Delaware Fraudulent Acts
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31 Del.C. §1001 et seq. is a Criminal and Civil
Statute.
Section 1003 False Statements:
Anyone who:
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Obtains or attempts to obtain payment or property
under a public assistance program to which the
provider is not entitled by means of false statements
or representations, concealing or failing to disclose
info., or any other scheme or device on behalf of the
provider
PENALTIES = Fines & Jail time.
Delaware Fraudulent Acts
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Section 1005 Kickbacks:
Anyone who:
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directly or indirectly, overtly or covertly,
solicits or receives
any remuneration in return for referring an
individual to medical care
where payment for care is provided by public
assistance program ( e.g. Medicaid)
Global Qui Tam Actions
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Actions brought under Federal and State False
Claims Acts
Qui Tam Pharmaceutical Fraud Cases settled
since 2000 have found BILLIONS in fraud
There are hundreds of global suits involving over
500 drugs currently under investigation by U.S.
Department of Justice
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Delaware is a Qui Tam State and part of NAMFCU
If a drug is marketed in Delaware or a drug company
is incorporated here, DE DOJ is likely involved.
Delaware False Claims Act
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6 Del.C. §1201 et seq. – Qui Tam Provision
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Whistle Blower Act
CIVIL statute . Anyone who:
 Knowingly presents or causes to be presented
to the government false or fraudulent claim
for payment
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“Knowingly” is 1.) actual knowledge of falsity or 2.)
deliberate ignorance or 3.) recklessly disregarding whether
claim is true/false.
PENALTIES = triple damages, $5,500 to $11,000
fine per false claim, and/or program exclusion
Examples of False Claims
in Qui Tam Actions
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Off-label marketing
Paying kickbacks to physicians, wholesalers and
pharmacies to induce drug purchases
Establishing inflated drug-prices knowing that
federal health care programs use these prices to
reimburse providers, then marketing the ‘spread'
between the federal reimbursement and the
provider's lower cost, to induce drug purchases
Failing to report the company's true ‘best price'
for a drug to reduce rebates owed to the
Medicaid program
U.S. ex rel. v. Pfizer (2009)
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Pfizer marketed drugs for non-FDA approved uses
and in doses which FDA declined to approve due to
safety concerns = Off-label marketing
Pfizer subsidiaries misbranded drugs with the intent
to defraud or mislead and paid kickbacks to
providers to increase prescribing
Settled for $2.3 billion with a $1.3 billion criminal
fine (largest fine ever imposed in U.S.)
$1 billion to State and Federal Medicaid programs Delaware received $537,266.22
$102 million to whistleblowers and their counsel
Pfizer also agreed to an expansive corporate
integrity agreement with DHHS OIG
Top 20 FCA Settlements/Awards
1
Pfizer*
$1,000,000,000
Sept-09
2
Tenet
$900,000,000
July-06
3
HCA*
$731,400,000
Dec-00
4
Merck
$650,000,000
Jan-08
5
HCA*
$631,000,000
June-03
6
Serono Group *
$567,000,000
Oct-05
7
TAP Pharmaceuticals Products Inc. *
$559,483,560
Oct-01
8
NY State & NY City
$540,000,000
June-09
9
Schering Plough
$435,000,000
Augl-08
Products Inc. *
10
Eli Lilly*
$438,000,000
Jan-09
11
Abbott Labs*
$400,000,000
July-03
12
Fresenius Medical Care of N. America*
$385,000,000
Jan-00
13
Cephalon
$375,000,000
Sept-08
14
Bristol-Myers Squibb
$328,000,000
Sept-08
15
Smith-Kline Beecham Clinical Labs
$325,000,000
Sept-08
16
HealthSouth*
$325,000,000
Dec-04
17
National Medical Enterprises*
$324,200,000
Jun-94
18
Gambro Healthcare
$310,000,000
Dec-04
19
Schering-Plough*
$292,969,482
Jul-04
20
Astra Zeneca*
$266,127,844
Jun-03
Source: Taxpayers Against Fraud (TAF) http://www.taf.org/statistics.htm
Prescription Drug
Diversion
Diversion of Prescription Drugs
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Affects all of us…
- providers
- pharmacies
- suppliers
- AND patients
…by increasing street crime and drug
addiction as well as costing billions of
dollars in fraud-related damages.
Prescription Drug Abuse in the US
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An estimated 15.1 million Americans (5% of
population) report abusing prescription drugs
In young people, ages 12-17, abuse of
prescription pain killers ranks second -only
behind Marijuana – as the nation’s most
abused illegal drug
Pain relievers such as OxyContin and Vicodin
are the most commonly abused prescription
drugs by teens
Teens are more likely to become dependent
on prescription medication than adults
Frequently Abused
Prescription Drugs
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Opiates – Codeine, Oxycodone,
Hydrocodone (Vicodin) and Morphine
Central Nervous System Depressants–
barbituates and benzodiazepines (Xanax)
Stimulants – amphetamines,
dextroamphetamine and methylphenidate
(Ritalin)
Where do kids get it?
What can be done?
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Law enforcement’s goal is to reduce abuse
without compromising access to essential
medications.
To do this, we need information on
individuals who may be diverting, selling
or abusing prescription drugs.
With that intelligence, we can punish the
dealers and treat the afflicted.
Drug Laws: The Legal Arsenal
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Delaware state and federal law provide
diversion programs for first offenders,
treatment programs for addicts, and stiff jail
sentences for dealers and distributors of
illegal drugs.
Oxycodone is a Narcotic Schedule II. Title 16
imposes minimum mandatory penalties for its
sale and distribution: 5 years for 2nd offense.
You are the first line of defense.
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Medical providers and support staff are in
unique position educationally and
experientially to identify fraud and criminal
activity – by providers – by patients - and
by the industry.
Report suspicious activity to law
enforcement …
What to report - Red Flags
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Dirty pharmacies, pharmacists and
technicians
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Pharmacists who falsify records to obtain then
sell pharmaceuticals or steal from inventories
Dirty providers
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Medical, Dental, Nursing or Veterinary
providers
Providers who either sell or “loosely prescribe”
prescriptions to dealers or abusers
Employees who steal prescription pads or
from inventories
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Dirty patients
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Valid prescriptions from patients who “doctor
shop” using local or long-distance doctors
Fake, doctored or forged prescriptions
submitted to multiple pharmacies
Groups of patients who visit a known dirty
doctor and then present prescriptions at one
or more pharmacies
Patients who fake – ADHD, car accident etc.
to get prescriptions
Patients who trade valid prescriptions for
other drugs or sex on the street
Robberies or burglaries at pharmacies, stores
or homes – Hobbs Act
Report suspicious activity to…
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State and Local Police Agencies
DEA: Toll-free hotline to report the illegal
sale and abuse of prescription drugs:
(1-877-792-2873)
Delaware Office of Narcotics and
Dangerous Drugs: (302) 834-2630
Delaware DOJ Drug Units
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New Castle County: (302) 577-8500
Kent County: (302) 739-4211
Sussex County: (302) 856-5353
… and/or the MFCU.
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The Delaware Medicaid Fraud Control Unit
(MFCU) is an arm of the Delaware
Department of Justice under Delaware
Attorney General Beau Biden.
We investigate and prosecute fraud within
the Delaware Medicaid Program – which
includes Healthcare Fraud & Prescription
Drug Diversion.
Referring Cases to the MFCU
WE ACCEPT REFERRALS IN ANY FORM:
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Anonymously
Mail 820 N. French Street, 5th Floor
Wilmington, DE 19801
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Phone – Main # (302) 577-8505
FRAUD HOTLINE: 577-5000
If you have a question as to whether you should
make a referral, please contact Director Dan
Miller(302)577-8859;[email protected].
DDOJ MFCU Contacts
MFCU - Wilmington Office, Carvel Building
Medicaid Fraud Hotline
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(302) 577-8505
(302) 577-5000
DAG Daniel Miller
MFCU Director
Office
(302) 577-8859
DAG Susan Purcell
DAG James Apostolico
DAG Kathleen Vavala
Office
Office
Office
(302) 577-8833
(302) 577-8830
(302) 577-8882
John Miller (Wilmington)
Chief Investigator
Dale Hall (Wilmington)
Special Investigator
Patrick Corcoran (Wilmington)
Special Investigator
Mike Medkeff (Wilmington)
Special Investigator
Office
Cell
Office
Cell
Office
Cell
Office
Cell
(302)
(302)
(302)
(302)
(302)
(302)
(302)
(302)
577-8938
593-0713
577-8503
379-4735
577-8314
528-1868
577-8303
236-0384
MFCU - Dover Office, West Water Street
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Allen Ruth (Dover)
Special Investigator
Office
Cell
MFCU - Georgetown Office, E. Market Street
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Ruth Townsend (Georgetown)
Special Investigator
Office
Cell
Jean Rothenburger (Georgetown)
Special Investigator
Office
Cell
(302) 739-4211
(302) 739-4211
(302) 593-0726
(302) 856-5353
(302) 856-5353
(302) 542-2978
(302)856-5353
(302) 354-9202
Questions?