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On June 27, U.S. Attorney General Merrick Garland announced the results of a two-week nationwide law enforcement action by the Department of Justice (DOJ) in 32 federal districts against 193 defendants for their participation in a variety of healthcare fraud schemes. These federal enforcement actions also included the seizure of more than $230 million in cash, luxury vehicles, gold and other assets. The Attorney General correlated these recent enforcement efforts with four “fundamental principles” that guide the government as it focuses resources in this area: (1) protecting vulnerable patients; (2) defending taxpayer-funded programs; (3) ensuring full accountability by prosecuting defendants and seizing their criminal proceeds; and (4) using data analytics to keep pace with evolving fraud schemes.

Exemplifying these principles, one prosecution in the Southern District of Florida included three owners of a pharmaceutical wholesale company involved in a $90 million wire fraud conspiracy to distribute adulterated and misbranded HIV drugs to pharmacies and patients nationwide, which resulted in patients sometimes receiving bottles containing entirely different drugs than those they were prescribed. In one instance, a patient passed out and was unconscious for 24 hours after taking an anti-psychotic medication he thought was his prescribed HIV drug. 

In another case brought in the District of Arizona, two wound-care company owners and two nurse practitioners were charged in a $900 million scheme with causing medically unnecessary and highly expensive wound grafts to be applied to elderly Medicare patients without coordinating with their treating physicians or proper treatment for infection. Many of those elderly patients were terminally ill and in hospice care. Medicare paid more than $1 million per patient for these unnecessary procedures. In addition to charging the wrongdoers, DOJ seized bank accounts, luxury vehicles and gold totaling more than $50 million.

DOJ is also utilizing data analytics to target ongoing and evolving fraud schemes in real time. As part of his announcement, Attorney General Garland explained how DOJ is proactively addressing schemes that exploit telemedicine technology to generate medically unnecessary prescriptions of Adderall and other stimulants. Through the use of data analytics, DOJ identified a connection between the increase in such prescriptions and the possible misuse of telemedicine, and then worked to identify potential criminal schemes. This, in turn, led DOJ to identify a particular healthcare company called Done that perpetrated a $100 million telemedicine fraud scheme defrauding taxpayers and providing medically unnecessary access to Adderall. DOJ charged the company’s former CEO and clinical President as well as five others for their involvement in distributing more than 40 million medically unnecessary Adderall pills. One of the defendants was indicted for rubber-stamping prescriptions without any medical review and signing prescriptions for patients who were deceased. The Attorney General vowed that “as healthcare fraud schemes continue to evolve, so will the Justice Department’s investigative and prosecutorial strategies.”

This recent set of enforcement actions generally highlights DOJ’s continued focus on healthcare fraud as a national enforcement priority, as well as its ongoing concern with unlawful telemedicine schemes and its determination to use DOJ analytics and resources to investigate those schemes. More specifically, the Attorney General’s announcement of “fundamental principles” informing DOJ’s exercise of prosecutorial discretion, as well as the types of cases that were included in this latest series of prosecutions, is a clear signal to the healthcare industry that DOJ will focus its attention on schemes that involve exploitation of vulnerable patients and/or abusive billing of public insurance programs for medically unnecessary items and services.

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