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Congress should get serious about reforming False Claims Act

From international law firm Arnold & Porter LLP comes timely views on current regulatory and legislative topics that weigh on the minds of today’s physicians and health care executives.

In the 7 years since its creation, the Medicare Fraud Strike Force (MFSF) has indicted more than 1,500 individuals for Medicare fraud. Based on Department of Justice (DOJ) statistics, those 1,500 people collectively billed the Medicare program for more than $5 billion. While these numbers seem large, they hide the real and inherent value of the work being done in the nine MFSF cities across the country.

The value of the MFSF is in its ability to deter crime and bears no relationship to the recovery of money for the Medicare trust fund. Assuming the 1,500 defendants billed in excess of the charged crimes and that media coverage of the prosecutions impacted the communities, MFSF operations probably saved taxpayers approximately $50 billion in only 7 years. This savings represents what would have been billed by the indicted, their trainees, and their communities absent the prosecutions.

 

Kirk Ogrosky

Unlike other Congressional and DOJ efforts, including False Claims Act (FCA) cases which can take years and are generally brought against companies doing their best to comply with complex regulations, the MFSF targets real criminals who are stealing from taxpayers. Taxpayers should reward the prosecutors and agents who are efficiently and effectively managing this program and handling these complex cases. Health care fraud cases involve difficult issues and highly-paid counsel. Anyone who believes that MFSF cases are easy, “low-hanging-fruit” cases has never seen a federal jury trial. Perhaps most important is what the MFSF prosecutors and agents are able to achieve with an extraordinarily low budget. The return on investment for taxpayers is thousands of times what it costs and is information that DOJ does not publish because it cannot calculate the real impact of deterrence.

No one doubts that it is far cheaper for taxpayers to operate the MFSF than the current FCA debacle that Congress expanded under FERA and ACA. DOJ civil attorneys are overloaded with private whistleblowers seeking lottery-type rewards in cases that take years to investigate. While we all admire whistleblowers who are motivated by doing “the right thing,” Congress should take notice that they have enabled a new breed of gambler — the employees who bring cases with no personal consequence seeking to force companies to settle meaningless claims.

 

If Congress were serious about fighting Medicare fraud, it would restrict the FCA, make relator’s counsel actually litigate cases themselves, and then adequately fund programs like the MFSF. By reigning in the FCA and funding the MFSF, Congress could stop wondering why no one gets prosecuted in the seemingly monstrous FCA settlement cases. The reality is that most of the FCA cases are matters where the FDA or CMS should have done a better job regulating providers on the front end rather than allowing whistleblowers to get rich on the back end.

The current administration has recognized the importance of the MFSF by making it a key part of the Health Care Fraud Prevention and Enforcement Action Team (HEAT), the first Cabinet-level program to fight Medicare fraud. HEAT is directed by HHS Secretary Kathleen Sebelius and Attorney General Eric Holder. Sebelius credited the Affordable Care Act with providing the money for the MFSF “to preserve Medicare and protect the tens of millions of Americans who rely on it each day.” Holder recently recognized that the MFSF is “helping to deter would-be criminals from engaging in fraudulent activities in the first place.”

Under HEAT’s supervision, the MFSF has funding to operate in nine cities: Baton Rouge, La.; Brooklyn, N.Y.; Chicago; Dallas; Detroit; Houston; Los Angeles; Tampa, Fla.; and Miami. HEAT’s expansion of the MFSF is a step in the right direction, but the goal to prevent “fraudsters from preying on people with Medicare” is misstated because it seeks to fix a problem that does not exist. No one who has ever seriously looked at Medicare fraud would claim that beneficiaries are the widespread victims of fraud. Taxpayers are the victims; and in the nine MFSF cities, there are thousands of Medicare beneficiaries who are recidivist criminals. These Medicare beneficiaries go unprosecuted based on the misconception that the elderly don’t commit crimes and are victims. Yet, these beneficiaries continue to take cash kickbacks and give their Medicare cards to people knowing that they are enabling billions of dollars in fraud. It is time to tell Congress to attack Medicare fraud the right way and send the crooks to jail.

Kirk Ogrosky, JD, can be reached Arnold & Porter LLP, 555 12th St. NW, Washington, DC 20004-1206; 202-942-5330; email: Kirk.Ogrosky@aporter.com