Whis­tle-blow­ing pays off

Fraud set­tle­ments bring in $2.5 bil­lion for feds

Modern Healthcare - - The Week In Healthcare - Gregg Blesch

See? We mean it. Tony West, as­sis­tant at­tor­ney gen­eral at the U.S. Jus­tice Depart­ment’s civil di­vi­sion, de­liv­ered that mes­sage last week when he an­nounced the govern­ment’s biggest-ever take from health­care cases un­der the False Claims Act: $2.5 bil­lion.

Since the early days of the Obama ad­min­is­tra­tion, the Jus­tice Depart­ment and HHS have promised they would ded­i­cate more money, man­power and at­ten­tion to find­ing and pun­ish­ing com­pa­nies, or­ga­ni­za­tions and peo­ple who rip off fed­eral health­care pro­grams.

“If you break the law, if you try to cheat tax­pay­ers out of pub­lic funds, if you try to mar­ket drugs out­side of what the FDA has said is safe and ef­fec­tive, we will hold you ac­count­able,” West said in a con­ver­sa­tion with re­porters last week about the fis­cal 2010 yield from False Claims Act set­tle­ments and judg­ments.

Fis­cal 2010’s record tally is in­ter­est­ing for what it omits, as well as for its mag­ni­tude, said Pa­trick Burns, spokesman for Tax­pay­ers Against Fraud Ed­u­ca­tion Fund. The Washington-based ad­vo­cacy group rep­re­sents whis­tle-blow­ers and their lawyers whose suits trig­ger the bulk of in­ves­ti­ga­tions un­der the fraud-fight­ing law.

The num­ber does not, for ex­am­ple, in­clude hun­dreds of mil­lions of dol­lars the Jus­tice Depart­ment se­cured in crim­i­nal penal­ties. The fis­cal 2010 health­care tally was fat­tened with a few mas­sive set­tle­ments from phar­ma­ceu­ti­cal com­pa­nies ac­cused of il­le­gally mar­ket­ing their prod­ucts. The biggest con­trib­u­tor was Pfizer, which paid the U.S. $669 mil­lion in a False Claims Act set­tle­ment, but also $1.3 bil­lion in crim­i­nal fines and for­fei­ture.

“If no­body’s go­ing to go to jail, all you re­ally did here was cheat the whis­tle-blow­ers,” Burns said, ar­gu­ing that a com­pany’s crim­i­nal guilty plea does lit­tle to de­ter wrong­do­ing in the in­dus­try.

West said the govern­ment is in­deed set­ting its sights on ex­ec­u­tives whose or­ga­ni­za­tions com­mit fraud on their watch. He pointed to a re­cent pub­li­ca­tion by HHS’ in­spec­tor gen­eral’s of­fice spell­ing out the cir­cum­stances in which the agency would seek to ex­clude them from par­tic­i­pat­ing in Medi­care and Med­i­caid.

West also pointed to the re­cent in­dict­ment of Lau­ren Stevens, the for­mer as­so­ci­ate gen­eral coun­sel to Glax­oSmithK­line ac­cused of mak­ing false state­ments and con­ceal­ing and fal­si­fy­ing doc­u­ments dur­ing an in­quiry by the U.S. Food and Drug Ad­min­is­tra­tion.

Burns added an­other: Mark Philip, for­mer pres­i­dent of Stryker Corp. sub­sidiary Stryker Biotech. Philip was per­son­ally in­dicted in Oc­to­ber 2009 for al­legedly en­cour­ag­ing sur­geons to roll an un­ap­proved mix­ture of the com­pany’s prod­ucts into sausage and cigar shapes for use in spine and bone pro­ce­dures. Philip pleaded not guilty, and the case is pend­ing in U.S. District Court in Bos­ton.

“You make those peo­ple un­em­ployed and un­em­ploy­able, you will see an im­pact,” Burns said.

As is peren­ni­ally the case, health­care cases made up the bulk of the False Claims Act re­cov­er­ies in all in­dus­tries. In fis­cal 2010, health­care ac­counted for 83% of the $3 bil­lion yielded by civil fraud cases. Last year, the health­care to­tal was $1.5 bil­lion. The pre­vi­ous record was $2.3 bil­lion in 2006, when the fig­ure in­cluded a $900 mil­lion set­tle­ment with Tenet Health­care Corp.

West vows to hold com­pa­nies re­spon­si­ble for il­le­gal ac­tions.

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