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White Collar and Government Compliance Alert: More aggressive enforcement yields record-breaking health care penalties

OIG Report highlights recent cases

The Office of Inspector General (OIG) for the Department of Health and Human Services (HHS) issued its semi-annual report to Congress in which it highlighted the agency’s work between April and September of this year (OIG Report) and the record-breaking amount of money it recovered from providers during this period. The OIG Report illustrates the government’s expanding scope and effort to combat health care fraud and further demonstrates the challenges facing the government as it seeks to fully implement the Affordable Care Act. 

Regarding enforcement efforts against individuals and companies, OIG reports:

  • The agency completed 687 criminal and 360 civil actions. Of note, HHS had $4.3 billion in receivables and $1.7 billion in non-HHS investigative receivables for health care offenses.
  • The agency anticipates $6.9 billion in total recoveries for FY 2012. In addition, many providers entered into corporate integrity agreements to ensure future compliance with federal fraud and abuse regulations.

Many of the cases cited in the OIG Report illustrate the government’s continuing efforts to extract large penalties from providers who employ business strategies deemed as violating federal health care fraud and abuse laws. For example:

  • GlaxoSmithKline agreed to pay $3 billion to settle allegations of illegal off-label promotion of drugs and illegal kickbacks.
  • Merck agreed to pay $950 million to settle allegations that the company made false and misleading statements regarding the cardiovascular and overall safety of Vioxx.
  • McKesson Corporation agreed to pay more than $300 million to OIG and certain affected states for marking up average wholesale pricing of its pharmaceutical products, resulting in states paying higher amounts for prescription drugs.
  • Walgreens paid $7.9 million to settle claims that the company improperly induced customers to transfer prescriptions to Walgreens by offering gift cards and other similar promotions.

Between April and September 2012, OIG imposed 1,911 administrative sanctions against providers, many of which derived from a provider’s prior health care fraud conviction, license revocation, or findings of patient abuse and/or neglect. Many administrative sanctions resulted in providers being excluded from participating in federal health care programs. During this time period, OIG also recovered more than $6.7 million in civil money penalties from providers who submitted false claims for cases related to a variety of fraud and abuse, such as upcoding, employment of excluded individuals, and violations of the Emergency Medical Treatment and Active Labor Act (EMTALA), a statute that prohibits hospitals from denying emergency medical services to individuals.

As health care costs continue to rise and the Affordable Care Act is further implemented, OIG will continue to expand its reach and enforcement efforts.

For more information on OIG enforcement activities and the role our Health Law and White Collar and Government Compliance attorneys can play in developing effective compliance strategies individually tailored for your company’s needs, please contact:

Richard H. Blake

Bruce E. Reinhart

Bridget K. Cougevan

Jennifer Dowdell Armstrong

White Collar and Government Compliance

Our White Collar and Government Compliance practice group understands firsthand how government investigations and prosecutions are handled. Our attorneys include distinguished former federal prosecutors who bring with them decades of white collar experience to counsel clients in all aspects of government compliance, investigations and litigation. We understand our clients’ businesses and draw upon that knowledge and our years of government experience to develop effective compliance strategies individually tailored for each client’s needs. When necessary, we conduct internal investigations and vigorously represent our clients throughout all phases of inquiries, investigations and prosecutions.

Carl J. Grassi, President
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© 2012 McDonald Hopkins LLC All Rights Reserved. This Alert is designed to provide current information for our clients, friends and their advisors regarding important legal developments. The foregoing discussion is general information rather than specific legal advice. Because it is necessary to apply legal principles to specific facts, always consult your legal advisor before using this discussion as a basis for a specific action.