Healthcare Fraud: it’s not just Medicare and Medicaid

Last year, the U.S. Department of Justice recovered $2.4 billion in settlements and judgments involving fraud in the healthcare industry perpetrated against government payors. But government programs like Medicare and Medicaid aren’t the only targets of massive healthcare fraud schemes. A recent Department of Justice press release announced the unsealing of a 32-count indictment containing charges against four individuals and seven companies in a $1 billion healthcare fraud that impacted private insurance companies.

The alleged scheme targeted tens of thousands of patients, over one hundred doctors, and major private health insurance carriers including Blue Cross Blue Shield of Tennessee. Briefly stated, the fraudsters allegedly solicited insurance coverage details and prescription information from consumers, convinced doctors to approve pain-related prescription medications, then billed private insurers for the invalidly prescribed drugs at massively marked-up prices.

The matter, being investigated by Tennessee-based federal authorities, is reminiscent of charges brought by California state prosecutors in April 2017. In that case, 26 individuals-including 21 physicians and 2 pharmacists-were charged, in part, with billing workers’ compensation insurers ludicrously inflated prices for prescription pain creams.

Although private insurers can find themselves at odds with the government, when insurance companies are themselves defrauded, it may be government enforcement staff that comes to their aid. Two states, California and Illinois, have laws that allow individuals-including defrauded insurers-to file suit against fraudsters who target private insurance companies by, for example, inflating claims, billing for services not performed, or presenting duplicative claims.

• In California, the California Insurance Frauds Prevention Act allows individuals with information about healthcare fraud impacting private insurers to bring a civil suit the suspected fraudsters. The California act mirrors the False Claims Act-it allows whistleblowers to receive a financial award for reporting fraud to the government. Those who violate the California Insurance Fraud Prevention Act are subject to penalties between $5,000 and $10,000 per violation, as well as three times the amount of each claim for compensation. In a successful action, the whistleblower who brought the suit can receive 30–50 percent of the proceeds.
• In Illinois, the Illinois Insurance Claims Fraud Prevention Act, like the California act and the False Claim Act, offers financial rewards to incentivize whistleblowers to bring civil suits against fraudsters who target private health insurers.

Constantine Cannon has significant experience representing whistleblowers with information about fraud in the healthcare industry. Please contact us if you would like to have a free and confidential discussion with one of our experienced whistleblower lawyers.

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