U.S. Department of Health and Human Services 
Office of Inspector General 

 
 
 
 
 
Medicaid Fraud Control Units 
 
 
 
 
Fiscal Year 2013 

Annual Report 

 
Daniel R. Levinson 
Inspector General  
 
March 2014 
OEI-06-13-00340 
       INTRODUCTION 
This Medicaid Fraud Control Unit (MFCU or Unit) Fiscal Year (FY) 2013 Annual Report 
highlights statistical achievements from the investigations and prosecutions conducted by  
50 MFCUs nationwide. The Office of Inspector General (OIG) compiled information from  
Quarterly Statistical Reports (QSRs) submitted by each Unit, as well as supplemental data 
gathered by OIG through a variety of methods.  See Appendix A for details about data sources 
used in this Annual Report. OIG maintains updated MFCU information on the OIG Web site, 
such as an interactive map with statistical information about each MFCU. This report represents 
a new effort by OIG to compile in one document information about MFCU activities and results, 
and we anticipate issuing annual reports for future years.  
MFCU Operations   
MFCUs investigate and prosecute Medicaid provider fraud and patient abuse and neglect in 
health care facilities or board and care facilities.1  In FY 2013, 49 States and the District of 
Columbia (States) operated Units.  As part of their Medicaid plans, all States are required to 
operate a Unit or demonstrate to the Secretary of Health and Human Services that operation of a 
MFCU would not be cost effective and that other program integrity protections are in place.2   
Units are jointly funded; the Federal government reimburses 75 percent of the costs of operating 
a Unit, with the States contributing the remaining 25 percent.3  In FY 2013, combined Federal 
and State expenditures for the Units totaled $230 million.4  The 50 Units employed 
1,912 individuals at the end of FY 2013.5    
Each Unit must be a single, identifiable entity of State government, distinct from the single State 
Medicaid agency, and must develop a formal agreement (i.e., Memorandum of Understanding, or 
MOU) that describes its relationship with that agency).6  MFCUs are required to have Statewide 
authority to prosecute their own cases or have formal procedures to refer suspected criminal 
violations to an office with such authority.7  In FY 2013, 44 of the Units were in offices of State 
Attorneys General; in the remaining 6 States, the Units were in other State agencies.8    
MFCUs operate on an interdisciplinary model and must employ a combination of investigators, 
auditors, and attorneys.9  Unit staff review referrals provided by the State Medicaid agency and 
other sources and determine the potential for criminal prosecution and/or civil action.  Although 
Units received many referrals of cases of potential fraud, often from the program integrity 
divisions of State Medicaid agencies, referrals may also come from a variety of other sources, 
including direct referrals from  the general public.  Similarly, Units receive referrals of patient  
abuse and neglect from a variety of sources, including local adult protective services agencies.  
MFCUs authority to receive Federal funding for cases of patient abuse and neglect extends to 
Medicaid-funded health care facilities, such as nursing homes, and to board and care facilities, 
such as assisted living facilities, which may or may not be funded by Medicaid.10  Additionally, 
the National Association of Medicaid Fraud Control Units (NAMFCU) coordinates MFCUs, 
typically through the involvement of MFCU attorneys from around the Nation, to work with the 
U.S. Department of Justice and OIG on globali.e., multi-Statecivil false-claims cases.   
   
Medicaid Fraud Control Units FY 2013 Annual Report (OEI-06-13-00340)  1  INTRODUCTION 
OIG Oversight of MFCUs 
HHS OIG oversees MFCUs and administers grants that provide Federal funding for Unit 
operations. As required by statute, OIG developed 12 performance standards for use in assessing 
the operations of MFCUs.  A copy of the MFCU performance standards, most recently revised in 
June 2012, may be found on the OIG Web site at https://oig.hhs.gov/authorities/docs/2012/ 
PerformanceStandardsFinal060112.pdf. 11    
On an annual and quarterly basis, MFCUs provide OIG with statistical and other information 
about Unit operations and the results of investigations and prosecutions.  OIG uses this Unit 
information, as well as information from other sources, to determine whether to annually 
recertify each Unit. Periodicallyapproximately every 5 yearsOIG conducts an 
in-depth onsite review of each Unit to evaluate its operations as related to the  
12 performance standards and to assess compliance with laws, regulations, and OIG policy 
guidance. 
Standards 
This study was conducted in accordance with the Quality Standards for Inspection and 
Evaluation issued by the Council of the Inspectors General on Integrity and Efficiency. 
   
Medicaid Fraud Control Units FY 2013 Annual Report (OEI-06-13-00340)  2    TABLE OF CONTENTS   
 
  MFCU CRIMINAL CASE OUTCOMES 
MFCUs reported 1,341 criminal convictions, mostly for fraud, in FY 2013 ..........4 

FY 2013 criminal convictions involved a variety of provider types, most 

notably home health agencies ..................................................................................5 

FY 2013 recoveries from criminal cases reached nearly $1 billion .........................6 

  MFCU CIVIL CASE OUTCOMES  
MFCUs reported 879 civil settlements and judgments in FY 2013 .........................7 

FY 2013 civil settlements and judgments involved a variety of provider types,  

most notably pharmaceutical companies   ...............................................................8 

FY 2013 recoveries from civil cases totaled over $1.5 billionmost from  

multi-State, global settlementsgenerally consistent with recent years   ...............9 

  PROVIDER EXCLUSIONS 
MFCU convictions often led to the providers exclusions from all Federal  

health care programs ..............................................................................................10 

  OTHER OBSERVATIONS  
Lack of fraud referrals from Medicaid managed care organizations presents 

challenges for MFCUs ...........................................................................................11 
 
Recent payment suspension rules require more coordination between MFCUs  

and State Medicaid agencies..................................................................................12 

  OIG OVERSIGHT 
In FY 2013, OIG conducted 10 onsite reviews of Units, published 8 reports on 

onsite reviews, issued regulations to allow data mining by MFCUs, and  

proposed new investigative authority regarding patient abuse and neglect ...........13 

  APPENDIXES 
A: Methodology....................................................................................................15 

B: FY 2013 MFCU Criminal and Civil Outcomes by Provider Type ...................17 

C: Selected FY 2013 Statistical Data....................................................................19 

D: Additional Analysis, MFCU Case Outcomes, FYs 2010-2013........................23 

E: Onsite Reviews Conducted and Reports Published in FY 2013 ......................24 

ACKNOWLEDGMENTS   ...............................................................................................25 

ENDNOTES .....................................................................................................................26 

   
Medicaid Fraud Control Units FY 2013 Annual Report (OEI-06-13-00340)  3  MFCU CASE OUTCOMES  
MFCUs reported 1,341 criminal convictions, mostly for fraud,  
in FY 2013 
As shown in Chart 1, about three-quarters of criminal convictions involved fraud; about  
one-quarter involved patient abuse and neglect.12  
Chart 1:  Percentage of FY 2013 Criminal Convictions by Type of Case  
(Fraud vs. Patient Abuse and Neglect)  
  Patient 
Abuse and 
  Neglect 
26% 
 
 
Fraud 
 
74% 
 
 
 
  Source: OIG analysis of Quarterly Statistical Report, 2013.  
 
FY 2013 criminal convictions for fraud:  74 percent  
Fraud convictions included convictions for (1) conspiracy to commit health care fraud,  
(2) health care fraud, (3) submitting false statements related to health care matters, (4) making a 
false statement in regard to health care reimbursements, (5) grand larceny, and (6) violations of 
anti-kickback statutes. For example, in August 2013, the New York MFCU obtained a 
conviction of the owner of several pharmacies for stealing $7.7 million from the New York State 
Medicaid program.  The pharmacist submitted phony bills for drugs that were never dispensed to  
patients. He was sentenced to a prison term of up to 3 years and was ordered to repay the stolen 
money to the New York Medicaid program.   
 
FY 2013 criminal convictions for patient abuse and neglect:  26 percent  
Cases of patient abuse and neglect included aggravated assaults; injury to an elderly or disabled 
person; and theft of patient funds.13  For example, in September 2013, the Maryland MFCU 
obtained a conviction of a nursing home aide for abuse of a vulnerable adult in the second 
degree. The convicted aide was placed on 2 years of probation, during which time he is 
prohibited from being employed in any position that includes the supervision of vulnerable 
adults. As another example, in August 2013, the Connecticut MFCU obtained a conviction of a 
nursing home accounts-receivable clerk for stealing from a patients trust account.  The clerk 
was sentenced to serve 7 years in prison with 5 years probation.  The clerk was also ordered to 
pay $140,171 in restitution to the Connecticut Medicaid program and is prohibited from working 
in the financial or health care sectors.   
 
Medicaid Fraud Control Units FY 2013 Annual Report (OEI-06-13-00340)  4  MFCU CASE OUTCOMES  
FYs 20102013 criminal convictions  
The total number of criminal convictions has remained relatively consistent in recent years.  As 
shown in Chart 2, convictions related to fraud consistently represented the majority of all 
criminal convictions.   
 
Chart 2:  Number of Criminal Convictions by Type of Case  

(Fraud vs. Patient Abuse and Neglect), FYs 20102013 
 
 
  1600 
 
1400 
 
1200 
354  350 
  490  Patient 
1000  407 
  Abuse  and 
  800  Neglect 
  600 
  982  991  Fraud 
400  839  823 
 
200 
 
  0 
  FY 2010  FY 2011  FY 2012  FY 2013 
     Source: OIG analysis of Quarterly Statistical Reports, 2013.  
 
FY 2013 criminal convictions involved a variety of provider types, 
most notably home health agencies    
MFCUs criminal convictions most frequently involved home health care aides (26 percent of all 
criminal convictions), other medical support (7 percent), and physicians (7 percent).  See 
Appendix B for a list of all convictions by provider type.  
Home health care aides:  26 percent of criminal convictions  
Home health care aides were most commonly convicted of fraud, often for claiming to have 
rendered services that were not provided to vulnerable beneficiaries. For example, a Nevada 
MFCU case resulted in the conviction of an individual employed by a home health care company 
who claimed she provided services, such as bathing, dressing, cleaning, and meal preparation, 
from February 2011 to September 2011, and who was paid for these services.  However, the 
individuals outside employment conflicted with the care she claimed to have provided.  She was 
convicted of submitting false claims and sentenced to 30 days incarceration; suspended from  
participation in the Nevada Medicaid program; required to perform 20 hours of community 
services; and made to pay $1,250 in restitution, penalties, and costs.  
Other medical support:  7 percent of criminal convictions  
The category other medical support includes individuals, facilities, or organizations, whether 
licensed or unlicensed, that provide medical support services. This category specifically 
excludes pharmacies; pharmaceutical manufacturers; suppliers of durable medical equipment; 
laboratories; providers of transportation; home health care agencies and aides; nurses; physician 
Medicaid Fraud Control Units FY 2013 Annual Report (OEI-06-13-00340)  5  MFCU CASE OUTCOMES  
assistants; nurse practitioners; and radiologists.  Individuals in this provider category were 
convicted of a wide variety of offenses.  For example, a District of Columbia (D.C.) MFCU case 
resulted in the conviction of the chief executive officer and owner of 2 rehabilitative and 
therapeutic services companies on 1 count of health care fraud and 34 counts of false statements 
for submitting more than $7 million in fraudulent claims to the D.C. Medicaid program.  
According to evidence presented at trial, this individual submitted false claims for therapeutic 
procedures, such as manual therapy, between January 2006 and April 2008.  The defendant 
billed Medicaid for as many as 48.5 hours of manual therapy for a single patient during a  
24-hour period. As of February 2014, the defendant was awaiting sentencing and faced a 
maximum of 10 years in prison, a $250,000 fine for the health care fraud conviction, and a 
$250,000 fine for each of the false-statement convictions.   
 
Physicians:  7 percent of criminal convictions    
Criminal convictions of physicians involved offenses such as fraud (including prescription fraud) 
and billing for services not rendered. For example, a California MFCU case resulted in the 
conviction of two physicians for grand theft and receiving unlawful remuneration.  The 
physicians worked at a pregnancy clinic alongside marketers who wore scrubs and offered 
pregnant women free baby gifts to visit the clinic.  The women were told to use false names and 
birth dates so they could visit repeatedly for more gifts.  The clinic enrolled the women in 
Medi-Cals (Californias Medicaid program) program for prenatal care (which uses a 
presumptive eligibility standard, then performed cursory examinations, billed Medi-Cal for 
extensive prenatal services that were never rendered, and paid the marketers $100 per patient. 
 
FY 2013 criminal case recoveries reached nearly $1 billion  
As shown in Chart 3, recoveries in FY 2013 exceeded the combined amount of recoveries in  
FYs 20102012. A single case accounted for the bulk of these FY 2013 recoveries.  In that case, 
the Virginia MFCU led a joint State-Federal investigation of Abbott Laboratories, which 
admitted liability for unlawful promotion of  a prescription drug (Depakote) for uses not 
approved by the Food and Drug Administration. The case resulted in the largest State MFCU 
criminal recovery in U.S. history.  
 Chart 3:  Criminal Recoveries, FYs 2010-2013 
 
$1,200,000,000 
 
$968,878,848 
$1,000,000,000 
 
  $800,000,000 
  $600,000,000 
$308,525,001 
  $400,000,000 
$218,144,774 
$174,004,532 
  $200,000,000 
 
$0 
  FY 2010  FY 2011  FY 2012  FY 2013 
   
Source: OIG analysis of Quarterly Statistical Reports, 2013. 
Medicaid Fraud Control Units FY 2013 Annual Report (OEI-06-13-00340)  6  MFCU CASE OUTCOMES  
MFCUs reported 879 civil settlements and judgments in FY 2013    
FY 2013 global civil settlements and judgments:  65 percent  
In FY 2013, MFCUs participated in the resolution of NAMFCU-coordinated global cases 
involving 588 civil settlements and 13 judgments.14  One example of a global civil settlement is 
the case of ISTA Pharmaceuticals, Inc., in which numerous MFCUs reached a $15 million 
agreement to settle allegations that between January 2006 and March 2011, ISTA marketed one 
drug for uses not approved by the Food and Drug Administration and allegations that ISTA paid 
doctors to write prescriptions for another unapproved ISTA drug.  ISTA paid approximately 
$18.5 million in a related criminal case in addition to the civil settlement. 
 
FY 2013 State-only civil settlements and judgments:  35 percent  
State-only cases are civil cases that involve only the State as the plaintiff.  For example, the 
New York MFCU was responsible for investigating a case in which the State reached a  
$268,494 settlement with a dental center that received Medicaid payments for services that were 
in violation of State regulations.  The dental clinic billed Medicaid for patient teeth cleanings that 
took place more frequently than the allowed once every 6 months, failed to properly document 
billed services, and billed for noncovered services, all in violation of State Medicaid regulations. 
 
FYs 20102013 civil settlements and judgments  
As shown in Chart 4, the total number of civil settlements and judgments remained relatively 
consistent in recent years.    
 
Chart 4:  Total Number of Civil Settlements and Judgments,  

FYs 2010-2013 
 
   
1,200 
1,090 
 
1,000 
 907 
879 
  824 
800
 
 
  600
 
 
400
 
 
200
   
 
 
0   
FY  2010  FY 2011  FY 2012  FY 2013 
 
Source: OIG Analysis of Quarterly Statistical Reports, 2013.  
   
Medicaid Fraud Control Units FY 2013 Annual Report (OEI-06-13-00340)  7  MFCU CASE OUTCOMES  
FY 2013 civil settlements and judgments involved a variety of provider 
types, most notably pharmaceutical companies  
MFCUs most often obtained settlements and judgments from pharmaceutical manufacturers  
(62 percent of all civil settlements and judgments), pharmacies (6 percent), and home health care 
agencies (5 percent). See Appendix B for a list of all convictions by provider type. 
 
Pharmaceutical manufacturing:  62 percent of civil settlements and judgments  
In FY 2013, pharmaceutical manufacturing cases accounted for more than half of all MFCU 
cases with civil settlements and judgments.  As an example, the Virginia MFCU led an 
investigation, along with 44 other Units organized through NAMFCU, the District of Columbia, 
and the Federal Government, that reached a $1.5 billion civil settlement agreement with Abbott 
Laboratories.  This action settled allegations that Abbott Laboratories (1) illegally marketed the 
drug Depakote for uses that were not approved by the Food and Drug Administration as safe and 
effective; (2) made false and misleading statements about the safety, efficacy, dosing and 
cost-effectiveness of Depakote for some unapproved uses; improperly marketed the product in 
nursing homes; and paid illegal remuneration to health care professionals and long-term-care 
pharmacy providers to induce them to promote and/or prescribe Depakote.   
 
Pharmacies:  6 percent of civil settlements and judgments  
Pharmacies were the second most common provider type in civil settlements and judgments.  In 
one case, the Vermont MFCU settled with a pharmacy over allegations that the pharmacy 
obtained excessive payment from the Vermont Medicaid program by submitting claims for 
dispensing drugs more frequently than instructed by physicians and more frequently than 
permitted under Medicaid rules, and by charging beneficiaries illegal administrative fees and 
copayments.  The pharmacy agreed to make a settlement payment of $250,000, with additional 
payments, plus interest, over 7 years.  The pharmacy also agreed to reimburse beneficiaries for 
copayments and administrative fees, which the State expects to total $111,000.  The pharmacy 
also agreed to heightened monitoring of its Medicaid claims by the State for the next 5 years.   
 
Home health care agencies:  5 percent of civil settlements and judgments  
Home health care agencies were the third most common provider type for civil settlements.  For 
example, the Michigan MFCU, along with the U.S. Attorneys Office, the Federal Bureau of 
Investigation, OIG, and Blue Cross Blue Shield of Michigan, reached a $1 million civil 
settlement with several health care entities over allegations of conspiracy to pay illegal kickbacks 
to practitioners and others for referring patients to clinics and agencies.  As part of the civil 
settlements, the owner of one home health agency agreed to a 20-year exclusion from  Federal 
health care programs, including Medicaid and Medicare.  
   
Medicaid Fraud Control Units FY 2013 Annual Report (OEI-06-13-00340)  8  MFCU CASE OUTCOMES  
FY 2013 recoveries from civil cases totaled over $1.5 billionmost 
from multi-State, global settlementsgenerally consistent with  
recent years  
As shown in Chart 5, recoveries from global cases accounted for 78 percent of the $1.5 billion in 
civil recoveries in FY 2013.  As mentioned above, global cases often involve large 
pharmaceutical manufacturing companies, multiple MFCUs, and the U.S. Department of Justice, 
and result in large financial settlements.  
 
Chart 5:  Percentage of Civil Recoveries That Resulted from Global  

and State-Only Settlements, FY 2013* 

 
 
State-only, 
  22% 
 
 
 
  Global, 
  78% 
 
 
 
Source: OIG Analysis of FY 2013 MFCU Annual Report Supplemental Data Collection, 2013.
 
*This information differs slightly from that reported in the Quarterly Statistical Reports, which does not break out civil 

recoveries into global and State-only categories.  Additionally, not all Units were able to provide civil recovery information 

broken out into these two categories.  

 
As shown in Chart 6, total recoveries from MFCU civil settlements and judgments have been 
consistent in recent years, with the noticeable exception of FY 2012.  The somewhat larger 
amount in FY 2012 is attributable to large global pharmaceutical cases settled that year.   
See Appendix D for additional analysis of both criminal and civil MFCU outcomes in FYs 2010 
through 2013. 
 
Chart 6:  Civil Recoveries, FYs 2010-2013  
 
  $3,000,000,000 
$2,633,844,564 
 
$2,500,000,000 
  $1,726,510,790 
$2,000,000,000 
 
$1,536,785,380  $1,537,756,196 
  $1,500,000,000 
 
$1,000,000,000 
 
$500,000,000 
 
  $0 
  FY 2010  FY 2011  FY 2012  FY 2013 

Source: OIG analysis of Quarterly Statistical Reports, 2013.  
Medicaid Fraud Control Units FY 2013 Annual Report (OEI-06-13-00340)  9  PROVIDER EXCLUSIONS 
MFCU convictions often led to the providers exclusions from all 
Federal health care programs 
In FY 2013, OIG excluded 1,022 subjects as a result of MFCU investigations, prosecutions, and 
convictions. As shown in Chart 7, this continues a pattern from previous years, demonstrating 
that MFCUs are an important source of referrals to OIG for purposes of exclusion.  OIG 
excludes individuals and entities from federally funded health care programs (primarily 
Medicare and Medicaid) when the providers are convicted of program-related crimes.15   
Exclusion means that no payment will be made for any items or services furnished, ordered, or 
prescribed by an excluded individual or entity.16  OIG data show that the number of MFCU cases 
that lead to exclusions by OIG has accounted for a quarter or more of all OIG exclusions in 
recent years.  
Chart 7:  OIG Exclusions Based on MFCU Referrals, FYs 2010-2013 
 
1200 
  942  1,022 
1000 
  721  746 
800 
 
600 
 
400 
 
200 
 
0 
  FY 2010  FY 2011  FY 2012  FY 2013 
 
    
Source: OIG analysis of HHS OIG exclusion data, 2013.  
   
Medicaid Fraud Control Units FY 2013 Annual Report (OEI-06-13-00340)  10  OTHER OBSERVATIONS 
 
Lack of fraud referrals from Medicaid managed care organizations 
presents challenges for MFCUs 
Medicaid services provided under managed care have steadily increased in recent years, with the 
number of enrollees receiving services through managed care exceeding 42 million in 2011, or 
about 74 percent of the total Medicaid population.17  A December 2011 OIG report found that 
fraud and abuse in managed care was a primary concern to State Medicaid agencies and 
managed care organizations (MCOs).18  Like other health care payers, MCOs may receive false 
or fraudulent claims from providers.  Federal regulations require Medicaid MCOs to establish 
arrangements or procedures to guard against fraud and abuse.19  For example, MCOs may use 
edits (system processes to ensure proper payment of claims) and retrospective reviews of 
claims to prevent and detect fraud and abuse.  Further, State contracts can require MCOs to 
report instances of suspected fraud to the State Medicaid agency, the MFCU, or both. 
However, in responses gathered for this report, officials from many MFCUs voiced concerns 
about a lack of fraud referrals from MCOs in their States.  Specifically, officials from 21 MFCUs 
reported that their Units received fewer fraud referrals from Medicaid MCOs than the 
respondents expected on the basis of the number of managed care-covered beneficiaries in their 
States. Further, only 25 MFCUs reported receiving any referrals from Medicaid MCOs in 
FY 2013.20  Although direct referrals from MCOs are not the only way Units can learn about 
potential fraud in Medicaid managed carefor example, State agencies can forward allegations 
of fraud to the Unitsthe MCOs are a critical source of referrals.  This is especially important 
for the increasing number of States that cover a substantial proportion of Medicaid beneficiaries 
through managed care arrangements.   
Through survey responses, some Unit officials also expressed possible reasons for this low 
volume.  Some respondents noted that because managed care is relatively new for some State 
programs, MCOs were still developing and refining processes for fraud detection.  Others 
commented that some MCOs had only a small number of employees assigned to fraud 
prevention, had not established robust efforts for detecting potential fraud, or used a narrow 
interpretation of the provider activities that would constitute potential fraud and warrant referral.  
A common concern expressed was that MCOs lack the incentive to detect and refer potential 
fraud and may even have an incentive not to do so. For instance, MCOs indicated that they may 
find it time-consuming to make referrals and support investigations, that MCOs can lose money 
if their contracts do not allow them to share in fraud-related recoveries, and that MCO contracts 
typically do not include negative consequences for a lack of fraud referrals.  Thus, some MCOs 
may find it preferable to remove a provider from their networks, rather than compiling 
supporting documentation and making a fraud referral to the State Medicaid agency or MFCU.  
To further examine these issues, OIG is planning (as part of its FY 2014 Work Plan) an 
evaluation of how effectively Medicaid MCOs identify and address incidents of potential 
fraud and how States oversee MCOs efforts to fight fraud and abuse.  
Several MFCU officials also identified recent efforts to improve coordination with their States 
MCOs to increase the number of referrals, including establishing periodic meetings with MCO 
program integrity staff to improve coordination, building informal relationships with  
Medicaid Fraud Control Units FY 2013 Annual Report (OEI-06-13-00340)  11  OTHER OBSERVATIONS 
 
MCO program integrity staff, developing data mining for MCO-generated encounter data to 
detect potential fraud, and working with the State Medicaid agency to adjust incentives to 
encourage more robust engagement by MCOs in detecting and referring potential fraudulent 
activity.  
Recent payment suspension rules require more coordination between 
MFCUs and State Medicaid agencies 
Federal provisions related to payment suspension were revised in the Patient Protection and 
Affordable Care Act of 2009 (ACA) and implemented in Federal regulations found at 42 CFR 
 455.23, which took effect on March 25, 2011.21  Under these provisions, State Medicaid 
programs must suspend payments after the Medicaid agency determines that a credible allegation 
of fraud exists against a provider enrolled in the Medicaid program.22  In such cases, regulations 
require the Medicaid agency to (1) refer the case to the MFCU or other appropriate law 
enforcement agency and (2) suspend the providers payments unless the Medicaid agency 
determines that a good cause exception applies, which results in a payment suspension not 
being imposed despite a credible allegation of fraud.23    
As of December 2013, 37 MFCUs had updated their MOUs with their State Medicaid agencies 
to include language that seeks to address payment suspension of Medicaid providers against 
whom there is a credible allegation of fraud.  (Federal regulations require that these MOUs be 
maintained.)  In accordance with MFCU performance standards, Units must update their MOUs 
with the State Medicaid agency periodically (at least once every 5 years) to reflect current law 
and practice.24  The remaining 13 Units had not updated their MOUs since the new payment 
suspension rule went into effect in 2011. In various communications with OIG, most Units 
reported already having implemented procedures for coordinating with their respective State 
Medicaid agencies on such fraud cases, and were in the process of formally updating their MOUs 
to reflect those procedures. 
During OIGs recent onsite reviews of MFCUs, representatives from some MFCUs and State 
agencies identified potential challenges associated with payment suspension based on credible 
allegations of fraud. One challenge involves State entities determining what constitutes a 
credible allegation of fraud. Although, in many cases, the fraudulent activity may be obvious on 
the basis of initial evidence, interviewees explained that other circumstances may require 
substantial review to determine whether payment suspension is warranted.  Another challenge 
involves making determinations in a timely manner.  To ensure prompt suspension of payments, 
if warranted, Units and State Medicaid agencies must coordinate in a timely manner when 
determining whether an allegation is credible.  Another challenge involves determining standards 
for use of good cause exceptions. A Unit may request a good cause exception to avoid 
compromising a case by alerting suspects that they are under investigation.  A State Medicaid 
agency may invoke a good cause exception if it determines that a payment suspension is not in 
the best interests of the Medicaid program, such as when no other providers are available to treat 
Medicaid beneficiaries in a specific geographical area.  To further examine these issues, OIG has 
undertaken additional reviews regarding payment suspension for a credible allegation of fraud.  
Medicaid Fraud Control Units FY 2013 Annual Report (OEI-06-13-00340)  12  OIG OVERSIGHT 
 
In FY 2013, OIG conducted 10 onsite reviews of Units, published  
8 reports on onsite reviews, issued regulations to allow data mining 
by MFCUs, and proposed new investigative authority regarding 
patient abuse and neglect 
Onsite reviews   
OIG conducted onsite reviews of 10 Units in FY 2013.  OIG conducts these oversight reviews 
for each Unit approximately every 5 years to assess Unit compliance with applicable Federal 
laws, regulations, and policies, and Unit adherence to the 12 performance standards.  During 
onsite reviews, OIG meets with Unit officials and with other key stakeholders familiar with the 
Units operations, such as the State Medicaid agencys program integrity staff and Federal 
investigators and prosecutors who sometimes partner with the Unit.  OIG reviews the Units 
operations during the onsite visit, including policies, procedures, financial documentation, and 
information about staffing and staff training.  OIG  reviews a sample of case files to assess (1) the 
Units compliance and performance in its handling of cases, including whether cases fell within 
the scope of Unit authority; (2) its supervisory oversight of cases; (3) and the timeliness of its 
casework. 
Reports on onsite reviews   
In FY 2013, OIG published 8 reports on MFCU onsite reviews.  (See Appendix E for a list of 
these reports.) Each report includes results from the onsite review; identifies any areas of Unit 
noncompliance with Federal laws, regulations, or policies; identifies areas in which operations 
did not adhere to the 12 performance standards; and includes other observations, as appropriate.  
The reports also contain recommendations for any corrective action that the Unit needs to take.  
Findings from these reviews revealed a few common concerns:   
	   Unit submission of conviction information: Onsite reviews revealed differences in 
interpretation about which convictions Units should refer to OIG.  In 2013, OIG officials 
issued additional guidance to MFCUs clarifying that Units should submit to OIG all 
pertinent information on MFCU convictionsincluding charging documents, plea 
agreements, and sentencing orderswithin 30 days of sentencing so that OIG may 
determine whether to impose exclusion.25  
 	  Case file documentation and reviews: Onsite reviews revealed variation in Unit 
practices for maintaining records in case files and for ensuring supervisory review of 
ongoing investigations. The reports identified situations in which case file practices did 
not adhere to performance standards and recommended corrective actions, as appropriate.  
 	  Completeness of MFCU staff training plans: Onsite reviews revealed that several 
Units training plans did not fully address the needs of professional staff (i.e., attorneys, 
auditors, and investigators). Reports made recommendations, as appropriate.   
 	  Collaboration with the State Medicaid agencys program integrity staff: Several 
onsite review reports highlighted critical interactions between MFCU staff, who 
investigate and prosecute Medicaid fraud, and their counterparts in the State Medicaid 
agencys program integrity unit, who often detect fraud and implement fraud prevention 
Medicaid Fraud Control Units FY 2013 Annual Report (OEI-06-13-00340)  13  OIG OVERSIGHT 
 
initiatives. These reports included findings and observations showing healthy and 
innovative collaboration in some States, as well as challenges that prevented effective 
collaboration in others. OIG encourages MFCU and Medicaid agency officials in all 
States to continue to improve how their entities work together to identify and deter 
Medicaid fraud. 
Regulation on data mining   
On May 17, 2013, OIG issued regulations giving new authority to MFCUs for data mining.26   
Units may now submit planssubject to OIG approval, in consultation with CMSto receive 
Federal matching funds for screening and analyzing State Medicaid data.  As described in the 
background to the revised regulation, analysis of Medicaid claims  data has historically been the 
responsibility of each State Medicaid agency, and MFCUs have been prohibited from receiving 
Federal funding to conduct data mining.  However, this practice of relying on State Medicaid 
agencies has required MFCUs to remain highly dependent on referrals from those agencies.  
Under the new regulation, MFCUs may submit applications to OIG for approval to conduct data 
mining; these applications must include information about the Units methods for 1) coordination 
with the State Medicaid agency, 2) staying current regarding programmatic knowledge, and 3) 
training MFCU staff in data mining techniques.  As part of its approval process, OIG coordinates 
with CMS, which oversees the Medicaid program at the Federal level.   
Legislative proposal to expand authority regarding cases of patient abuse and 
neglect 
The Presidents FY 2014 budget includes an OIG proposal to expand MFCUs authority with 
regard to cases of patient abuse and neglect.27  Under current law, MFCUs are limited in their 
investigations of such cases to complaints arising either in Medicaid-funded facilities (such as 
hospitals or nursing homes) or in board and care facilities (such as assisted living 
facilities). The proposal, reflecting the Medicaid programs increasing reliance on home and 
community-based services, would permit the investigation and prosecution of patient abuse and 
neglect arising when Medicaid services are provided in a home or community-based 
setting. MFCUs investigate a large number of cases of fraud in personal care services and other 
fraud cases that arise in the home or community.  The proposal would permit the Units to also 
investigate situations of abuse and neglect that arise in these nontraditional settings.  
Medicaid Fraud Control Units FY 2013 Annual Report (OEI-06-13-00340)  14  APPENDIXES 
 
Appendix A:  Methodology 
We based the information in this report on an analysis of data from six sources:  (1) Quarterly 
Statistical Reports; (2) supplemental data collection for the FY 2013 MFCU Annual Report; (3) 
HHS OIG exclusion data; (4) information gathered through onsite reviews; (5) MFCUs MOUs 
with their State Medicaid agencies; and (6) the annual reports of individual MFCUs.  We  
analyzed data from all six sources to describe the criminal and civil case outcomes of MFCUs 
during FY 2013 and in previous years when data was available.  We also analyzed data to 
describe exclusions from Federal health care programs, other observations about the environment 
in which MFCUs operate, and OIG oversight of MFCUs.    All statistical information is current as 
of January 31, 2014, except where otherwise noted. 
Data Collection and Analysis 
Review of Quarterly Statistical Reports. In 2013 and in prior years, MFCUs submitted statistical 
data to OIG each quarter.  In the Quarterly Statistical Reports, Units reported data elements such 
as the number of open investigations; the number of persons indicted or charged; the number of 
criminal convictions; the number of civil settlements and judgments; the amount of criminal and 
civil recoveries; and the number of staff employed.  We reviewed Quarterly Statistical Reports 
for FYs 2010 through 2013 to determine the number of convictions for fraud and for patient 
abuse and neglect; recoveries associated with those convictions; the number of civil settlements 
and judgments; and recoveries associated with those civil outcomes.   
Supplemental data collection for the FY 2013 MFCU Annual Report. We requested additional 
data from all MFCUs in November 2013.  We received responses from 49 of the 50 Units.  We  
used this supplemental information to provide statistical information about the types of providers 
that were most frequently convicted in criminal cases or involved in civil settlements and 
judgments in FY 2013.  We determined the number of State-only and global civil settlements and 
judgments and the recoveries associated with those civil outcomes.  The supplemental data 
collection also provided information about referrals that MFCUs received from MCOs.  
HHS OIG exclusion data. We reviewed HHS OIG Exclusion Data to determine the number of 
Federal health care program exclusions that OIG made on the basis of information referred by 
MFCUs.   
Information from onsite reviews. We examined information gathered during onsite reviews to 
identify other observations about the environment in which MFCUs operate, such as challenges 
in receiving referrals from MCOs and the extent to which the new rules on payment suspension 
require more coordination between MFCUs and State Medicaid agencies. 
MOUs between MFCUs and State Medicaid agencies. As a requirement for recertification and 
to fully adhere to the performance standards, each MFCU must have an MOU with its State 
Medicaid agency, review the MOU every 5 years, and ensure that the MOU reflects current 
practice, policy, and legal requirements, including 42 CFR  455.21 and 455.23.  We reviewed 
the most current MOUs as of January 15, 2014, to determine the extent to which they included 
language about the payment suspension provisions at 42 CFR  455.23.  For purposes of the 
Annual Report, we identified only whether each MOU referenced the functions outlined in  
Medicaid Fraud Control Units FY 2013 Annual Report (OEI-06-13-00340)  15  APPENDIXES 
 
42 CFR  455.23; we did not attempt to assess the adequacy or sufficiency of the processes 
described in the MOUs. 
MFCU Annual Reports.   As a grant requirement, each MFCU must submit to OIG an annual 
report that highlights its activities.  We reviewed the most recent annual report from each MFCU 
for case examples of frequently convicted provider types (such as home health care agencies) 
and provider types with which MFCUs were frequently involved in civil settlements and 
judgments (such as pharmaceutical manufacturers). 
Medicaid Fraud Control Units FY 2013 Annual Report (OEI-06-13-00340)  16  APPENDIXES 
 
Appendix B:  FY 2013 MFCU Criminal and Civil Outcomes by    
Provider Type 
Table B1:  FY  2013  Outcomes:  Number of Convictions, Settlements  
and Judgments, and Recoveries by Provider Type*  
Criminal  Civil  
Provider Type  Number of  Amount of  Number of  Amount of 
Settlements and 
Convictions   Recoveries   Recoveries  
Judgments  
TOTAL  1,377   $980,130,529  898   $1,499,049,422 
ABUSE AND NEGLECT  
Certified Nursing Assistants  75   $39,644   1  $0  
Home/Personal Care Aides   14   $147,118   0  $0  
Nursing Facilities  10   $154,692   6  $770,845  
Registered/Licensed Nurses, 
Physician Assistants, and Nurse  62   $80,284   5  $2,500  
Practitioners  
Other Long-Term Care   21   $156,538   1  $25,000  
Other  44   $40,078   4  $14,790  
FRAUD:  Facilities  
Hospitals    4  $17,890,082   21   $12,706,211  
Nursing Facilities   14   $1,121,053   16   $8,305,826  
Substance Abuse Treatment Centers   1   $628,678   2  $22,047  
Other Long-Term Care   11   $340,562   3  $2,067,897  
Other   10   $4,446,605   13   $7,015,534  
FRAUD:  Medical Support  
Suppliers of Durable Medical 
Equipment  35   $22,099,494  7  $2,793,305  
Home Health Care Agencies   68   $57,500,409   46   $4,324,719  
Home Health Care Aides   363   $6,572,537   25   $325,738  
Laboratories   4  $0   5  $28,952,346  
Nurses, Physician Assistants, and 
Nurse Practitioners   59   $1,094,172   10   $256,090  
Pharmacies   45   $721,463,280   55   $39,048,460  
Pharmaceutical Manufacturers    0  $0   558   $1,344,013,697 
Radiologists   0  $0   0  $0  
Transportation Providers   38   $8,658,649   12   $3,537,155  
Other  92   $5,048,778   13   $13,881,130  
Continued on the next page.  
 
Medicaid Fraud Control Units FY 2013 Annual Report (OEI-06-13-00340)  17  APPENDIXES 
 
Table B1:  FY  2013  Outcomes:  Number of Convictions, Settlements  
and Judgments, and Recoveries by Provider Type*  
Criminal  Civil  
Provider Type  Number of  Amount of  Number of  Amount of 
Settlements and 
Convictions   Recoveries   Recoveries  
Judgments  
FRAUD:  Practitioners  
Chiropractors  3  $2,061,921   0  $0  
Counselors/Psychologists   59   $16,875,233   9  $2,329,487  
Dentists  31   $6,620,336   17   $3,483,034  
Optometrists/Opticians  6  $1,194,862   3  $282,922  
Physicians or Doctors of Osteopathy    94   $95,226,296   42   $21,798,724  
Podiatrists   1   $1,363,070   0  $0 
Other  14   $1,496,519   6  $257,808  
FRAUD:  Program Related  
Billing Companies   1  $23,063   1  $240,000  
Managed Care Organizations   6   $2,718,602   0  $36,607  
Medicaid Program Administration   7   $956,138   0  $0  
Other  56   $2,010,511   14   $12,547,974  
THEFT OF PATIENT FUNDS  
Certified Nursing Assistants  35   $116,978   0  $0  
Nondirect Care    23   $703,901   0  $0  
Registered/Licensed Nurses, 
Physician Assistants, and Nurse 
Practitioners   6  $7,872   1  $10,000  
Other  65   $1,272,572   2  $25 
Source: OIG Analysis of supplemental data collection for the FY  2013 MFCU Annual Report, 2013.
  
*This information differs slightly from that reported in the Quarterly Statistical Reports.  Not all Units were able to all provide the 

information requested in the supplemental data collection for the FY 2013 MFCU Annual Report.
  
   
*Some categories are current as of February 21, 2014.
 
Medicaid Fraud Control Units FY 2013 Annual Report (OEI-06-13-00340)  18  APPENDIXES 
 
APPENDIX C:  Selected FY 2013 Statistical Data 
Table C1: Investigations, Indictments or Charges, Criminal Convictions, 
and Civil Settlements and Judgments by State 
Indictments or   Criminal 
Investigations  Civil 
Charges   Convictions  
Settlements 
State  Abuse Abuse  Abuse 
and 
Fraud   and   Fraud  and   Fraud  and  
Judgments  
Neglect   Neglect   Neglect  
Alabama   10   17   2  2  0  0  8 
Alaska  202   17   57   1  17   2  10  
Arizona  237   83   50   22   29   8  0 
Arkansas  52   38   6  14   3  7  16  
California   718   439   69   60   41   27   19  
Colorado  241   8  18   0  13   0  36  
Connecticut   53   11   15   1  6  1  11  
Delaware  478   81   0  5  0  7  9 
District of 
115   71   0  1  4  2  15  
Columbia  
Florida  596   62   39   28   48   19   28  
Georgia   336   4  13   0  10   1  15  
Hawaii  50   63   0  7  4  5  13  
Idaho   115   4  5  0  4  0  12  
Illinois  236   75   41   21   38   26   21  
Indiana  812   252   13   2  16   9  30  
Iowa  205   35   31   19   18   13   13  
Kansas   127   19   7  1  13   0  15  
Kentucky  104   14   8  2  8  0  17  
Louisiana   317   79   76   17   47   15   39  
Maine  31   7  7  2  6  4  6 
Maryland  284   36   7  6  12   5  29  
Massachusetts  497   186   20   2  17   0  32  
Michigan  436   49   11   8  11   17   16  
Minnesota  86   3  24   0  20   3  21  
Mississippi  78   611   3  33   0  54   14  
Missouri  280   21   7  1  13   1  31  
Montana   26   1  4  0  6  0  9 
Nebraska  75   22   4  0  9  5  19  
Nevada  19   3  12   2  13   3  15  
New Hampshire  31   7  0  2  1  3  15  
New Jersey  352   12   19   3  11   3  14  
New Mexico   107   5  8  0  9  1  30  
New York   677   124   131   44   110   28   69  
Continued on the next page.  
Medicaid Fraud Control Units FY 2013 Annual Report (OEI-06-13-00340)  19  APPENDIXES 
 
Table C1: Investigations, Indictments or Charges, Criminal Convictions, 
and Civil Settlements and Judgments by State 
Indictments or   Criminal 
Investigations  Civil 
Charges   Convictions  
Settlements 
State  Abuse Abuse  Abuse 
and 
Fraud   and   Fraud  and   Fraud  and  
Judgments  
Neglect   Neglect   Neglect  
North Carolina   402   16   20   0  28   2  18  
Ohio  701   348   138   15   133   15   21  
Oklahoma  135   78   12   11   15   6  20  
Oregon   46   4  23   4  27   2  13  
Pennsylvania  337   15   76   0  51   3  13  
Rhode Island   48   23   9  8  9  0  4 
South Carolina   151   26   32   13   21   13   18  
South Dakota   42   7  1  1  1  1  0 
Tennessee  187   26   14   8  10   14   17  
Texas   1165  114   104   8  82   15   18  
Utah  93   13   2  0  3  1  15  
Vermont   116   18   7  2  9  0  12  
Virginia  363   10   24   4  18   3  11  
Washington   152   12   10   0  9  2  16  
West Virginia   49   42   4  8  7  3  17  
Wisconsin   339   11   10   3  8  1  2 
Wyoming  57   2  4  0  3  0  17  
Total  12,366   3,224   1,197   391   991   350   879  
Source: OIG analysis of Quarterly Statistical Reports, 2013. 
 
   
Medicaid Fraud Control Units FY 2013 Annual Report (OEI-06-13-00340)  20  APPENDIXES 
 
 
Table C2:  Recoveries, Expenditures, and Staff by State  
Recoveries  Expenditures  Staff 
State  on 
Total  Criminal  Civil   MFCU Grant  Total Medicaid  
Board
Alabama  $16,206,582   $0  $16,206,582   $1,110,349   $5,216,155,508   8 
Alaska  $1,093,136   $53,058   $1,040,078   $1,156,792   $1,446,189,444   8 
Arizona  $622,974   $589,704   $33,270   $2,408,103   $8,669,976,278   21 
Arkansas  $14,622,465   $32,643   $14,589,822   $2,211,756   $4,428,390,909   21 
California  $57,748,650   $19,975,038   $37,773,612   $30,260,728   $66,056,757,855   172 
Colorado  $8,131,662   $226,252   $7,905,409   $2,046,627   $5,314,867,064   16 
Connecticut  $28,228,261   $140,246   $28,088,014   $1,629,583   $6,723,113,621   11 
Delaware  $398,817   $28,000   $370,817   $1,877,814   $1,655,387,071   17 
District of 
$7,805,484   $3,937,198   $3,868,286   $2,473,055   $2,397,083,097   21 
Columbia 
Florida  $40,891,858   $9,048,765   $31,843,093   $14,179,446   $19,180,703,866   151 
Georgia  $28,881,718   $1,793,138   $27,088,580   $4,029,111   $9,359,038,151   42 
Hawaii  $4,537,670   $48,017   $4,489,653   $1,288,535   $1,696,678,001   13 
Idaho   $6,553,493   $204,312   $6,349,180   $695,463   $1,761,758,211   7 
Illinois  $60,041,822   $917,903   $59,123,919   $9,541,211   $16,536,234,179   58 
Indiana  $28,246,064   $7,934,941   $20,311,123   $5,236,624   $8,367,085,690   58 
Iowa  $10,717,543   $150,132   $10,567,411   $1,040,525   $3,805,810,851   9 
Kansas  $23,438,027   $2,298,195   $21,139,833   $1,514,339   $2,720,787,284   15 
Kentucky  $39,547,876   $289,576   $39,258,300   $2,608,934   $5,931,446,503   28 
Louisiana  $187,601,191   $63,873,287   $123,727,904   $4,863,800   $7,181,407,383   52 
Maine  $7,403,483   $110,124   $7,293,360   $700,451   $2,959,349,126   6.5 
Maryland   $22,331,246   $198,147   $22,133,100   $2,839,746   $8,052,966,208   28 
Massachusetts  $29,607,993   $884,124   $28,723,869   $5,271,067   $13,687,392,762   43 
Michigan  $24,541,893   $353,924   $24,187,969   $4,882,449   $12,970,899,451   33 
Minnesota  $14,988,004   $1,922,673   $13,065,331   $1,464,767   $9,343,811,915   14 
Mississippi   $27,788,828   $8,771,739   $19,023,789   $3,087,424   $4,879,175,168   35 
Missouri  $47,764,282   $2,693,335   $45,070,947   $1,984,423   $9,209,870,025   20 
Montana   $985,871   $34,845   $951,026   $654,447   $1,076,709,165   8 
Nebraska  $8,593,146   $175,562   $8,417,584   $770,566   $1,906,330,745   8 
Nevada   $6,261,358   $2,648,816   $3,612,543   $1,904,689   $1,918,533,349   16 
New Hampshire   $3,663,351   $152,162   $3,511,189   $523,160   $1,292,037,438   6 
New Jersey   $33,887,934   $1,174,166   $32,713,769   $4,579,683   $11,143,784,058   35 
New Mexico  $2,017,386   $31,424   $1,985,962   $1,827,905   $3,471,930,215   17 
New York   $134,493,522   $19,177,053   $115,316,469   $45,054,451   $54,192,911,238   300 
North Carolina   $47,052,649   $14,294,435   $32,758,214   $5,357,886   $12,463,184,143   48 
Ohio   $41,072,514   $5,942,719   $35,129,795   $7,344,992   $17,237,076,852   77 
Oklahoma  $28,399,517   $1,360,282   $27,039,234   $1,986,667   $4,752,126,532   22 
Oregon   $15,151,850   $895,244   $14,256,606   $1,806,515   $5,600,397,595   14.5 
Medicaid Fraud Control Units FY 2013 Annual Report (OEI-06-13-00340)  21  APPENDIXES 
 
Table C2:  Recoveries, Expenditures, and Staff by State  
Recoveries  Expenditures  Staff 
State  on 
Total  Criminal  Civil   MFCU Grant  Total Medicaid  
Board
Pennsylvania  $30,729,120   $2,666,616   $28,062,504   $4,730,372   $21,698,977,826   33 
Rhode Island   $4,381,892   $62,301   $4,319,590   $1,184,944   $2,018,428,048   11 
South Carolina   $19,983,522   $1,609,887   $18,373,636   $1,451,006   $4,921,639,527   15 
South Dakota   $3,053,873   $365,165   $2,688,709   $384,176   $820,357,642   5 
Tennessee  $78,870,739   $1,167,952   $77,702,787   $3,990,162   $9,022,143,146   32 
Texas   $196,718,960   $81,995,797   $114,723,163   $15,582,973   $29,086,162,849   181 
Utah  $7,989,088   $49,173   $7,939,915   $1,817,277   $2,229,362,038   13 
Vermont   $5,507,996   $58,600   $5,449,397   $987,268   $1,499,744,254   7 
Virginia  $1,008,988,075   $704,439,186   $304,548,889   $11,249,106   $7,604,993,529   96 
Washington  $16,562,704   $192,715   $16,369,988   $3,596,829   $8,407,111,070   30.5 
West Virginia   $16,148,738   $3,779,140   $12,369,599   $1,112,518   $3,181,083,472   14 
Wisconsin  $54,757,244   $54,750   $54,702,494   $1,274,531   $7,390,660,088   11 
Wyoming  $1,623,272   $76,388   $1,546,884   $489,024   $594,690,624   4 
Total    $2,506,642,044   $968,878,848   $1,537,756,196   $230,064,270   $453,082,711,064  1,911.5  
 
Source: OIG analysis of Quarterly Statistical Reports, 2013.
  
*MFCU Grant Expenditure data is current as of February 11, 2014.
  
*Federal and State Governments for MFCU operations expenditures of $230 million and MFCU reported recoveries of over  

$2.5 billion translates to a return on investment (ROI) of $10.90 per $1 expended by  the MFCU.  ROI is calculated as the total dollar 
 
amount of recoveries in both civil and criminal cases divided by the total amount of grant expenditures by Federal and State 

governments.
  
For additional FY 2013 Statistical Data, please see http://oig.hhs.gov/fraud/medicaid-fraud-control-units-mfcu/. 
Medicaid Fraud Control Units FY 2013 Annual Report (OEI-06-13-00340)  22  APPENDIXES 
 
Appendix D:  Additional Analysis, MFCU Case Outcomes,  
FYs 2010-2013 
Criminal Convictions and Civil Settlements and Judgments, FYs 2010-2013 
As shown in Chart D1, the total number of MFCU case outcomes (criminal convictions and civil 
settlements and judgments) remained steady in FY 2013 compared to recent years.  Consistently 
during each year, the number of criminal convictions was greater than the number of civil 
settlements and judgments. 
Chart D1:  Number of Case Outcomes, Criminal and Civil, FYs 2010-2013 
 
3,000 
 
2,500 
 
2,000 
  1,090  907  824  879 
1,500  Civil 
  Criminal 
1,000 
  1,329  1,230  1,336  1,341
500
 
 
0
 
FY 2010  FY 2011  FY 2012  FY 2013 
 
 
 
Source: OIG analysis of Quarterly Statistical Reports, 2013. 
 
Criminal and Civil Recoveries, FYs 2010-2013  
As shown in Chart D2, the total amount of recoveries resulting from  MFCU work varied in 
recent yearsunder $2 billion in FYs 2010 and 2011, and exceeding $2 billion in  
FYs 2012 and 2013. 
Chart D2:  Criminal and Civil Recoveries, FYs 2010-2013  
 
  $3,500,000,000 
$3,000,000,000 
 
$2,500,000,000 
 
$2,000,000,000 
Criminal 
 
$1,500,000,000 
Civil 
 
$1,000,000,000 
  $500,000,000 
  $0 
FY 2010  FY 2011  FY 2012  FY2013 
 
 
Source: OIG analysis of Quarterly Statistical Reports, 2013.    
Medicaid Fraud Control Units FY 2013 Annual Report (OEI-06-13-00340)  23  APPENDIXES 
 
Appendix E:  Onsite Reviews Conducted and Reports Published in  
FY 2013 
Onsite Reviews Conducted, FY 2013 
MFCU Reviewed   Onsite Review  Date  
Montana Medicaid Fraud Control Unit  December 2012  
New Jersey Medicaid Fraud Control Unit   January  2013  
Arkansas Medicaid Fraud Control Unit  January  2013  
West Virginia Medicaid Fraud Control Unit   February 2013  
Michigan Medicaid Fraud Control Unit  March 2013  
Minnesota Medicaid Fraud Control Unit   April 2013  
Indiana Medicaid Fraud Control Unit   May 2013  
Vermont Medicaid Fraud Control Unit   July  2013  
Texas Medicaid Fraud Control Unit   August 2013  
Utah Medicaid Fraud Control Unit   September 2013  
Source: http://oig.hhs.gov/reports-and-publications/oei/m.asp#mfcu  
   
FY 2013 Reports on Onsite Reviews 
Report Title   Release Date   OIG Report Number 
Arkansas State Medicaid Fraud Control Unit:  2013 Onsite Review   September 20, 2013   OEI-06-12-00720  
New Jersey Medicaid Fraud Control Unit:  2013 Onsite Review   September 18, 2013   OEI-02-13-00020  
Illinois State Medicaid Fraud Control Unit:  2012 Onsite Review   June 12, 2013   OEI-07-12-00510  
Tennessee State Medicaid Fraud Control Unit:  2012 Onsite   April 24, 2013   OEI-6-12-00370 
Review  
Idaho State Medicaid Fraud Control Unit: 2012  Onsite Review   April 16, 2013   OEI-09-12-00220  
Louisiana State Medicaid Fraud Control Unit:  2012 Onsite Review   December 28, 2012   OEI-09-12-00010  
New Hampshire Medicaid Fraud Control Unit:  2012 Onsite Review   October 19, 2012   OEI-02-12-00180  
South Carolina State Medicaid Fraud Control Unit:  2011 Onsite  October 17, 2012   OEI-09-11-00610  
Review  
Source: http://oig.hhs.gov/reports-and-publications/oei/m.asp#mfcu  
Medicaid Fraud Control Units FY 2013 Annual Report (OEI-06-13-00340)  24  ACKNOWLEDGEMENTS 
  LWEDGEMENTS   
This report was prepared under the direction of Richard Stern, Director of Medicaid Fraud Policy 
and Oversight in Washington, D.C.; Kevin Golladay, Regional Inspector General for Evaluation 
and Inspections in the Dallas regional office; and Blaine Collins and Ruth Ann Dorrill, Deputy 
Regional Inspectors General in the Dallas regional office. 
Lyndsay Patty served as team leader for this study.  Other Office of Evaluation and Inspections 
staff who provided support include Thomas Brannon, Susan Burbach, Malinda Hicks, and 
Christine Moritz. Office of Management and Policy staff who provided support include Alexis 
Crowley. Office of Investigations staff who provided support include Jason Weinstock.  Office 
of Counsel to the Inspector General staff who provided support include Andrew VanLandingham.    
   
25 
MFCU FY 2013 Annual Report (OEI-06-13-00340)    ENDNOTES   
 
                                                 
1 Social Security Act (SSA)  1903(q).  

2  SSA  1903(a)(61). 
 
3 SSA  1903(a)(6)(B).  

4  Office of  Inspector General (OIG),  State Medicaid Fraud Control Units  Fiscal Year 2013 Statistical Chart. 
 
5 Ibid.  

6 SSA   1903(q) & (q)(2); 42 CFR   1007.5 and 1007.9(d). 

7  SSA  1903(q)(1). 
 
8 OIG, Medicaid Fraud Control Units. Accessed at  http://oig.hhs.gov/fraud/medicaid-fraud-control-units-
mfcu/index.asp on September 25, 2013. 
 
9 SSA  1903(q)(6) and 42 CFR  1007.13. 

10  SSA  1903(q)(4). 
 
11 Prior to the current standards issued in June  2012, MFCU  performance standards were previously issued in  1994, 

and accessed at https://oig.hhs.gov/fraud/medicaid-fraud-control-units-mfcu/index.asp. 59 Fed. Reg. 49080   
   
(Sept. 26, 1994).   

12 Cases may involve participation by  other Federal and State law enforcement agencies. 
 
13 42 CFR   1007.11(b)(1) allows Units to  receive Federal financial participation (FFP) for reviewing complaints of 
 
the misappropriation of  patients private funds.  This authority falls under the Units general patient abuse and 
 
neglect duties. 

14 The total number of settlements exceeds the total number of cases finalized  by MFCUs in  2013, as in other years.  

The reason is that many global cases result in multiple settlements - between the defendant and each  State MFCU 

that is party to  the investigation and civil matter.   

15 According to  SSA  1128, 42  USC   1320a-7, OIG is required to exclude from participation in all Federal health 

care programs individuals and entities convicted of the following types of criminal offenses:  Medicare or Medicaid 
 
fraud, as well as any  other offenses related to the delivery  of items or services under Medicare, Medicaid, the 
 
Childrens Health Insurance Program (CHIP), or  other State health care programs; patient  abuse or neglect; felony
  
convictions for other health care-related  fraud, theft, or other financial misconduct; and  felony convictions relating 
 
to unlawful manufacture, distribution, prescription,  or dispensing  of controlled substances.  

http://oig.hhs.gov/exclusions/background.asp. 
16 OIG, The Effect of Exclusion From Participation in Federal Health  Care Programs.  Special Advisory Bulletin. 

September 1999.  Accessed at http://oig.hhs.gov/exclusions/effects_of_exclusion.asp on September 17, 2013.  

17 Centers for Medicare & Medicaid Services (CMS), Medicaid Managed Care Enrollment Report:  Summary 
 
Statistics as of July 1, 2011.  http://www.medicaid.gov/Medicaid-CHIP-Program-Information/By-Topics/Data-and-
Systems/Downloads/2011-Medicaid-MC-Enrollment-Report.pdf. 

18 Medicaid Managed Care:   Fraud and Abuse Concerns Remain Despite Safeguards, OEI-01-09-00550. 
 
19 42 CFR   438.608.  

20 The remaining Units either did not  report any referrals  or explained that  MCOs in their States typically made 

referrals to the  State Medicaid agency, and therefore they could not report the actual number of referrals from MCOs 

separate from other referral sources. 

21  P.L. 111-148,  6402(h)(2), (March 23, 2010), as amended by the Health  Care Reconciliation  Act of 2010, P.L. 

111-152  (March 30, 2010), collectively known  as ACA; 42  CFR  455.23(a);  76 Fed. Reg. 5862 (February 2,  2011).  

22 Prior to  ACA, Medicaid agencies were required to demonstrate reliable evidence of provider fraud or willful 

misrepresentation, before  withholding Medicaid payments.  (52 Fed. Reg. 48814 (December 28, 1987)).  However, 

pursuant to  ACA, the threshold requirement of reliable evidence was reduced to a credible allegation of fraud.  

23 Allegations of fraud come from a variety of sources.  Examples of allegation sources include, but are not limited 

to, fraud hotline complaints, data mining, provider audits, civil false claims cases, and law enforcement 

investigations.  42 CFR   455.2.  For further information, see CMS guidance to State agencies regarding
  
determination  of credible allegation and imposing  payment suspensions.  CMS, Guidance  to States on Section 

6402(h)(2) of ACA Program  Integrity Provisions,  CPI-B 11-04, 2011.  Accessed  at 

http://oig.hhs.gov/fraud/medicaid-fraud-control-units-mfcu/files/payment-suspensions-info-bulletin-3-25-2011.pdf  
on July 9, 2013.  

24 Performance Standard  10A. 
 
25 Performance Standard  8F. 
 
2678 Fed. Reg. 29055  (May 17, 2013).  

27 2014  Fiscal Year  2014 Budget in Brief, Strengthening Health and  Opportunity for all Americans, p.  64, 

www.hhs.gov/budget/fy2014/fy-2014-budget-in-brief.pdf. 

26 
MFCU FY 2013 Annual Report (OEI-06-13-00340)