The Department of Health and Human Services 

 
And  

  The Department of Justice 

  Health Care Fraud and Abuse Control Program 

  Annual Report for Fiscal Year 2015 

 
 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
FEBRUARY 2016 
 
 
     
  TABLE OF CONTENTS 

 
   
I.   Executive Summ ary 	   1 
  
   
II.   Statutory Background  	 3  

   
III. 	  Program  Results and Accomplishments  5  

              Monetary Results                 5 

    Expenditures    7 
  
    Overall Recov eries    8 
  
    Health Care Fraud Prevention and Enforcement Action Team       8 

    Health Care Fraud Prevention Partnership  9  

    Medicare Fraud Strike Force  10  

    Highlights of Successful Criminal and Civil Investigations      12 

 
IV.  	 Department of Health and Human Services            36 

  Office of Inspector General        36 

  Centers for Medicare & Medicaid Services  45  

  Administration on Community Living  56  

  Office of the General Counsel  58  

  Food and Drug Administration Pharmaceutical Fraud Program  62  

 
V.  	 Department of Justice  64  

  United States Attorneys       64 

  Civil Division  66  

  Criminal Division  69  

  Civil Rights Division  72  

   
VI.  	 Appendix  77  

  Federal Bureau of Investigation   77  

  Return on Investment Calculation   80  

  Total HCFA C Resour ces               81 
  
 
VII.   Glossary of Terms	                   82
                                 
   
 
 
   
  GENERAL NOTE  
 
All years are fiscal years unless otherwise 
noted in the text.    
 
  EXECUTIVE SUMMARY 

 
The Health Insurance Portability and Accountability Act of 1996 (HIPAA) established a national 
Health Care Fraud and Abuse Control Program (HCFAC or the Program) under the joint 
direction of the Attorney General and the Secretary of the Department of Health and Human 
Services (HHS)1, acting through the Inspector General, designed to coordinate federal, state and 
local law enforcement activities with respect to health care fraud and abuse.  In its nineteenth 
year of operation, the Programs continued success confirms the soundness of a collaborative 
approach to identify and prosecute the most egregious instances of health care fraud, to prevent 
future fraud and abuse, and to protect program beneficiaries. 
 
Monetary Results  
 
During Fiscal Year (FY) 2015, the Federal Government won or negotiated over $1.9 billion in 
health care fraud judgments and settlements2, and it attained additional administrative 
impositions in health care fraud cases and proceedings.  As a result of these efforts, as well as 
those of preceding years, in FY 2015, approximately $2.4 billion was returned to the Federal 
Government or paid to private persons.  Of this $2.4 billion, the Medicare Trust Funds3 received 
transfers of approximately $1.6 billion during this period, and $135.9 million in Federal 
Medicaid money was similarly transferred separately to the Treasury as a result of these 
efforts. Of the approximately $29.4 billion returned by the HCFAC account to the Medicare 
Trust Funds since the inception of the Program in 1997, over $16.2 billion has been returned 
between 2009 and 2015. 
 
Enforcement Actions  
 
In FY 2015, the Department of Justice (DOJ) opened 983 new criminal health care fraud 
investigations. Federal prosecutors filed criminal charges in 463 cases involving 888 defendants.  
A total of 613 defendants were convicted of health care fraud-related crimes during the year.  
Also in FY 2015, DOJ opened 808 new civil health care fraud investigations and had 1,048 civil 
health care fraud matters pending at the end of the fiscal year.  In FY 2015, the FBI investigative 
efforts resulted in over 625 operational disruptions of criminal fraud organizations and the 
dismantlement of the criminal hierarchy of more than 144 health care fraud criminal enterprises.  
                      
In FY 2015, HHS Office of Inspector General (HHS-OIG) investigations resulted in 800 
criminal actions against individuals or entities that engaged in crimes related to Medicare and 
Medicaid, and 667 civil actions, which include false claims and unjust-enrichment lawsuits filed 
in federal district court, civil monetary penalties (CMP) settlements, and administrative 
recoveries related to provider self-disclosure matters.  HHS-OIG also excluded 4,112 individuals 
                                                 
1 Hereafter, referred to as the Secretary. 

2 The amount  reported as won or negotiated only reflects the federal  recoveries and therefore does not reflect state 

Medicaid monies recovered as part of any global federal-state settlements. 

3 Also known as the Medicare Hospital Insurance (Part A) Trust Fund and the Supplemental Medical Insurance (Part 

B) Trust Fund. 

 
  1 
 and entities from participation in Medicare, Medicaid, and other federal health care programs.  
Among these were exclusions based on criminal convictions for crimes related to Medicare and 
Medicaid (1,329) or to other health care programs (424), for patient abuse or neglect (302), and 
as a result of licensure revocations (1,743).  HHS-OIG also issued numerous audits and 
evaluations with recommendations that, when implemented, would correct program  
vulnerabilities and save program funds. 
 
Sequestration Impact 
  
Due to sequestration of mandatory funding in 2015, there were fewer resources for DOJ, FBI, 
HHS, and HHS-OIG to fight fraud and abuses against Medicare, Medicaid, and other health care 
programs.  A total of $22.0 million was sequestered from the HCFAC program in FY 2015, for a 
combined total of $74.2 million in the past three years.  Including funds sequestered from the 
FBI, the total equals $101.2 million in the past three years.  
   
 
  2 
 STATUTORY BACKGROUND
 
 
 
The Annual Report of the Attorney General and the Secretary detailing expenditures and 
revenues under the Health Care Fraud and Abuse Control Program for Fiscal Year 2015 is 
provided as required by Section 1817(k)(5) of the Social Security Act.  
 
The Social Security Act Section 1128C(a), as established by the Health Insurance Portability and 
Accountability Act of 1996 (P.L. 104-191, HIPAA or the Act), created the Health Care Fraud 
and Abuse Control Program, a far-reaching program  to combat fraud and abuse in health care, 
including both public and private health plans.   
 
As was the case before HIPAA, amounts paid to Medicare in restitution or for compensatory 
damages must be deposited in the Medicare Trust Funds.  The Act requires that an amount 
equaling recoveries from health care investigationsincluding criminal fines, forfeitures, civil 
settlements and judgments, and administrative penaltiesalso be deposited in the Trust Funds.   
 
The Act appropriates monies from the Medicare Hospital Insurance Trust Fund to an expenditure 
account, called the Health Care Fraud and Abuse Control Account (the Account), in amounts that 
the Secretary and Attorney General jointly certify as necessary to finance anti-fraud activities.  
The maximum amounts available for certification are specified in the Act.  Certain of these sums  
are to be used only for activities of the HHS-OIG, with respect to the Medicare and Medicaid 
programs.  In FY 2006, the Tax Relief and Health Care Act (TRHCA) (P.L 109-432, 303) 
amended the Act so that funds allotted from the Account are available until expended.  
TRHCA also allowed for yearly increases to the Account based on the change in the consumer 
price index for all urban consumers (all items, United States city average) (CPI-U) over the 
previous fiscal year for fiscal years for 2007 through 2010.4  In FY 2010, the Patient Protection 
and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act, 
collectively referred to as the Affordable Care Act (P.L. 111-148, ACA) extended permanently 
the yearly increases to the Account based upon the change in the consumer price index for all 
urban consumers, or CPI-U. 
  
In FY 2015, the Secretary and the Attorney General certified $279.7 million in mandatory 
funding to the Account after accounting for sequester reductions of $22.0 million to the total 
appropriation.  Additionally, Congress appropriated $672.0 million in discretionary funding.  A 
detailed breakdown of the allocation of these funds is set forth later in this report.  HCFAC 
appropriations generally supplement the direct appropriations of HHS that are devoted to health 
care fraud enforcement and supported over two-thirds of DOJs health care fraud funding and 
over three-fourths of HHS-OIGs appropriated budget in FY 2015.  (Separately, the FBI, which 
is discussed in the appendix, received $129.2 million from HIPAA, after accounting for $10.2 
million in mandatory sequester reductions.)  Under the joint direction of the Attorney General 
and the Secretary, the Programs goals are:  
 
                                                 
4 The CPI-U adjustment in TRHCA  did not apply to the Medicare Integrity Program (MIP).  Section  6402 of the 
ACA indexed  Medicare Integrity Program funding to inflation starting in  FY  2010. 
3 

  (1) 	 to coordinate federal, state and local law enforcement efforts relating to health care fraud 
and abuse with respect to health plans; 
 
(2) 	 to conduct investigations, audits, inspections, and evaluations relating to the delivery of 
and payment for health care in the United States; 
 
(3) 	  to facilitate enforcement of all applicable remedies for such fraud; and 
 
(4) 	 to provide education and guidance regarding complying with current health care law. 
 
The Act requires the Attorney General and the Secretary to submit a joint annual report to the 
Congress that identifies both: 
 
(1) 	 the amounts appropriated to the Trust Funds for the previous fiscal year under various 
categories and the source of such amounts; and 
 
(2) 	 the amounts appropriated from the Trust Funds for such year for use by the Attorney 
General and the Secretary and the justification for the expenditure of such amounts. 
 
This annual report fulfills the above statutory requirements.   
 
Additionally, this report fulfills the requirement in the annual discretionary HCFAC 
appropriation (Public Law 113-235 Consolidated and Further Continuing Appropriations Act, 
2015) that this report include measures of the operational efficiency and impact on fraud, 
waste, and abuse in the Medicare, Medicaid, and CHIP programs for the funds provided by this 
appropriation. 
 
 
 
4 

  PROGRAM RESULTS  ACCOMPLISHMENTS 
  AND 
 
As required by the Act, HHS and DOJ must detail in this Annual Report the amounts deposited 
to the Medicare Trust Funds and the source of such deposits.  In FY 2015, approximately 
$2.4 billion was deposited with the Department of the Treasury and CMS, transferred to other 
federal agencies administering health care programs, or paid to private persons during the fiscal 
year.  Monetary results from these transfers and deposits are provided in the table below:  
Monetary Results: Total Transfers/Deposits by Recipient FY 2015 
Department of the Treasury   Amount  
  Deposits to the Medicare Trust Funds, as required by HIPAA   
Gifts and Bequests  $10,372 
            Amount Equal to Criminal Fines  56,549,115 
            Civil Monetary Penalties  45,772,271 
Asset Forfeiture  14,791,644 
            Penalties and Multiple Damages  512,054,108 
Subtotal   629,177,509 
 
Centers for Medicare & Medicaid Services 
  HHS-OIG Audit Disallowances  Recovered - Medicare  132,612,502 
  Restitution/Compensatory Damages  793,934,739 
             Subtotal*   926,547,241 
 
Grand Total of Amounts Transferred to the Medicare Trust Funds   $1,555,724,750 
Restitution/Compensatory Damages to Federal Agencies    
   
HHS/Other  $31,355,848 
TRICARE  14,921,254 
CMS  8,253,589 
HHS-OIG Cost of Audits, Investigations and Compliance Monitoring  7,766,281 
Other Agencies   18,200,774 
   
Centers for Medicare and Medicaid Services    
Federal Share of Medicaid  135,866,585 
HHS-OIG Audit Disallowances  Recovered - Medicaid  168,955,572 
Subtotal   385,319,903 
Relators= Payments**   414,456,455
 TOTAL***  $2,355,501,108 
 
*Restitution, compensatory damages, and recovered audit disallowances include returns to both the Medicare
Hospital Insurance (Part A) Trust Fund and the Supplemental Medical Insurance (Part B) Trust Fund. 

**These are funds awarded to private persons who file suits on  behalf  of the Federal  Government under the qui tam 
 
(whistleblower) provisions of  the False Claims Act, 31 U.S.C.  ' 3730(b). 

***State funds are also collected on behalf  of state Medicaid programs; only the Federal share of Medicaid funds 
 
transferred to CMS are represented here. 

5 
  The above transfers include certain collections, or amounts equal to certain collections, required 
by HIPAA to be deposited directly into the Medicare Trust Funds.  These amounts include: 
 
(1) 	 Gifts and bequests made unconditionally to the Trust Funds, for the benefit of the 
Account or any activity financed through the Account; 
 
(2) 	  Criminal fines recovered in cases involving a federal health care offense, including 
collections under section 24(a) of Title 18, United States Code (relating to health care 
fraud); 
 
(3) 	  Civil monetary penalties in cases involving a federal health care offense; 
 
(4) 	 Amounts resulting from the forfeiture of property by reason of a federal health care 
offense, including collections under section 982(a)(7) of Title 18, United States Code; 
and 
 
(5) 	 Penalties and damages obtained and otherwise creditable to miscellaneous receipts of the 
general fund of the Treasury obtained  under sections 3729 through 3733 of Title 31, 
United States Code (known as the False Claims Act, or FCA), in cases involving claims  
related to the provision of health care items and services (other than funds awarded to a 
relator, for restitution or otherwise authorized by law). 
 
 
 
  6 
 Expenditures 
 
In the nineteenth year of operation, the Secretary and the Attorney General certified 
$279.7 million in mandatory funding as necessary for the Program, after accounting for 
mandatory sequester reductions of $22.0 million as required by law.  Additionally, Congress 
appropriated $672.0 million in discretionary funding.  See allocation by recipient below: 
 
 
FY 2015 ALLOCATION OF HCFAC APPROPRIATION 
Mandatory  Discretionary  Funds  Total 
Organization 
Allocation5   Allocation  Sequestered   Allocation 
Department of Health and Human 
        
Services  
Office of Inspector General6  $200,718,475  $67,200,000  ($14,652,449)  $253,266,026 
Office of the General Counsel  10,000,000  0  0  10,000,000 
Administration for Community  
8,710,136  0  0  8,710,136 
Living  
Food and Drug Administration   3,377,220  0  0  3,377,220 
Centers for Medicare & Medicaid 
13,500,000  544,320,000  0  577,820,000 
Services  
Unallocated Funding   2,802,456  0  (2,802,456)   0
 Subtotal   239,108,287  611,520,000  (17,454,905)   853,173,382 
          
Department of Justice         
United States Attorneys  31,400,000  20,505,542   51,905,542 
Civil Division7  19,538,751  12,093,818    31,632,569 
Criminal Division  4,580,184  10,162,659    14,742,843 
Civil Rights Division  2,376,000  5,443,276    7,819,276 
Justice Management Division   200,000  100,000    300,000 
Department of Justice - Other  4,574,898  12,174,705  (4,574,898)   12,174,705
 Subtotal   62,669,833  60,480,000  (4,574,898)  118,574,935 
TOTAL8  $301,778,120  $672,000,000  ($22,029,803)  $971,748,317 
 
 
   
                                                 
5As  of  FY 2007, mandatory funds are available until expended.   Discretionary funds are available for two years.  

6 In addition, HHS-OIG obligated  $9.8 million in  funds received as reimbursement for the costs of conducting 

investigations  and audits and for monitoring  compliance plans as authorized by section 1128C(b) of  the Social 

Security Act, 42 U.S.C.  1320a-7c(b).   

7 The Elder Justice Initiative, managed by the Civil Division, is included in the Civil Division  figures.   

8 Amounts only represent those that are provided by statute, and do not include other mandatory sources or 
 
discretionary appropriated sources provided through Departments annual appropriations. 

 
  7 
 Overall Recoveries  
 
During this fiscal year, the Federal Government won or negotiated over $1.9 billion in judgments 
and settlements, and attained additional administrative impositions in health care fraud cases and 
proceedings.  As a result of these efforts, as well as those of preceding years, approximately $2.4 
billion was returned to the Federal Government or private persons.  Of this $2.4 billion, the 
Medicare Trust Funds received transfers of approximately $1.6 billion during this period; and 
another $135.9 million in Federal Medicaid money was transferred to the Treasury separately as 
a result of these efforts.9  
 
In addition to these enforcement actions, numerous audits, evaluations and other coordinated 
efforts yielded recoveries of overpaid funds, and prompted changes in federal health care 
programs that reduce vulnerability to fraud.    
 
The return on investment (ROI) for the HCFAC program over the last three years (2013-2015) is 
$6.10 returned for every $1.00 expended.  Because the annual ROI can vary from year to year 
depending on the number and type of cases that are settled or adjudicated during that year, DOJ 
and HHS use a three-year rolling average ROI for results contained in the report.  Additional 
information on how the ROI is calculated can be found in the Appendix. 
 
Health Care Fraud Prevention and Enforcement Action Team (HEAT) 
 
The Attorney General and the Secretary maintain regular consultation at both senior and staff 
levels to accomplish the goals of the HCFAC Program. On May 20, 2009, Attorney General 
Holder and Secretary Sebelius announced the Health Care Fraud Prevention & Enforcement 
Action Team (HEAT), a new effort with increased  tools and resources, and a sustained focus by 
senior level leadership to enhance collaboration between the Departments of Health and Human 
Services  and  Justice.   With the creation of the new HEAT effort, DOJ and HHS pledged a 
Cabinet-level commitment to prevent and prosecute health care fraud.  HEAT, which is jointly 
led by the Deputy Attorney General and HHS Deputy Secretary, is comprised of top level law 
enforcement agents, prosecutors, attorneys, auditors, evaluators, and other staff from DOJ and 
HHS and their operating divisions, and is dedicated to joint efforts across government to both 
prevent fraud and enforce current anti-fraud laws around the country.  The Medicare Fraud 
Strike Force teams are a key component of HEAT.     
 
The mission of HEAT is: 
 
	   To marshal significant resources across government to prevent waste, fraud and 
abuse in the Medicare and Medicaid programs and crack down on the fraud 
perpetrators who are abusing the system  and costing us all billions of dollars. 
 
	   To reduce health care costs and improve the quality of care  by ridding the system of
perpetrators who are preying on Medicare and Medicaid beneficiaries.  
                                                 
9 Note that some of the judgments, settlements, and administrative actions that occurred in FY  2015  will result in  
transfers in future years, just as some of the transfers  in  FY 2015 are attributable to actions  from prior years. 
 
  8 
 	   To highlight best practices by providers and public sector employees who are 

dedicated to ending waste, fraud, and abuse in Medicare. 

 
	   To build upon existing partnerships between DOJ and HHS, such as our Medicare 
Fraud Strike Force Teams, to reduce fraud and recover taxpayer dollars. 
 
Since its creation in May 2009, HEAT has focused on key areas for coordination and 
improvement.  HEAT members are working to identify new enforcement initiatives and areas for 
increased oversight and prevention to increase efficiency in areas such as pharmaceutical and 
device investigations. DOJ and HHS have expanded data sharing and improved information 
sharing procedures in order to get critical data and information into the hands of law enforcement 
to track patterns of fraud and abuse and increase efficiency in investigating and prosecuting 
complex health care fraud cases.  The departments established a cross-government health care 
fraud data intelligence sharing workgroup to share fraud trends, new initiatives, ideas, and 
success stories to improve awareness across of issues relating to health care fraud.  
 
Both departments also have developed training programs to prevent honest mistakes and help 
stop potential fraud before it happens. This includes CMS compliance training for providers, on-
going meetings at U.S. Attorneys Offices (USAOs) with the public and private sector, and 
increased efforts by HHS to educate specific groupsincluding elderly and immigrant 
communitiesto help protect them.  In addition, DOJ conducts, with the support of HHS, a 
Medicare Fraud Strike Force training program designed to teach the Strike Force concept and 
case model to prosecutors, law enforcement agents, and administrative support teams.   
 
Healthcare Fraud Prevention Partnership (HFPP) 
 
The Healthcare Fraud Prevention Partnership (HFPP) is the groundbreaking public/private 
partnership between the Federal Government, State officials, law enforcement, private health 
insurance plans and associations, and healthcare anti-fraud associations.  The purpose of the 
partnership is to exchange data and information between the partners to help improve capabilities 
to fight fraud, waste and abuse in the health care industry.  Since its inception in 2012, the 
number of participants has increased to 45 public, private and state partner organizations.  The 
Partnership has completed several studies associated with fraud, waste or abuse that have yielded 
successful results for participating partners. Studies have examined such subjects as false store 
fronts or phantom providers and top billing pharmacies.  Additional studies are underway and 
the Partnership has established a Trusted Third Party (TTP) which conducts HFPP data 
exchanges, research, data consolidation and aggregation, reporting, and analysis.  The TTP will 
not share the source of the data (i.e., which partner submitted what data) during an exchange in 
order to keep the identity of the data source confidential.  HFPP is continuing to expand with 
new partners. 
 
The Partnership is a demonstrated example of effective departmental collaboration between HHS 
and DOJ, working together to create a strong partnership with the states and private payers to 
detect fraud, waste, and abuse. In FY 2015, the Partnership hosted its fifth Executive Board 
meeting.  The meeting focused on developing a strategy to ensure the productivity of the 
Partnership and highlighted achievements and progress since the last meeting including data 
exchanges, information sharing, and partnership growth.   
 
  9 
 Medicare Fraud Strike Force 
 
The first Medicare Fraud Strike Force (Strike Force) was launched in March 2007 as part of the 
South Florida Initiative, a joint investigative and prosecutorial effort against Medicare fraud and 
abuse in South Florida. The Strike Force is comprised of interagency teams made up of 
investigators and prosecutors that focus on the worst offenders in regions with the highest known 
concentration of fraudulent activities. The Strike Force uses advanced data analysis techniques 
to identify aberrant billing levels in health care fraud hot spotscities with high levels of 
billing fraudand target suspicious billing patterns, as well as emerging schemes and schemes 
that migrate from one community to another.  Based on the success of these efforts and increased  
appropriated funding for the HCFAC program from Congress and the Administration, DOJ and 
HHS expanded Strike Force operations to a total of nine areas in the United StatesMiami, 
Florida; Los Angeles, California; Detroit, Michigan; Southern Texas; Brooklyn, New York; 
Southern Louisiana; Tampa, Florida; Chicago, Illinois; and Dallas, Texas.     
 
Each Medicare Fraud Strike Force team brings the investigative and analytical resources of the 
FBI and HHS-OIG and the prosecutorial resources of the Criminal Divisions Fraud Section and 
the USAOs to analyze data obtained from CMS and bring cases in federal district court.  Strike 
Force accomplishments in the areas noted above and USAO accomplishments in their districts 
during FY 2015 include10: 
 
	   200 indictments, informations and complaints involving charges filed against 
391 defendants who allegedly collectively billed the Medicare program approximately 
$1.4 billion; 
 
	   314 guilty pleas negotiated and 28 jury trials litigated, with guilty verdicts against 

48 defendants; and
   
 
	   Imprisonment for 263 defendants sentenced during the fiscal year, averaging more than 
56 months of incarceration.  
 
In the eight and a half years since its inception, Strike Force prosecutors filed more than 
1,164 cases charging more than 2,536 defendants who collectively billed the Medicare program  
more than $8 billion; 1,781 defendants pleaded guilty and 243 others were convicted in jury 
trials; and 1,477 defendants were sentenced to imprisonment for an average term of 
approximately 49 months.11  
 
Medicare payment trends demonstrate the positive impact of Strike Force enforcement and 
prevention efforts. For example, Medicare payments for home health care increased from 2006 
until 2010. In 2009, CMS changed Medicares Home Health Agency (HHA) outlier coverage 
policy, following federal enforcement actions initiated by the HEAT Strike Force case U.S. v. 
Zambrana in Miami and HHS-OIG reports regarding home health outlier payments.  As reflected 
                                                 
10 The accomplishments figures presented in the bullets include all reported Strike Force cases handled by DOJ 

Criminal Division attorneys and AUSAs in the respective USAOs during FY 2015. 

11 These statistics are for the  period of May  7, 2007 through September 30, 2015. 
 
 
  10 
 on the chart below, since 2010, payments for HHAs in Miami decreased by $100 million per 
quarter since the peak in 2009, and continue to decline. In Dallas and Detroit, payments for 
HHAs are down by over $40 million and $25 million per quarter, respectively, since 2010.  This 
may suggest that the home health fraud convictions not only eliminated some of the bad actors 
but also deterred other fraudsters from exploiting the outlier coverage policy.  We have seen 
similar patterns of decreased Medicare payments for Durable Medical Equipment (DME) and 
community mental health services (CMHC) following concentrated law enforcement initiatives 
and administrative fraud prevention efforts. 
 
 
Medicare Payments for CMHC, DME, and HHA Services, 
Calendar Years 2006-2015 
$275 
CMHC-National 
$250 
HHA-Miami area 
$225 
DME-Miami area 
$200 
HHA-Detroit area 
s $175 
n HHA Dallas area 
o
Milli$150 
$125 
$100 
$75 
$50 
$25 
$0 
 
 
 
For examples of successful Strike Force cases initiated or concluded during FY 2015, please see 
Highlights of Successful Criminal and Civil Investigations beginning on p. 12.   
 
 
   
 
  11 
 Highlights of Successful Criminal and Civil Investigations 
 
Our respective Departments successfully pursued Medicare Fraud Strike Force matters, as well 
as other criminal and civil investigations in a wide range of areas.  Cases are organized by type 
and presented in chronological order.  Strike Force cases are denoted by (SF) in the lead 
sentence. 
 
Ambulance and Transportation Services 
 
In November 2014, the co-owner of Brotherly Love, a Philadelphia, Pennsylvania ambulance 
company, was sentenced to 5 years and 4 months of incarceration and was ordered to pay more 
than $2 million in restitution after pleading guilty to health care fraud and the anti-kickback 
statute (AKS) charges.  The investigation revealed that the co-owner and her co-conspirators 
transported by ambulance patients who could walk; transported patients in personally owned 
vehicles, but billed as if the patients were transported by ambulance; used patient information to 
bill as if the patients had been transported by ambulance when, in fact, the patients actually 
transported themselves; and paid patients to be transported by Brotherly Love. 
 
In May 2015, five Orange County California ambulance companies in San Diego, California 
agreed to pay a total of more than $11.5 million to settle civil False Claims Act (FCA) 
allegations that they engaged in so-called swapping kickback schemes by providing deeply 
discountedand often below costambulance services to hospitals and/or skilled nursing 
facilities (SNFs) in exchange for exclusive rights to the facilities more lucrative Medicare 
patient referrals in violation of the AKS. The government alleged that the arrangements resulted 
in false claims for Medicare Part B transports, which in essence subsidized the discounted trips.  
The settling defendants were Pacific Ambulance, Inc., Bowers Companies, Inc., Care 
Ambulance Service, Inc., Balboa Ambulance Service, Inc., and E.R. Ambulance, Inc. 
  
(SF) In August 2015, the owner, operators, and managers of ProMed Medical Transportation, an 
ambulance transportation company in the greater Los Angeles area, were convicted after trial for 
their roles in a $2.4 million Medicare fraud scheme.  The evidence at trial demonstrated that the 
defendants conspired to bill Medicare for ambulance transportation services for individuals 
whom the defendants knew did not need such services.  The defendants also instructed  
emergency medical technicians who worked at ProMed to conceal the true medical conditions of 
patients they were transporting by altering requisite paperwork and creating fraudulent 
documents to justify the transportation services.  
 
(SF) In June 2015, a general manager and a dispatch supervisor of Mauran Ambulance Inc., an 
ambulance company in San Fernando, California, were indicted for their roles in a $28 million 
Medicare fraud scheme.  The defendants allegedly billed Medicare for medically unnecessary 
ambulance transportation services, which primarily were to and from dialysis treatments.  In 
their respective roles at Mauran, the defendants instructed emergency medical technicians who 
worked at Mauran to conceal the true medical condition of patients they were transporting by 
altering paperwork and creating false reasons to justify Maurans ambulance transportation 
services. A former administrator of a dialysis clinic was also indicted for receiving cash 
kickbacks from Maurans general manager in exchange for patient referrals. 
 
  12 
 Clinics  
 
In FY 2015, DaVita Healthcare Partners, Inc., the nations largest provider of dialysis services, 
agreed to pay a total of $800 million to settle allegations made in two civil FCA actions.  In 
October 2014, DaVita agreed to pay $350 million to settle civil FCA allegations that it paid 
kickbacks to induce the referral of patients to its dialysis clinics.  The government alleged that 
DaVita offered physicians lucrative opportunities to acquire and/or sell an interest in DaVita 
dialysis clinics to which their patients would be referred for treatment and then prevented the 
physicians from referring their patients to other dialysis providers through a series of non-
compete and non-disparagement agreements with the physicians.  In June 2015, DaVita paid an 
additional $450 million to settle civil FCA allegations pursued by two whistleblowers that it 
created unnecessary waste in administering the drugs Zemplar and Venofer to dialysis patients, 
and then billed federal health care programs for such avoidable waste.  
 
(SF) In October 2014, two owners of several Brooklyn, NY medical clinics pled guilty to health 
care fraud conspiracy and falsification of records in the Eastern District of New York. The 
medical director of one clinic pled guilty to health care fraud conspiracy in March 2015.  The 
defendants owned and operated a series of medical clinics that were used to submit more than 
$14.3 million in Medicare claims, of which $5.3 million was paid.  The indictment alleged that 
the majority of the claims were fraudulent because they were for services such as vitamin 
infusions, physical and occupational therapy, and diagnostic tests that were medically 
unnecessary, not provided, or otherwise not reimbursable.  The defendants also allegedly 
laundered the proceeds of the fraudulent scheme and falsified documents, which they then 
provided to Medicare auditors and the FBI in order to conceal the fraudulent scheme.  
 
(SF) In October 2014, an occupational therapist pled guilty in the Eastern District of New York 
to health care fraud conspiracy for his role in a scheme that involved the payment of cash 
kickbacks to elderly beneficiaries who received massages and light group exercises that were 
billed to Medicare and Medicaid as individual one-on-one occupational therapy and other 
occupational therapy services. As part of the scheme, the defendant, who was a full-time 
therapist for the New York Board of Education, signed false and fabricated patient charts and 
billing records for therapy that was not actually provided.  As part of the plea, the defendant 
agreed to restitution and forfeiture of $1.6 million.  Between February 2008 and February 2011, 
the defendant was the seventh-highest biller of occupational therapy in the country.  
 
(SF) In January 2015, two physician owners of Spectrum Care P.A., a Houston community 
mental health clinic, were sentenced to 148 months and 120 months, respectively, for their roles 
in a $97 million Medicare fraud scheme. The physician defendants were convicted, along with 
three co-defendantsa group home owner, a physician assistant, and an office managerof 
health care fraud conspiracy and substantive counts of health care fraud following a five-week 
jury trial. The evidence at trial showed that the physician defendants signed admission 
documents and progress notes certifying that Medicare beneficiaries qualified for partial 
hospitalization services, when they did not.  The evidence also showed that the physician 
defendants paid kickbacks to group home operators and patient recruiters, including their co-
defendants, in exchange for the referral of beneficiaries.  The group home owner was sentenced 
to 54 months imprisonment, the office manager was sentenced to 60 months imprisonment, and 
the physician assistant was sentenced to 68 months imprisonment. 
 
  13 
 In January 2015, six co-conspirators in Arlington, Texas were sentenced for submitting over $5 
million in false health insurance claims to Blue Cross Blue Shield of Texas (BCBS), the Federal 
Employees Health Benefits Program, and other insurers for services not rendered at a 
chiropractic clinic.  The co-conspirators included a licensed chiropractor and occupational 
therapist who allowed the use of their provider numbers to fraudulently bill insurers for services 
not provided. To further the scheme, a union representative for a Texas automotive parts 
manufacturer actively recruited employees to go to the co-conspirators chiropractic clinic.  The 
union representative and recruited employees received illegal kickback for these referrals.  The 
sentences imposed in this case ranged from 6 months imprisonment to 156 months 
imprisonment, and restitution from $1.3 to $2.4 million.   
 
(SF) In February 2015, the co-owners of BONB LLC, aka Bioscan, were sentenced to 57 and 37 
months imprisonment in the Middle District of Florida for their roles in a health care fraud and 
money laundering scheme.  Bioscan was a shell company the defendants used to facilitate a 
multi-million dollar fraud scheme executed through several purported medical clinics. As part of  
their guilty pleas, the defendants admitted that their co-conspirators submitted $12 million in 
fraudulent claims to Medicare, including claims resulting from illegal kickback arrangements 
and claims for radiology, audiology, neurology, and cardiology services that were never 
rendered. The defendants admitted to attempting to conceal the proceeds of the fraudulent 
claims by transferring funds through bank accounts for Bioscan and other entities.  In addition to  
the prison sentences, one defendant agreed to forfeit a $60,000 platinum and diamond ring he 
purchased with health care fraud proceeds.  
 
In July 2015, the operator of a sham  clinic in the Central District of California was sentenced 
after being convicted at trial to 15 years in federal prison for his role in a $20 million scheme to 
defraud Medicare and Medicaid by fraudulently prescribing expensive anti-psychotic 
medications, selling these drugs on the black market, and then redistributing them to pharmacies, 
where the drugs would be subject to new claims made to Medicare and Medicaid as though they 
were new bottles of drugs. Employees of sham  clinic generated thousands of prescriptions for 
identity theft victimssuch as elderly Vietnamese beneficiaries of Medicare and Medicaid, 
military veterans who were recruited from drug rehab programs, and denizens of Skid Row.  
This case was the first in the nation involving an organized scheme to defraud government health 
care programs through fraudulent claims for expensive anti-psychotic medications. 
 
Community Mental Health Centers 
 
(SF) In December 2014, a certified nursing assistant in Miami, Florida was sentenced to 12 years 
and six months in prison and ordered to pay $18.2 million in joint and several restitution after 
being convicted by a jury on charges of relating to health care fraud.  American Therapeutic 
Corporation (ATC) operated several purported partial hospitalization programs (PHP) 
throughout Florida. Evidence at trial demonstrated that the defendant received thousands of 
dollars a month in cash kickbacks in exchange for referring Medicare patients to ATC.  The 
evidence also demonstrated that the beneficiaries  he sent to ATC did not need, qualify for, or 
receive PHP treatment.  Nevertheless, ATC submitted false claims to Medicare for PHP services 
purportedly provided to each of these patients.  To date, 30 defendants, including the owners of 
 
  14 
 ATC, have previously pleaded guilty or been convicted at trial on charges related to the ATC 
scheme, which resulted in more than $200 million in fraudulent Medicare billings.  
 
(SF)  In January 2015, two physicians in Houston, Texas were sentenced to a combined 22 years 
and 4 months in prison and ordered to pay a combined $8 million in restitution after being 
convicted by a jury on charges relating to health care fraud.  The two physicians owned a 
community mental health center (CMHC) that purportedly provided PHP services to Medicare 
beneficiaries. Evidence at trial showed that the two physicians paid kickbacks to group care 
home operators and patient recruiters in exchange for bringing ineligible Medicare beneficiaries 
to their CMHC. They then signed admission documents and progress notes certifying that the 
beneficiaries qualified for PHP services when, in fact, they did not qualify for or need these 
services and/or the actual services were not performed.  The CMHC billed Medicare 
approximately $97 million for these fraudulent services.  One of the group home owners was 
sentenced to 4-and-a-half years in prison and ordered to pay $1.8 million in restitution.   
 
(SF)  In April 2015, a licensed mental health counselor in Miami, Florida was sentenced to 4 
years in prison and ordered to pay $13.6 million in joint and several restitution after pleading 
guilty to conspiracy to commit health care fraud.  The defendant worked as a therapist for Health 
Care Solutions Network, Inc., in Florida (HCSN-FL).  He admitted that he provided intensive 
therapy to mental health patients who were ineligible to receive the therapy or could not benefit 
from partial hospitalization program (PHP) services, including patients suffering from dementia, 
mental retardation, and Alzheimers disease.  He signed fabricated PHP therapy notes and other 
medical records, which were used to support the false claims to Medicare and Medicaid.  During 
his employment, the defendant and his co-conspirators submitted approximately $31 million in 
false claims to Medicare and Florida Medicaid programs.  
 
Device Companies 
 
In December 2014, OtisMed Corp. of Newark, New Jersey was ordered to pay $34.4 million in 
fines and $5.1 million in forfeiture after pleading guilty to distributing, with the intent to defraud 
and mislead, adulterated medical devices into interstate commerce in violation of the Food, 
Drug, and Cosmetic Act.  OtisMed submitted a pre-market notification to the Food and Drug 
Administration (FDA) seeking clearance to market the OtisKnee in October 2008.  In September 
2009, the FDA sent OtisMed a notice that its submission was denied, stating that the company 
failed to demonstrate that the OtisKnee was as safe and effective as other legally marketed 
devices. Despite his awareness of the letter and advice from legal counsel that it would be 
unlawful to continue distributing the OtisKnee, the Chief Executive Officer ordered employees 
at OtisMed to distribute more than 200 OtisKnee devices to surgeons throughout the United 
States. The CEO and others also concealed the shipments from the FDA, and did not disclose  
that distributing OtisKnee was prohibited.  The CEO pleaded guilty to introducing adulterated 
medical devices in interstate commerce and was sentenced on June 29, 2015 to 24 months in 
prison. Apart from the criminal plea, OtisMed agreed to pay a $41.2 million settlement to 
resolve its civil FCA liability arising from the marketing and distribution of the OtisKnee, and to 
be excluded from participation in federal health care programs for 20 years.     
 
In February 2015, medical device manufacturer ev3 Inc., formerly known as Fox Hollow 
Technologies Inc., agreed to pay $1.3 million to resolve civil FCA allegations that it caused 
 
  15 
 certain hospitals to submit false claims to Medicare for unnecessary inpatient admissions for 
procedures involving its atherectory device.  Atherectomy is a minimally-invasive surgical 
procedure that uses a small cutting device to remove atherosclerosis, or hardening of the arteries, 
from large blood vessels within the body.  The government alleged that to increase hospital 
purchases of its atherectomy devices, Fox Hollow advised hospitals that they should bill 
atherectomy procedures as more expensive inpatient claims, as opposed to less costly outpatient 
claims.  As a result, certain hospitals allegedly claimed greater reimbursement than they were 
entitled to receive for procedures involving Fox Hollows devices. 
 
In April 2015, Medtronic plc and certain affiliated Medtronic companies agreed to pay   
$4.4 million to settle civil FCA allegations that they made false statements to the U.S. 
Department of Veterans Affairs and the U.S. Department of Defense regarding the country of 
origin of certain Medtronic products sold to the United States.  The Trade Agreements Act of 
1979 (TAA) generally requires companies selling products to the United States to manufacture 
them in the United States or in another designated country.  The settlement resolved allegations 
that Medtronic sold to the United States products manufactured in China and Malaysia; under the 
TAA, the Government is precluded from acquiring the products at issue from those countries.   
The specific Medtronic products included anchoring sleeves sold with cardiac leads and used to 
secure the leads to patients, certain instruments and devices used in spine surgeries, and a 
handheld patient assistant used with a wireless cardiac device. 
 
In July 2015, NuVasive Inc. of San Diego, California, agreed to pay $13.5 million to resolve 
allegations that the company promoted its CoRoent System for surgical uses that were not 
approved or cleared by the FDA and paid kickbacks to induce physicians to use its CoRoent 
System.  The government alleged that, between 2008 and 2013, NuVasive promoted its CoRoent 
System for certain surgical uses, including for use in treating two complex spine deformities: 
severe scoliosis and severe spondylolisthesis.  Because these specific uses were not approved or 
cleared by the FDA, the claims submitted to Medicare and Medicaid from physicians and 
hospitals for these spine surgeries were not eligible for reimbursement.  The government also 
alleged that NuVasive knowingly offered and paid illegal remuneration to certain physicians to 
induce them to use the CoRoent System in spine fusion surgeries, in violation of the Federal anti-
kickback statute. The alleged illegal remuneration consisted of promotional speaker fees, 
honoraria, and expenses relating to physicians attendance at events sponsored by a group that 
was allegedly created, funded, and operated by NuVasive. 
 
Drug Companies 
 
In January 2015, Daiichi Sankyo Inc., a global pharmaceutical company, agreed to pay    
$39 million to resolve civil FCA allegations that it paid kickbacks to induce physicians to 
prescribe Daiichi drugs, including Azor, Benicar, Tribenzor and Welchol.  The alleged kickbacks 
took the form of honoraria payments, lavish meals, and other remuneration to physicians who 
participated, or supposedly participated, in speaker programs.  Daiichi allegedly made payments 
to physicians even when physicians took turns speaking on duplicative topics over Daiichi-
paid dinners, the recipient spoke only to members of his or her own staff in his or her own office,  
   
 
  16 
 or the associated dinner was so lavish that its cost exceeded Daiichis own internal cost 
limitation of $140 per person. 
 
In February and May 2015, Medco Health Solutions, Inc., a wholly-owned subsidiary of the 
pharmacy benefit manager Express Scripts Holding Company, and AstraZeneca, a 
pharmaceutical manufacturer, agreed to pay a total of $15.8 million to settle civil FCA 
allegations of a kick-back scheme involving marketing and selling pharmaceutical products.  The 
government alleged that AstraZeneca paid kickbacks to Medco in exchange for identifying 
Nexium as the sole and exclusive proton pump inhibitor on certain of Medcos prescription 
drug lists known as formularies.  The alleged remuneration from AstraZeneca took the form of 
price concessions on certain AstraZeneca drugs other than Nexium, namely on Prilosec, Toprol 
XL, and Plendil. 
 
In July 2015, drug manufacturers AstraZeneca LP  and Cephalon, Inc. agreed to pay a total of 
$54 million to settle civil FCA allegations that they knowingly underpaid rebates owed under the 
Medicaid Drug Rebate Program (MDRP).  Pursuant to the MDRP, drug manufacturers must pay 
quarterly rebates to state Medicaid programs in exchange for Medicaids coverage of the 
manufacturers drugs.  The rebates are based, in part, on the Average Manufacturer Prices 
(AMPs) that the manufacturers report to the government for each of their covered drugs.  The 
settlements with AstraZeneca and Cephalon resolved allegations that they underreported AMPs 
for a number of their drugs by improperly reducing the reported AMPs for service fees they paid 
to wholesalers. As a result, the government contended that AstraZeneca and Cephalon underpaid 
quarterly rebates owed to the states and caused the United States to be overcharged for its 
payments to the states for the Medicaid program. 
 
Durable Medical Equipment (DME) 
 
In December 2014, a medical supplies company owner was sentenced in Baton Rouge, Louisiana 
to 156 months imprisonment for submitting hundreds of false and fraudulent claims to Medicare 
for medical devices over a two year period.  For instance, he submitted claims for brace kits, 
regardless of whether any of the Medicare beneficiaries named in the claims needed or had 
prescriptions for the items, submitted claims for custom-fabricated devices which were never 
provided, and submitted numerous claims for expensive replacement power wheelchairs that he 
falsely claimed had been damaged or destroyed by a hurricane.  The owner was ordered to make 
restitution to the Medicare program in the amount of $1.2 million, to forfeit the proceeds of his 
criminal activity up to an additional $1.2 million, and to serve a two-year term of supervised 
release.  
 
(SF) In February 2015 and May 2015, two individuals pled guilty to health care fraud conspiracy 
for their roles in a $13 million long-running scheme to submit false claims for durable medical 
equipment to a government-sponsored organization for managed care in New York.  The scheme  
involved the defendants using information for approved, in-network equipment providers to 
obtain approvals that were then used to secure payments on behalf of sham companies that the 
defendants set up.  Companies believed to have been involved in the scheme submitted 
fraudulent claims to the managed care organization in amounts over $13 million since 2008.  In 
   
 
  17 
 September 2015, one of the defendants was sentenced to 21 months in jail and ordered to pay 
over $337,000 in forfeiture and the same amount in restitution. 
 
(SF) In March 2015, an owner of Colonial Medical Supply, a durable medical equipment 
company in Los Angeles, was convicted after a jury trial for his role in a $3.3 million Medicare 
fraud scheme. The evidence at trial established that the defendant paid cash kickbacks to 
medical clinics for fraudulent prescriptions for durable medical equipment, such as expensive 
power wheel chairs, which the patients did not need.  The defendant then used these 
prescriptions to bill Medicare for the medically unnecessary equipment.  In May 2015, the 
defendant was sentenced to 84 months imprisonment. 
 
(SF) In March 2015, an owner of Ezcor-9000, Inc., a durable medical equipment company in 
Valencia, California, was convicted after an eight-day jury trial for her role in a $3.5 million 
Medicare fraud scheme.  The evidence at trial established that the defendant paid illegal 
kickbacks to patient recruiters in exchange for patient referrals.  The evidence also showed that 
the defendant paid kickbacks to physicians for fraudulent prescriptionsprimarily for medically 
unnecessary, but expensive, power wheelchairsthat she then used to support her fraudulent 
bills to Medicare.  In June 2015, the defendant was sentenced to 97 months in prison.  
 
In May 2015, DME suppliers Orbit Medical Inc. and its partial successor, Rehab Medical Inc., 
agreed to pay $7.5 million to settle civil FCA allegations that Orbit submitted false claims to 
federal health care programs for power wheelchairs and accessories.  The settlement resolved 
allegations that Orbit sales representatives knowingly altered physician prescriptions and 
supporting documentation to get Orbits power wheelchair and accessory claims paid by 
Medicare, the Federal Employees Health Benefits Plan and the Defense Health Agency.  In 
particular, the government alleged that Orbit sales representatives changed or added dates to 
physician prescriptions and chart notes to falsely document that the prescription was sent to the 
supplier within 45 days of the face-to-face beneficiary exam; changed the physician prescription, 
chart notes, and other documentation to falsely establish medical necessity for the power 
wheelchair or accessory; and added facsimile stamps to supporting documentation to make it 
appear as though the physicians office had sent the documents to Orbit. 
 
In May 2015, a DME supplier in Austin, Texas was sentenced to 36 months imprisonment and 3 
years supervised release, and ordered to pay $846,171 in restitution for submitting fraudulent 
bills through the Department of Labor for items never sent to patients.  The supplier was billing 
primarily for electrode pads.  The false claims  were for DME supplies for U.S. Postal employees. 
The scheme ran for at least three years and involved billings to the Government of over $1 
million.  The supplier paid the restitution/forfeiture up-front, and the forfeiture included cash and 
a 2014 BMW. 
 
(SF)  In May 2015, a registered nurse and owner of a DME company in Los Angeles, California 
was sentenced to 4 years in prison and ordered to pay $4.3 million in joint and several restitution 
after being convicted of health care fraud and laundering of monetary instruments.  According to 
the investigation, the nurse/owner and her co-conspirators used cash and checks to pay illegal 
kickbacks to recruit Medicare beneficiaries for power wheelchairs and other DME, to which the 
beneficiaries did not have a legitimate medical need.  She and her co-conspirators also paid 
 
  18 
 illegal kickbacks to a physician in exchange for writing false prescriptions and documents for the 
DME, which was then used to fraudulently bill Medicare.  
 
Electronic Health Records 
 
In June 2015, the Chief Financial Officer (CFO) of Shelby Regional Medical Center of Center, 
Texas, was sentenced to 1 year and 11 months in jail and ordered to pay $4.4 million in 
restitution after pleading guilty to making a false statement.  As CFO he oversaw the 
implementation of electronic health records (EHR) for the hospital and was responsible for 
attesting that the hospitals EHR platform met meaningful use requirements in order to qualify 
for incentive payments under Medicares EHR Incentive Program.   During FY 2012, Shelby 
Regional did not meaningfully use the EHR platform, despite an attestation from the CFO that it 
did. He falsely certified to CMS that Shelby Regional met the meaningful use requirements, 
even though he was fully aware that Shelby Regional used the EHR system sparingly and did not 
meet the criteria for incentives.  As a result of his conduct, Shelby Regional received a $785,655 
EHR incentive payment from CMS in FY 2012.  
 
Health Maintenance Organization 
 
In May 2015, an employee of several organizations in Miami, Florida, including Florida 
Healthcare Plus, Inc. (FHCP), was sentenced to 2 years in prison and ordered to pay $16 million 
in joint and several restitution after pleading guilty to conspiracy to commit health care fraud and 
wire fraud. FHCP was a health maintenance organization in Florida.  According to the 
investigation, the defendant submitted fraudulent Medicare and Medicaid enrollment 
applications for beneficiaries, which claimed that the beneficiaries resided in Florida, when they 
actually resided in Nicaragua and the Dominican Republic.  In addition to the defendant, five 
other individuals connected to this health care fraud scheme were sentenced in June 2015 to a 
combined 10 years and 3 months in prison and ordered to pay $16 million in joint and several 
restitution. 
 
Home Health Providers 
 
(SF) In October 2014, the director of two Miami-based businesses that purportedly provided 
home health services to Medicare beneficiaries was sentenced to 10 years and 1 month in prison 
and ordered to pay $18.6 million in restitution after pleading guilty to conspiracy to commit 
health care fraud and payment of kickbacks in connection with a federal healthcare program.  
The investigation related that the director paid co-conspirators thousands of dollars in kickbacks 
in exchange for referring Medicare beneficiaries and also paid kickbacks to the owner of a 
medical clinic in exchange for home health service prescriptions. 
 
In November 2014, CareAll Management LLC, a Nashville, Tennessee home health provider, 
agreed to pay $25 million to settle civil FCA allegations that it submitted false and upcoded 
home health care billings to the Medicare and Medicaid programs.  The settlement resolves 
allegations that CareAll overstated the severity of patients conditions to increase billings and 
billed for services that were not medically necessary and rendered to patients who were not 
homebound. 
 
 
  19 
 (SF)  In November 2014, an administrator and owner at two Miami-based Florida businesses 
which purportedly provided home health care and physical therapy services to Medicare 
beneficiaries was sentenced to 6 years and 8 months of incarceration and ordered to pay   
$45 million in restitution after pleading guilty to conspiracy to commit health care fraud.  The 
investigation revealed that administrator/owner and her co-conspirators paid kickbacks to patient 
recruiters for the referral of patients and for the provision of medically unnecessary or sham  
prescriptions, plans of care, and certifications for therapy and home health services.  The 
businesses submitted approximately $74 million in fraudulent claims for home health services to 
Medicare and were paid approximately $45 million on those claims. Another co-conspirator was 
previously sentenced to 5 years in prison and ordered to pay $27 million in restitution.  
 
(SF) In January 2015, the owner of Nations Best Home Health, a Miami home health care 
agency, was sentenced to 106 months imprisonment for his role in a $35 million Medicare fraud 
scheme. According to his plea agreement, the defendant and his co-conspirators operated 
Nations Best for the purpose of billing the Medicare program for, among other things, physical 
therapy and other home health care services that were not medically necessary or not provided.  
The co-conspirators paid kickbacks to patient recruiters in exchange for patient referrals to  
Nations Best, as well as prescriptions, plans of care, and certifications for medically 
unnecessary home health care services, all of which were used to fraudulently bill the Medicare 
program for unnecessary home health care services. 
 
In January 2015, an owner and operator of Norfolk, Virginia based Community Personal Care 
home health care services was sentenced to 63 months in prison, followed by three years of 
supervised release, and his wife who was the companys office administrator and executive 
assistant was sentenced to 25 months in prison, followed by three years of supervised release for 
their operation of a massive false billing scheme.  During a three week trial, the government 
proved that 7,800 fraudulent claims were submitted to the Virginia Medicaid program, falsely 
representing that personal care and respite care services had been provided to 78 Medicaid 
recipients by Community Personal Care.  To conceal the fraudulent payments, the defendants 
directed employees to alter the companys office records, including home health aide time  
sheets. Both defendants were ordered together to pay $1.5 million in restitution.   
 
(SF) Between January 2015 and May 2015, five patient recruiters pled guilty for their roles in a 
$4.5 million Medicare fraud scheme involving Joystar Home Health Services, LLC, a home  
health care company located in Richmond, Texas. According to court documents, each of the 
defendants agreed with Joystars owner and director of nursing to refer Medicare beneficiaries to 
Joystar in exchange for kickbacks.  Joystar then billed Medicare for home health care services 
that were medically unnecessary or not provided.  The co-conspirators in the fraud also paid 
beneficiaries to participate in the scheme and paid physicians to authorize medically unnecessary 
services. Previously, the owner of Joystar was sentenced to five years imprisonment following 
his guilty plea to structuring over $1.8 million to conceal the funds he used to pay kickbacks to  
patient recruiters and physicians.  Joystars director of nursing, who pled guilty to health care 
fraud and structuring, is awaiting sentencing.    
  
In February 2015, ResCare Iowa Inc., a home health service provider, agreed to pay $5.6 million 
to settle civil FCA allegations that it submitted false home health care billings to Medicare and 
 
  20 
 Medicaid. Medicare and the state of Iowas Medicaid program  require an independent physician 
to certify that home health care services are medically necessary and to order the specific type 
and amount of health care services to be provided by the home health agency (HHA).  The 
settlement resolves allegations that ResCare Iowa billed the government for services provided to 
Medicare and Medicaid patients in Iowa without documenting compliance with these 
requirements. 
 
(SF)  In April 2015, the Miami, Florida owner of a business that purportedly provided home  
health care and physical therapy services to Medicare beneficiaries was sentenced to 9 years and 
5 months in prison and ordered to pay $21 million in restitution after pleading guilty to 
conspiracy to commit health care fraud.  According to the investigation, the owner and his co-
conspirators paid patient recruiters to place beneficiaries at the business.  The recruiters then sent  
the beneficiaries to doctors to obtain prescriptions for home health services that were not 
medically necessary and were not provided.  The man and his co-conspirators caused patient 
documentation to be falsified in order to bill Medicare approximately $32 million for the 
fraudulent services. He was indicted in May 2013 and was an HHS-OIG Most Wanted Fugitive 
living in Cuba until he returned to the United States in September 2014 and was arrested. 
 
(SF) Between April and July 2015, three defendants were sentenced in the Eastern District of 
Michigan to a combined 20 years and 8 months in jail and ordered to pay more than $22 million 
in joint and several restitution after being convicted of conspiracy to commit health care fraud 
and other charges. Two of the defendants jointly operated several home health agencies in 
Michigan, while the third, who was a daughter of one of the others, co-operated a home health 
agency. According to the investigation, the three defendants, along with their co-conspirators, 
paid kickbacks and bribes to recruiters and others for beneficiary information that would be used 
to falsely bill Medicare millions for home health services that were medically unnecessary and 
not performed. Another co-conspirator, who jointly operated several of the home health care 
facilities, was indicted in September 2012, but investigators believe that he fled the country.  
 
(SF) In April 2015, the owner of AA Advanced Home Health Inc., a Miami home health care 
agency, was sentenced to 113 months imprisonment for his role in a $32 million home health 
care fraud scheme.  As part of his guilty plea, the defendant admitted that he and his co-
conspirators paid kickbacks to patient recruiters in exchange for patient referrals and billed 
Medicare for physical therapy and other home health care services that were medically 
unnecessary or not provided. 
 
(SF) In April 2015, the owner of multiple home health care agencies in the Detroit area was 
sentenced to 120 months imprisonment after being convicted in an eight-week jury trial for his 
role in a $29.1 million Medicare fraud scheme.  The wide-ranging scheme involved 
approximately 30 purported medical clinics in the Detroit area that paid kickbacks to patient  
recruiters and billed Medicare for home health services that were not provided. Eight co-
defendants previously pled guilty and two co-defendants were convicted at trial.  One of the co-
defendants who owned two home health care companies involved in the scheme pled guilty and 
was sentenced to 80 months imprisonment in July 2015.  That defendant also received proceeds 
of the home health care fraud through bank accounts he controlled, withdrew substantial sums  
for his personal use, failed to report these proceeds on his individual federal income tax returns, 
and pled guilty to filing a false tax return.  
 
  21 
 (SF) In May 2015, the owner of a Miami-based business that purportedly provided home health 
and therapy services to Medicare beneficiaries was sentenced to 10 years in prison and ordered 
to pay $13 million in joint and several restitution after pleading guilty to conspiracy to commit 
health care fraud.  The owner admitted that he and his co-conspirators billed Medicare for, 
among other things, expensive physical therapy and home health care services that were not 
medically necessary and/or were not provided.  The owner and his co-conspirators also paid 
kickbacks and bribes to other co-conspirators in doctors' offices and clinics in exchange for 
providing home health and therapy prescriptions.  From approximately January 2009 to 
November 2014, Longcare submitted more than $13 million in claims to Medicare for home 
health services that were not necessary and/or were not provided.  Eight defendants who 
participated in the fraud scheme were previously sentenced to a combined 53 years and 7 months 
in jail.  
 
In June 2015, a group of home health care companiesFriendship Home Healthcare, Inc., 
Friendship Home Health, Inc., Angel Private Duty and Home Health, and Friendship Home  
Health Agency, LLC. (collectively Friendship)and their owner agreed to pay $6.5 million to 
resolve civil FCA allegations that they improperly billed federal health care programs for home  
health services.  The settlement resolves allegations that Friendship submitted false claims for 
private duty nursing services that were furnished or supervised by a woman who was excluded 
from billing federal and state health care programs and that Friendship submitted required forms 
containing the forged signature of Friendships Director of Nursing. 
 
(SF) In July 2015, an owner and controller of multiple home health care agencies in the Detroit 
area and a co-owner were convicted at trial for their roles in a $33 million home health care fraud 
scheme. One co-defendant, a patient recruiter, previously pled guilty for her role in the scheme.  
According to the evidence at trial, patient recruiters were paid kickbacks to bring Medicare 
beneficiaries into the scheme.  In exchange for cash kickbacks and prescriptions for controlled 
substances, the beneficiaries signed forms and therapy visit sheets that were later falsified to 
indicate they received home health services that were never provided.  Physicians employed by 
one of the defendants then purported to examine non-homebound Medicare beneficiaries for 
home health care services, signed false paperwork so they could be billed through four home 
health agencies, and provided the patients with narcotic prescriptions.  
 
Hospice Care 
 
In February 2015, for-profit hospice provider Good Shepherd Hospice Inc., whose main location 
is in Oklahoma City, and certain affiliated entities agreed to pay $4 million to resolve civil FCA 
allegations that they submitted false claims for hospice patients who were not terminally ill.  The  
Medicare hospice benefit is available for patients who elect palliative treatment for a terminal 
illness and have a life expectancy of six months or less if their illness runs its normal course.  
The settlement resolved allegations that Good Shepherd knowingly submitted false claims for 
hospice care for patients who were not terminally ill by pressuring staff to meet admissions and 
census targets, paying bonuses to staff based on the number of patients enrolled, hiring medical 
directors based on their ability to refer patients, and failing to properly train staff on the hospice 
eligibility criteria.  
 
   
 
  22 
 In June 2015, Covenant Hospice Inc., a non-profit hospice service provider, agreed to pay 
$10 million to settle civil FCA allegations that it overbilled Medicare, TRICARE and Medicaid 
for hospice services. Hospice benefits are generally available only for patients who have a life 
expectancy of six months or less if their disease runs its normal course.  Patients admitted to a 
hospice stop receiving care to cure their illnesses and instead receive medical care focused on 
providing them with relief from  the symptoms, pain and stress of a terminal illness.  The 
settlement resolved allegations that Covenant improperly submitted hospice claims for higher-
level inpatient care that should have been billed at lower-level routine home care. 
 
(SF) In June 2015, two physicians and three owners of hospice and home health care companies 
in the greater Detroit area were charged for their roles in a $58.3 million scheme to defraud 
Medicare by submitting claims for home health care and hospice services that were medically 
unnecessary or not provided. According to court documents, the owners of the home health care 
and hospice companies, two of whom are also registered physical therapists, paid physicians and 
patient recruiters kickbacks for referring patients, then billed Medicare for services that were 
medically unnecessary or never provided.  The companies, located in Livonia, Michigan, were A 
Plus Hospice and Palliative Care, At Home Hospice, and At Home Network Inc., a home health 
care agency.  The physicians who solicited and received kickbacks also submitted claims to 
Medicare for medically unnecessary physician services. Court documents also allege that one of 
those physicians used prescriptions for controlled substances to induce beneficiaries to allow At 
Home Network to bill Medicare for purportedly providing services to the beneficiaries.   
 
Hospitals and Health Systems  
 
In October 2014, Dignity Health, the fifth largest health system in the country formerly known as 
Catholic Healthcare West, agreed to pay $36.7 million to settle civil FCA allegations that 13 of 
its hospitals in California, Nevada, and Arizona knowingly submitted false claims to Medicare 
and TRICARE by admitting patients who could have been treated on a less costly, outpatient 
basis. Specifically, the government alleged that certain Dignity hospitals billed Medicare and 
TRICARE for inpatient care for certain patients who underwent elective cardiovascular 
procedures and elective, minimally-invasive kyphoplasty procedures and patients with certain 
common medical diagnoses where admission as an inpatient was medically unnecessary and 
appropriate care could have been provided in a less costly outpatient or observation setting. 
 
In December 2014, the owner/operator of a hospice agency in Greenwood, Mississippi was 
sentenced to 5 years and 10 months in prison and ordered to pay $7.9 million in restitution after 
pleading guilty to conspiracy to commit healthcare fraud.  The investigation revealed that, from  
around March 2010 to February 2013, the owner/operator and her co-conspirators used the 
hospice to submit millions of dollars in fraudulent claims to Medicare, for which they were 
reimbursed more than $12.5 million.  These false billings included claims for patients who were 
not eligible for hospice benefits because they were not terminally ill and claims based on medical 
records containing forged signatures of the beneficiaries, the hospice Medical director, and/or the 
beneficiaries attending physician.  In addition, the defendant, through the hospice, submitted 
claims to Medicare based on patient referrals from physicians who, in actuality, never referred 
patients. Many of the patient names were obtained from a medical records clerk, who has been 
separately charged for accepting over $240,000 in kickbacks from the defendant.  The defendant 
 
  23 
 used the funds obtained from Medicare to purchase more than $1.4 million in vehicles and 
property. 
 
In December 2014, five senior hospital administrators and five hospital physicians and a 
podiatrist in Illinois were charged with criminal violation of conspiracy to receive kickbacks and 
receiving kickbacks. In December 2014, two administrators pled guilty and the remaining 
administrators went to trial.  After a seven-week trial, on March 19, 2015, the jury found each of 
the defendants guilty of the charges alleged. The Court sentenced one administrator to 54 
months imprisonment and a $770,000 fine, another administrator was sentenced to 21 months 
imprisonment, and a third was sentenced to a term of imprisonment of 12 months and 1 day and 
to pay a fine of $25,000 on July 30, 2015. The Court has also entered joint and several orders of 
forfeiture against the administrators in the amount of $10.5 million and $8.5 million.  Three 
doctors pled guilty and one has been sentenced to six months imprisonment, two went to trial 
and one was acquitted, the third doctor is set to go trial in 2016. 
 
In February 2015, Community Health Systems Professional Services Corporation (CHS), a 
nationwide hospital management company, and three of its affiliated New Mexico hospitals 
agreed to pay $75 million to settle civil FCA allegations that they made illegal donations to 
county governments that were used to fund the state share of Medicaid payments to the hospitals.  
Under a program discontinued in 2014, the federal government reimbursed New Mexico for 
approximately 75 percent of supplemental Medicaid expenditures in rural hospitals, and required 
that New Mexicos 25 percent matching payments had to consist of state or county funds, and 
not donations from private hospitals.  The government alleged that CHS knowingly made 
improper donations to Chaves, Luna, and San Miguel counties, which were then used by the 
counties, and subsequently the state, to obtain federal matching payments.  The government 
alleged that CHS concealed the true nature of these donations, and as a result of its scheme, 
received supplemental Medicaid payments which were funded by the United States in the 
amount of three times CHS donations.   
 
In April 2015, The Medical Center of Central Georgia, Inc. (MCCG) agreed to pay $20 million 
to resolve civil FCA allegations that it submitted false claims to Medicare for medically 
unnecessary inpatient admissions, including zero-day stays, one-day stays, cardiac stays with a 
procedure, and cardiac stays without a procedure.  Specifically, these services should have been 
billed as outpatient or observation services due to the absence of medical necessity for inpatient 
services.  
 
In April 2015, Citizens Medical Center, a county-owned hospital in Victoria, Texas, agreed to 
pay $21.7 million to settle civil FCA allegations that it engaged in improper financial 
relationships with referring physicians. The settlement resolved allegations that the hospital 
provided compensation to several cardiologists that exceeded the fair market value of their 
services and that the hospital paid bonuses to emergency room physicians that improperly took 
into account the value of their cardiology referrals in violation of the Stark Law. 
   
 
  24 
 In June 2015, Childrens Hospital in Washington, DC, Childrens National Medical Center Inc., 
(CNMC) and its affiliated entities agreed to pay $12.9 million to resolve civil FCA allegations 
that they submitted false cost reports and other applications to the components and contractors of  
HHS, as well as to Virginia and District of Columbia Medicaid programs.  The settlement 
resolves allegations that CNMC misstated information regarding its available bed count and 
overhead costs on cost reports and applications that were used by HHS and Medicaid programs 
to calculate reimbursement rates to CNMC. 
 
In June 2015, Community Health Network (CHN), an Indiana-based non-profit health system, 
agreed to pay over $20 million to resolve allegations that it submitted false claims to the 
Medicare and Medicaid programs.  CHN contracted with free-standing ambulatory surgery 
centers (ASCs) to provide outpatient surgical services to CHN patients.  When billing Medicare 
and Medicaid, however, CHN allegedly represented that the surgery was performed in the out-
patient department of CHNs hospitals, rather than in an ASC.  Based on this prohibited practice, 
CHN allegedly received a higher reimbursement from the Medicare and Medicaid programs than 
it was entitled. 
 
(SF) In July 2015, the former owner and chief executive officer, the chief operating officer, and 
the chief financial officer of Sacred Heart Hospital, a now-closed acute care facility in Chicago, 
were sentenced to 54 months, 21 months, and 12 months and a day in prison, respectively, for 
their roles in a Medicare and Medicaid kickback scheme.  Following a seven-week trial, a jury 
convicted these defendants of conspiring to violate the AKS and of substantive AKS violations.  
The evidence at trial revealed that the defendants were involved in a conspiracy to pay 
physicians hundreds of thousands of dollars in illegal bribes and kickbacks to induce patient 
referrals to the hospital and to increase the patient census, which, in turn, increased hospital 
revenue. Five other defendants pled guilty in the case, including three physicians, a chief  
operating officer, and the vice president of geriatric services.  Another physician defendant was 
found guilty of violating the AKS following a bench trial that ended in June 2015.  One 
remaining defendant in the case, a physician, is scheduled for trial in February 2016. 
 
(SF) In August 2015, a jury in the Southern District of Florida returned guilty verdicts against a 
former medical director and three therapists of Health Care Solutions Network Inc., a defunct 
partial hospitalization program that purported to provide intensive psychiatric treatment to 
Medicare and Medicaid beneficiaries. The trial evidence showed that the former medical 
director routinely signed what he knew to be fabricated and altered medical records without 
reviewing the substance of the records and, in most instances, without ever meeting with the 
patients.  The evidence at trial also demonstrated that the three therapists fabricated medical 
records to support Healthcare Solution Networks false and fraudulent claims  for reimbursement 
for intensive psychiatric services.  In total, Healthcare Solutions Network submitted 
approximately $63.7 million in fraudulent claims to Medicare and Medicaid, which paid $28 
million on those claims.  Two co-defendants were each sentenced to six years imprisonment in 
February 2015, following their convictions in a separate November 2014 trial.  
   
 
  25 
 In September 2015, North Broward Hospital District, a special taxing district of the state of 
Florida that operates hospitals and other health care facilities, agreed to pay $69.5 million to 
settle civil FCA allegations that it engaged in improper financial relationships with referring 
physicians. The settlement resolved allegations that the hospital district provided compensation 
to nine employed physicians that exceeded the fair market value of their services in violation of 
the Stark Law. 
 
In September 2015, Columbus Regional Healthcare System (Columbus Regional) and a 
physician agreed to pay more than $25 million to settle civil FCA allegations that they submitted 
claims to federal health care programs that violated the Stark Law and that misrepresented the 
level of services they provided.  The government alleged that Columbus Regional provided 
excessive salary and directorship payments to the physician that violated the Stark Law, 
submitted claims for services at higher levels than supported by the documentation, and 
submitted claims for radiation therapy at higher levels than the therapy that was provided.    
Under the settlement agreement, Columbus Regional agreed to pay $25 million, plus additional 
contingent payments not to exceed $10 million, for a maximum settlement amount of $35 
million; the physician has agreed to pay $425,000.   
 
In September 2015, Adventist Health Care System, a non-profit healthcare organization that 
operates hospitals and other healthcare facilities in 10 states, agreed to pay $115 million to settle 
civil FCA allegations that they submitted false claims to Medicare and Medicaid.  Adventist 
allegedly paid bonuses to its employed physicians based on the number of tests and procedures 
they ordered and billed Medicare for its employed physicians professional services using 
improper coding modifiers. 
 
Identity Theft 
 
In June 2015, an individual in Naples, Florida was sentenced to 6 years in prison and ordered to 
pay $351,358 in joint and several restitution after pleading guilty to charges relating to health 
care fraud, identity theft, and distribution of controlled substances.  He admitted that he and his 
co-conspirators, including his brother, submitted claims for reimbursement from Medicare, 
Medicaid, and TRICARE for prescriptions that were not filled or provided to beneficiaries or 
recipients, including prescriptions for patients that had not been written or authorized by a 
licensed physician. The brother, who was a licensed pharmacist and owner of a pharmacy used 
to further the scheme, previously pleaded guilty to conspiracy to commit health care fraud and 
was sentenced to 2 years in prison in March 2014.  
 
In June 2015, a husband and wife were sentenced to a combined 30 years and 9 months of 
incarceration and ordered to pay over $1.2 million in joint and several restitution and forfeiture 
after being convicted of charges related to health care fraud. Evidence at trial showed that the 
two operated a sham clinic in Coral Gables, Florida, and employed unlicensed medical 
professionals to bill Medicare for HIV services that were never rendered. The clinic used billing 
numbers of other medical professionals without their knowledge in order to submit the 
fraudulent claims.  The couple also paid co-conspirators to recruit Medicare beneficiaries for 
their Medicare identification numbers, and they instructed the beneficiaries to enroll into a 
targeted Medicare Part C & D plan.  
 
  26 
 Laboratories 
 
In August 2015, in Newark, New Jersey, three physicians were sentenced after pleading guilty to 
charges related to a test-referral kickback scheme.  According to the investigation, Biodiagnostic 
Laboratory Services LLC (BLS) solicited and paid bribes to physicians in exchange for referring 
patient blood specimens to the laboratory.  As part of the kickback scheme, BLS entered into 
sham consulting agreements, sham rental and service agreements, and offered cash and other 
inducements, such as third party businesses, credit card payments, and valuable items (cars and 
electronics).  BLS used the patient blood specimens to submit more than $100 million in claims  
to Medicare and private insurers. In April and May of 2015, the physicians admitted to 
accepting approximately $1,500 or more per month in return for referring patient blood 
specimens.  The three were sentenced to a combined 7 years and 2 months in jail and ordered to 
pay a combined $434,300 in restitution.  BLSs owner pleaded guilty to conspiracy to commit 
bribery and money laundering and is awaiting sentencing.  
 
In April 2015, two cardiovascular testing laboratoriesHealth Diagnostics Laboratory Inc. 
(HDL), of Richmond, Virginia, and Singulex Inc., of Alameda, Californiaagreed to resolve 
civil FCA allegations that they paid physicians kickbacks in exchange for patient referrals and 
billed federal health care programs for medically unnecessary testing.  The laboratories allegedly 
induced physicians to refer patients for blood tests by paying them processing and handling fees 
of between $10 and $17 per referral and by routinely waiving patient co-pays and deductibles.  
Under the settlements, HDL will pay $47 million and Singulex will pay $1.5 million.   
 
Nursing Homes and Facilities  
 
In October 2014, Extendicare Health Services Inc., a nationwide skilled nursing facility, and its 
subsidiary Progressive Step Corporation (ProStep), a rehabilitation services provider, agreed to 
pay $38 million to settle civil FCA allegations that they billed Medicare and Medicaid for 
nursing services that were so deficient that they were effectively worthless and billed Medicare 
for medically unreasonable and unnecessary rehabilitation therapy services.  The settlement 
resolves allegations that Extendicare, among other things, failed to have a sufficient number of 
skilled nurses to adequately care for its skilled nursing residents, failed to provide adequate 
catheter care to some of the residents, and failed to follow the appropriate protocols to prevent 
pressure ulcers or falls. As a result of the inadequate care, the government alleged that patients 
suffered fractures, head injuries, malnutrition, dehydration, pressure ulcers, infections, and 
amputation of limbs.  In addition, the settlement resolves allegations that Extendicare provided 
medically unreasonable and unnecessary rehabilitation therapy services to its Medicare Part A 
beneficiaries so that it could bill Medicare for those patients at the highest possible per diem rate. 
 
In March 2015, two skilled nursing facility operatorsthe Catholic Health Care System, a/k/a 
ArchCare and Ross Manor, agreed to pay a total of $4.7 million to resolve civil FCA allegations  
that they submitted false claims to Medicare for rehabilitation services delivered by their 
subcontractor, RehabCare Group East, Inc. (RehabCare), a part of Kindred Healthcare, Inc..  The 
government alleged that the nursing homes failed to prevent RehabCare from routinely providing 
unreasonably high levels of therapy during so-called assessment reference periods, and then 
providing less therapy to those same patients outside the assessment reference periods.  As a 
 
  27 
 result of this practice by RehabCare, the nursing homes frequently billed Medicare for its 
patients care at the highest therapy-based levels, even though the patients often were not 
receiving therapy at those levels.  The settlements further resolved allegations that the nursing 
homes failed to prevent RehabCare from presumptively placing patients in the highest 
reimbursement level and planning amounts of therapy based on thresholds for billing at higher 
reimbursement levels rather than based on patients clinical needs.  
 
In June, 2015, Hebrew Homes Health Network Inc., a skilled nursing service provider in Miami-
Dade County, Florida, and its former president and executive director, agreed to pay $17 million 
to resolve civil FCA allegations of improperly paying doctors for referrals of Medicare patients 
requiring skilled nursing care. The settlement resolved allegations that Hebrew Homes hired 
numerous physicians ostensibly as medical directors, when in reality, most of the medical 
directors were required to perform few, if any, of their contracted job duties.  Instead, they were 
allegedly paid for their patient referrals to the Hebrew Homes facilities, which increased 
exponentially once the medical directors were put on the payroll. 
 
Patient Harm  
 
In October 2014, a Westchester County, New York cardiologist was sentenced to 3 years in 
prison and ordered to pay $2 million in restitution and forfeiture after pleading guilty to a charge 
of health care fraud. According to the investigation, the cardiologist lured new patients and 
maintained existing patients by offering them narcotic prescriptions in exchange for those 
patients undergoing unnecessary diagnostic tests and other medical procedures.  He then billed 
Medicare, Medicaid, and private insurance carriers millions of dollars for these fraudulent 
claims.  Investigators believe that he also performed cardiac procedures that served no legitimate 
medical purpose, billed for office visits that did not occur, and falsified patients' symptoms to 
justify costly and unnecessary diagnostic tests.   
  
(SF) In July 2015, a Detroit area hematologist-oncologist was sentenced to 45 years 
imprisonment and ordered to forfeit $17.6 million for the health care fraud, money laundering 
and kickback scheme he devised and executed.  The government showed at a contested 
sentencing that the defendant administered medically unnecessary infusions and injections to 553 
individual patients, including medically unnecessary chemotherapy, cancer treatments, 
intravenous iron, and other infusion and injection therapies.  Patients receiving these treatments 
suffered many serious side effects as a result.  The defendant also referred patients for 
unnecessary cancer tests at his diagnostic facility, United Diagnostics, PLLC, in Rochester Hills, 
Michigan. The defendant billed Medicare, Blue Cross Blue Shield of Michigan, Health Alliance 
Plan, and other insurers approximately $34 million in fraudulent claims through his cancer 
treatment clinic, Michigan Hematology Oncology P.C., which had multiple locations in 
Michigan, and through United Diagnostics.  The defendant also admitted to soliciting and 
receiving kickbacks from Guardian Angel Hospice and Guardian Angel Home Health Care in 
exchange for referring his patients to those companies.  Finally, he admitted that he laundered 
the proceeds of his infusion therapy fraud to promote his diagnostic testing fraud.  
   
 
  28 
 Pharmacies  
 
In December 2014, Rite Aid Corporation, a national retail drugstore chain, agreed to pay nearly 
$3 million to settle civil FCA allegations that  it offered and provided improper inducements to 
beneficiaries of government programs to transfer their prescriptions to Rite Aid pharmacies in 
violation of the AKS. These inducements took the form of gift cards, gift checks, and similar 
promotions. 
  
In May 2015, PharMerica Corporation, a national long-term care pharmacy provider, entered 
into two settlements for a total of $31.5 million to resolve claims that it violated the FCA and the 
Controlled Substances Act.  The government alleged that PharMerica dispensed and billed 
Medicare for schedule II controlled substances without a valid prescription.  The prescriptions 
were allegedly invalid because they did not have a prescriber's signature or, in the case of 
emergency dispenses, were not based on an oral prescription from the prescriber followed by a 
written prescription with the prescriber's signature within seven days. 
 
In July 2015, Blanding Health Mart Pharmacy, a Jacksonville, Florida-based compounding 
pharmacy, agreed to pay $8.4 million to resolve civil FCA allegations that it sought 
reimbursement for compounding pharmaceutical prescriptions that were not medically necessary 
and were written by physicians that had never actually seen the patients. 
 
In August 2015, the Chief Executive Officer of a Kentwood, Michigan pharmacy was sentenced 
to ten years in prison, agreed to a 50-year exclusion from federal health care programs, and is 
likely to pay over $8 million in restitution in connection with a conspiracy to commit health care 
fraud by billing Medicare Part D plans, Medicaid, and private insurers for over $79 million in 
drugs that were adulterated and misbranded in violation of the Federal Food, Drug, and Cosmetic 
Act. The CEOs conviction was the eighteenth criminal conviction in a case that included the 
felony convictions of six licensed pharmacists.  This pharmacy serviced over 800 nursing and 
adult foster care homes between 2006 and 2010.  As part of its operations they retrieved unused 
prescription drugs (including controlled substances) from those homes and returned those drugs 
to pharmacy stock in a manner that resulted in the cross-contamination of drugs, the improper 
labeling of drugs, the placement of different drug dosages into stock bottles, and the placement 
of different drugs in the same stock bottle.  The pharmacy then re-dispensed and billed health 
care insurers for those adulterated and misbranded drugs.   
 
Physician Practice  
 
In October 2014, two groups of diagnostic centers  agreed to pay a total of $2.6 million to settle 
civil FCA allegations. The first group, doing business as One Step Diagnostic, agreed to pay 
$1.2 million to settle allegations that it violated the Stark Law and the FCA by entering into 
sham consulting and medical director agreements with physicians who referred patients to its 
diagnostic centers. The second group, comprised of Complete Imaging Solutions LLC doing 
business as Houston Diagnostics, Deerbrook Diagnostics & Imaging Center LLC, Elite 
Diagnostic Inc., Galleria MRI & Diagnostic LLC, Spring Imaging Center Inc. and West Houston 
MRI & Diagnostics LLC, agreed to pay $1.4 million to resolve allegations that they engaged in 
improper financial relationships with referring physicians and improperly billed Medicare using 
 
  29 
 the provider number of a physician who had not authorized them to do so and had not been 
involved in the provision of the services being billed. 
 
(SF) In December 2014, a physician and a registered nurse were sentenced to 120 months and 48 
months in prison, respectively, for their roles in a $3 million Medicare fraud scheme following 
their convictions at trial in May 2014.  According to the evidence at trial, the physician defendant 
falsely certified that beneficiaries needed home health care and, in exchange for kickbacks, 
referred beneficiaries to PTM Healthcare Services Inc., a defunct home health care agency in 
Irving, Texas, at which his co-defendant served as the director of nursing. The nurse defendant 
and co-conspirators then prepared falsified medical records to make it appear that beneficiaries 
needed home health care services and billed Medicare for services that were medically 
unnecessary or not provided. The owner of PTM Healthcare Services previously pled guilty in 
2013 to health care fraud conspiracy. 
 
(SF) In February 2015, a jury in Detroit convicted an unlicensed physician for his participation in 
a nearly $4.7 million Medicare fraud scheme.  The evidence at trial revealed that the defendant 
used pre-signed prescription pads from a licensed physician to prescribe drugs to Medicare 
patients and also referred patients for medically unnecessary home health care services in 
exchange for kickbacks. In January 2015, shortly before trial, the owner of Cherish Home  
Health Services, Inc., one of the companies to which the unlicensed physician referred patients, 
pled guilty and admitted to paying kickbacks to the unlicensed physician and billing Medicare 
for home health care services that were not provided.  Two other defendantsa patient recruiter 
and a physicianpreviously pled guilty for their roles in the fraud.    
 
(SF) In February 2015, an Illinois physician pled guilty to accepting illegal kickbacks and 
benefits totaling nearly $600,000 from two pharmaceutical companiesTeva Pharmaceuticals 
USA Inc. and IVAX LLCin exchange for regularly prescribing the anti-psychotic drug 
Clozapine to his patients. As set forth in the plea agreement, the physician agreed to switch his 
patients to generic Clozapine if the manufacturer agreed to pay him $50,000 under a one-year 
consulting agreement and to provide other benefits to the physician.  The physician also agreed 
to pay over $3.8 million to settle a parallel civil FCA lawsuit alleging that, by prescribing 
Clozapine in exchange for kickbacks, he caused the submission of false claims to Medicare and 
Medicaid for the Clozapine he prescribed for thousands of elderly and indigent patients in at 
least 30 Chicago-area nursing homes and other facilities.  Previously, in March 2014, Teva and 
IVAX paid a total of $27.6 million to resolve allegations related to paying kickbacks to the 
physician defendant. 
 
(SF) In March 2015, a New York doctor pled guilty to health care fraud conspiracy for his 
involvement in a scheme to fraudulently bill Medicare for $14.2 million in claims for medically 
unnecessary treatments.  As part of the plea, the defendant agreed to pay $5.4 million in 
restitution to the Medicare program, which represents the total amount of money Medicare paid 
as the result of the fraudulent claims.  In connection with his guilty plea, the defendant admitted 
that he and other medical providers at the clinic submitted approximately $14.2 million in false 
and fraudulent claims to Medicare for medically unnecessary vitamin infusions, physical 
therapy, and occupational therapy that did not qualify for reimbursement by Medicare. 
   
 
  30 
 (SF) In April 2015, a physician who served as the medical director of Hollywood Pavilion, LLC, 
a state-licensed psychiatric hospital located in Hollywood, Florida, was sentenced to 60 months 
imprisonment for his role in a $67 million Medicare fraud scheme.  Evidence at trial revealed 
that the defendant falsified medical records certifying that patients qualified for and received 
intensive outpatient services.  The evidence demonstrated that the defendant signed patient files 
for over 400 patients, certifying that he had provided mental health services to each of them, 
even though he never saw or provided any treatment to the patients.  Hollywood Pavilion used 
these falsified records to submit over 2,800 false claims to Medicare.  Five other individuals 
previously were convicted and sentenced in this case, including Hollywood Pavilions former 
chief executive officer, chief operating officer, and clinical director.  
 
In April 2015, Family Dermatology P.C., the owner and operator of dermatology practices and a 
dermatopathology laboratory, agreed to pay $3.2 million to settle civil FCA allegations that its 
financial relationships with certain employed physicians violated the Stark Law.  Family 
Dermatology employs dermatologists as independent contractors and routinely required them to 
use Family Dermatologys in-house pathology lab, Nelson Dermatopathology, for their 
pathology services. The government alleged that Family Dermatology violated the Stark Law 
and FCA by billing Medicare for dermatopathology analyses performed by Nelson 
Dermatopathology on specimens that were sent to the laboratory by these employed physicians. 
In April 2015, a medical doctor and sole physician at a pain clinic in Athens, Tennessee, was 
sentenced to 28 months and was ordered to pay $7.5 million in restitution to Medicare for 
misbranding drugs with the intent to defraud.  The doctor purchased 254 vials of Botox from a 
foreign supplier, and had used 204 vials during the course of the scheme to defraud, but had 
billed Medicare for 16,119 vials.  A forfeiture order was also entered against the $6.8 million 
seized from the defendants bank accounts.    
 
In May 2015, Garden State Cardiovascular Specialists P.C., a New Jersey cardiology practice 
that owns and operates several facilities under the name NJ MedCare/NJ Heart, agreed to pay 
$3.6 million to settle civil FCA allegations that its facilities and their principals submitted claims  
to Medicare for various cardiology diagnostic tests and procedures, including stress tests, cardiac 
catheterizations, and external counterpulsation, which were not medically necessary.  
 
(SF) In May 2015, an administrator and a biller were convicted after trial for their roles in a   
$4 million Medicare fraud scheme involving Medicall Physicians Group, a home visiting 
physician practice in Schaumburg, Illinois.  The evidence at trial revealed that Medicall billed 
Medicare for services that were never provided to patients, including physician oversight of 
patient care plans, extended patient visits, and other services purportedly provided to individuals 
who had already died. A third defendant, the owner and medical director of Medicall, pled 
guilty prior to trial.  In September 2015, the lead administrator of a home visiting physician 
practice was sentenced to 87 months in prison and the medical biller, who submitted many of the 
fraudulent claims to Medicare, was sentenced to serve 45 months in prison and pay restitution of 
approximately $1 million. 
  
   
 
  31 
 (SF) In August 2015, a dermatologist was sentenced to seven years imprisonment, following a 
jury trial that resulted in six mail and wire fraud convictions.  The defendant also was ordered to 
pay over $3.7 million in restitution to Medicare, private insurers, and patients.  According to the 
evidence at trial, the defendant misdiagnosed patients benign skin conditions as pre-cancerous 
lesions and falsely billed cosmetic treatments as the destruction of large numbers of such lesions. 
 
In August 2015, a Brooklyn doctor was sentenced to 24 months in prison for his role as the no 
show doctor in a $13 million health care fraud conspiracy scheme.  Medical services were 
provided by a physicians assistant who was acting without supervision by a medical doctor, but 
the doctor still billed Medicare and Medicaid for the services using his provider number.  He also  
falsely certified that patient transportation by ambulette was medically necessary and billed for 
this unnecessary service.  As part of the sentence, the court entered an order directing the doctor 
to pay $6.4 million in restitution and to forfeit $6.6 million.   
 
Prescription Drugs 
 
(SF) In October 2014, the operator of a Dallas family practice and weight loss management 
clinic based in Dallas, Texas, was sentenced to 7 years and 3 months of incarceration and 
ordered to forfeit his house, cars, boat, and funds from several bank accounts after pleading 
guilty to conspiracy to unlawfully distribute controlled substances.  The investigation revealed 
that clinic operated as a pill mill, where dealers recruited and drove patients in groups to the 
clinic to obtain prescriptions for hydrocodone and Xanax.  The clinics office manager and three 
dealers were also sentenced during this reporting period to more than 18 years in prison, 
combined.   
 
In October 2014, two individuals were sentenced to a combined 17 years and 1 month in jail and 
ordered to pay $6.2 million in joint and several restitution after pleading guilty to conspiracy to 
commit health care fraud.  The two individuals operated a Miami-based retail pharmacy.  The 
investigation revealed that their co-conspirators recruited and paid Medicare beneficiaries to 
obtain prescriptions, including for expensive antipsychotic and skin treatment pharmaceutical 
drugs that the co-conspirators subsequently furnished back to the two men.  The two then used 
the fraudulent prescriptions to bill the Medicare Part D program.  
 
In November 2014, a Baltimore, Maryland individual was sentenced to 8 years and 4 months of 
incarceration after pleading guilty to conspiracy to distribute and possession with intent to 
distribute oxycodone. The investigation revealed that the individual obtained fraudulent 
prescriptions for oxycodone from a secretary who was stealing prescriptions from the doctors 
office where she worked.  The prescriptions were filled out in the names of Medicare 
beneficiaries and other defendants.  He then either filled the prescriptions himself and billed 
Medicare, or he had them filled by other individuals and sold the oxycodone pills for around $10  
per pill on the streets. Eight other defendants previously pleaded guilty to charges in connection 
with this scheme and were sentenced to a combined 29 years and 6 months in jail.  
 
In May 2015, the owner/operator of Astramed, a chain of purported medical clinics with multiple 
locations in the Bronx, New York, was convicted of conspiracy to distribute and possess with 
intent to distribute oxycodone and is awaiting his sentencing.  The charge carries a maximum 
 
  32 
 sentence of 20 years in prison. Astramed doctors were paid cash in exchange for writing tens of 
thousands of medically unnecessary prescriptions for large quantities of oxycodone; these 
prescriptions were then filled at pharmacies by co-conspirators who, in turn, resold and 
distributed the drugs at vastly inflated rates.  In total, Astramed issued approximately 31,500 
medically unnecessary prescriptions for oxycodone, comprising nearly 5.5 million tablets with a 
street value of up to $164 million.  More than 20 defendantsincluding doctors, clinic 
employees, and drug traffickershave previously pleaded guilty to their participation in the 
scheme. 
 
In July 2015, the operator of an imaging center in Glendale, California, was sentenced to 15 
years in prison and ordered to pay $9.1 million in joint and several restitution after being 
convicted on charges relating to health care fraud, identity theft, and misbranding pharmaceutical 
drugs. As part of the scheme, patient recruiters brought beneficiaries to the clinic in exchange 
for cash or other inducements.  The patients received prescriptions for anti-psychotic 
medications and other drugs, even though they were not evaluated by a physician or there was no 
medical need for the medications.  The patients were then driven to a pharmacy where, under the 
supervision of the driver, they filled their prescriptions and then gave the drugs to the driver.  
The drugs were eventually sold on the black market or redistributed to pharmacies, where they 
could be rebilled to Medicare and Medi-Cal as new bottles of drugs.  In addition to recruiting 
beneficiaries, the operator and his co-conspirators also stole the identities of beneficiaries and 
used their information to generate fraudulent prescriptions.  Ten of his co-conspirators were 
previously sentenced to a combined 28 years and 3 months in prison. 
 
Psychiatric and Psychological Testing and Services  
 
In April 2015, Health Management Associates, Inc. (HMA) in Naples, Florida, and 14 hospitals 
formerly owned and operated by HMA agreed to pay $15 million to resolve allegations that they 
billed Medicare for intensive outpatient psychotherapy (IOP) services that did not meet the 
conditions for payment, including services provided to patients whose condition did not qualify 
for IOP. 
 
(SF) In June 2015, two owners were indicted for their roles in a $25 million psychological 
testing scheme carried out through eight companies operating in multiple states. According to 
court documents, the defendants owned and operated Nursing Home Psychological Service and 
Psychological Care Services, each with locations in Louisiana, Mississippi, Alabama, and 
Florida. The indictment alleges that the defendants contracted with nursing homes in these states 
to allow their companies to administer psychological tests to the nursing homes residents.  The 
defendants then caused the submission of claims for purported psychological testing, 
psychotherapy, and related services to the nursing home residents that were medically 
unnecessary or not provided. 
 
Quality of Care 
 
In May 2015, Country Villa Service Corp, d/b/a Country Villa Health Services, and the ARBA 
Group, Inc., CF Watsonville East, LLC and CF Watsonville West, LLC of California entered 
into separate settlement agreements worth a combined $3.8 million to resolve allegations of false 
claims for materially substandard or worthless services. The government alleged that employees 
 
  33 
 at Country Villa Watsonville East Nursing Center and Country Villa Watsonville West Nursing 
Center persistently overmedicated elderly and vulnerable residents of their facilities, causing 
infection, sepsis, malnutrition, dehydration, falls, fractures, pressure ulcers, and for some  
beneficiaries, premature death.  In addition to the settlements, the CF Watsonville companies 
entered into a 5-year CIA with HHS-OIG, under which they will retain a quality monitor chosen 
by HHS-OIG to perform quarterly reviews of the facilities quality and compliance systems.  
 
Other Medicare and Medicaid Matters  
 
(SF) In October 2014, the owner/manager of two health centers in Baton Rouge, Louisiana was 
sentenced to 7 years and 6 months in prison and ordered to pay $43.5 million in joint and several 
restitution after being convicted by a jury on charges of conspiracy to commit health care fraud 
and health care fraud. A second defendant was sentenced to 5 years in prison and ordered to pay 
$3.2 million in joint and several restitution after being convicted by a jury of conspiracy to 
commit health care fraud and conspiracy to pay and receive health care kickbacks.  The 
investigation revealed that owner/manager and co-conspirators recruited Medicare beneficiaries 
to attend medically unnecessary or sham programs at the health centers.  The second defendant 
and others were paid cash kickbacks to recruit Medicare beneficiaries to receive partial 
hospitalization program services at the centers.  The health centers billed Medicare more than 
$258 million for these fraudulent services. In addition to these two defendants, 15 defendants 
have been convicted in connection with this scheme.  
 
In January 2015, the Commonwealth of Pennsylvania agreed to pay $48.8 million to settle civil 
FCA allegations that it provided benefits to ineligible aliens in violation of federal law. Under 
the Personal Responsibility Work Opportunity Act, only documented aliens who meet certain 
low-income requirements and who have been in the country for more than five years may receive 
non-emergency aid under Medicaid, Temporary Assistance for Needy Families (TANF) and the 
Supplemental Nutrition Assistance Program (SNAP), formerly known as food stamps.  The 
United States alleged that, between 2004 and 2010, Pennsylvania provided Medicaid, TANF and 
SNAP benefits to ineligible aliens in violation of these restrictions. 
 
In March 2015, heart monitoring company BioTelemetry, Inc., agreed to pay $6.4 million to 
settle civil FCA allegations that its subsidiary, CardioNet, billed Medicare for Mobile Cardiac 
Outpatient Telemetry (MCOT) services that were not reasonable or medically necessary.  An 
MCOT monitor is a real-time, outpatient cardiac monitoring service.  The settlement resolves 
allegations that although CardioNet was aware that MCOT services were not eligible for 
Medicare reimbursement when provided to patients who had experienced only mild or moderate 
heart palpitations, CardioNet knowingly submitted claims to Medicare for more expensive 
MCOT services by using an inaccurate diagnostic code that ensured that the claims would be 
reimbursed by Medicare at a higher rate. 
 
In August 2015, two workers at a wholesale drug distribution operation were sentenced for 
distributing counterfeit and adulterated Botox to a medical clinic in Missouri.  One worker 
received 24 months imprisonment and another received three months imprisonment, and both 
were ordered to forfeit $1 million.  Eight other individuals were previously convicted in the 
Eastern District of Missouris investigation, including two local doctors and a clinic owner, a 
 
  34 
 citizen of the United Kingdom, and two Turkish nationals, with sentences ranging from 30 
months to probation, and over $5 million recovered in forfeitures and fines.  The USAO also 
reached civil settlements with three local doctors who were purchasing unapproved drugs and 
billing them to Medicare and Medicaid, resulting in civil program recoveries in excess of   
$1.6 million.  
 
   
 
  35 
 DEPARTMENT OF HEALTH AND HUMAN SERVICES 

  
 
Office of Inspector General 
 
A certain portion of the funds appropriated under HIPAA are, by law, set aside for Medicare and 
Medicaid activities of HHS-OIG.   In FY 2015, the Secretary and the Attorney General jointly 
allotted $186.1 million to HHS-OIG after accounting for a sequester reduction of $14.7 
million.  Additionally, Congress appropriated $67  million in discretionary funding for HHS-OIG 
HCFAC activities. 
 
In FY 2015, HHS-OIG investigations resulted in 800 criminal actions against individuals or 
entities that engaged in crimes related to Medicare and Medicaid; and 667 civil actions, which 
include false claims and unjust-enrichment lawsuits filed in Federal district court, civil monetary 
penalties (CMP) settlements, and administrative recoveries related to provider self-disclosure 
matters.  In addition, during FY 2015, HHS-OIG excluded a total of 4,112 individuals and 
entities, the details of which are below. 
 
In FY 2015, HHS-OIG continued to staff and support Medicare Strike Force operations worked 
in conjunction with DOJ Criminal Divisions Fraud Section, local USAOs, the FBI, and State 
and local law enforcement agencies.  HHS-OIG has assigned agents to Strike Forces in Miami, 
New York City, Houston, Tampa, Detroit, Los Angeles, Southern Louisiana, Dallas, and 
Chicago.  HHS-OIG has supported Strike Force operations by providing investigative, analytic, 
and forensic resources. These Strike Forces have effectively investigated and prosecuted 
individuals and entities that do not provide legitimate health care services, but exist solely for the  
purpose of defrauding Medicare and other government health care programs.  The continued 
support of Medicare Strike Force operations is a top priority for HHS-OIG.   
 
Program Savings 
 
Investigations, audits, and evaluations frequently reveal vulnerabilities or incentives for 
questionable or fraudulent practices in agency programs or administrative processes.  As 
required by the Inspector General Act, HHS-OIG makes recommendations to agency managers 
to address these vulnerabilities.  In turn, agency managers recommend legislative proposals or 
other corrective actions that, when enacted or implemented, close loopholes and reduce improper 
payments or conduct.  The savings from these joint efforts toward program improvements can be 
substantial. For FY 2015, potential savings from legislative and administrative actions that were 
supported by HHS-OIG recommendations were estimated by third parties, such as the 
Congressional Budget Office or actuaries within HHS, to be $20.5 billion$18.4 billion in 
Medicare savings and $2.1 billion in savings to the Federal share of Medicaid.   
 
Settlement with New York State based on HHS-OIG Audit Recommendations:  Included in these 
savings figures is the $1.95 billion the State of New York agreed to pay to CMS pursuant to a 
settlement agreement based on HHS-OIG audit work. HHS-OIG had found that New Yorks 
Medicaid daily rate for 15 selected State-operated intermediate care facilities (ICFs or 
development centers) for individuals with intellectual and developmental disabilities did not 
meet Federal requirements.  The daily rate for Medicaid beneficiaries to reside in the selected 
 
  36 
 developmental centers grew by a factor of 21 between State fiscal year (SFY) 1985 and SFY 
2009 because the States rate-setting methodology significantly inflated the Medicaid daily rate 
for the developmental centers.  On March 20, 2015, New York and CMS entered into a 
settlement agreement in which New York agreed to pay a total of $1.95 billion to the Federal 
Government to resolve the resulting overpayment determination.  In addition, CMS approved a 
plan amendment to New Yorks Medicaid program  that changed the rate to better reflect the 
actual costs of providing care, saving approximately $1.2 billion.   
 
Additional information about savings achieved through such policy and procedural changes may 
be found in the HHS-OIG fall Semiannual Report to Congress, on-line at http://oig.hhs.gov. 
 
Exclusions 
 
One important mechanism for safeguarding the care provided to program beneficiaries is through 
exclusion of providers and suppliers who have engaged in the abuse or neglect of patients or 
fraud from participation in Medicare, Medicaid, and other federal health care programs.   
During FY 2015, HHS-OIG excluded a total of 4,112 individuals and entities.  Among these 
were exclusions based on criminal convictions for crimes related to Medicare and Medicaid 
(1,329) or to other health care programs (424); for patient abuse or neglect (302); or as a result of 
licensure revocations (1743). This list of conduct is not meant to be exhaustive, but identifies the 
most prevalent causes underlying HHS-OIGs exclusions of individuals or entities in FY 2015.  
In addition to those mentioned in the Program Accomplishments section above, exclusion 
actions by HHS-OIG included: 
 
	   MichiganIn July 2015 a pharmacist was excluded for a minimum period of 18 years based 
on his conviction for, among other charges, conspiracy to distribute and possess with intent 
to distribute controlled substances.  The pharmacist owned and operated a pharmacy in 
Detroit, Michigan. He conspired with other individuals to bring him fraudulent prescriptions, 
to which he dispensed controlled substances with no legitimate medical purpose.  The 
pharmacist then received cash payments for illegally dispensing the controlled substances. 
He was sentenced in February 2015 to 6 years of incarceration. 
 
	   IndianaIn June 2015 an employee of a group home was excluded for a minimum period of 
20 years based on his conviction for criminal deviate conduct.  While working in a group 
home, he instructed a mentally retarded patient to perform sex acts on him  in the living room  
of the group home.  As a result of his conviction, he was sentenced in October 2014 to 10 
years of incarceration.  
 
	   FloridaIn May 2015 an employee of a chiropractic clinic was excluded for a minimum  
period of 15 years based on his conviction for conspiracy to commit mail fraud.  The 
employee helped recruit individuals to participate in staged automobile accidents, instruct 
those recruited on how to participate in the accident and how to collect police reports, told 
them what clinics they should go to for treatment, and prepared fraudulent documentation to 
support medically unnecessary treatment.  As a result of his conviction, Sacerio was 
sentenced in July 2015 to 4 years in prison and ordered to pay approximately $1.1 million in 
restitution.  
 
  37 
 	   New YorkIn January 2015 a physician was excluded for a minimum period of 50 years on 
the basis of his conviction health care fraud, conspiracy to defraud the United States Railroad 
Retirement Board (RRB), and other related charges.  From approximately 1998 through 
2008, the physician assisted employees from the Long Island Railroad (LIRR) in applying for 
disability benefits from the RRB, even though he knew they were not disabled.  The LIRR 
employees generally paid the physician $800 to $1200, often in cash, to prepare medical 
assessments and/or illness narratives for submission to the RRB.  He prescribed and billed 
patients insurers for unnecessary medical tests and he ordered physical therapy and medical 
treatments in an effort to pad their medical files.  The physician fabricated and fraudulent 
assessments enabled 242 LIRR employees to supplement their pensions with a collective $70 
million in RRB disability benefit payments to which they were not entitled.  He was 
sentenced to 8 years in prison and ordered to pay $70.6 million in restitution.  The New York 
State Board for Professional Medical Conduct revoked his medical license, and the New 
York State Office of the Medicaid Inspector General excluded him from participation in the 
Medicaid program. 
 
	   TexasIn December 2014 a pharmacist was excluded for a minimum period of 10 years on 
the basis of her conviction for conspiracy to unlawfully distribute controlled substances.  The 
pharmacist owned and operated Urban Independent Pharmacy (UIP).  The investigation 
revealed that she participated in a scheme whereby dealers recruited patients to obtain 
unlawful prescriptions for controlled substances and drove the patients to UIP, where she 
filled their prescriptions. After the pharmacist filled the prescriptions, the patients provided 
the pills to the dealers, who then sold them on the street for a profit.  She was sentenced to 5 
years in prison.  
 
	   IowaIn November 2014 a pediatrician was excluded for a minimum of 30 years on the 
basis of his conviction of possession of child pornography.  The investigation revealed that 
the pediatrician used a hidden camera to take pictures and videos of his minor patients 
without the advice or knowledge of the patients, their parents, or guardians.  The images and 
videos were taken during what were purported to be necessary medical exams.  Investigators 
searched his computers and found files that included child pornography along with videos 
and images of the minor patients.  Jones was sentenced to 10 years and 1 month in prison.  
The Iowa Board of Medicine also accepted the surrender of his license to practice as a 
medical doctor.  
 
Civil Monetary Penalties 
 
HHS-OIG has the authority to impose civil monetary penalties (CMPs) against providers and 
suppliers who knowingly submit false claims to the Federal Government, who participate in 
unlawful patient referral or kickback schemes, who fail to appropriately treat or refer patients at  
hospital emergency rooms, or who engage in other activities prescribed in statute.  HHS-OIG 
continues to pursue its affirmative enforcement actions under these authorities.  Examples 
include:   
 
	   New JerseyIn March 2015 Sandoz, Inc. agreed to pay $12,640,000 to settle allegations that 
it misrepresented drug pricing data to the Medicare program.  Sandoz, a division of Novartis 
 
  38 
 Pharmaceuticals and one of the worlds largest generic manufacturers, markets hundreds of 
generic medications in the United States.  Under federal law, drug makers must report both 
accurate and timely Average Sales Price (ASP) information to CMS, which CMS uses to set 
payment amounts for most drugs covered under Medicare Part B.  OIG alleged that Sandoz 
failed to submit accurate ASP data to CMS for each quarter from January 2010 through 
March 2012. OIG previously pursued CMPs against Sandoz for late reporting of drug 
pricing information to CMS.  That case was settled in December 2011 with Sandoz agreeing 
to a $230,000 settlement.  The 2015 Sandoz settlement is the largest ever under OIGs drug 
price reporting CMP authority. 
 
	   TexasIn October 2014 three Houston-area physicians collectively agreed to pay $200,266 
for allegedly violating the Civil Monetary Penalties Law (CMPL) provisions applicable to 
kickbacks. OIG alleged that a family practitioner and two orthopedic surgeons received 
illegal remuneration from another physician and his practice.  This improper remuneration 
took the form of the physician paying the salary of one of the family practitioners employees 
to serve as a referral coordinator and hiring the two surgeons as medical directors.  OIG 
alleged that these arrangements took into account the volume or value of referrals made to 
the physicians practice.  To date, 11 physicians have agreed to pay a collective total of 
$1,415,137 to resolve their CMPL liability for allegedly receiving kickbacks from the  
physicians practice.  Yet another physician agreed to be excluded from participation in 
federal health care programs for 3 years. 
 
	   New YorkIn December 2014 a physician and his medical clinic entered into a $694,887 
settlement agreement with OIG.  The settlement resolved allegations that, from May 2008 to 
December 2013, the physician and the clinic knowingly submitted, or caused to be submitted, 
fraudulent claims to Medicare for physical therapy services.  Specifically, OIG alleged that 
these claims were fraudulent for one or more of the following reasons:  (1) physical therapy 
services were not provided or supervised by the rendering provider, (2) group services were 
billed as one-on-one provider-patient physical therapy services, (3) services were performed 
by unqualified individuals, and (4) claims for time-based physical therapy services did not 
accurately reflect the actual time spent performing the services.   
 
	   CaliforniaIn February 2015, Hyundai Drugs and its owner  agreed to pay $1,342,295 to 
resolve allegations under the CMPL. From January 1, 2009 through April 12, 2014, Hyundai 
allegedly submitted claims to Medicare Part D for prescription drugs that it knew or should 
have known were not provided as claimed and were false or fraudulent.  The case was 
investigated as part of Operation Pharm Fury, a joint effort between OIGs Office of 
Investigations, Office of Evaluation and Inspections, and Office of Counsel to the Inspector 
General.  Operation Pharm Fury has exposed pharmacies across the country that have shown 
a pattern of questionably high billing practices when submitting claims to Medicare for 
prescription drugs. 
 
	   KansasIn March 2015 Newton Healthcare Corporation d/b/a Newton Medical Center 
(NMC) agreed to pay $45,000 to resolve its liability under EMTALA.  OIG alleged that 
NMC failed to provide an adequate medical screening examination for a patient who arrived 
at its emergency department 38 weeks pregnant and complaining of abdominal and lower 
back pain. OIG contended that NMC did not record the patients medical history, take any 
 
  39 
 vitals, conduct fetal monitoring, test for fetal movement, or perform any exam on the patient. 
Instead, OIG alleged that NMC instructed the patient to leave and see her personal physician. 
The patient left NMC by private vehicle and arrived at the emergency department of another 
hospital, where she was admitted and delivered a stillborn baby.   
 
Audits and Evaluations 
 
The focus of HHS-OIGs audits and evaluations is determined through a dynamic process and 
adjustments are made to HHS-OIGs work plan throughout the year to meet priorities and to 
anticipate and respond to emerging issues with the resources available.  HHS-OIG assesses 
relative risks in Medicare and Medicaid (as well as the many other programs for which HHS-
OIG has oversight authority) to identify the areas most in need of attention and, accordingly, to 
set priorities for the sequence and proportion of resources to be allocated.  In assessing this 
relative risk, HHS-OIG considers a number of factors, including:  
 
	   Mandatory requirements for OIG reviews, as set forth in laws, regulations, or other 
directives;  
	   Requests made or concerns raised by Congress, HHS management, or the Office of 
Management and Budget (OMB);  
	   Top management and performance challenges facing HHS;  
	   Work to be performed in collaboration with partner organizations;  
	   Managements actions to implement our recommendations from previous reviews; and  
	   Timeliness. 
 
As a consequence of this work planning process, HHS-OIG identified questionable or improper 
conduct in Medicare and Medicaid, and recommended corrective actions that, when 
implemented, will return misspent funds and prevent future wasteful or improper payments.  
Among HHS-OIGs audit and evaluation findings in FY 2015 were the following:  
 
Medicaid Orthodontic Services 
Texas did not ensure that requests for prior authorization of Medicaid orthodontic services were 
approved in accordance with State Medicaid guidelines.  HHS-OIG estimated that Texas paid at 
least $133.4 million for unallowable orthodontic services.  Of 106 sampled orthodontic prior-
authorization requests, 89 were improperly approved:  78 did not qualify for orthodontic 
services, and 11 did not have sufficient documentation to determine whether they qualified.  
 
Medicaid Pediatric Dental Services  
HHS-OIG identified 329 general dentists and 6 orthodontists in California with questionable 
billing. Medicaid paid these providers $117.5 million for pediatric dental services in 2012.  
These 335 dental providersrepresenting 8 percent of the California general dentists and 
orthodontists whom we reviewedprovided either a large number of services or provided 
certain services to an extremely large number of children, among other practices.  Half of the 
dental providers with questionable billing worked for dental chains. 
 
Medicaid Drug Rebates 
Missouri did not always comply with Federal Medicaid requirements for billing drug 
 
  40 
 manufacturers for rebates for physician-administered drugs.  Missouri did not collect the national 
drug codes (NDCs) that were required for it to invoice manufacturers for rebates associated with 
about $34.8 million in physician-administered drugs.  In addition, Missouri did not capture the 
utilization and coding data necessary to collect rebates for all physician-administered drugs. 
Without the NDCs, HHS-OIG was unable to determine whether Missouri improperly claimed 
federal reimbursement for an additional $13.2 million for other physician-administered drug 
claims.  
 
Medicaid Home Health Services  
CMS could not rely on New Yorks or New Jerseys qualification requirements to ensure quality 
of care was provided to Medicaid beneficiaries receiving home health services.  Some New York 
and New Jersey home health agencies (HHAs) did not meet certain Federal and State 
requirements for employee health screenings and training, among other issues.  HHS-OIG 
estimated that $31.9 million in Federal Medicaid reimbursement was associated with HHA 
workers who did not meet Federal and State requirements ($27.9 million in New York and $4 
million in New Jersey).  
 
Terminated Medicaid Providers 
The Affordable Care Act (ACA) requires States to terminate providers who were already 
terminated for cause in another State, yet States face challenges complying with this mandate.  
HHS-OIG found continued participation from providers terminated in one State in other States 
Medicaid program, and about one-third received payments for services provided to Medicaid 
beneficiaries after the providers terminations for cause.  Continued participation of providers 
after their terminations for cause presents a vulnerability to Medicaid and raises concern that 
these providers could continue to treat Medicaid beneficiaries. 
 
Developmental Disabilities Waiver Program 
New York improperly claimed an estimated $76.8 million in Federal Medicaid reimbursement 
for some Office for People With Developmental Disabilities (OPWDD) waiver program services  
during CYs 2006 through 2008.  The OPWDD waiver program is intended to enable adults and 
children with developmental disabilities to live in the community as an alternative to 
intermediate care facilities for individuals with intellectual disabilities.   
 
Access to Medicaid Managed Care Services 
Slightly more than half of providers reviewed could not offer appointments to enrollees.  
Notably, 35 percent could not be found at the location listed by the plan, and another 8 percent 
were at the location but were not participating in the plan.  Among the providers who offered 
appointments, the median wait time was two weeks.  However, over a quarter had wait times of 
more than one month.  Finally, primary care providers were less likely to offer an appointment 
than specialists; however, specialists tended to have longer wait times.   
 
Non-Emergency Medical Transportation Services 
During FY 2011, Texas claimed at least $30.4 million for unallowable Medicaid payments for 
nonemergency medical transportation (NEMT) services.  Federal regulations require each State 
to ensure that Medicaid beneficiaries have necessary transportation to and from  medical 
providers. Prior OIG reviews have found that States claims for NEMT services were not always 
in accordance with Federal and State requirements. 
 
  41 
 Targeted Case Management Services 
Missouri claimed $11.5 million of unallowable Medicaid payments for Targeted Case 
Management (TCM) services provided to individuals with developmental disabilities during 
State FYs 2011 through 2013. Missouri did not address OIGs recommendations to, among 
other things, refund $11.5 million to the Federal Government. 
 
Anti-Psychotic Drugs Prescribed to Children  
In the five States reviewed, medical reviewers identified quality-of-care concerns in the medical 
records associated with 67 percent of claims for second-generation antipsychotic (SGA) drugs 
prescribed to children. Quality-of-care concerns identified through medical record reviews 
corresponded to the following issues: dosage, duration, indications for use, monitoring, 
polypharmacy (too many drugs), patient age, and side effects.  The high percentage of claims for 
which our reviewers identified quality-of-care concerns indicates that more needs to be done to 
ensure the quality of care provided to children receiving SGAs paid for by Medicaid. 
 
Payments to Delinquent Providers 
CMS made $10.7 million in Medicare and Medicaid payments associated with 23 of 82 
individual physicians with delinquent debts after CMS had referred their Medicare debts to the 
U.S. Department of the Treasury (Treasury) for collection.  In addition, 13 of the 23 individual 
physicians had ownership interest in and/or managing control of 15 Medicare Part B entities that 
received Medicare reimbursement from CMS after CMS referred the individual physicians 
debts to Treasury.  CMS is required to seek recovery of all identified overpayments and can 
recoup or offset overpayments against a providers future Medicare and/or Federal share of 
Medicaid payments.   
 
Medicare Outpatient Drugs 
Medicare contractors in 13 jurisdictions overpaid providers $35.8 million for selected outpatient 
drugs from July 1, 2009, through June 30, 2012.  For 88 percent of the overpayments, providers 
billed either incorrect units of service or, otherwise, a combination of incorrect units of service 
and incorrect Healthcare Common Procedure Coding System codes.  The Medicare claims  
processing systems did not have sufficient prepayment edits in place to prevent all 
overpayments.  
 
Financial Incentives to Provide Hospice Care 
Medicare payments for hospice care provided in assisted living facilities (ALFs) more than 
doubled in 5 years, totaling $2.1 billion in 2012.  Hospices provided care much longer and 
received much higher Medicare payments for beneficiaries in ALFs than for beneficiaries in 
other settings. Beneficiaries in ALFs often had diagnoses that usually require less complex care.  
This report raises concerns about hospices targeting beneficiaries in ALFs because they may 
offer the hospices the greatest financial gain.   
 
Potential Fraud in Medicare Part D  
Spending for Part D drugs, especially commonly abused opioids, has grown substantially.  HHS-
OIG identified questionable billing by 1,400 pharmacies that may indicate fraudulent activity.  
Each of these pharmacies billed for extremely high amounts for one or more of our billing 
 
  42 
 measures.  HHS-OIG also identified geographic hotspots for certain drugs that point to possible 
fraud and abuse. 
 
Medicare Part D Program Integrity 
This portfolio presents an overview of HHS-OIG investigations, audits, evaluations, and legal 
guidance related to Part D. It synthesizes numerous HHS-OIG reports that have identified 
weaknesses in Part D program integrity, and provides updates on Departmental efforts to address 
these weaknesses. In particular, HHS-OIG has identified weaknesses in the use of data to 
identify vulnerabilities, as well as in the oversight by all parties responsible for protecting Part D:  
CMS, Part D plan sponsors, and the Medicare Drug Integrity Contractor.  OIG has made 
recommendations to strengthen Part D program integrity, and progress has been made.  
However, Part D remains vulnerable to fraud, as evidenced by ongoing investigations.   
 
Swing-Bed Services at Critical Access Hospitals 
Medicare spending for swing-bed services in critical access hospitals (CAHs) steadily increased 
to, on average, almost four times the costs of similar services at alternative facilities from  
calendar years 2005 through 2010. Medicare reimburses CAHs at 101 percent of their 
reasonable costs for providing services to beneficiaries rather than at rates set by Medicares 
prospective payment system or Medicares fee schedules. Medicare could have saved $4.1 
billion over a 6-year period at CAHs if swing-bed services were reimbursed using the skilled 
nursing facility prospective payment system rate. 
 
Skilled Nursing Facilities 
The findings of this and prior HHS-OIG reports demonstrate the need for CMS to reevaluate the 
skilled nursing facility (SNF) payment system.  Medicare payments for therapy greatly exceeded 
SNFs costs for therapy. Combined with the current method of paying for therapy, this large 
difference between therapy payments and costs creates a strong financial incentive for SNFs to 
bill for higher levels of therapy than necessary.  Increases in SNF billingparticularly for the 
highest level of therapyresulted in $1.1 billion in Medicare payments in FYs 2012 and 2013.  
 
Hospital Outlier Payments  
Medicare contractors did not always refer Medicare cost reports whose outlier payments 
qualified for reconciliation to CMS. In addition, the 13 contractors did not always reconcile the 
outlier payments associated with cost reports whose outlier payments qualified for reconciliation.  
The financial impact to Medicare of the unreconciled outlier payments and cost reports for all the 
contractors was approximately $428.3 million.  Medicare supplements basic prospective 
payments for inpatient hospital services by making outlier payments for unusually high-cost 
cases. 
 
Deceased Beneficiaries  
Medicare paid for HIV drugs for over 150 deceased beneficiaries in 2012. CMS has edits (i.e., 
systems processes) in place that reject prescription drug event records for drugs with dates of 
service more than 32 days after death.  This practice allows payment for drugs for deceased 
beneficiaries for dates of service within 32 days of death.  A change in the edits would affect all 
Part D drugs, not just HIV drugs. 
 
 
  43 
 Ambulance Transports  
Medicare paid $24 million in the first half of 2012 for ambulance transports that did not meet 
certain program requirements justifying payments, and that about one in five ambulance 
suppliers had questionable billing. These findings indicate that inappropriate and questionable 
billing for ambulance transports pose vulnerabilities to Medicare program integrity.  
 
Other OIG Fraud and Abuse Prevention Activities  
 
HCFAC funding also supported HHS-OIGs continued enhancement of data analysis and mining 
capabilities for detecting health care fraud, including tools that allow for complex data 
analysis. OIG continues to use data mining, predictive analytics, trend evaluation, and modeling 
approaches to better analyze and target the oversight of HHS programs.  Analysis teams use 
near-time data to examine Medicare claims for known fraud patterns, identify suspected fraud 
trends, and to calculate ratios of allowed services as compared with national averages, as well as 
other assessments.  When united with the expertise of OIG agents, auditors, and evaluators, as 
well as our HEAT partners, HHS-OIGs data analysis fosters a highly effective combination of 
technologies and traditional skills to the fight against fraud, waste, and abuse.  
 
Industry Outreach and Guidance 
 
Advisory Opinions 
Central to the HIPAA guidance initiatives is an advisory opinion process through which parties 
may obtain binding legal guidance as to whether their existing or proposed health care business 
transactions run afoul of the AKS, the CMP laws, or the exclusion provisions.  During FY 2015, 
the HHS-OIG, in consultation with DOJ, issued 15 advisory opinions.  A total of 329 advisory 
opinions have been issued during the 19 years of the HCFAC program. 
 
Corporate Integrity Agreements 
Many health care providers elect to settle their cases before litigation.  As part of the settlements, 
providers often agree to enter into Corporate Integrity Agreements (CIA) with OIG to avoid 
exclusions from Medicare, Medicaid, and other federal health care programs.  Under a CIA, a 
provider commits to establishing a program and taking other specified steps to ensure future 
compliance with Medicare and Medicaid rules.  The compliance programs are designed, in part, 
to prevent future fraud. OIG monitors providers compliance with these agreements.  OIG may 
impose penalties on entities that fail to comply with the requirements of their CIAs, as shown in 
the example below: 
 
	   IllinoisIn March 2015, LifeWatch Services, Inc., a durable medical equipment supplier, 
agreed to pay $737,572 to settle allegations that it knowingly submitted false claims to 
Medicare from February 21, 2013 through June 30, 2014 for cardiac monitoring services. 
Specifically, OIG alleged that LifeWatch submitted claims to Medicare for Ambulatory 
Cardiac Telemetry (ACT) services for which the medical record documentation did not 
support that the physician had ordered ACT services.  The settlement resolves a reportable 
event submitted by LifeWatch as required under its CIA.  LifeWatch entered into the CIA in 
March 2012 as part of an $18.5 million civil settlement with the United States, resolving 
allegations that, among other things, it submitted  claims to Medicare for cardiac monitoring 
 
  44 
 services that were not medically necessary and encouraged the use of more expensive cardiac 
monitoring devices when a less expensive device was sufficient to meet the patients needs.  
 
 
Centers for Medicare & Medicaid Services  
 
In FY 2015, CMS was allocated $13.5 million by HHS, and appropriated $544.3 million in 
discretionary funds by Congress to support its comprehensive program integrity strategy for 
Medicare, Medicaid, and the Childrens Health Insurance Program (CHIP).  With these funds, 
CMS is working to ensure that public funds are not diverted from their intended purpose:  to 
make accurate payments to legitimate entities for allowable services or activities on behalf of 
eligible beneficiaries of federal health care programs.  CMS also performs many program  
integrity activities that are beyond the scope of this report because they are not funded directly 
by the HCFAC Account or discretionary HCFAC funding.  Medicare Fee-for-Service and 
Medicaid improper payment rate measurement and activities, the Fraud Prevention System, 
Recovery Audit Program activities, and prior authorization initiatives are discussed in separate 
reports, and CMS will submit a combined Medicare and Medicaid Integrity Program report to 
Congress later this year. 
   
1.   Prevention  
Moratoria  
Building on strong anti-fraud efforts already underway in the home health provider and 
ambulance supplier arenas, CMS in July 2013 announced the first use of its temporary moratoria 
authority granted by the Affordable Care Act in certain counties in Florida, Illinois, and 
Texas. The moratoria stops the enrollment of new home health and ambulance enrollments in 
Medicare, Medicaid, and CHIP in fraud hot spot areas of the country with demonstrated 
oversupply of certain types of providers.  In January 2014, CMS extended the original 
enrollment moratoria for these locations and expanded the enrollment moratoria to include 
HHAs in Broward county Florida; the Michigan counties of Wayne, Macomb, Monroe, Oakland, 
and Washtenaw; and the Texas counties of Dallas, Collin, Denton, Ellis, Kaufman, Rockwall, 
Tarrant, Harris, Brazoria, Chambers, Fort Bend, Galveston, Liberty, Montgomery, and Waller. 
CMS also expanded the moratorium on ground ambulance suppliers in the Philadelphia area, 
including several New Jersey counties, at the same time.  All of these moratoria actions continue 
to be extended an additional six months with the latest notice effective January 2016.  The focus 
of these efforts is to prevent and deter fraud, waste, and abuse in problematic services and areas 
across the country while ensuring beneficiary access to care.  
  
Under the moratoria, existing providers and suppliers can continue to deliver and bill for 
services, but no new provider and supplier applications will be approved in these areas, allowing 
CMS and its law enforcement partners to remove bad actors from the program while blocking 
provider entry or re-entry into these already over-supplied markets.  After reviewing the number 
of providers in the moratoria areas and recent Medicare Payment Advisory Commission 
(MedPAC) reports, CMS determined that the moratoria do not adversely impact beneficiary 
access to care. CMS is required to re-evaluate the need for such moratoria every six months.  
 
  45 
 One Program Integrity  
In FY 2015, CMS continued making improvements and changes to One Program Integrity (One 
PI), CMS centralized portal that provides CMS contractors and law enforcement with a single 
access point to Medicare data, as well as analytic tools to review the data. CMS continues to 
enhance the existing analytic tools.  One PI improves CMS ability to detect fraud, waste, and 
abuse with consistent, reliable, and timely analytics. 
 
One PI users have access to the CMS Integrated Data Repository (IDR) to perform data 
analytics.   The IDR contains a comprehensive and accurate set of Medicare provider, beneficiary, 
and claims data from Medicare Parts A, B, C, and D back to January 2006.  The IDR includes 
claims data at three distinct points in the claim  life-cycle: at the time the claims are enumerated, 
at the time claims are adjudicated, and at the time the claims have payment data posted.  This 
access allows users to perform prepayment analytics on historical data and develop models that 
can be applied in CMS predictive analytics system, the Fraud Prevention System.  With claims  
available from 2006, Zone Program  Integrity Contractors (ZPICs) are also able to improve their 
analytics for post-payment detection of fraud, waste, and abuse. 
 
In order to streamline access for our law enforcement partners, in 2015, CMS released a re-
engineered version of the Services Tracking Analysis and Reporting System (STARS) that 
improves system access, enhances the end-user experience, and improves overall 
performance.  STARS, a health care fraud, waste, and abuse analytics tool, is part of the One PI 
suite of tools. The One PI team enhanced the overall training process by including virtualized 
training in combination with on-site instructor  led training to reduce training costs and provide 
better access for law enforcement.  Additionally, STARS initiated a monthly end users group to 
increase collaboration. 
Compromised Number Checklist  
In January 2010, CMS created the repository of compromised Medicare beneficiary and provider 
ID numbers called the Compromised Number Checklist (CNC).  In March 2013, CMS deployed 
a Web-based application that allows direct update and real-time access of CNC information by 
CNC users. This database is populated by submissions from CMS program integrity 
contractors. The purpose of the CNC is to share compromised ID numbers and any associated 
corrective actions that have been taken among CMS staff, program integrity contractors, and law 
enforcement such as the FBI.  CMS uses the national CNC database to enhance efforts to detect 
and prevent fraud and abuse in Medicare.   
The Command Center  
CMS opened its state-of-the-art Command Center on July 31, 2012 to facilitate improvements in 
health care fraud detection and investigation, drive innovation, and help reduce fraud and 
improper payments in the Medicare and Medicaid programs.  CMS is using the Command 
Center to collaborate in unprecedented ways with the private sector, law enforcement, and our 
State partners.  The Command Centers advanced technologies and collaborative environment 
allow multi-disciplinary teams of experts and decision makers to more efficiently coordinate 
policies and case actions, reduce duplication of efforts, and streamline fraud investigations for 
more immediate administrative action.  These collaborative activities enable CMS to take 
administrative actions, such as revocations of Medicare billing privileges and payment 
suspensions, more quickly and efficiently.   
 
  46 
 In FY 2015, the Command Center conducted 41 missions that included participants from CMS 
and our partners, including the HHS-OIG and FBI that are designed to lead to improvements in 
the fraud prevention and detection process.  Missions are facilitated collaboration sessions that 
bring together experts from various disciplines to improve the processes for fraud prevention in 
Medicare and Medicaid. CMS is also working with the FBI, HHS-OIG, and other federal 
agencies in the Command Center to pool resources to tackle cross-cutting issues surrounding 
fraud prevention. 
DME Initiatives  
DME suppliers pose a high risk of fraud to the Medicare Program and CMS has undertaken an 
aggressive strategy to address this risk. Through the DME Stop Gap Project, initiated in 2009, 
ZPICs/Program Safeguard Contractors (PSCs) have increased site visits and interviews of DME 
suppliers, providers, and beneficiaries receiving DME products in high billing areas for DME 
supplies and products. In FY 2015, these additional funds supported DME investigations, which 
included site visits to, and interviews of, suppliers, doctors, and patients that were identified as 
potentially suspicious or high risk. 
 
National Correct Coding Initiative (NCCI) 
CMS developed the National Correct Coding Initiative (NCCI) to promote national correct 
coding methodologies and to control improper coding leading to inappropriate payment in 
Medicare claims. The use of the NCCI edits saved the Medicare program $681.9 million in FY 
2014.12  In FY 2015, CMS also continues to work with states to fully and correctly implement 
the NCCI methodologies in their Medicaid programs, to add new Medicare and Medicaid NCCI 
edits to the quarterly Medicaid NCCI edit files that are compatible with claims filed with 
Medicaid, and to update the technical guidance document for states. 
 
Medicaid Enterprise System 
Todays modern design of IT systems encompasses the use of current technologies that span 
across the entire Medicaid Enterprise. These systems work in concert with one another and must 
adhere to certain regulations and guidance, including the Medicaid Information Technology 
Architecture (MITA) framework and the Seven Standards and Conditions.  Adhering to these 
mandates will promote the consistency of business and technical processes and IT platforms, as 
well as standards across the Medicaid Enterprise.    
 
The project includes independent technical assistance for IT and policy requirements, including 
monitoring and oversight, in working with state-specific system requirements, IT system builds, 
and associated interfaces for all states and the territories.  All fifty states and the territories 
received technical assistance with moving through the Enterprise Life Cycle (ELC) Gate Review 
Process, including any associated consults. States received assistance with project management, 
implementation, and operations.  Technical artifacts required by statute were analyzed and 
tracked to assess state progress. Gap analyses were done on a regular basis and risk registers 
were studied to identify opportunities for improvement. 
   
                                                 
12 NCCI savings are from Medicare Part B Medically Unlikely Edits (MUEs) and Part  B Procedure-to-Procedure 
(PTP) Edits.  
 
  47 
 2.   Detection 
 
Strengthened Program Integrity Activities in Medicare Advantage and Medicare Part D 
Medicare Drug Integrity Contractors (MEDICS) 
 
National Benefit Integrity 
In FY 2015, the National Benefit Integrity (NBI) MEDIC received on average approximately 
762 actionable complaints per month, processed an average of 54 requests for information from  
law enforcement per month, and referred an average of 48 cases to law enforcement per month 
through July. NBI MEDIC referrals have resulted in sentences ordering restitution of $41.4 
million, forfeitures of $13.6 million, and civil settlements of $12.2 million according to FY 2015 
notifications from law enforcement.  The NBI MEDIC was responsible for assisting the OIG and 
the Department of Justice (DOJ), through data analysis and investigative case development, in 
achieving 68 convictions, 35 arrests, and 45 indictments from FY 2015 notifications.  In one 
case, the NBI MEDIC investigated complaints concerning out-of-country beneficiary 
enrollments in Nicaragua and the Dominican Republic alleging that a Medicare plan was 
advertising improper inducements for Medicare-eligible beneficiaries to sign up for the plan.  
Ten subjects involved were charged with multiple counts of health care fraud and have pled 
guilty. As of July 2015, 6 of the 10 have been sentenced for their involvement in a transnational 
health care fraud scheme and ordered to pay restitution of $14.5 million.   
 
Outreach and Education  
In FY 2015, the Outreach and Education (O&E) MEDIC facilitated the CMS Parts C & D Fraud 
Waste and Abuse (FWA) training sessions that offered Medicare Advantage organizations and 
Prescription Drug plans an opportunity to collaborate and discuss techniques on how to prevent 
and detect fraud, waste, and abuse in the Medicare Advantage and Part D programs.  These FWA 
training sessions are designed to educate Medicare Advantage organization and Prescription 
Drug plan staff through enhanced collaboration, information sharing, data analytics and 
communication. FWA training session stakeholders include plan sponsors, Pharmacy Benefit 
Managers (PBMs), representatives from law enforcement agenciesincluding HHS-OIG, U.S. 
DOJ, and other state and local law enforcement entities.  These FWA training sessions provide a 
forum for stakeholders to learn about the most recent fraud schemes and fraud prevention best 
practices to assist in developing effective fraud prevention programs.  
 
The O&E MEDIC is also responsible for other outreach activities and has developed many 
courses and resources to train Medicare Advantage organizations and Prescription Drug plans on 
best practices to detect and investigate Medicare Advantage and Prescription Drug fraud, waste, 
and abuse. In order to help Parts C and D Plan sponsors better educate their enrollees on fraud 
waste and abuse, the O&E MEDIC developed a video on Open Enrollment Fraud, as well as 
several fraud alerts on identity theft, prescription drug abuse, telemarketing, and phishing 
schemes.  The O&E MEDIC also created a video tutorial for providers to explain how to enroll 
in PECOS and comply with the CMS-4159-F requirements.  In FY 2015, the O&E MEDIC also 
updated its most comprehensive fraud fighting tool, the Medicare Advantage and Part D Fraud 
Handbook: Practical Techniques and Approaches on Detecting and Preventing Fraud, and an 
Online Training Module for Medicare Advantage organizations (MAOs) and Part D sponsors. 
The handbook is a modular online reference providing MAOs and Part D sponsors with industry 
best practices regarding processes, methods, and resources to support fraud prevention, 
 
  48 
 detection, corrective action, preliminary investigation, and referral activities. The training is an 
online presentation covering each chapter of the Fraud Handbook in an on-demand webcast 
format. 
  
Medicare Advantage (MA) Benefits Review Activities  
 
Each year, MA organizations are required to submit bids detailing how their MA plans will 
provide coverage to beneficiaries for the following year.  These 3,600 MA plans cover more than 
17 million beneficiaries.  Bid submissions are reviewed to ensure they do not discriminate 
against beneficiaries and comply with all CMS regulations.  Plan requirements are established 
and communicated annually and the following reviews are performed:  
 
	   Low Enrollment PlansEach year, CMS evaluates existing MA plans that have low 
total enrollment to make sure these plans are sustainable over time and protect 
beneficiaries from selecting a potentially unsustainable plan. 
 
	   Total Beneficiary Cost (TBC)Evaluate increases in beneficiary cost sharing or 
decreases in plan benefits from one year to the next.  This evaluation ensures 
beneficiaries receive value in their benefit package selection and do not experience large 
increases in out of pocket costs. 
 
	   Maximum Out of Pocket Costs (MOOP)This review examines the maximum out-of-
pocket costs that face beneficiaries who enroll in MA.  These reviews protect 
beneficiaries from very high out of pocket medical costs. 
 
	   Meaningful DifferenceThis review helps to reduce potential confusion for 
beneficiaries when they are choosing between multiple plan options.  By conducting this 
review, CMS helps to protect meaningfully different choices between plans and prevent 
MA organizations from offering similar plans in the same geographic area. 
 
	   Service Category Cost-Sharing StandardsEach year, CMS evaluates the cost-
sharing standards plans include in their bids to make sure the plans do not exceed 
established limits.  There are currently 26 cost-sharing health care service categories that 
have established limits and this review enables CMS to protect beneficiaries from  
discriminatory cost sharing levels.  
 
	   Actuarial EquivalenceCMS also reviews bids to make certain the actuarially 
estimated cost sharing presented in the bid does not exceed the cost-sharing levels in 
Original Medicare. CMS currently examines four categories for actuarial equivalence 
and this examination helps guard against plans imposing discriminatory cost-sharing on 
beneficiaries. 
 
	   Supplemental BenefitsThere are several reviews conducted in this area, including a 
review of supplemental benefits that help make sure that any optional supplemental 
benefits offered are of reasonable value, as well as a review to make certain the benefits 
are offered in a non-discriminatory fashion. 
 
 
  49 
 All of these reviews are conducted in careful coordination with the Office of the Actuary and the 
Medicare Drug Benefit Group to make certain that plans make all necessary changes to their 
bids. These reviews occur between early June and August and involve communications with 
MA organizations to correct issues and resubmit their bids.  Following bid approval, MA 
organizations must complete the contracting process with CMS and may market to beneficiaries 
beginning October 1.  MA benefits requirements and review processes are intended to protect 
beneficiaries from discrimination and to make sure that MA plans provide value to enrollees.  
 
Medicare Advantage Encounter Data Processing System Contract 
The Medicare Advantage (MA) Encounter Data Processing System (EDPS) is currently being 
maintained and modified out of guidance published in the final FY 2009 inpatient prospective 
payment system (IPPS) rule.  In that rule, CMS revised regulations to clarify that CMS has the 
authority to require MA organizations to submit encounter data for each item and service 
provided to MA plan enrollees. Consistent with this authority, CMS is requiring MA 
organizations to submit encounter data for dates of service January 3, 2012 and later.  MA plans 
are required to submit data for all institutional, professional, and DME services provided to MA 
plan enrollees on or after that date.  To date, CMS has collected over 1.7 billion encounter data 
(ED) records.   
  
The encounter data detail each item and service provided to enrollees of Medicare Advantage 
organizations.  These records are comparable in format and detail to claims submitted to the 
MACs by FFS providers.  The encounter data collected by EDPS will allow CMS to recalibrate  
the risk adjustment payment model, so that MA payments more accurately reflect the patterns of 
care and the predicted costs of diseases for MA enrollees.  Recalibrating the model on MA 
diagnoses and expenditures, rather than using the FFS experience, will result in payments that 
are more accurate to MA organizations.  CMS is also able to use the information to evaluate 
service utilization, assess quality of care, and assess the performance of MA plans. 
  
Beginning with payment year 2015, CMS began to use encounter data as an additional source of 
diagnoses to risk adjust payments to Medicare Advantage Organizations.  For payment year 
2016, CMS continued that transition and will ultimately use encounter data as the sole source of 
plan-submitted diagnosis information.   
 
Medicaid/CHIP Financial Management Project 
Under this project, funding specialists, including accountants and financial analysts, worked to 
improve CMS financial oversight of the Medicaid Program and CHIP.  In FY 2015 through the 
continued efforts of these specialists, CMS removed an estimated $2.5 billion (with 
approximately $1 billion recovered and $1.5 billion resolved) of approximately $9.4 billion 
identified in questionable Medicaid costs.  
 
Furthermore, an estimated $1.028 billion in questionable reimbursement was actually averted 
due to the funding specialists preventive work with States to promote proper State Medicaid 
financing. The funding specialists activities included reviews of proposed Medicaid state plan 
amendments that related to reimbursement; development of financial management reviews; 
research regarding state Medicaid financing policy and practices; collaboration with states to 
resolve the Medicaid and CHIP portions of the A-133 Single State audits; and identification of  
   
 
  50 
 sources of the non-Federal share of Medicaid program payments to ensure proper financing of 
Medicaid program costs.   
HHS-OIG Hotline Database  
OIG Hotline Operations accepts tips and complaints from all sources about potential fraud, 
waste, abuse, and mismanagement in HHS programs.  The CMS-OIG HOTLINE database is 
used by CMS and its contractors to investigate and resolve those complaints that are sent from  
the HHS OIG. 
 
3. 	  Transparency and Accountability 
 
Healthcare Fraud Prevention Partnership  
One of the Secretarys key health care fraud prevention initiatives is to establish an ongoing 
partnership with the private sector to fight fraud across the health care system.  Data collected 
and shared across payers can assist payers in evaluating trends, recognizing patterns consistent 
with potential fraud, and potentially uncover schemes or bad actors they could not otherwise 
identify using only their own information.  Such collaboration is the purpose of the Healthcare 
Fraud Prevention Partnership (HFPP), which brings together both public and private, federal and 
state-level individuals and organizations combatting health care fraud across all payers. 
 
The legal authority for the HFPP is 42 U.S.C.  1320a-7c.  The delegated authority allows for the 
HFPP to consult with, and arrange for the collection of data from, and sharing of data with 
representatives of health plans under the HCFAC program. 
 
CMS added additional partners to the HFPP and is targeting further expansion of the HFPP to 
include additional willing public and private payers once the technical and legal components of 
the program are in place.  The increase in members providing data will increase the resources 
necessary for the trusted third party contractor to process and store the increased number of 
claims data from the new members.   
 
The HFPP has completed eight studies to date, listed below: 
 
	   Study 1, Iterations 1 & 2 (counted as two studies):  Misused Codes and Fraud Schemes 
To share information on misused codes and potential fraud schemes to improve overall 
awareness of fraud patterns and trends. 
 
	   Study 2, Iterations 1 & 2 (counted as two  studies): Non-Operational  ProvidersTo 
create an aggregate list of non-operational  provider entities for use  in  investigations. 
 
	   Study 3:  Terminated/Revoked ProvidersTo create an aggregate list of 

terminated/revoked provider entities for potential investigations.
  
 
	   Study 4: Top Billing PharmaciesTo identify outlier  pharmacies that are dispensing 
a high amount of controlled prescription drugs.  
 
	   Study 5: Urine Drug ScreensTo study how providers  bill for qualitative and 

quantitative urine drug  screens. 

 
  51 
  
	   In-Person Study:   High Risk ProceduresTo view summary data live and examine 
potential trends in high-risk procedures.  
 
The HFPP also has received input from partners about which study topics would have the 
highest potential value and identified 15 study topics of common interest in addition to the 
eight studies previously mentioned.  
 
After using the first study's findings for analyses and corrective action determinations, 
CMS reported $187.7 million in savings to the Medicare Trust Funds from system edits, 
revocations, and payment suspensions related to the first two studies  listed above. This 
estimate is  based on CMS' latest savings calculation methodologies, but the estimate is 
subject to change due to improvements in  the methodological approach and data accuracy. 
However, CMS does not expect any changes to be significant. 
 
Participating HFPP partners received  results  for studies 1-5.  Partners have been assessing and 
continue to assess the results and independently determine appropriate corrective  actions. 
Partner outcomes, savings, and cost  avoidance  data will be available in the future.  
 
Improper Payment Rate Measurement and Increased Accountability in Medicaid and CHIP 
Programs  
The Improper Payments Information Act (IPIA) of 2002, as amended by the Improper Payments 
Elimination and Recovery Improvement Act of 2012 (IPERIA) requires each agency to 
periodically review programs  it administers, identify programs that may be susceptible to 
significant improper payments, estimate the amount of improper payments, submit those 
estimates to Congress, and report on actions the agency is taking to reduce improper payments.   
 
The Medicaid Program and CHIP have been identified as at risk for significant improper 
payments.  CMS estimates improper payment rates in Medicaid and CHIP established through 
the Payment Error Rate Measurement (PERM) Program.  The improper payment rates are based 
on reviews of the fee-for-service (FFS), managed care, and eligibility components of Medicaid 
and CHIP in the fiscal year under review.  CMS measures Medicaid and CHIP improper 
payment  rates using a 17-state rotation so that each state is reviewed once every three years.  
 
In light of changes to the way states adjudicate eligibility for Medicaid and CHIP under the 
Affordable Care Act, CMS is currently updating the PERM eligibility component measurement 
methodology and related program regulations to reflect the required changes.  During this time, 
CMS will not conduct the eligibility measurement component of PERM and the national 
Medicaid eligibility improper payment rate will be held constant at the FY 2014 reported rate as 
a proxy in the overall improper payment rate calculation.  In place of PERM eligibility, all states 
are required to conduct eligibility review pilots through FY 2018.  The eligibility review pilots 
provide more targeted, detailed information on the accuracy of eligibility determinations and 
provide states and CMS with critical feedback during initial implementation. 
 
CMS reported in the FY 2015 Agency Financial Report the national Medicaid improper payment 
rate that is based on measurements that were conducted in FYs 2013, 2014, and 2015.  The FY 
2015 national Medicaid improper payment rate is 9.8 percent, representing $29.1 billion in 
 
  52 
 estimated improper payments compared to the FY 2014 improper payment rate of 6.7 percent or 

$17.5 billion in improper payments.  The national component improper payment rates are as 

follows: Medicaid FFS10.59 percent, Medicaid managed care0.12 percent, and Medicaid 

eligibility3.11 percent. The Medicaid eligibility component improper payment rate is held 

constant at the FY 2014 reported rate of 3.1 percent.  The major cause of error was state 

difficulties achieving compliance with new system requirements that were put in place to 

strengthen program integrity.  The Affordable Care Act requires all referring/ordering providers 

to be enrolled in Medicaid and requires claims to contain the referring/ordering provider 

National Provider Identifier (NPI).  The Affordable Care Act also requires states to screen 

providers under a risk-based screening process prior to enrollment.  Additionally, a new Health 

Insurance Portability and Accountability Act of 1996 (HIPAA) standard requires the attending 

providers NPI be on all electronically-filed institutional claims.  While these requirements will 

ultimately strengthen the integrity of the program, it takes time for states to make the necessary 

compliant systems changes. 

   
CMS reported in the FY 2015 Agency Financial Report the national CHIP improper payment 

rate that is based on measurements that were conducted in FYs 2013, 2014, and 2015.  The FY 

2015 national CHIP improper payment rate is 6.8 percent, representing $0.6 billion in estimated 

improper payments compared to the FY 2014 improper payment rate of 6.5 percent or $0.6 

billion in improper payments.  The national component improper payment rates are as follows: 

CHIP FFS7.33 percent and CHIP managed care0.37 percent.  The CHIP eligibility 

component improper payment rate is held constant at the FY 2014 reported rate of 4.2 percent. 

The major cause of error in CHIP is the same cause described in Medicaid above. 

CMS is currently measuring cycles that will be reported in FYs 2016 and 2017.     

 
Improper Payment Rate Measurement and Increased Accountability in Medicare Advantage 

(Part C) and Medicare Prescription Drug Benefit Program (Part D) 

In compliance with IPIA, as amended by IPERA and IPERIA, CMS has implemented a 

systematic plan regarding improper payments for Part C and D programs.   

 
The Part C payment error estimate reported for FY 2015 (based on calendar year CY 2013) is 9.5 
percent. The Part C payment error is driven by errors in risk adjustment data (clinical diagnosis 
data) submitted by Part C plans to CMS for payment purposes.  Specifically, the Part C payment 
error estimate reflects the extent to which diagnoses that plans report to CMS are not supported 
by medical record documentation.   
 
In an effort to improve the Part C improper payment rate, CMS has implemented two key 
specific corrective actions described below: contract level audits and new regulatory provisions. 
 
	   Contract-Level Audits: CMS conducts Risk Adjustment Data Validation (RADV) 
contract-level audits to recover overpayments. RADV verifies, through medical record 
review, the accuracy of enrollee diagnoses submitted by MA organizations for risk 
adjusted payment.  RADV audits are HHSs primary corrective action to recoup 
overpayments from MA organizations.  CMS expects that payment recovery will have a 
sentinel effect on the quality of risk adjustment data submitted by plans for payment.  
RADV audits of payment year 2011, which began in FY 2014, will be the first CMS 
reviews to recoup funds based on extrapolated estimates. 
 
  53 
 	   New Regulatory Provisions: In CMS-4159-F, Policy and Technical Changes to the 
Medicare Advantage and the Medicare Prescription Drug Benefit Program (79 FR 100), 
HHS codified the Affordable Care Act requirement that MA organizations must report 
and return overpayments that they identify.  In CMS-1613-FC, CMS-Identified 
Overpayments Associated with Submitted Payment Data (79 FR 66769), HHS also 
established a payment recovery and appeal mechanism to be applied when HHS identifies 
erroneous payment data submitted by an MA organization.  
 
The Part D payment error estimate reported for FY 2015 (based on CY 2012) is 3.6 percent.  The 
FY 2015 Part D error estimate represents the combined impact on Part D payments of four 
sources of error: Payment error related to low income subsidy status; payment error related to 
Medicaid status; payment error related to prescription drug event data validation; and payment 
error related to direct and indirect remuneration.       
 
In an effort to improve the Part D error rate, CMS has implemented two key specific corrective 
actions described below: outreach to plan sponsors and new regulatory provisions. 
 
	   Outreach:  Formal outreach to plan sponsors will continue for invalid/incomplete 

documentation. 

 
	   New Regulatory Provisions: HHS codified the ACA requirement that Part D sponsors 
must report and return overpayments that they identify. CMS also proposed a payment 
recovery and appeal mechanism to be applied when CMS identifies erroneous payment 
data submitted by a Part D sponsor. 
Probable Fraud Measurement Pilot   
There is no reliable estimate of the amount of fraud in the Medicare program.  Documenting the 
baseline amount of fraud in Medicare is of critical importance, as it allows officials to better 
evaluate the success of ongoing fraud prevention activities.  In collaboration with the HHS 
Office of the Assistant Secretary for Planning and Evaluation (ASPE), CMS developed the 
methodology for the first nationally representative estimate of the extent of probable fraud in the 
Medicare FFS program in FY 2011.  In FY 2012, CMS developed the measurement tools for the 
pilot, and collaborated with government partners, including ASPE, on the strategy for 
implementation.  CMS received OMB approval in May 2013. CMS awarded a contract in 
September 2015 to conduct the pilot. 
 
This project will estimate probable fraud in the Home Health benefit to pilot test the 
measurement approach and calculate a service-specific estimate.  This pilot is measuring 
probable fraud rather than fraud because fraud is a legal determination that involves 
establishing intenta determination that is made through the judicial system.  A review panel of 
experienced health care analysts, clinicians, policy experts, and fraud investigators will review 
all collected data and determine if there is sufficient evidence to warrant a referral to law 
enforcement.  After the completion of this pilot, CMS will assess the value of expanding the 
measurement to other areas of Medicare. CMS began collecting data on probable fraud to 
establish an estimate of probable fraud within HHAs in 2015.  
 
   
 
  54 
 4.   Recovery 
Suspension  
CMS in FY 2015 continued its use of the new Affordable Care Act authority to suspend 
payments to providers during an investigation of a credible allegation of fraud.  CMS also has 
authority to suspend payment if reliable information of an overpayment exists.  During FY 2015, 
there were 420 payment suspensions that were active at some point during the fiscal year (data 
reflected as of September 10, 2015).  Of the 420 payment suspensions, 105 new payment 
suspensions were imposed during FY 2015.  
 
Field Offices 
CMS has designated program integrity field offices located in or near the HEAT cities of Miami, 
Los Angeles, and Brooklyn that provide a CMS presence in high risk fraud areas of the country.  
All three field offices have staff that are designated CMS Strike Force Liaisons, who coordinate 
with law enforcement, facilitate data analysis, and expedite suspension requests.  The field 
offices also work with CMS central office and the ZPICs to conduct data analysis to proactively 
identify targets and to coordinate efforts among various contractors and agencies to identify local 
issues and vulnerabilities with national or regional impact.   
 
CMS program integrity field offices develop solutions to the most challenging fraud issues in 
their regions.  For example, the Miami field office has implemented a comprehensive, multi-
agency approach to address Medicare and Medicaid aspects of health care fraud in South Florida 
and has served as a testing ground for efforts that have been expanded to a national level.  To 
address emerging fraud schemes by ambulance providers, the Los Angeles staff is working with 
county Emergency Medical Service licensing authorities and related health care providers; CMS 
contractors; and local, state, and federal law enforcement.  
 
Enrollment Special Study 
This is a project designed to utilize and expand the existing programmatic infrastructures to take 
administrative actions under existing CMS authorities by conducting site verifications of 
potentially high risk providers and suppliers.  The information obtained during site verifications 
is used to determine if provider enrollment requirements are met and to calculate a fraud level 
indicator. 
 
Since inception in July 2009, this project has produced significant results; including an increased 
number of revocations, deactivations, and prepayment edit savings.  The project has also 
provided valuable information that CMS has used to identify and implement programmatic 
changes that have proven successful to deter and prevent Medicare fraud. 
 
As of June 30, 2015, the Medicare Administrative Contractor covering Florida (First Coast 
Service Operations), had conducted 6,838 site verifications to verify providers and suppliers 
operational status, deactivated 117 practice locations, and revoked or denied 773 providers.  
CMS saved $8,919,228 from prepayment medical record review. 
 
 
   
 
  55 
 Administration for Community Living 
 
The mission of the Senior Medicare Patrol (SMP) program is to empower and assist Medicare 
beneficiaries, their families, and caregivers to prevent, detect, and report health care fraud, 
errors, and abuse through outreach, counseling, and education.  In FY 2015, the Administration 
for Community Living (ACL) was allocated $3.4 million in HCFAC funding by HHS to support 
infrastructure, technical assistance, and other SMP program support.  In addition to this funding, 
ACL was allocated $5.3 million for capacity-building activities designed to enhance the 
effectiveness of state-wide SMP programs. During FY 2010 and FY 2011, CMS had provided 
this capacity funding to ACL for the SMP projects.  Since FY 2012 HCFAC funding has been 
allocated directly to ACL. The base SMP project grant is funded from a separate Congressional 
appropriation. 
 
SMP Project Activities and Outcomes 
 
ACL funds 54 SMP statewide projects (each state, Guam, Puerto Rico, U.S. Virgin Islands and 
the District of Columbia) with funds authorized in the Older American Act and the HCFAC 
Wedge. In addition to the projects base grants, funded from the Older American Act, the SMP 
program offers HCFAC funds to each grantee so that they can expand their program. Prior to FY 
2013, the additional funding was based largely on the known fraud prevalence within each state. 
However, in FY 2013, the program moved to a formula-driven allocation taking into account the 
number of Medicare beneficiaries living in each state and the ruralness of the state.  The new 
formula is intended to provide a more equitable allocation of funds and reflects the reality that 
the prevalence of fraud is much broader than a few selected states.  
 
According to the most recent annual performance report from HHS-OIGs Deputy Inspector  
General for Evaluation and Inspections, issued August 2015, a total of 5,249 active volunteers 
served SMP projects during 2014. These volunteers performed an essential function of this 
program, contributing 117,300 hours and conducting over 202,862 one-on-one counseling 
sessions in efforts to educate beneficiaries about how to prevent and detect Medicare fraud 
within local communities. 
 
Outreach to Medicare beneficiaries is a key element of the SMP program.  During 2014, SMP 
projects held 12,417 community outreach education events reaching more than 1,118,982 people,  
and were responsible for over 110,615 media airings to increase beneficiary awareness about 
issues related to Medicare fraud.  In addition, over 452,714 beneficiaries were educated through 
14,692 group educational sessions conducted by SMP programs in local communities. SMP 
projects nationwide received 94,368 inquiries for information or assistance in 2014 from or on 
behalf of beneficiaries. This included receipt of 1,614 complex issues, i.e., beneficiary 
complaints requiring further research, assistance, case development, and/or referral.  SMP 
projects reported that 1,369 complex issues were resolved for beneficiaries during 2014, while 
660 complex issues with an estimated dollar value of over $994,603, were referred to law 
enforcement, CMS integrity contractors, state Medicaid Fraud Control Units, or other entities for 
further action. During this period, HHS-OIG documented that $200,598 in health care  
expenditures were avoided and nearly $741,562 in Medicare, Medicaid and other savings 
resulted from actions taken by the SMP program. 
 
  56 
  
Since the programs inception, the program has educated over 6.6 million beneficiaries in group 
or one-on-one counseling sessions and has reached more than 30 million people through 
community education outreach events.  While SMPs make numerous referrals of potential fraud 
to investigators, it is still difficult to measure the outcome of these cases without a tracking 
mechanism.  Therefore, we have no specific measure of these outcomes, though we anticipate 
that they would demonstrate an additional benefit of the SMP programs ability to detect and 
prevent fraud and abuse in the Medicare program.  In addition, the impact of the SMP programs 
primary activitieseducation of beneficiaries to prevent health care fraudis extremely difficult 
to quantify in dollars and cents. As HHS-OIG indicated in the August 2015 report: 
 
We continue to emphasize the projects may not be receiving full credit for savings 
attributable to their work.  It is not always possible to track referrals to Medicare  
contractors or law enforcement from beneficiaries who have learned to detect fraud, 
waste, and abuse from the projects.  In addition, the projects are unable to track the 
substantial savings derived from a sentinel effect whereby fraud and errors are reduced 
by Medicare beneficiaries scrutiny of their bills.   
 
ACL recognizes the importance of measuring the value of the SMP program impact to the fullest 
degree possible. Toward that end, in 2012, ACL contracted for the first-ever SMP program  
evaluation that assessed the national design and implementation of the SMP program, the 
adequacy of current SMP performance measures, and sought to determine the most appropriate 
measures of SMP program value (benefits, results and impact).  The contract concluded in 
December 2013 and ACL is reviewing the evaluation recommendations for implementation in               
FY 2015. In addition, in FY 2013, the SMP program  issued a three-year research grant designed 
to measure the value of prevention activities.  As the SMP program is focused on education and 
prevention, the true value of the program comes from beneficiaries avoiding fraud in the first 
place. This grant is intended to help the program identify a way to measure that effect.  
 
Despite the factors that have limited ACLs ability to quantify the value of the SMP program in 
preventing, identifying, and reporting health care fraud, HHS-OIG has documented in the annual 
performance report over $122 million in savings attributable to the program as a result of 
beneficiary complaints since its inception in 1997.  
 
SMP Infrastructure and Program Support  
SMP Resource Center 
In FY 2014, the SMP Resource Centers grant was up for competition and a new three-year grant 
was awarded. The SMP Resource Center, established October 1, 2003, provides technical 
assistance, support and training to the SMP projects, ensuring a fully consolidated national 
approach to reaching Medicare and Medicaid beneficiaries.  The goal of the Center is to provide  
professional expertise and technical support, serve as an accessible and responsive central source 
of information, and maximize the effectiveness of the SMP projects in health care integrity  
outreach and education. The Center has been instrumental in supporting ACL efforts to forge 
national visibility for the SMP program. 
   
 
  57 
 SMP Data System 
The SMP program issued a contract in FY 2014 for the development of a new data system  
designed to support the evolving needs of the SMP program.  The previous system, SMART 
FACTS, has been in operation for seven years and is at the end of its functionality.  The new 
system will be operational in late FY 2015 and is expected to last at least 10 years.  
 
Integration Project Grants  
The goal of the SMP program is to provide education to all Medicare beneficiaries.  However, 
there are specific populations that are historically hard to reach.  Three of these populations 
Medicare beneficiaries under age 65; Lesbian, Gay, Bisexual and Transgender (LGBT) Medicare 
beneficiaries; and American Indian/Alaska Native (AI/AN) Medicare beneficiarieswere 
specifically identified as target populations.  In FY 2013, ACL awarded five grants to 
organizations that initiated seventeen-month projects seeking to increase awareness, 
empowerment, and actions to prevent health care fraud amongst these generally underserved 
populations. The goal of these grants is to develop new, efficient, and sustainable approaches for 
ensuring high-quality and culturally competent service delivery and help educate consumers to 
prevent health care fraud. This work ended in FY 2015. 
 
Prevention Research Grant 
As mentioned above in FY 2013, the SMP program issued a three-year research grant to identify a 
way to measure the overall impact of the SMP program.  Specifically, the grantee will develop and 
test an evaluation method to determine how to best measure the effects of the SMP programs 
community education techniques on health care fraud prevention.  This work continued in FY 2014. 
 
 
Office of the General Counsel   
 
In FY 2015, the Office of the General Counsel (OGC) was allocated approximately $10 million 
in HCFAC funding by HHS to supplement OGCs efforts to support program integrity activities.  
Many of OGCs efforts in FY 2015 were focused heavily on program integrity review, in which 
OGC reviews CMS programs and HCFAC activities in order to strengthen them against 
potential fraud, waste, and abuse. OGC also continued its active litigation role in order to assist 
in the recovery of program  funds.  During FY 2015, OGC was involved in a wide range of 
HCFAC efforts that resulted in Government recoveries of over $2.4 billion in judgments, 
settlements, or other types of recoveries, savings, or receivables as described elsewhere in this 
report. 
 
The Affordable Care Act 
The Affordable Care Act (ACA) significantly amended existing anti-fraud statutes.  These 
provisions established fundamental expectations for compliance, disclosure, transparency, and 
quality of care, and are matched by corresponding enforcement provisions.  Some specific 
provisions of the ACA that particularly support HCFAC priorities include amending Medicare 
and Medicaid provider/supplier enrollment requirements, strengthening overpayment provisions 
to specifically invoke the False Claims Act (FCA), and creating a statutory disclosure protocol 
for violations of the physician self-referral prohibition known as the Stark law.  During FY 
2015, as new ACA programs continued to be  implemented, OGC spent significant time and 
 
  58 
 resources working with the relevant CMS client components to ensure that program integrity 
issues were reviewed and resolved, and assisted the client in addressing program integrity and 
compliance problems as they occurred.   
 
HEAT  
During FY 2015, OGC was involved in Health Care Fraud Prevention and Enforcement Action 
Team (HEAT) initiatives and worked closely with other HEAT members to combat fraud, waste, 
and abuse in the Medicare and Medicaid programs by providing advice on the myriad legal 
issues presented as the Government works to initiate innovative anti-fraud programs in various 
hotspots throughout the country. OGC assisted DOJ in pursuing both criminal and civil cases 
involving individuals and entities seeking to defraud the Medicare and Medicaid programs and to 
defend any federal court challenges that are brought as a result of HEAT initiatives.  OGCs 
involvement in HEAT also included advising CMS on provider and supplier revocations, 
payment suspensions, recoupments, and defending the administrative appeals that resulted.  
  
FCA and Qui Tam Actions 
OGC supported DOJ in assessing qui tam actions filed under the FCA by interpreting complex 
Medicare and Medicaid rules and policies to assist DOJ in discerning which allegations were 
program violations and should be pursued, and to help DOJ focus government resources on those 
matters which were most likely to result in a recovery of money for the Government.  When DOJ 
filed or intervened in a FCA matter, OGC provided litigation support, including interviewing and 
preparing witnesses and responding to often extensive requests for documents and information. 
OGC also expended considerable resources in responding to requests for information and witness 
testimony in declined qui tams that were litigated by relators.  In FY 2015, OGC participated in 
FCA and related matters that recovered over $452 million for the Government.  The types of  
FCA cases that OGC worked collaboratively with DOJ on included: drug pricing manipulation, 
illegal marketing activity by pharmaceutical manufacturers that resulted in Medicare and 
Medicaid paying for drugs for indications not covered, physician self-referral violations, and 
provider upcoding cases. 
 
Provider/Supplier Suspensions and Enrollment Revocations or Denials 
Suspensions play a critical role in protecting against the abuse of program funds.  OGC advised 
CMS on whether to suspend payments to Medicare providers and suppliers and defended the 
suspensions when challenged through the appeal process.  In FY 2015, OGC attorneys were 
involved in a myriad of suspension and recoupment actions, which involved suspected fraudulent 
billings by many different segments of the health care industry, including DME suppliers, 
ambulance companies, physicians, infusion clinics, therapists, home health agencies, and 
diagnostic testing facilities. OGC also represented CMS when a provider or supplier appealed a 
denial of enrollment or revocation.  In FY 2015, OGC represented CMS in appeals before the 
HHS Departmental Appeals Board (DAB) and worked to resolve these cases without formal 
hearings. Further, OGC continued to advise CMS on the interpretation of enrollment regulations 
and reviewed proposed enrollment rules and manual changes.   
 
Medicare Prescription Drug Program (Part D) & Medicare Advantage (Part C) Compliance 
During FY 2015, OGC continued to provide extensive advice to CMS on a variety of Part D and 
Medicare Advantage (MA)-related contract  compliance issues, including identifying 
enforcement options against sponsors that are noncompliant or violate program rules, such as the 
 
  59 
 Marketing Guidelines. OGC reviewed compliance-related correspondence that CMS issued to 
Part D sponsors and MA plans in the form of warning letters, corrective action plan letters, 
intermediate sanctions, Civil Monetary Penalty (CMP) notices, and non-renewal or termination 
notices. 
 
Civil Monetary Penalties 
CMS has the responsibility for administering numerous CMP provisions enacted by Congress to 
combat fraud, waste, and abuse by enforcing program compliance and payment integrity.  In FY 
2015, OGC provided legal advice to CMS regarding the development and imposition of CMPs 
and defended CMS in many administrative appeals and judicial litigation resulting from these 
cases.  
 
Petitions for Remission 
OGC collaborated with federal law enforcement, including the FBI, U.S. Attorneys Offices, the 
Secret Service, U.S. Postal Service, and the U.S. Marshals Service in filing petitions for 
remission directed to recover assets subject either to administrative forfeiture by federal law 
enforcement or civil judicial forfeiture by DOJ.  Each petition set forth the background of the 
fraudulent scheme, the history of Medicares payments, and how the fraudulently induced 
payments could be traced to the seized assets.  During FY 2015, OGC petitioned these agencies 
to recover funds in both criminal and civil litigation matters in which Medicare was a victim of 
fraud. 
     
Regulatory Review and Programmatic Advice 
In FY 2015, OGC advised CMS on a vast variety of regulatory and program issues, all to assist 
CMS in strengthening its programs and activities against fraud and to prevent the wrongful 
disbursement of program funds in the first instance.  Some highlights of OGC efforts include: 
providing counsel to the CMS Innovation Center regarding new payment and delivery models 
to improve the quality of care and reduce costs to the Medicare and Medicaid programs, working 
with CMS to implement the agencys second notice related to provider and supplier enrollment 
moratoria, and providing counsel on the program integrity issues to CMS to assist in the 
development of the Notice of Proposed Rulemaking for the Medicare Shared Savings Program  
published on December 8, 2014.  Further, OGC worked on a final rule amending CMSs 
enrollment regulations to establish new authority for CMS to deny or revoke billing privileges 
from individuals and entities that pose a program integrity risk to the Medicare program.  Among 
many other things, the regulation provides new authority to deny enrollment to individual or 
entity affiliated with entities that have an existing Medicare debt and new authority to revoke 
enrollment from providers and suppliers that have a pattern or practice of billing for services that 
do not meet Medicare requirements.  In addition, OGC routinely works with CMS to review 
legislative proposals regarding program integrity matters.  
 
Medicaid Program Integrity 
Continuing recent trends, OGC saw continued increasing involvement in FY 2015 in Medicaid 
program integrity issues as CMS devoted more resources to financial reviews and oversight and 
as states continued to present innovative proposals to reconfigure their Medicaid programs. For 
example, in Detroit-Wayne Mental Health Authority, OGC obtained a fully favorable decision 
from the DAB, sustaining the Division of Cost Allocations denial of the Authoritys request to 
use unspent Medicaid funds to reduce its pension obligations, and resulting in an affirmative 
 
  60 
 recovery of $4.8 million as the State of Michigan recently refunded the unspent funds to CMS.  
Further, OGC assisted CMS with the Indiana Medicaid Programs pilot project to recover 
Medicare overpayments through the offset of the FFP portion of Medicaid payments.  To date, 
this pilot project has recovered nearly $1 million. OGC anticipates providing similar support to 
CMS with a recently launched initiative with the State of Ohio Medicaid Program that has so far 
recovered over $100,000. 
 
Physician Self-Referral 
OGC provided guidance to CMS and DOJ in navigating the complexities of the Stark physician 
self-referral law. This consultation helps to build stronger cases and focus investigatory efforts, 
leading to successful results for the Government.  In FY 2015, OGC provided extensive counsel 
to CMS in its ongoing implementation of the Medicare Physician Self-Referral Disclosure 
Protocol (SRDP)created under the ACA to enable Medicare providers to self-disclose 
technical violations of the Stark laws physician self-referral prohibition.  OGC advised CMS 
regarding numerous matters disclosed under this protocol, now numbering over 350.   
 
Medicare Secondary Payer (MSP) Workload 
OGCs efforts to recover conditional payments by Medicare that are the primary responsibility of 
other payers directly supports the HCFAC statutory goal of facilitating the enforcement of all 
applicable legal remedies for program fraud and abuse.  During FY 2015, OGC has been 
successful in establishing the right to recover over $4.8 million for Medicare under the MSP 
program.  Further, statutory changes implementing mandatory insurance reporting requirements 
to the MSP law have strengthened and expanded OGCs efforts in this areato the benefit of the 
Medicare Trust Fundsincluding the authority for CMS to impose substantial CMPs for failure 
to report. 
 
Bankruptcy Litigation  
OGC protects Medicare funds from waste in bankruptcy cases by asserting CMS recoupment 
rights to collect overpayments, arguing to continue suspension or termination actions against 
debtors, seeking adequate assurances from the bankruptcy court that CMS interests in the 
debtors estate will be protected, arguing for the assumption of the Medicare provider agreement 
as an executory contract, and petitioning for administrative costs where appropriate.  In FY 2015, 
OGC asserted CMS interests in numerous bankruptcy and receivership actions involving 
physicians, hospitals, independent diagnostic test facilities, DME suppliers, nursing homes, and  
nursing home chains, collecting or establishing the right to collect over $16 million in recoveries 
involving bankrupt providers. 
 
Denial of Claims and Payments 
CMS and its contractors engaged in various activities and initiatives to detect and prevent 
abusive and fraudulent billing practices. These measures included provider and beneficiary 
education, use of claim sampling techniques, and a more rigorous scrutiny of claims with 
increased medical review. In FY 2015, OGC played a major role in advising CMS regarding the 
development and implementation of these types of program integrity measures and defended 
CMS in litigation brought by providers and suppliers who challenged these efforts.  OGC 
continued to aggressively defend CMS and its contractors in cases seeking damages for the 
alleged wrongful denial of claims, for being placed on payment suspension, and for not being 
granted extended repayment plans.   
 
  61 
 In summary, OGCs FY 2015 work in support of CMS advances the specific goals of the 
HCFAC program, including program integrity, fraud prevention, and fraud response.  Most CMS 
operations have a fraud/abuse component, and OGCs work supporting all CMS substantive 
program areas directly supports the HCFAC programs goals of fraud and abuse prevention in 
those operational program areas. 
 
 
Food and Drug Administration Pharmaceutical Fraud Program  
 
In  FY 2015, $3.4 million in HCFAC funding was made available for the FDA Pharmaceutical 
Fraud Program  (PFP).  The PFP was instituted to enhance the health care fraud-related 
activities of FDA's Office of Criminal Investigations (OCI) and the Office of the General  
Counsel  (OGC) Food and Drug Division.  OCI,  with the support of OGC, investigates 
criminal violations of the Federal Food, Drug, and Cosmetic Act (FFDCA), the  Federal Anti-
Tampering Act, and related Federal statutes. 
 
The PFP is designed to detect, prosecute, and prevent pharmaceutical, biologic, and medical 
device fraud.  The PFP gathers information from sources inside and outside FDA and focuses on 
fraudulent marketing schemes, application fraud, clinical trial fraud, and flagrant manufacturing- 
related violations concerning biologics, drugs, and medical devices.  The goal of the program is 
the early detection and prosecution of such fraudulent conduct and furthers FDAs public  health  
mission by helping to reduce health care costs, in most cases before they are incurred, and deter 
future  violators.  By initiating investigations of pharmaceutical fraud schemes earlier in their 
lifecycle, FDA is able to preclude potential public harm by barring medical products, which 
have not followed the legal FDA approval processes and do not meet FDA standards, from  
making it to market, thus saving valuable  health care dollars  from being spent.  
  
The PFP has identified multiple alleged medical product fraud schemes through various 
avenues. Since the inception of the PFP, OCI has opened a total of one hundred twenty criminal 
investigations. In FY 2015, FDAs fifth full fiscal year of HCFAC Program activity, OCI, 
through its PFP, opened twenty-nine criminal investigations, described below: 
 
	   Two investigations involving allegations of questionable manufacturing practices of 
foreign-based drug firms.  The investigations are focused on violations related to 
application fraud, data integrity, data manipulation, and adulteration. 
 
	   Two investigations involving allegations of questionable manufacturing practices of an 
injectable drug by a domestic firm causing the finished product to be sub-potent.  The 
investigation is focused on misbranding and/or adulteration. 
 
	   Three investigations involving allegations of questionable manufacturing practices of  
medical devices ultimately causing public safety risks.  The investigations are 
focused on misbranding and/or adulteration.  
 
	   Five investigations involving marketing schemes by medical device and drug 
manufacturers.  These investigations involve alleged misbranding  of devices and drugs 
 
  62 
 by offering them for sale  to address conditions for which they are not FDA cleared or 
approved. 
 
	   Seventeen investigations involving allegations of clinical trial or application 
fraud. These investigations are focused in part on individuals or companies suspected 
of improperly commencing and conducting clinical trials, falsifying clinical trial data, 
forging signatures of clinical investigators, and enrolling ineligible or non-existent 
subjects in clinical trials, as well as falsifying approval or clearance applications made 
to the FDA. 
 
In regard to judicial action, the types of criminal investigations conducted through the PFP tend to 
be complex in nature requiring extensive document review and coordination with the affected FDA 
Center.  It is not unusual for these complex fraud investigations to last five years or more from 
initiation to conclusion.  For example, in February  2015, one of our PFP investigations opened in 
FY 2011 concluded with a clinical trial coordinator being sentenced to 36 months in prison, 36 
months of probation, and ordered to pay approximately $200,000 for making false statements in 
a matter within the jurisdiction of the FDA.  Specifically, an FDA investigator found evidence to 
show a number of study subjects that had been reported as being enrolled in a clinical study of an 
HIV drug did not actually participate in the study and that all the data regarding their 
participation had been fabricated. 
 
Additionally, in March 2015, the first investigation opened at the inception of our PFP program  
in mid-FY 2010, concluded with a large prescription and over-the-counter drug manufacturer 
located in the Philadelphia area pleading guilty for introducing adulterated infants and 
childrens liquid medications into interstate commerce.  The investigation netted a $25,000,000 
recovery. 
 
Furthermore, FDA believes that various investigations already initiated under the PFP show 
promise of future judicial action that may include criminal prosecution and monetary 
recoveries. These promising cases include several large foreign generic drug manufacturers 
under investigation for data integrity and other manufacturing violations which would deem  
their products adulterated and could possibly pose a risk to the publics health and safety.  
Sixty percent of generic drugs in the United States come from foreign manufacturers.   
 
In addition to these investigative activities, FDA conducted a one day training session in early 
March 2015 for criminal investigators covering PFP related topics.  The training also provided 
background on FDAs participation in the HCFAC Program and resources available to assist in 
investigations being conducted under the PFP. Due to this training, FDA has seen a measurable 
increase in HCFAC Program awareness, interest, and level of skill in conducting the 
investigations. 
 
   
 
  63 
 DEPARTMENT OF JUSTICE 

 
United States Attorneys 
 
In FY 2015, the United States Attorneys Offices (USAOs) were allocated approximately 
$51.9 million in HCFAC funding to support civil and criminal health care fraud and abuse 
litigation, as exemplified in the Program Accomplishments section.  The USAOs dedicated 
substantial district resources to combating health care fraud and abuse in 2015, and HCFAC 
allocations have supplemented those resources by providing funding for attorneys, paralegals, 
auditors and investigators, as well as funds for litigation of resource-intensive health care fraud 
cases. USAOs work with CMS by reviewing and conferring with CMS about their imposing any 
potential civil monetary penalties against a provider.  Additionally, the Attorney General 
Advisory Committees (AGAC) Health Care Fraud Working Group has supported and is 
working on efforts to reduce the number of home  health care fraud cases.  The effort to reduce 
this type of fraud is in working on proposals to change the home health care documentation, and 
providing extended education to providers about their responsibilities to correctly certify service 
for these programs and the risks they face for not submitting correct information. 
 
The 93 United States Attorneys and their assistants, or AUSAs, are the nations principal 
prosecutors of federal crimes, including health care fraud.  Each district has a designated 
Criminal Health Care Fraud Coordinator and a Civil Health Care Fraud Coordinator.  Civil and 
criminal health care fraud referrals are often made to USAOs through the law enforcement 
network described herein, and these cases are usually handled primarily by the USAOs, although 
the civil referrals are sometimes handled jointly with the Civil Divisions Commercial Litigation 
Branch (Fraud Section). The other principal source of referrals of civil cases for USAOs is 
through the filing of qui tam (or whistleblower) complaints.  These cases are often handled 
jointly with trial attorneys in the Fraud Section. USAOs also handle most criminal and civil 
appeals at the Federal appellate level.  
 
USAOs play a major role in health care fraud enforcement by bringing criminal and affirmative 
civil cases to recover funds wrongfully taken from the Medicare Trust Funds and other taxpayer-
funded health care systems as a result of fraud, waste, and abuse.  Civil and criminal AUSAs 
litigate a wide variety of health care fraud matters, including false billings by physicians and 
other providers of medical services, overcharges by hospitals, Medicaid fraud, and kickbacks to 
induce referrals of Medicare or Medicaid patients, fraud by pharmaceutical and medical device 
companies, home health and hospice fraud, and failure of care allegations against nursing home 
owners. Working closely with their partners in the Civil Division, several civil health care fraud 
AUSAs have focused their efforts on pharmaceutical fraud, resulting in significant recoveries.  
Most notably, health care giant Johnson & Johnson agreed to pay $2.2 billion to resolve criminal 
and civil liability arising from allegations relating to the prescription drugs Risperdal, Invega and 
Natrecor, including misbranding related to the promotion for intended uses not approved as safe 
and effective by the Food and Drug Administration (FDA) and payment of kickbacks to 
physicians and to the nations largest long-term care pharmacy provider.    
 
Other major pharmaceutical cases included:  Endo Health Solutions Inc., which agreed to pay to 
 
  64 
 pay $192.7 million to resolve criminal and civil liability arising from Endos marketing of the 
prescription drug Lidoderm for intended uses not approved as safe and effective by the FDA, 
which rendered the drug misbranded; and Teva Pharmaceuticals USA Inc., which  agreed to pay 
the Government and the State of Illinois $27.6 million for allegedly violating the FCA by making 
payments to induce prescriptions of an anti-psychotic drug for Medicare and Medicaid 
beneficiaries. Most of the major civil settlements were part of a global resolution, which also 
addressed the criminal liabilities, resulting in criminal pleas, as well as significant fines and 
forfeitures. The criminal portion of these investigations and resolutions was handled by criminal 
health care fraud AUSAs, often working with their counterparts at the Consumer Protection 
Branch of the Civil Division. These global settlements resolved allegations including reporting 
of false and inflated drug prices, manufacturing and distributing adulterated drugs, distribution of 
drugs for uses not approved by FDA, and kickbacks.   
 
The USAOs also partner with the Criminal Division in the Medicare Fraud Strike Forces 
currently operating in nine areas across the country.  Each USAO has dedicated several AUSAs 
and support personnel to work with Criminal Division attorneys in this important initiative.  
Additionally, USAOs in Strike Force and non-Strike Force cities work on other substantial cases 
which result in high monetary recovery or have a substantial impact on the law and the 
community. Examples of successful cases that were not initiated or concluded in districts as part 
of a Strike Force team during FY 2015 are detailed earlier in this report.   
 
In addition to the positions funded by HCFAC, the Executive Office for United States Attorneys 
Office of Legal Education (OLE) uses HCFAC funds to train AUSAs and other DOJ attorneys, 
as well as paralegals, investigators, and auditors in the investigation and prosecution of health 
care fraud. In April 2015, OLE offered a Health Care Fraud Seminar which was attended by 
over 85 AUSAs and DOJ trial attorneys. In November 2015, OLE offered training for USAO 
auditors, investigators, and paralegals which included a focus on health care fraud investigations.  
Many USAO attorneys, investigators, auditors, and paralegals served as faculty at these OLE 
trainings, and also participate in other federal, state, and private health care fraud seminars. 
 
Criminal Prosecutions13  
 
In FY 2015, the United States Attorneys Offices (USAO) opened 983 new criminal health care 
fraud investigations. Assistant United States Attorneys (AUSA) filed criminal charges in 463 
cases involving 888 defendants. A total of 613 defendants were convicted of health care fraud-
related crimes during the year.   
 
Civil Matters and Cases14  
 
In FY 2015, USAOs opened 808 new civil health care fraud investigations and had 1,048 civil 
health care fraud matters pending at the end of the fiscal year. 
                                                 
13 FY  2015  numbers are actual data through the end of  September 2015. This data includes records classified either 
 
with the primary or tertiary 03G  Health  Care Fraud program code.   

14 FY  2015  numbers are actual data through the end of  September 2015. This data includes those records classified 
 
under with the FRHC  Health Care Fraud  civil code. 

 
  65 
 Civil Division  
 
In FY 2015, the Civil Division received approximately $31.6 million in FY 2015 HCFAC 
funding to support the health care fraud activities of the Commercial Litigation Branchs Fraud 
Section and the Consumer Protection Branch. This amount also included funding to support the 
Department of Justices Elder Justice Initiative.   
 
The Commercial Litigation Branchs Fraud Section  
 
The Civil Divisions Commercial Litigation Branch (Fraud Section) investigates complex health 
care fraud allegations and files suit under the FCA to recover money on behalf of defrauded 
federal health care programs including Medicare, Medicaid, TRICARE, and the FEHBP.  The 
Fraud Section works closely with the United States Attorneys Offices and often team with the 
Consumer Protection Branch, HHS-OIG, state Medicaid Fraud Control Units and other law 
enforcement agencies to pursue allegations of healthcare fraud.  As a result of these efforts, the 
Fraud Section has obtained settlements and judgments in health care cases of over $1 billion 
almost every year since 2000 and over $1.9 billion in FY 2015 alone. 
 
The Fraud Section investigates and resolves matters against a wide array of health care providers 
and suppliers.  In FY 2015, some of the most significant matters pursued by the Fraud Section 
involved hospitals and physicians. In some of these cases, the hospitals allegedly improperly 
admitted patients who could have been treated on a less costly outpatient basis (such as the 
Dignity Health, MCCG, and CHS matters discussed above).  Other cases against hospitals and 
physicians involved alleged violations of the Stark Law, which prohibits physicians from  
referring their patients to other entities for services payable by Medicare when the physician or 
an immediate family member of the physician has a direct or indirect financial relationship with 
the entity (such as the North Broward Hospital District, Robinson Health System, Citizens 
Medical Center, Columbus Regional, and Adventist Health Care System matters discussed 
above). The Fraud Section continues to look closely at these types of arrangements to make sure 
that Medicare and Medicaid, as well as the beneficiaries of these programs, are protected from  
the distorted medical decision-making that these improper financial deals can cause.  
 
The Fraud Section has been called upon to litigate an increasing number of FCA cases that in the 
past may have been settled.  For example, while it has settled allegations against for profit 
hospice providers relating to the admission of beneficiaries not eligible for the hospice benefit 
(such as the Good Shepherd Hospice and Covenant Hospice matters discussed above), the 
Section has filed complaints and committed significant resources to litigating claims against a 
number of other hospice providers, including Vitas Hospice Services, AseraCare Hospice, 
Creekside Hospice, and Evercare Hospice and Palliative Care (now known as Optum Palliative 
Care and Hospice). Similarly, while the Section has settled allegations against nursing homes 
and healthcare providers relating to medically unnecessary and inappropriate levels of 
rehabilitation therapy administered to elderly residents (such as the Extendicare Health Services 
and RehabCare matters discussed above), it has filed complaints against other providers, 
including Life Care Centers of America, Inc. and HCR Manorcare.  
 
 
  66 
 Matters involving pharmaceutical and device manufacturers were historically some of the most 
complex and resource intensive cases handled by the Fraud Section, and the Sections historic 
recoveries in these areas have had a significant deterrent effect on industry.  The Section 
continues to investigate allegations that drug and device manufacturers caused the submission of 
false claims to federal healthcare programs  by promoting drugs for uses not approved by the 
FDA and not covered by federal health care programs (as alleged in the Inspire Pharmaceuticals 
matter discussed above), by distributing unapproved and non-reimbursable medical devices (as 
alleged in the OtisMed and NuVasive matters discussed above), and by paying kickbacks to 
healthcare providers to recommend or prescribe particular products (as alleged in the Daiichi 
Sankyo and Medco Health/AstraZeneca matters discussed above).  
 
Because the Fraud Section receives every FCA complaint filed across the country by  
whistleblowers (otherwise known as relators), it has a unique vantage point over health care 
fraud trends and developments nationwide and therefore regularly handles some of the most 
complex matters and takes the lead on coordinating national investigations with its law 
enforcement partners.  Likewise, given the diversity of health care fraud cases pursued by the 
Fraud Section, it frequently provides training and guidance to AUSAs and agents on the FCA 
and health care fraud issues. The Section works closely with HHS-OIG, Office of General 
Counsel, in all settlements of health care fraud allegations in order to ensure that the 
administrative remedies possessed by HHS are appropriately considered and to enable the 
negotiation of compliance terms that diminish the risk that the offending conduct will be 
repeated. The Section also collaborates with and counsels CMS and HHS-OIG on interagency 
initiatives and proposed rules and regulations.   
 
The Elder Justice Initiative, which is housed in the Civil Division, coordinates and supports law 
enforcement efforts to combat elder abuse, neglect, and financial exploitation.  The Initiative 
supports law enforcement efforts by maintaining an information bank of Elder Justice related 
materials (including briefs, opinions, indictments, plea agreements, subpoena templates); funding 
medical reviewers, auditors, and other consultants to assist DOJ attorneys and AUSAs in their 
nursing home and/or long term care facility cases; hosting quarterly teleconferences with DOJ 
attorneys and AUSAs across the country to discuss issues or developments in connection with 
our nursing home and failure of care cases; and coordinating nationwide investigations of skilled 
nursing facilities. In addition to supporting law enforcement efforts, the Initiative continues to 
fund research projects awarded by the Office of Justice Programs, National Institute of Justice, to 
study the abuse, neglect, and exploitation of elderly individuals and residents of residential care 
facilities.  Elder Justice Initiative members represent the Justice Department on Interagency 
Working Groups such as the Elder Justice Coordinating Councils Working Group.  The Civil 
Division maintains the Elder Justice Website (www.justice.gov/elderjustice), a valuable resource 
for elder abuse victims and their families, state and local prosecutors, elder abuse researchers, as 
well as practitioners.  
 
The Consumer Protection Branch  
The Consumer Protection Branch (CPB) litigates consumer fraud actions to end dangerous 
practices that harm Americas most vulnerable populations, like the sick and elderly.  Among its 
top priorities are pursuing  cases against those who market unsafe or fraudulent products and 
services that endanger the health and safety of patients. CPB works closely with United States 
 
  67 
 Attorneys Offices, the Commercial Litigation Branchs Fraud Section, the Food and Drug 
Administration (FDA), and other law enforcement partners on a wide range of health care fraud 
cases, including those involving the promotion and distribution of unapproved and adulterated 
drugs and medical devices.  CPB has made significant headway in fighting fraud schemes that 
endanger the public health, having successfully prosecuted dozens of cases resulting in 
significant jail terms, fines, and forfeitures.  This litigation serves to deter companies and 
individuals from marketing and selling unsafe pharmaceuticals and medical products to the 
American public.  
    
In partnership with key agencies, in FY  2015, CPB prosecuted medical device maker OtisMed 
Corporation and its former president and CEO for distributing an unapproved medical device 
used in knee replacement surgery.  OtisMed marketed the OtisKnee cutting guide as a tool to 
assist surgeons in making accurate bone cuts during knee replacement surgery.  After FDA 
notified OtisMed and its CEO that the OtisKnee had failed to demonstrate that it was as safe and 
effective as other legally  marketed devices and therefore that distribution of the device was 
prohibited, the CEO ordered the shipment of approximately 218 devices to surgeons 
nationwide. The corporation pled guilty to violating the Federal Food, Drug, and Cosmetic Act 
and paid a criminal fine and forfeiture totaling $39.6 million.  It also entered into a civil 
settlement with the federal government and the states of more than $40 million.  The CEO was 
sentenced to 24 months in prison followed by one year of supervised release, and ordered to pay 
a $75,000 fine. 
 
In another medical device matter, CPB, in collaboration with the U.S. Attorneys Office for the 
Middle District of Florida, entered into a deferred prosecution agreement with Genzyme 
Corporation, a wholly-owned biotechnology subsidiary of French pharmaceutical company 
Sanofi, to resolve criminal charges that it violated the Federal Food, Drug, and Cosmetic Act 
with regard to Seprafilm, a surgical device it markets and promotes.  A two-count criminal 
information charged that, between 2005 and 2010, Genzyme caused Seprafilm to become  
adulterated and misbranded while held for sale.  For instance, some Genzyme sales 
representatives taught surgeons how to mix Seprafilm sheets into a slurry that could be squirted 
through the narrow tubes used during laparoscopic surgery, even though Seprafilm was never 
FDA-approved for use in such procedures. In addition, during the course of the governments 
investigation, Genzyme voluntarily disclosed that it had distributed promotional material that 
implied that Seprafilm had been proven safe and effective for use in gynecologic cancer 
surgeries, even though Seprafilms FDA-approved label cautioned against such use.  Genzyme 
paid a monetary penalty of more than $32 million and agreed to undertake several measures to 
enhance its internal compliance program.  In 2013, the government entered into a separate   
$22.3 million civil agreement to resolve allegations under the False Claims Act related to 
Seprafilm.   
 
CPB has also increased its attention to dietary supplement manufacturers that sell misbranded 
and adulterated products, which pose a danger to the public and scam consumers out of money 
for misrepresented products.  For example, last fiscal year, CPB along with the FDA, and the 
U.S. Attorneys Office in New Jersey, teamed together to prosecute the owner and president of 
the dietary supplement company, Raw Deal Inc.  The president instructed employees to add 
fillers like maltodextrin, rice flour, and cocoa replacer to dietary ingredients in supplements sold  
   
 
  68 
 to customers.  The company president was sentenced to prison and ordered to forfeit $1 million 
in profits from his fraudulent scheme.   
 
CPB brought actions in FY 2015 to ensure the safety and integrity of the nations drug supply.  
McNeil-PPC, Inc., a wholly-owned subsidiary of Johnson & Johnson, pled guilty in U.S. District 
Court for the Eastern District of Pennsylvania to delivering for introduction into interstate 
commerce adulterated infants and childrens over-the-counter (OTC) liquid medicines from in 
or around May 2009 to in or around April 2010. The drugs were adulterated because McNeil did 
not manufacture them in compliance with current Good Manufacturing Practices (cGMP), which 
is required under the Federal Food, Drug, and Cosmetic Act.  Among other things, McNeil 
received a consumer complaint regarding black specks in its Childrens Tylenol (later 
identified as nickel/chromium-rich inclusions, which were not intended ingredients in the OTC 
liquid drug). In addition to this consumer complaint, McNeil discovered other OTC batches with 
particulates. However, McNeil did not initiate or complete a Corrective Action Preventive 
Action plan as required by its standard operating procedures.  Consequently, McNeil was not in 
compliance with cGMP regarding the manufacturing of certain OTC liquid drugs.  As part of the 
plea, McNeil agreed to pay a $20 million fine and forfeit $5 million in substitute assets. 
 
CPB also made inroads in the area of drug diversion, successfully prosecuting multiple 
individuals engaged in a massive drug diversion scheme involving more than $390 million worth 
of prescription drugs. In FY 2015, these individuals were charged with conspiracy and related 
offenses as part of this scheme relating to sale of prescription drugs from illegal, unlicensed 
sources to wholesalers and pharmacies throughout the United States.  To hide the true, illegal 
sources of their prescription drugs, the defendants falsified pedigree documents required by law 
that show the source of drugs. In FY 2015, five defendants pled guilty to crimes relating to their 
part in the scheme. 
 
Criminal Division 
 
In FY 2015, the Criminal Division was allocated $14.7 million in FY 2015 HCFAC funding to 
support criminal health care fraud litigation and interagency coordination, which is carried out 
primarily by the Fraud Section and, to a lesser extent, the Organized Crime and Gang Section.   
 
The Fraud Section  
 
The Fraud Section initiates and coordinates complex health care fraud prosecutions and supports 
the USAOs with legal and investigative guidance  and training and trial attorneys to prosecute 
health care fraud cases.  Beginning in March 2007, the Fraud Section, working with the local 
USAOs, the FBI and law enforcement partners in HHS-OIG, and state and local law enforcement 
agencies, launched the Medicare Fraud Strike Force in Miami-Dade County, Florida, to 
prosecute individuals and entities that do not provide legitimate health care services but exist 
solely for the purpose of defrauding Medicare and other government health care programs.  
Since 2007, DOJ and HHS have expanded the Strike Force to nine regions.  In FY 2015, the 
Fraud Section continued to provide attorney staffing, litigation support, and leadership and 
management oversight for numerous Strike Force prosecutions in eight of the nine regions.  The 
Fraud Sections key litigation accomplishments in FY 2015 can be summarized as follows:   
 
  69 
  
	   Filed 200 indictments, informations and complaints involving charges filed against 
391 defendants who allegedly collectively billed the Medicare program approximately 
$1.4 billion; 
 
	   Obtained 314 guilty pleas and litigated 28 jury trials, with guilty verdicts against 

48 defendants; and
   
 
	   Secured imprisonment for 263 defendants sentenced during the fiscal year, averaging 
more than 56 months of incarceration. 
 
The Fraud Section attorneys staffed and coordinated the Divisions health care fraud litigation 
through the existing Medicare Fraud Strike Force teams in Miami, Los Angeles, Detroit, 
Southern Texas, Brooklyn, Southern Louisiana, Tampa, Dallas, and Chicago. 
 
In FY 2015, the Criminal Division organized the largest national health care fraud takedown in 
history, both in terms of individuals charged and the loss amount.  On June 18, 2015, Attorney 
General Loretta E. Lynch and Department of Health and Human Services (HHS) Secretary 
Sylvia Mathews Burwell announced a nationwide sweep led by the Medicare Fraud Strike Force 
in 17 U.S. Attorneys Offices, resulting in charges against 243 individuals, including 46 doctors, 
nurses and other licensed medical professionals, for their alleged participation in Medicare fraud 
schemes involving approximately $712 million in false billings.  In addition, the Centers for 
Medicare & Medicaid Services (CMS) also suspended a number of providers using its 
suspension authority as provided in the Affordable Care Act.  
 
In addition to Medicare Fraud Strike Force cases, the Fraud Section handles corporate criminal 
health care fraud investigations.  Often, such cases are handled in a parallel manner by the Fraud 
Sections prosecutors along with DOJ Civil Division attorneys and/or AUSAs from USAOs 
across the country. In FY 2015, the Criminal Division opened several new corporate health care 
fraud matters and had over a dozen active investigations into large, nationwide medical 
providers. 
 
In addition to health care fraud litigation, the Fraud Section also provided legal guidance to FBI 
and HHS-OIG agents, health program agency staff, AUSAs, and other Criminal Division 
attorneys on criminal, civil, and administrative tools to combat health care fraud.  Throughout 
FY 2015, the Fraud Sections prosecutors met with federal prosecutors and agents across the 
United States to provide training, investigative leads based on data analysis, and related support.  
The Fraud Section also provided advice and written materials on patient medical record 
confidentiality and disclosure issues, and coordinated referrals of possible criminal HIPAA 
privacy violations from the HHS Office for Civil Rights; monitored and coordinated DOJ 
responses to legislative proposals, major regulatory initiatives, and enforcement policy matters; 
reviewed and commented on health care provider requests to the HHS-OIG for advisory 
opinions, and consulted with the HHS-OIG on draft advisory opinions; worked with CMS to 
improve Medicare contractors fraud detection, referrals to law enforcement for investigation, and 
case development work; and prepared and distributed to all USAOs and FBI field offices 
periodic summaries of recent and significant health care fraud cases.  Finally, the Fraud Section 
 
  70 
 also held a National Health Care Fraud Training Conference in September 2015 that was 
attended by 280 criminal and civil prosecutors (representing over 50 U.S. Attorneys Offices) 
and law enforcement personnel. 
 
The Organized Crime and Gang Section (OCGS)  
 
The Criminal Divisions Organized Crime and Gang Section (OCGS) supports and conducts 
investigations and prosecutions of fraud and abuse targeting private sector health plans as well as 
health care fraud and abuse perpetrated by domestic and international organized crime groups.  
With respect to private sector health care fraud, OCGS supports and conducts enforcement 
efforts combatting fraud and abuse directed at the 2.5 million private sector health plans 
sponsored by employers and/or labor organizations which cover some 137 million Americans.  
OCGS also works to improve strategic coordination in the identification and prosecution of 
domestic and international organized crime groups engaged in sophisticated frauds posing a 
threat to the health care industry. 
 
In FY 2015, six OCGS attorneys were assigned to health care fraud prosecutions and 
investigations. Two OCGS attorneys worked with the Organized Crime Strike Force in the 
Philadelphia United States Attorneys Office on prosecutions involving Medicare fraud in the 
operation of a hospice. A third OCGS attorney conducted the prosecution of an employer in the 
District of Maryland who created false documents to conceal the companys underpayment of 
required contributions for employee benefits.  Additional OCGS attorneys were engaged in 
health care fraud investigations involving fraudulent billings by an ambulance service provider, 
embezzlement and fraud targeting large collectively bargained health plans, fraud in the 
operation of a pharmacy, and theft of personally protected health care information from a health 
clinic.  
 
The Philadelphia case involved the prosecution of a registered nurse in connection with a scheme  
to defraud Medicare in the operation of a hospice.  The nurse, who served as the Director of 
Professional Services and supervised the nursing staff at the hospice, is alleged to have 
authorized the submission of more than $9.5 million in fraudulent medical claims for hospice 
services provided to patients who did not receive services or were ineligible for the benefits 
claimed.  The hospice founder, a co-owner, the medical director, and four staff nurses have 
previously been convicted and sentenced in connection with this false billing scheme.  The 
massive fraud was alleged to be successful due to participation by nurses and other staff in the 
altering of patient records to make patients appear eligible for hospice services when, in reality, 
they were not. Trial for the remaining defendant is scheduled for FY 2016. 
 
The District of Maryland prosecution involved the victimization of a union health care plan by 
an employer who underpaid contributions to the plan which were required by a collective 
bargaining agreement and concealed the underpayment in plan records and reports for three 
years. In October 2014, the company owner was sentenced to probation and ordered to make 
restitution for making false statements in documents required by the Employee Retirement 
Income Security Act.  
 
 
  71 
 In addition to conducting health care fraud investigations and prosecutions, OCGS attorneys 
routinely provide litigation support and advice to  AUSAs and criminal investigative agencies in 
the investigation and prosecution of corruption and abuse of private employment-based group 
health plans covered by the Employee Retirement Income Security Act (ERISA).  Litigation 
support is provided as requested at any stage of the prosecution from indictment through trial and 
on appeal. Private sector employment-based group health plans are the leading source of health 
care coverage for individuals not covered by Medicare or Medicaid.  OCGS attorneys also 
provide support to investigations and prosecutions of fraud schemes by corrupt entities that sell 
unlicensed health insurance products as well as fraud schemes by corrupt employers that cheat 
workers out of health benefits required by the prevailing wage laws and regulations. 
 
OCGS attorneys regularly provide health care fraud and abuse training and legal guidance to 
AUSAs and to criminal investigators and agents of the Department of Labors Employee 
Benefits Security Administration and Office of Inspector General.  Such training and guidance 
covers prosecutions involving abuse of private sector employee health plans subject to ERISA 
and health plans sponsored by labor organizations as well as fraud and abuse committed in 
connection with the operation of multiple employer welfare arrangements.  OCGS is also 
responsible for drafting and reviewing criminal legislative proposals affecting employee health 
benefit plans. Finally, OCGS provides legal guidance to prosecutors and required approvals in 
the use of the Racketeer Influenced and Corrupt Organizations (RICO) statute in prosecutions of 
Medicare and Medicaid frauds as well as private sector health care frauds.  
 
 
Civil Rights Division  
 
In FY 2015 the Civil Rights Division was allocated approximately $7.8 million in FY 2015 
HCFAC funding to support Civil Rights Division litigation activities related to health care fraud 
and abuse. The Civil Rights Division pursues relief affecting public, residential and 
nonresidential health care facilities and service systems, as well as conducts investigations to 
eliminate abuse and grossly substandard care in public, Medicare and Medicaid funded long-
term care facilities.  Consistent with the Supreme Courts decision in Olmstead v. L.C., 527 U.S. 
581 (1999), the Division has also undertaken initiatives to eliminate the needless 
institutionalization of individuals who require health care supports and services. 
  
The Division plays a critical role in the HCFAC Program.  The Special Litigation Section of the 
Civil Rights Division is the sole DOJ component responsible for the Civil Rights of Institution-
alized Persons Act, 42 U.S.C.1997 (CRIPA). CRIPA authorizes the investigation of conditions 
of confinement at state and local residential institutions (including facilities for persons with 
developmental disabilities or mental illness, and nursing homes) and initiation of civil action for 
injunctive relief to remedy a pattern or practice of violations of the Constitution or Federal 
statutory rights. The program includes review of conditions in facilities for persons who have 
mental illness, facilities for persons with developmental disabilities, and nursing homes.  
The Disability Rights Section of the Civil Rights Division has primary enforcement authority 
for the Americans with Disabilities Act (ADA).  Title II of the ADA authorizes investigation of 
allegations of discrimination by public entities against individuals with disabilities, including 
 
  72 
 discrimination in the form of needless institutionalization of persons who require health care 
supports and services. See Olmstead, 527 U.S. 581. Title II also authorizes the initiation of 
civil action to remedy discrimination in violation of the ADA.  In addition to violating the civil 
rights of individuals with disabilities, such unnecessary institutionalization often results in 
unnecessarily increased Medicaid costs inconsistent with the Medicaid requirements for home 
and community-based services.  Both the Special Litigation Section and the Disability Rights 
Section have undertaken initiatives to combat the use of Medicaid funding for the unjustified 
institutionalization of persons with disabilities.  
 
The Educational Opportunities Section of the Civil Rights Division also participates in the 
HCFAC Program to address the use of Medicaid funding for unnecessary institutionalization of 
youth with disabilities in segregated education placements in violation of the ADA.  
The Special Litigation, Educational Opportunities, and Disability Rights Sections work 
collaboratively with the USAOs and with HHS.  
 
Fiscal Year 2015 Accomplishments  
 
Key litigation and enforcement accomplishments in FY 2015 by the Civil Rights Division can be 
summarized as follows: 
 
   Number of matters in active enforcement:  19; 
   Cumulative estimate of individuals with disabilities affected:  33,322; and 
   Number of institutional facilities affected:  2,172.  
Special Litigation Section 
 
In Fiscal Year 2015, the Special Litigation Section resolved two major systemic reform cases 
after the jurisdictions complied with settlement agreements; issued findings that a state 
unnecessarily institutionalizes children with mental illness; opened one statewide investigation 
regarding the unnecessary institutionalization of people with mental health disabilities in nursing 
facilities; monitored compliance of 10 statewide settlement agreements and four facility-focused 
agreements impacting thousands of people; monitored an agreement with an urban police 
department requiring them to connect individuals with mental illness to community-based 
services instead of costly institutional services and to avoid unnecessary criminal justice 
involvement; and filed one statement of interest in litigation regarding a Protection and 
Advocacy organizations ability to access investigatory records needed to ensure individuals at a 
health care facility were not subjected to abuse and neglect. In FY 2015, the Sections work 
including its formal investigations, monitoring of remedial agreements, and active litigation 
affected more than 1,700 health care facilities in 17 states as well as the District of Columbia.  
The large number of health care facilities reflects the Sections  expanded focus on whether states 
are ensuring that nursing facilities and other institutional settings do not inappropriately admit 
persons who should be served in more integrated settings. 
An important aspect of the Divisions work is the active enforcement of its agreements (i.e., 
ongoing monitoring to ensure agreements are successfully implemented and pursuit of remedial 
measures where expected compliance is not occurring).  Because of these agreements scope and 
 
  73 
 complexity, this work typically spans several years.  In FY 2015, the Special Litigation Section 
brought to a successful close two such agreements after years-long enforcement efforts.  In 
Nebraska, the Section concluded a seven-year enforcement effort to improve conditions at the 
States largest institution for people with intellectual and developmental disabilities, the Beatrice 
State Developmental Center, and enact system reforms to improve community services 
throughout the state. The court-ordered agreement required the State to remedy health, safety, 
and welfare issues at the institution, and more importantly, required the State to significantly 
expand and enhance community capacity and to establish robust quality assurance mechanisms  
in the community. It impacted the lives of hundreds of people who have received services at the 
institution and thousands of people who benefited from the system-wide reforms called for by 
the settlement.  In Connecticut, the Section concluded a six-year enforcement effort to improve 
conditions at the Connecticut Valley Hospital. The agreement there required the State to remedy 
health, safety, and welfare issues for people with mental health disabilities at the institution, 
improve treatment and planning, and more appropriately consider community-based services for 
people residing at the facility. 
 
The Section continued monitoring implementation of large-scale, systemic reform agreements in 
numerous jurisdictions across the country.  These ongoing enforcement efforts include: 
 
   A statewide agreement in Amanda D. v. Hassan / United States v. New Hampshire  
(D.N.H. 2012)  requiring the creation of robust community alternativesincluding high-
intensity services for at least 1,500 people, integrated housing for hundreds of people, 
and employment supports for hundreds of peoplethat will reduce the risk that people 
needing only community-based services will be psychiatrically hospitalized 
unnecessarily; 
 
	   An agreement with the City of Portland in United States v. City of Portland (D. Or. 
2012) requiring the Portland Police Department to train officers in mental health crisis 
intervention and connect individuals with mental illness to community-based mental 
health services to avoid unnecessary criminal justice involvement and 
institutionalization;   
 
	   A statewide settlement agreement in United States v. Virginia (E.D. Va. 2012) requiring 
the development of approximately 4,200 home and community-based waivers for people 
with intellectual and developmental disabilities who are on waitlists for community 
services and individuals transitioning from four State-run institutions; 
 
	   A statewide agreement in United States v. Delaware (D. Del. 2011) requiring the 
development of comprehensive community mental health supportsincluding high-
intensity services for more than 1,000 people, integrated housing for 650 people, and 
employment supports for 1,100 peoplefor people with mental health disabilities in, or 
at risk of being placed in, the Delaware Psychiatric Center; and 
 
	   A statewide agreement in United States v. Georgia  (N.D. Ga. 2010) requiring the 
development of community resources to serve thousands of people with serious mental 
illness or intellectual disabilities who reside in Georgias State Hospitals or are at risk of  
being institutionalized there.   
 
  74 
  
In FY 2015, the Section also issued findings in its investigation into West Virginias childrens 
mental health system.  The United States concluded that West Virginia fails to serve children 
with mental health conditions in the most integrated setting appropriate to their needs in violation 
of the Americans with Disabilities Act (ADA) and Olmstead v. L.C.  More than 1,000 children in 
the state reside in segregated, expensive residential facilities, often for long periods unrelated to 
their disability, because of a lack of less expensive, community-based service options.  
Negotiations began this fiscal year to resolve these issues in a comprehensive agreement. 
 
Also in FY 2015, the Section opened an investigation into Louisianas use of nursing facilities to 
serve people with mental illness and continued its investigation into South Dakotas use of  
nursing facilities to serve older adults and people with disabilities.  
 
The Section filed one statement of interest in Idaho regarding a Protection and Advocacy 
organizations ability to access investigatory records needed to ensure individuals at a health care 
facility were not subjected to abuse and neglect. 
Disability Rights Section 
 
In FY 2015, the Disability Rights Section resolved one major, statewide litigation; continued to 
actively litigate another systemic, statewide case; monitored compliance of three statewide 
settlement agreements, under which more than 15,700 people collectively will obtain relief; and 
filed two statements of interest in litigation raising issues of needless segregation.  
The Section entered into a proposed statewide settlement agreement with the State of Oregon in 
Lane v. Brown (D. Or.), a class action in which the United States intervened and which addresses 
the unnecessary segregation of individuals with disabilities in sheltered workshop and facility-
based day programs in violation of Title II of the ADA.  Under the agreement, the State has 
pledged a sustained commitment to transform  its service system, impacting approximately 7,000 
people. The State will provide supported employment services so that 1,115 working-age 
individuals will obtain competitive, integrated employment.  The State will also reduce the 
number of individuals receiving services in segregated settings, and will ensure that at least 
4,900 youth ages 14 to 24 are provided the employment services necessary for them to prepare 
for, choose, and maintain integrated employment. 
The Section continued to litigate United States v. Florida (S.D. Fla. 2013), a case in which the 
United States alleges, among other things, that the State of Florida administers its Medicaid 
service system for children with significant medical needs in violation of the ADA and Olmstead 
by unnecessarily segregating them in nursing facilities, when they could, and want to, be served 
at home or in other community-based settings.   
The Section also continued to monitor the implementation of its eight-year settlement agreement 
with the State of North Carolina, pursuant to which the State is providing opportunities to 
individuals with mental illness in adult care homes to transition to less costly, integrated service 
settings. To date, more than 400 individuals have moved from institutions to community-based 
settings, and more than 4,000 people receive community-based mental health services. 
 
  75 
 It also continued to monitor its settlement agreements with the State of Rhode Island and the City 
of Providence, addressing the unnecessary segregation of individuals with disabilities in 
sheltered workshop and facility-based day programs.  Under the agreements, the State will 
provide supported employment placements to roughly 2,000 individuals with intellectual and 
developmental disabilities.   
 
The Section also monitored its settlement agreement with the State of New York and private 
plaintiffs regarding New Yorks mental health service system, in United States v. New York  
(E.D.N.Y. 2013). The agreement benefits at least 2,500 people and remedies discrimination by 
the State in the administration of its mental health service system and ensures that individuals 
with mental illness who reside in 23 large adult homes in New York City receive services in the 
most integrated setting appropriate to their needs consistent with the ADA and Olmstead. Under 
the agreement, such individuals will have the opportunity to live and receive services in the 
community such that  they are able to live, work, and participate fully in community life.   
 
The Section filed two statements of interest in litigation raising issues of needless segregation in 
Florida and Indiana. These briefs have addressed issues relating to the unnecessary 
institutionalization of individuals in state-run and private institutions.    
Educational Opportunities Section 
The Educational Opportunities Section (EOS) has participated in the HCFAC Program for the 
past two years. The Section has carefully analyzed the legal issues related to unnecessary 
segregation in the context of K-12 schools. 
 
In FY 2015, the Section completed its investigation of the Georgia Network of Educational and 
Therapeutic Services (GNETS) program, which provides segregated educational services for 
approximately 5,000 Georgia students with emotional and behavioral disabilities.  On July 15, 
2015, the Division issued a letter of findings to the State identifying the ways in which the State 
unnecessarily segregates children with disabilities in its operation and administration of the 
program.  GNETS is funded and operated by the State and provides services to most of the 
students in the program in segregated GNETS Centers throughout the State rather than providing 
community-based behavioral health services for these children.   
 
The Section filed five statements of interest or amicus briefs in litigation raising issues of  
needless segregation of children in Pennsylvania, Mississippi, and the U.S. Court of Appeals for 
the Third and Eleventh Circuits.  These briefs have addressed issues relating to the unnecessary 
institutionalization of children in state-run and private, state-funded institutions.   
   
 
  76 
 APPENDIX 

 
Federal Bureau of Investigation 
 
In FY 2015, the FBI was allocated $129.2 million in funding from HIPAA to support the 
facilitation, coordination and accomplishment of the goals of the HCFAC Program.  This yearly 
appropriation was used to support 797 positions (476 Agent, 321 Support).  
 
In FY 2015, the FBI initiated 642 new Health Care Fraud (HCF) investigations and had 2,744 
pending investigations. Investigative efforts produced 718 criminal HCF convictions and 1,038 
indictments and informations.  In addition, investigative efforts resulted in over 625 operational 
disruptions of criminal fraud organizations and the dismantlement of the criminal hierarchy of 
more than 144 HCF criminal enterprises.  
 
The FBI is the primary investigative agency involved in the fight against HCF that has 
jurisdiction over both federal and private insurance programs. HCF investigations are 
considered a high priority within the FBIs Complex Financial Crime Program.  Each of the 56 
FBI field offices had personnel assigned specifically to investigate HCF matters.  
 
The FBI seeks to approach the HCF crime problem in a threat-based and intelligence-driven 
manner.  The approach employs the prioritization of enforcement efforts, at both the national and 
field office levels, to ensure limited resources are focused on the most significant entities 
committing health care fraud and abuse.  As part of the process, the FBI gathers relevant data 
and information to understand the impact of the crime problem and to identify intelligence 
gaps, or areas which require additional research and analysis.  The need and availability of  
resources to support mitigation efforts, including enforcement and intelligence related activities, 
are also factored into the analysis.  The process is constantly on-going and requires collaboration 
not only between FBI components, but also with our public and private partners.  
 
As part of our collaboration efforts, the FBI maintains investigative and intelligence sharing 
partnerships with government agencies such as other DOJ components, HHS-OIG, state 
Medicaid Fraud Control Units, and other enforcement and regulatory agencies.  On the private 
side, the FBI conducts significant information sharing and coordination efforts with private 
insurance partners, such as the National Health Care Anti-Fraud Association, the National 
Insurance Crime Bureau, and private insurance investigative units.  The FBI is also actively 
involved in the Healthcare Fraud Prevention Partnership, an effort to exchange facts and 
information between the public and private sectors in order to reduce the prevalence of HCF.  
 
As a result of the collaboration and review process, the FBI has designated criminal enterprises 
and other crime groups, corporate-level fraud and abuse, and public safety issues as the priority 
HCF threat areas of focus. Each field office conducts a similar analysis to determine their areas 
of focus and the actions they will take to mitigate the associated threat.  
 
FBI field offices throughout the U.S. proactively address the HCF threat through joint 
investigative efforts; intelligence collection, sharing, and analysis; and the utilization of  
advanced and sophisticated investigative techniques.  Each FBI field office is involved in a HCF 
 
  77 
 Task Force and/or working group.  Members of the groups include US Attorneys Office and 
HHS-OIG personnel, and in many cases also include other federal, state, local, and private 
insurance personnel. Based on information sharing and coordination, additional cases are vetted 
and identified for investigation. These activities seek to identify and pursue investigations 
against the most egregious offenders involved in health care fraud and abuse.  
 
The FBIs Health Care Fraud Unit (HCFU) oversees program efforts, including providing 
guidance to field offices, to ensure the threat is mitigated in an effective and efficient manner. In 
support of joint agency activities and general threat mitigation efforts the HCFU has 
promulgated three initiatives, including the Health Care Fraud Prevention and Enforcement 
Action Team (HEAT), Large Scale Conspiracies, and Major Provider Fraud Initiatives.  
 
HEAT is DOJs and HHS Cabinet-level commitment to prevent and prosecute HCF.  HEAT, 
which is jointly led by the Deputy Attorney General and HHS Deputy Secretary, is comprised of 
top level law enforcement agents, prosecutors, attorneys, auditors, evaluators, and other staff 
from DOJ and HHS and their operating divisions, and is dedicated to joint efforts across 
government to both prevent fraud and enforce current anti-fraud laws around the country.  The 
Medicare Fraud Strike Force (Strike Force) teams are a key component of HEAT.  As part of the 
HEAT Initiative, the FBI coordinates with the DOJ and HHS-OIG on all HEAT aspects 
including funding, resource allocation, Strike Force expansion, target identification, training, and 
operations. The FBI has 62 agents assigned to the nine Strike Forces in Miami, New York City, 
Southern Texas, Tampa, Detroit, Los Angeles, Southern Louisiana, Dallas, and Chicago.  In 
addition to funding agent resources, the FBI funded undercover operation expenses, financial and 
investigative analysis support, offsite and evidence storage locations, and other investigative 
costs. The Strike Forces have effectively investigated and prosecuted individuals and entities 
that do not provide legitimate health care services, but exist solely for the purpose of defrauding 
Medicare and other federal health care programs.  The continued support of Medicare Strike 
Force operations is a top priority for the FBI.  In addition, the FBI completes coordination and 
intelligence sharing with HHS and DOJ components on other prevention and enforcement 
activities, including efforts associated with the Large Scale Conspiracies and Major Provider 
Fraud Initiatives. 
 
The Large Scale Conspiracies Initiative seeks to identify and target criminal enterprises and 
other groups whose schemes result in significant losses to health care benefit programs.  
Intelligence efforts for this initiative include information sharing and analysis of billing data with 
HCF enforcement partners.  As the FBI continued to focus efforts on these groups, statistical 
accomplishments associated with the operational disruptions of criminal fraud organizations and 
the dismantlement of the criminal hierarchy of criminal enterprises have consistently increased, 
with an over fifty percent increase from FY 2012 to FY 2015.  Investigative assistance provided 
to field offices as part of the initiative can include support for undercover operations, source 
identification and support, and funding of investigative costs.  An example of these types of 
cases was the conviction of the former medical director of, and three therapists employed by, a 
now-defunct mental health provider for conspiracy to commit HCF and related charges for their 
roles in a scheme to fraudulently bill Medicare and Florida Medicaid more than $63 million.  
According to the evidence presented at trial, from approximately 2004 through 2011, the 
provider billed Medicare and Medicaid for mental health services that were not medically 
necessary or never provided, and paid kickbacks to assisted living facility owners and operators 
 
  78 
 who in exchange referred beneficiaries to provider.  The FBI is committed to addressing this type 
of crime problem through the disruption, dismantlement and prosecution of those involved in 
criminal enterprises and other organized criminal activities.  
 
The Major Provider Fraud Initiative seeks to identify and target corporate-level groups involved 
in fraud and abuse schemes with significant billing to health care benefit programs.  The related 
schemes are frequently complex, challenging to identify, and can involve conduct that is 
nationwide in scope. Extensive resources and coordination are frequently required due to the 
complexity and scope of the schemes. Qui tams are a significant intelligence source for these 
types of cases. These investigations frequently involve pharmaceutical manufacturers, hospital 
corporations, and regional or national medical provider agencies. In addition to the work 
completed at the field office level, and in response to this substantial threat, the FBI has 
established a centralized support team to provide investigative assistance on these cases 
nationwide. An example of these types of cases would include the investigation of Health 
Diagnostics Laboratory Inc. (HDL), of Richmond, Virginia, which resulted in HDL agreeing to 
pay $47 million to resolve allegations they violated the False Claims Act. The FBI coordinates 
efforts in these types of cases with our law enforcement partners, such as DOJ components, 
HHS-OIG, and other federal agencies.   
 
The FBI actively provides training and guidance on HCF matters.  The FBI has teamed with the 
DOJ, HHS, and private insurance organizations to provide training in the priority threat areas of  
HCF. Funded training has included innovative methods of employing advanced investigative 
techniques; basic HCF training for FBI special agent and professional staff newly assigned to 
investigate HCF; and sessions on new and current HCF trends and issues.  FBI personnel training 
opportunities included sessions offered by the FBI, other government agencies and the private 
sector. In FY 2015, more than 223 FBI HCF investigators and analysts received training.  FBI 
personnel also conducted a wide range of training for external audiences, including private 
insurance and regulatory personnel. 
 
Funding received by the FBI is used to pay direct and indirect personnel-related costs associated 
with the 797 funded positions.  Funds not used directly for personnel matters, are used to provide  
operational support for HCF investigations, national initiatives, training, specialized equipment, 
expert witness testimony, and Strike Force operations. 
 
   
 
  79 
 Return on Investment Calculation 
 
	   The return on investment (ROI) for the HCFAC program is calculated by dividing the total 
monetary results to the Federal government (not including relator payments) by the annual 
appropriation for the HCFAC Account in a given year (not including portions of CMS 
funding dedicated to the Medicare Integrity Program listed in the table on page 81).   
 
	   The monetary results include deposits and transfers to the Medicare Part A Trust Fund and 
the Treasury, as well as restitution and compensatory damages to Federal agencies. 
 
	   The HCFAC Account is made up of three funding sources: mandatory funding for HHS and 
DOJ, including HHS-OIG, appropriated through Section 1817(k)(3)(A) of the Social Security 
Act; mandatory funding for FBI activities appropriated through Section 1817(k)(3)(B) of the 
Social Security Act; and discretionary funding for the HCFAC Account appropriated through 
the annual Labor-HHS-Education appropriation.   
 
	   FBI mandatory HIPAA funding is included in the HCFAC ROI calculations given the 
important role the FBI plays in achieving the monetary results reflected in the HCFAC 
annual report and because that statute states that the funds are for the same purposes as the 
funds provided for HHS and DOJ under the Social Security Act.  However, FBI spending 
and monetary results are not required to be reported per the statute.  Therefore, even though 
the FBI mandatory HIPAA funding is included in the HCFAC ROI calculation, it is not 
reflected in the table on page 7 of this report.   
 
	   Only certain portions of discretionary HCFAC Account funding are included in the ROI 
calculation. All discretionary HCFAC funding for HHS-OIG and DOJ are included in the 
HCFAC report ROI since they spend their discretionary funding on the same types of 
activities that they support with mandatory funding.  Only the portion of CMS Medicare 
discretionary HCFAC funding that supports law enforcement is included in the HCFAC 
report ROI. The remainder of CMSs HCFAC Medicare discretionary funding supports 
activities in the Medicare Integrity Program (MIP) that are included in the MIP ROI, which 
calculates the impact of the prevention activities supported by the MIP mandatory and 
discretionary funds is calculated separately from the HCFAC ROI and is reported outside of 
the HCFAC report. Impacts for both the CMS Medicaid and Medicare program integrity 
funding are included in a separate report.  
 
 
 
  80 
 Total Health Care Fraud and Abuse Control Resources  
 
The table below sets forth HCFAC funding, by agency, for health care fraud and abuse control 
activities in FY 2015, including sequester reductions.  The FBI also receives a stipulated amount 
of HIPAA funding for use in support of the Fraud and Abuse Control Program, which is shown 
below. Separately, CMS receives additional Mandatory Resources under the Medicare Integrity  
Program (section 1817(k)(4) of the Social Security Act).  The inclusion of the activities 
supported with these funds is not required in this report, and this information is included for 
informational purposes.   
 
Since 2009, Congress has also appropriated annual amounts to help carry out health care fraud 
and abuse control activities within DOJ and HHS.  Those amounts are set forth as Discretionary 
Resources in the table below and the results of the efforts supported with these funds are 
contained within this report.  
Mandatory Resources1   Fiscal Year 2015 
Office of Inspector General  $186,066,026 
Health and Human Services Wedge2  35,587,356 
Medicare Integrity Program3  863,773,251 
MIP/Medicare (non-add)  797,329,155 
Medi-Medi (non-add)  66,444,096 
Department of Justice Wedge2  58,094,935 
Federal Bureau of Investigation4  129,216,580 
Subtotal, Mandatory HCFAC  $1,272,738,148 
Discretionary Resources   
Office of Inspector General  $67,200,000 
CMS Program Integrity  544,320,000 
Medicare Program Integrity (Non-Add)  477,120,000 
Medicaid Program Integrity (Non-Add)5  67,200,000 
Department of Justice  60,480,000 
Subtotal, Discretionary HCFAC  672,000,000 
Grand Total, HCFAC  $1,944,738,148 
 
                                                 
1 All mandatory resources are post-sequester. 
  
2 The HHS and DOJ Wedge funds are divided among multiple agencies within HHS and DOJ.  Page 7 of this  report 
 
includes the allocations of the HHS and DOJ Wedge by agency or activity. 

3 Medicare Integrity Program (MIP) and Medi-Medi fund  fraud  prevention and detection activities within Medicare 

and Medicaid, which are not included in this report to Congress. There is another mandatory  report due to Congress 

regarding MIP activities. 

4 The FBI receives funding annually to conduct anti-fraud activities authorized by HIPAA. This  funding is included 

in the HCFAC ROI calculation  for this report.   

5 This does not include the Medicaid  Integrity Program authorized in the Deficit Reduction Act of  2005, which 

receives funding separately from the HCFAC account. 

 
  81 
 Glossary of Terms  
 
The AccountThe Health Care Fraud and Abuse Control Account 
 
ACA  Affordable Care Act 
 
AKS Anti-Kickback Statute  
 
AoADepartment of Health and Human Services, Administration on Aging 
 
ACLDepartment of Health and Human Services, Administration for Community Living 
 
ASPA  Assistant Secretary for Public Affairs (HHS) 
 
AUSAAssistant United States Attorney 
 
CHIPChildrens Health Insurance Program 
 
CIACorporate Integrity Agreement 
 
CMP  Civil Monetary Penalty 
 
CMPLCivil Monetary Penalties Law 
 
CMSDepartment of Health and Human Services, Centers for Medicare & Medicaid Services    
 
CNCCompromised Number Contractors 
 
CPICenter for Program Integrity 
 
CRIPACivil Rights of Institutionalized Persons Act 
 
CYCalendar Year 
 
D.XX or X.D.XxFederal judicial district of a state, which may include north, south, east, west  
 
DMEDurable Medical Equipment 
 
DOJThe Department of Justice 
 
FEHBPFederal Employee Health Benefits Program 
 
FBIFederal Bureau of Investigation 
 
FCAFalse Claims Act 
 
  82 
 FDAFood and Drug Administration 
 
FDCAFood, Drug, and Cosmetic Act 
 
FYFiscal Year 
 
HCFACHealth Care Fraud and Abuse Control Program or the Program 
 
HEATHealth Care Fraud Prevention & Enforcement Action Team 
 
HFPPHealth care Fraud Prevention Partnership  
 
HHAHome Health Agency 
 
HHSThe Department of Health and Human Services  
 
HHS-OIGThe Department of Health and Human Services - Office of the Inspector General 
 
HIHospital Insurance Trust Fund 
 
HIPAA  The Health Insurance Portability and Accountability Act of 1996, P.L. 104-191 
 
HIVHuman Immunodeficiency Virus 
 
MEDICMedicare Drug Integrity Contractors 
 
MFCUMedicaid Fraud Control Unit 
 
OCGSOrganized Crime and Gang Section  
 
OGCOffice of the General Counsel, Department of Health and Human Services  
 
PERMProgram Error Rate Measurement  
 
PFPPharmaceutical Fraud Pilot Program 
 
The ProgramThe Health Care Fraud and Abuse Control Program 
 
SecretaryThe Secretary of the Department of Health and Human Services 
 
SMPSenior Medicare Patrol 
 
USAOUnited States Attorneys Office 
 
ZPICZone Program Integrity Contractor 
 
  83