The Department of Health and  Human  Services  
 
  And  
  The Department of Justice  
 
  Health Care Fraud and  Abuse Control Program  
  Annual Report for  Fiscal  Year  2019  
 
 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
June  2020  
 
      TABLE  OF  CONTENTS  
 
   
I.   Executive Summary                     1  
   
II.   Statutory Background                    3  
   
III.   Program Results and Accomplishments               5  
              Monetary Results                    5  
    Expenditures                     7  
    Overall Recoveries                   8  
    Health Care  Fraud Prevention and  Enforcement Action Team         8   
    Health Care  Fraud Prevention Partnership            10  
    Strike Forces                    10  
    Opioid Fraud and Abuse  Detection Unit             13  
    Highlights of Successful Criminal and Civil Investigations        14  
 
IV.   Department of Health and Human Services              39  
  Office of Inspector General          39  
  Centers for Medicare &  Medicaid Services          61  
  Administration on Community  Living              85  
  Office of the General Counsel                88  
  Food and Drug Administration Pharmaceutical Fraud Program       91  
 
V.   Department of Justice                   95  
  United States Attorneys        95  
  Civil Division        96  
  Criminal Division       102  
  Civil Rights Division       107  
  Department of Justice Office of Inspector General       110  
   
VI.   Appendix                     112  
  Federal Bureau of Investigation               112  
  Return on Investment Calculation             116  
  Total HCFAC Resources                117  
 
VII.   Glossary of Terms                   118                                                                                   
   
 
 
   
  GENERAL NOTE  
 
All years are fiscal years unless otherwise 
stated 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 twenty-third  
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.  
 
During  Fiscal Year (FY)  2019, the Federal Government won or negotiated over $2.6 billion in 
health care fraud judgments and settlements,2  in addition to other health care administrative  
impositions.   As a result of these efforts, as well as those of preceding  years, $3.6 billion was 
returned to the  Federal Government or paid to private persons in FY 2019.   Of this $3.6 billion, 
the Medicare Trust Funds3  received transfers of  approximately $2.5 billion during this period, in 
addition to the $148.6 million in Federal Medicaid money that was similarly  transferred 
separately to the Treasury  due to  these efforts.   
 
Enforcement Actions  
 
In FY 2019, the  Department of Justice (DOJ) opened 1,060  new criminal health care  fraud 
investigations.  Federal prosecutors filed criminal charges in 485 cases involving  814 defendants.  
A total of  528 defendants were  convicted of health care  fraud-related crimes during the year.  
Also in FY 2019, DOJ  opened 1,112 new civil health care  fraud investigations and had 1,343  
civil health care  fraud matters pending  at the end of the fiscal year.  FBI investigative  efforts 
resulted in over  558 operational disruptions of criminal fraud organizations and the 
dismantlement of the criminal hierarchy of more than 151 health care  fraud criminal schemes.  
 
In FY 2019, investigations conducted by HHSs Office of Inspector General (HHS-OIG)  resulted 
in 747 criminal actions against individuals or entities that engaged in crimes related to Medicare  
and Medicaid, and 684 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 2,640 individuals 
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 (1,194) or to other health care programs (335), for patient abuse or neglect (238), and 
as a result of state health care licensure  revocations (576).  HHS-OIG also issued numerous 
audits and evaluations with recommendations that, when implemented, would correct program 
vulnerabilities and save  Medicare and Medicaid funds.  
                                                 
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  The Medicare Trust Funds  is  the collective term  for  the Medicare Hospital Insurance  (Part A)  Trust Fund  and  the 
Supplemental Medical Insurance  (Part B)  Trust Fund.  
 
1  
  Sequestration Impact  
  
Due to the  FY 2019 sequestration of mandatory  funding, DOJ, FBI, HHS, and HHS-OIG had 
fewer resources to fight fraud and abuse of Medicare, Medicaid, and other health care programs.  
A total of $19.5  million was sequestered from the HCFAC program in FY 2019, for a combined 
total of $139.6  million in  mandatory  funds sequestered in the past seven  years.  Including funds 
sequestered from the  FBI ($64.8  million  in the past seven years), $204.4  million has been 
sequestered from mandatory  HCFAC funds  since  FY 2013.  
 
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 2019  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 investigations   including criminal fines, forfeitures, civil 
settlements and judgments, and administrative penalties   also 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 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 2019, the Secretary  and the Attorney General certified $294.3 million in mandatory  
funding to the Account after accounting for sequester reductions of $19.5  million to the total 
appropriation.  Additionally, Congress appropriated $765 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 have supported over two-thirds of DOJs health care  fraud funding  
and over three-fourths of HHS-OIGs appropriated budget in FY 2019.  (Separately, the FBI, 
which is discussed in the appendix, received $138.3 million from HIPAA, after accounting for  
$9.1 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.  
 
Additionally, 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.   
 
Finally, this report fulfills the requirement in the  annual discretionary HCFAC appropriation 
(Public Law 115-245,  Department of Defense  and Labor, Health and Human Services, and 
Education Appropriations Act, 2019 and Continuing Appropriations Act, 2019) 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  AND  ACCOMPLISHMENTS  
 
 
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 2019, $3.6  billion was 
deposited with the Department of the Treasury and Centers for Medicare  & Medicaid Services 
(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 2019  
Department of  the Treasury     
  Deposits to the Medicare Trust Fund, as required by HIPAA:  
    Gifts and Bequests   $0  
    Amount Equal  to Criminal Fines   14,927,760  
    Civil  Monetary Penalties   64,381,876  
    Asset Forfeiture   37,095,907  
    Penalties  and Multiple Damages   815,368,976  
          Subtotal   $931,774,520  
Centers for Medicare  &  Medicaid Services    
   HHS/OIG Audit Disallowances: RecoveredMedicare   $627,175,115  
   Restitution/Compensatory Damages*   972,433,406  
          Subtotal    $1,599,608,521  
Total Transferred to the Medicare Trust  Funds   $2,531,383,041  
Restitution/Compensatory Damages to Federal Agencies     
   TRICARE   $28,458,032  
   HHS/OIG   11,274,490  
   Office of Personnel  Management   6,803,485  
   Veterans Benefits Administration   4,819,453  
   Other Agencies   18,482,522  
          Subtotal    $72,014,930  
Centers for Medicare  &  Medicaid Services    
   Federal Share of Medicaid   148,603,792  
   HHS/OIG Audit Disallowances:  RecoveredMedicaid   578,933,010  
          Subtotal    $727,536,802  
Total   $799,551,732  
Relators'  Payments**   $254,579,804  
GRAND TOTAL MONETARY RESULTS***   $3,585,514,577  
 
*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 twenty-third  year of operation, the Secretary and the Attorney General certified 
$294.3  million in mandatory  funding  as necessary  for the Program, after accounting for 
mandatory sequester reductions of $19.5  million as required by law.  Additionally, Congress 
appropriated $765 million in discretionary funding.  See  allocation by recipient below:  
 
 
FY 2019  ALLOCATION  OF HCFAC APPROPRIATION  
Mandatory  Discretionary  Funds  Total  
Organization  
Allocation5   Allocation   Sequestered   Allocation  
       
Department of  Health and  Human Services  
Office of  Inspector  General    $223,319,949    $87,230,000    ($12,939,025)    $297,610,924   
Office of  the General Counsel   7,289,940   0   0   7,289,940  
Administration  for  Community  Living   0   18,000,000   0   18,000,000  
Food  and  Drug  Administration   5,959,166   0   0   5,959,166  
Centers  for  Medicare &  Medicaid  Services   8,500,000   581,389,000   0   589,889,000  
Unallocated  Funding   3,540,110   0   (2,474,743)   1,065,367  
   Subtotal   $248,609,165   $686,619,000   ($15,413,768)   $919,814,397  
  
Department of  Justice          
United  States  Attorneys   $29,851,009   $27,000,000   $0   $56,851,009  
Civil Division6   19,101,188   21,935,740   0   41,036,928  
Criminal Division   10,150,000   21,972,450   0   32,122,450  
Civil Rights  Division   1,891,937   2,599,133   0   4,491,070  
Justice Management Division   125,942     0   125,942  
Federal Bureau  of  Investigation   0   4,375,621   0   4,375,621  
Office of  the Inspector  General   0   498,056   0   498,056  
Unallocated  Funding   4,039,919   0   (4,039,919)   0  
   Subtotal   $65,159,995   $78,381,000   ($4,039,919)   $139,501,076  
TOTAL7   $313,769,160   $765,000,000   ($19,453,687)   $1,059,315,473  
 
 
 
                                                 
5  As  of  FY 2007,  mandatory  funds  are available until expended.   Discretionary  funds  are available for  two  years.  
6  The Elder  Justice Initiative,  managed  by  the  Civil Division,  is  included  in  the Civil Division  figures.   
7  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 $2.6  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  $3.6  
billion was returned to the Federal Government or private persons.  Of this $3.6 billion, the  
Medicare Trust Funds received transfers of approximately $2.5  billion during this period; 
another $148.6  million in Federal  Medicaid money  was transferred to the  Treasury separately  
due to  these efforts.8  
  
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 (20172019) is 
$4.2  returned for every $1.00 expended.9   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.  
 
It is important to note that the ROI does not capture the full impact of the results of the Program.  
For example, criminal action, from either a search warrant, an indictment or an arrest, prevents 
the defendant from continuing to defraud federal health care programs.  Therefore, this ROI  
calculation that relies on actual recoveries and collections, does not represent the effect of 
preventing future  fraudulent payments.  Further, the threat of oversight alone can have a sentinel 
impact that prevents future bad actors from defrauding Medicaid, Medicare,  and other federal 
health care benefit programs.  
 
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.  With the creation of the Health Care  
Fraud Prevention and Enforcement Action Team (HEAT) effort, DOJ and HHS  pledged a  
commitment to prevent and prosecute health care  fraud.  These teams are  comprised of top-level 
law enforcement agents, prosecutors, attorneys, auditors, evaluators, and other staff  from DOJ  
and HHS and their operating divisions, and are  dedicated to joint efforts across government to 
both prevent fraud and enforce  current anti-fraud laws around the country.  The Strike Force  
teams are  a key  component of HEAT.  The  mission  of  HEAT  is:  
 
                                                 
8  Note that some of  the judgments,  settlements,  and  administrative actions  that occurred  in  FY 2019  will result in  
transfers  in  future years,  just as  some of  the transfers  in  FY 2019  are attributable to  actions  from  prior  years  
9  The three-year  average  ROI  includes  a downward  adjustment to  the savings  assumed  in  the FY 2017  Report on  
HCFAC  Recoveries.  The FY 2017  HHS-OIG Audit Disallowances  were corrected  by  reducing  them  from  $365.2  
million  to  $175.6  million.   The updated  FY 2017  three  year  average return  on  investment (2015-2017)  was  $4.1  
returned  for  every  $1.00  expended.  
 
8  
     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  the government 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.  
 
   To target doctors and physicians who prescribe opioids outside the scope of  
legitimate  medical practice  and often charge Medicare  and Medicaid for these visits and 
prescriptions.   
 
   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 its  Strike Force  
Teams,  to reduce  fraud and recover taxpayer dollars.  
 
Since its creation, 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.  In 2017, DOJ formed an Opioid Fraud and Detection Unit and, in collaboration 
with HHS-OIG, selected 12 Federal judicial districts to participate in the program.  In August 
2018, DOJ and HHS added  two additional  Strike Forces  in Newark  and Philadelphia to combat 
health care  fraud and illegal opioid prescriptions.  In  October 2018, the  Attorney General  
announced the launch  of the Appalachian  Regional Prescription Opioid (ARPO)  Strike Force 8.   
ARPO operates in 10  Federal judicial districts  in Alabama, Kentucky, Ohio, Tennessee, Virginia, 
and West Virginia.  Its goal is to investigate and charge medical professionals with the illegal 
prescription of opioids.   A year later, in August 2019, Assistant Attorney  General Brian 
Benczkowski announced the creation of the Rio Grande Valley/San Antonio Strike Force, in 
partnership with the Southern and Western Districts of Texas.  Like other Strike Forces, the Rio 
Grande  Valley/San Antonio Strike Force  will utilize data analytics and other investigative  
techniques to identify and prosecute health care fraud in the region.  HEAT activities have also 
expanded to include significant involvement from State Medicaid Fraud Control Units (MFCUs), 
which play a critical role  in the many fraud cases involving both  Medicare  and Medicaid.  A total 
of 30 MFCUs participated in both the 2017 and 2018 National Health Care  Fraud Takedowns 
and  four  MFCUs participated in the 2019 ARPO Surge  Takedown.  Strike Force efforts also led 
to nine takedowns conducted in August/September 2019 involving opioids, health care fraud, 
medical professionals, telemedicine, and compounding pharmacies.  A total of 12 MFCUs 
participated in the nine takedowns conducted in August/September 2019.  
 
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.  This expanded data sharing  enables the DOJ and HHS to efficiently identify and 
target the worst actors in the system.  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 issues relating to health care  fraud.  
 
 
9  
  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,  
HHS-OIG  compliance program guidance documents and trainings for providers, ongoing  
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.  Moreover, HHS-OIG offers a  Compliance Resource Portal on its website, 
which includes special fraud alerts, videos, and other resources directed at various segments of 
the health care  industry.  In addition, DOJ conducts, with the support of HHS, a Health Care  
Fraud training program designed to teach the Strike Force concept and case model to 
prosecutors, law  enforcement agents, and administrative support teams.  In FY 2019, more than 
300 prosecutors and law enforcement agents attended the program.  Prescription opioid fraud 
and abuse training was also provided to the USAO community  and DOJ agency partners during  
the fiscal year.  
 
Health Care Fraud Prevention Partnership (HFPP)  
 
The  Health Care  Fraud Prevention Partnership (HFPP) is a voluntary public/private partnership 
between the Federal Government, state  agencies, law enforcement, private health insurance  
plans, employer organizations, and health care  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.  The number of participants has 
increased to 144  public, private, and state partner organizations at the end of FY 2019. 
Collectively, these organizations represent more than 215 million covered lives, equivalent to 
more than 3 in 4 insured Americans. Thirty-four of the current partners are  actively submitting  
claim level data, representing 100 million individuals, or more than 1 in 3 insured Americans.   
 
The  HFPP  commenced or completed studies using multiple partners  data to address fraud, waste 
and abuse  in FY 2019, providing partners with detailed results that can be used for corrective  
actions within their organizations.  The HFPP continued its efforts to foster collaboration among  
partners by hosting in-person information-sharing  sessions and an Annual Executive  Board 
meeting.  These meetings were used to share  fraud schemes and provider alerts, provide updates 
on law enforcement activities, and strategize on how to broaden the HFPPs impact in the private  
and public sectors.  See  HFPP section in the CMS  section for more information on HFPP  
activities.  
 
Strike Forces   
 
The first 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 inter-agency 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.   
 
 
10  
  Based on the success of these efforts and increased appropriated funding  for the HCFAC 
program from  Congress, DOJ and HHS now operate 15 Health Care  Fraud and Prescription 
Opioid Strike Forces in 24 districts across the United States, including  Los Angeles, California; 
Miami and Tampa/Orlando, Florida; Chicago, Illinois;  Ft. Mitchell, Kentucky; Baton Rouge  and 
New Orleans, Louisiana; Detroit, Michigan; Brooklyn, New York; Newark, New Jersey/  
Philadelphia, Pennsylvania;  Nashville, Tennessee; and Houston, San Antonio,  and Dallas, Texas; 
along with a Corporate Strike Force located in Washington, D.C.   In FY2019, the Strike Force  
program expanded to include the Appalachian Regional Prescription Opioid (ARPO) Strike  
Force, a joint effort between DOJ, HHS, FBI, DEA, and state law  enforcement to combat health 
care  fraud and the opioid epidemic.  The ARPO Strike Force is  based in two hubs, Ft. Mitchell, 
Kentucky  and Nashville, Tennessee, and originally  covered  nine  federal districts.  Following the 
first ARPO takedown in April 2019, ARPO was expanded to include a  tenth  districtthe  Western 
District of Virginia.  In August 2019, Assistant Attorney General Brian Benczkowski announced 
the creation of the Rio Grande Valley/San Antonio Strike Force, in partnership with the Southern 
and Western Districts of Texas.   Strike Force  activities have also expanded to include significant 
involvement from State MFCUs, which play a  critical role in the many fraud cases involving  
both Medicare  and Medicaid.  
 
Each Strike Force team brings the investigative  and data analytic 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 a wide variety of sources including CMS, and bring cases in federal 
district court.   Strike Force accomplishments in the areas noted above, including USAO 
accomplishments, during FY 2019 included:10  
 
   Filing  359  indictments, informations and complaints involving charges against  673  
defendants who allegedly billed federal health care programs more than $5.1  billion;    
 
   Obtaining  323  guilty pleas negotiated and 33  jury trials litigated, with guilty  verdicts 
against  35  defendants; and   
 
   Securing  imprisonment for 340  defendants sentenced, averaging  nearly  49  months of 
incarceration.  
 
Since its inception, Strike Force prosecutors filed  more than 1,920  cases charging  more than  
4,200  defendants who collectively  billed the Medicare program approximately $19.1  billion; 
2,800 defendants pleaded  guilty  and 361  others were  convicted in jury  trials; and 2,587  
defendants  were sentenced to imprisonment for an average term of approximately  51  months.    
Medicare  payment trends demonstrate the positive impact of  Strike  Force  enforcement and 
prevention  efforts.  
 
Increased outreach and coordination by Strike  Force partners at the national, regional, state, and 
local levels is another positive measure that reflects the overall impact of the HCFAC program. 
In April, the ARPO Strike Force Takedown involved 60 charged defendants, including 53 
medical professionals, and over 32 million pills, across 11 federal districts. To ensure patients 
impacted by law enforcement operations maintained  continuity of care, this Takedown 
                                                 
10  The summary  statistics  in  this  document exclude sealed  cases.  
 
11  
  coordinated an unprecedented public health response, led by the Criminal Division, in 
partnership with the DEA, HHS-OIG, HHS Substance Abuse  and Mental Health Services 
Administration (SAMHSA), Centers for Disease  Control and Prevention (CDC), and all  
impacted State Departments of Health. In FY 2019, the Fraud Sections Health Care Fraud Data 
Analytics Team completed 2,383 data analysis requests in 59 federal districts.  
 
In FY 2019, Strike  Forces successfully completed 11 coordinated law enforcement actions.  
 
   On April 9, 2019, 24 defendants, including the CEOs, COOs and others associated with 
five telemedicine companies, the owners of dozens of durable medical equipment (DME) 
companies and three licensed medical professionals, were charged in a Telemedicine and 
DME scheme involving  over $1.2 billion in losses.  
 
   On April 17, 2019, the ARPO Strike Force led its  first takedown, resulting  in charges 
against 60 defendants,  including 53 licensed medical professionals across 11 federal 
districts.  
 
   On September  27, 2019, charges involving fraudulent genetic testing  were  brought 
against 35 individuals responsible for over $2.1 billion in losses in one of the largest 
health care fraud schemes ever charged. Among those charged were 10 medical 
professionals, including  nine doctors.  
 
   From August 28 to September 27, 2019, eight regional takedowns were  carried out. 
These regional takedowns resulted in charges against over 345 individuals who allegedly  
billed federal health care  programs for more than $1 billion and allegedly  
prescribed/dispensed approximately 50 million controlled substance pills in Houston, 
across Texas, the West Coast, the Gulf Coast, the  Northeast, Florida and Georgia, and the 
Midwest.  Charges include those  against 105 defendants for opioid-related offenses.  
   
 
12  
  The following  chart shows the  Strike Force trends from FY 2017 to FY 201911:  
Strike Force Districts 
800  6.0 
700 
5.0 
,,,,,,,' 
600 
,, 
4.0 
500  ,,'  ........ 
"='  
~ 
400  3.0 
----------- ~ 
300  ...:..!.. . 
2.0 
200 
1.0 
100 
0  so.o 
FY2017  FY2018  FY2019 
c:::J Ca e  Charged  - Defendant  Charged  - - - Lo s  mount 
 
 
A review of the Part A  and Part B CMS data shows that Medicare spending in Strike Force  cities 
has decreased by  hundreds of millions of dollars, which highlights the deterrent effect of 
prosecuting  health care  fraud, in addition to the monies recovered, and the monies prosecutions 
have prevented from going out the door.  
 
Opioid Fraud and Abuse Detection Unit  
 
In August FY 2017, the  Attorney  General announced the formation of the Opioid  Fraud and 
Abuse Detection Unit, a new Department of Justice pilot program that utilizes data to help 
combat the devastating opioid crisis that is ravaging families and communities across America.  
This unit focuses specifically on opioid-related health care  fraud using data to identify and 
prosecute individuals that are contributing to this prescription opioid epidemic.  
 
As part of the program, the Department has funded 12 experienced Assistant U.S. Attorneys  
(AUSAs)  for  a three-year term who will work with dedicated HHS-OIG, FBI, and DEA 
investigators to focus solely on investigating and prosecuting health care  fraud related to 
prescription opioids, including pill mill schemes and pharmacies that unlawfully divert or  
dispense prescription opioids for illegitimate purposes.  The following districts are participating  
in the program: Middle District of Florida, Eastern District of Michigan, Northern District of 
Alabama, Eastern District of Tennessee, District of Nevada, Eastern District of Kentucky, 
District of Maryland, Western District of Pennsylvania, Southern District of Ohio, Eastern 
District of California, Middle District of North Carolina, and Southern District of West Virginia.    
                                                 
11  Loss  Amount is  defined  as the total that federal health  care programs,  including  Medicare,  Medicaid,  and  VA,  
were allegedly  billed  in  indicted  cases.  
 
13  
  Highlights  of Significant  Criminal  and Civil  Investigations   
 
Our respective Departments successfully pursued 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)  before the lead sentence.  
 
Ambulance and Transportation Services  
 
In May  2019, the  owner of Your Health EMS  in Texas pleaded guilty to conspiracy to commit 
health care  fraud and was sentenced to five  years and three  months in prison and ordered to pay  
$1.3 million in restitution.  The individual knowingly and falsely billed Medicare  and Medicaid 
for non-eligible transports.  Specifically, the individual  submitted claims for individual 
ambulance transports, when in fact, multiple patients were being transported via one ambulance.  
Moreover, Your Health submitted claims for transporting Medicare patients unauthorized  via an 
ambulance to Partial Hospitalization Programs at various facilities.  The individual  also billed 
Medicare for  ambulance  transportation services when there was no medical necessity.  As a  
result, Your Health falsely  billed Medicare  for approximately $2.8 million in ambulance  
transports and  was reimbursed approximately $1.0 million by Medicare.  
 
In July  2019, Unicare Ambulance  LLC and PA Paramedics LLC, d/b/a EasternCare Ambulance, 
and their owners, agreed to a judgment against them jointly and severally in the amount of 
$459,907 to resolve allegations made by the United States in the Eastern District of  Pennsylvania  
that they made repeated false statements to state and federal officials. As part of the settlement, 
each defendant has also agreed to a term of exclusion of not less than five  years from all federal 
health care programs.  According to the allegations in the complaint filed in U.S. District Court, 
the defendants individually or collectively made repeated false statements, from September 2015 
through August 2016, in order to avoid overpayment debts to the United States Medicare  
program and to hide the  fact that one of the owners state paramedic license had previously been 
suspended because he had admitted to forging  a physicians signature.  
 
Clinics  
 
In October 2018, Vascular Access Centers L.P., along with its 23 subsidiary  and related 
corporations (collectively  VAC), agreed to pay  at least $3.8 million and up to $18.3 million 
over five years, to resolve civil FCA allegations that it billed Medicare for non-reimbursable 
vascular  access procedures performed on End Stage Renal Disease (ESRD) beneficiaries and 
engaged in an alleged kickback scheme related to referrals for such procedures.  The  government 
alleged that VAC billed Medicare for vascular  access surgical procedures performed on ESRD 
beneficiaries, including fistulagrams and percutaneous transluminal angioplasties, without all of 
the required medical documentation supporting the necessity of the procedures.  The  government 
also alleged that VAC submitted false claims to Medicare for services that resulted from referrals 
that VAC had induced through improper remuneration to physician investors and medical 
directors, in violation of the Anti-Kickback Statute.  As part of the resolution, VAC entered into 
a five-year Corporate Integrity Agreement (CIA)  with HHS-OIG.  
 
In October 2018, three  community mental health clinics and their two owners entered into a  
consent judgment in the  Eastern District of Pennsylvania as part of  a settlement resolving  a  
 
14  
  health care  fraud lawsuit.  One of the owners had been convicted of Medicaid fraud in 2000 by  
the Commonwealth of Pennsylvania.   As a result, he was excluded from participating in all 
federally  funded health care programs, including  Medicaid and Medicare.   The exclusion 
prohibited him from owning, managing, or receiving payments from any federally funded health 
care  provider.   The United States alleged in the lawsuit that in spite of his exclusion, the owner, 
assisted by his wife, continued to own and operate two clinics in Pennsylvania, and that he  
started a third clinic in North Carolina while his exclusion was ongoing in 2009.  
 
In November 2018, the owner of  a pain management clinic pleaded guilty to operating a pill mill 
that illegally distributed over 600,000 oxycodone  pills.  The defendant had twice previously  
surrendered his medical license, both times admitting to creating a substantial risk to public 
health by  engaging in wrongful prescribing practices for opiates, including oxycodone, 
oxymorphone, hydrocodone, and hydromorphone.  Upon surrendering his license in the second 
time, the defendant founded a clinic that operated out of the same office, had the same 
employees, and the same patients, as his former practice.  The defendant admitted that between 
the clinics 2013 founding and 2015, he caused the distribution of more than 600,000 pills 
containing oxycodone.  
 
(SF)  In November 2018, the owner of two clinics was sentenced to 160 months  imprisonment, 
followed by  three  years of supervised release, and was ordered to pay jointly  and severally  with 
her co-conspirators $6.3 million in restitution and forfeiture. The defendant pleaded guilty to one  
count of conspiracy to commit health care fraud and one count of health care fraud. The  
individual submitted claims to Medicare for medically unnecessary services and for the payment 
of kickbacks. The defendants three  co-conspirators have been sentenced.   
 
In December  2018, the owner and manager of 1st Class Sleep Diagnostic Center and 1st Class 
Medical in Virginia  were convicted for  conspiring  to defraud Medicare, TRICARE, private 
insurance, and the Internal Revenue Services (IRS)  of more than $10 million.  The  owner  formed 
the primary entities used to commit the crimes.  The defendants directed their employees to 
solicit patients who were  referred to the  clinics for legitimate sleep studies for supplemental but  
medically unnecessary studies.  To conceal the scheme, the owner, for  example,  instructed 
employees not to send study  results to the patients doctors, lied to patients about  not having to  
pay  copays or coinsurance, and cross-billed using  different entities to get out-of-network  
payments for in-network services.  The defendants also used the original referring doctors 
names and identifying information on claims without their permission.  The individuals  were  
sentenced to a combined 9  years and 11 months in prison and were ordered to pay $10.6 million 
in restitution, jointly  and severally.  
 
(SF) In April 2019, the owner of Sunshine Medical Care Group, a medical clinic in South 
Florida, was sentenced to 91 months in prison and ordered to pay $2.5 million in restitution.  The  
defendant submitted false and fraudulent claims to Medicare for medical services that were not 
provided or were not medically necessary.  In addition, the defendant accepted kickbacks from 
several Miami-area home health agencies in exchange  for providing prescriptions for Part A  
home health services that were not needed or were never provided.  
 
 
 
15  
  (SF) In May 2019, a physician and co-owner of a  pain management clinic was sentenced to 37 
months in prison.  The defendant fraudulently maximized reimbursements by  billing Medicare  
and Blue Cross Blue Shield of Louisiana for office visits and minor surgical procedures actually  
provided in a single day, as if the services were provided on subsequent days, a practice  
commonly referred to as unbundling. To support the fraudulent billing, the physician, along  
with a billing manager, falsified the dates of minor  surgical procedures in the treatment records.  
 
In May 2019,  CRC Health, LLC and Acadia Healthcare Corporation  (its parent corporation)  
agreed to pay $17 million to resolve civil FCA allegations of a billing scheme that defrauded 
Medicaid of $8.5 million  in West Virginia.  The  United States alleged that specified CRC  
outpatient drug treatment centers submitted claims to West Virginia Medicaid for moderate to 
high complexity urine drug tests as if they  were performed by the CRC outpatient drug treatment 
centers when those centers did not have the proper laboratory  certifications to perform that 
testing.  The settlement represents the largest health care  fraud settlement in the history of West 
Virginia.  As part of the resolution, CRC and Acadia agreed to enter into a  five-year CIA with 
HHS-OIG requiring that CRC and Acadia maintain a compliance program, implement a risk 
assessment, and hire  an Independent Review  Organization.   
 
In July 2019, a part owner of several pain clinics pleaded guilty in the Eastern District of 
Tennessee to a Racketeering  Influenced Corrupt Organization (RICO)  conspiracy charge in 
connection with a large pill-mill prosecution involving illegal operation of  pain clinics in 
Tennessee  and Florida which prescribed vast quantities of opioids and generated revenues of 
over $21 million.   In pleading  guilty, the defendant admitted that the pain clinics business model 
centered on providing opioid-based prescriptions to patients for profit by prescribing and/or 
dispensing powerful narcotics outside the scope of professional practice  and not for a legitimate 
medical purpose.   The defendant admitted that onsite clinic managers operated the clinics in such 
a way as to invite abuse  by providers, employees, customers and drug traffickers and were  aware  
that patients travelled long distances to illegally obtain controlled substances and requested 
prescriptions for large quantities of Schedule II Controlled Substances.    
 
In August, 2019, a pain clinic owner and the medical director of the clinic  were sentenced to 25 
years and 21 years in prison, respectively, in the Eastern District of Kentucky.  After a month-
long trial earlier in 2019, a jury  convicted the two men, along  with another co-owner, of  
operating the clinic as a  pill mill, and for money laundering related to proceeds from the  
clinic.   The three men were responsible for the illicit distribution of more than 1.6 million 
oxycodone 30  mg pills, and hundreds of thousands of other narcotic pills and sedative pills, such 
as Xanax.  
 
(SF)  In August 2019, a doctor and clinic owner was sentenced to four  years in prison in the  
Central District of California.  The doctor was charged in 2015 with billing Medicare for medical 
equipment and services that were not medically necessary and often not  provided. From January  
2005 through May 2015, recruiters associated with the clinic traveled throughout the Southland 
looking for Medicare beneficiaries so that the doctor could write medically  unnecessary  
prescriptions for medical supplies and home health services.  
 
 
16  
  (SF) In September 2019, a defendant pled guilty to  conspiracy to receive and pay health care  
kickbacks and conspiracy  to defraud the IRS. In November 2019, one of his co-conspirators, the 
manager of the clinics, was convicted on all counts, following a two-week trial. These 
defendants were involved in a  $96  million money laundering and health care fraud kickback 
scheme, where doctors, physical and occupational therapists paid the defendant and his co-
conspirators kickbacks via checks to shell  companies. After laundering the funds, a portion of 
this cash was used to pay ambulette drivers/patient recruiters, who in turn paid kickbacks to 
beneficiaries to go to the  clinics for purported treatment. The defendant and co-conspirators then 
filed false tax returns, omitting income from the  checks written to their shell companies.  
 
Dental  
 
In November 2018, ImmediaDent of Indiana, LLC (ImmediaDent), which operates nine dental 
care practices in Indiana, and Kansas based Samson Dental Partners, LLC  (SDP),  which provides 
administrative support services to ImmediaDent, agreed to pay $3.4 million to resolve civil FCA 
allegations that they improperly billed Indianas Medicaid program for dental services.  Both 
companies are alleged to have submitted false claims to Indianas Medicaid program by (1)  
improperly billing simple tooth extractions as though they were surgical extractions and (2) 
improperly billing Scale and Root Planings (otherwise known as deep cleanings) that were  
either not performed or not medically necessary.  In addition to the federal recovery, 
ImmediaDent and SPD agreed to pay $1.7 million to Indiana resolve their state Medicaid 
liability.  
 
In April 2019, a defendant was sentenced to 24 months in prison in the Southern District of New 
York for committing  health care  fraud, conspiracy to commit health care  fraud, and conspiracy to 
violate the anti-kickback statute.  From in or around 2012 through at least November 2017, the 
defendant, who was not a licensed dentist, and others conspired and participated in a scheme to 
defraud insurance providers of more than $2 million.   The defendant and his coconspirators 
induced patients to be seen at a dental clinic on the Upper West Side of Manhattan by offering  
patients a $25 cash kickback.   Once the patients were in the door, the defendant and his 
coconspirators charged insurance  companies for services that were never performed and for 
services performed by defendant that he was not licensed to perform.  
 
In April 2019, a dentist agreed to pay $75,000 in civil penalties to resolve allegations in the 
District of Minnesota that he issued illegitimate prescriptions for opioid medications and 
repeatedly  failed to comply with the recordkeeping requirements of the Controlled Substances 
Act.  According to the allegations in the complaint, the defendant unlawfully  issued multiple 
prescriptions for Schedule II controlled substances, namely, oxycodone  and hydrocodone, 
without a legitimate medical purpose.  The  complaint further alleges that the defendant failed to 
keep complete and accurate records regarding the receipt and dispensing of controlled substances 
used at his clinic.  As a result of the defendants alleged actions, hundreds of doses of controlled  
substances went unaccounted for and are presumed to have been diverted for illicit purposes.  
 
In June 2019, a dentist was sentenced to 33 months in prison in the Middle District of Tennessee  
for operating  a scheme to defraud health care  benefit programs.  The defendant owned and 
operated a dental practice with four locations.  Between November 2013 and January 2018, the 
 
17  
  defendant caused the submission of false and fraudulent claims to health care  benefit programs, 
including Delta  Dental, Cigna, TennCare  and DentaQuest, TennCares dental benefits program 
administrator.   The fraudulent claims included billing for dental work that had not been 
completed or performed at all; falsifying dates of  service to appear to comply with benefit 
programs timeframe and preauthorization requirements; falsifying claims to appear that services 
had been rendered by a benefits program credentialed dentist; falsifying supporting documents 
and adding false narratives to support the upcoding of claims; and others, including continuing to 
submit false claims after being  advised by insurance companies that audits had determined a  
pattern of false claims and that the Tennessee Bureau of Investigation was conducting  a criminal 
investigation into the companys billing practices.   
 
Device Companies  
 
In November 2018, medical device manufacturer Covidien LP (Covidien) agreed to pay $13 
million to resolve civil FCA allegations that it paid kickbacks to induce the use of its Solitaire  
mechanical thrombectomy  device.   The  government alleged that after receiving  the U.S. Food 
and Drug Administration (FDA)  clearance for the  Solitaire device, Covidien launched a  registry  
to pay hospitals and institutions to collect data about user experiences with the device.   For about 
two years beginning in August 2014, Covidien paid a fee to hospitals and institutions that 
participated in a registry  each time they used a new Solitaire device and reported certain clinical 
data about their practices for treating stroke patients to Covidien.   Covidien solicited certain 
hospitals and institutions for the registry in order to convert their business from the competitors 
product and/or persuade them to continue using Covidien products, and knowingly and willfully  
used the registry  to increase  device sales.   
 
In December 2018, ev3 Inc., a device manufacturer based in Minnesota, agreed to plead guilty in 
the District of Massachusetts to charges related to the distribution of its neurovascular medical 
device, and pay $17.9 million in fines and forfeiture.  According to court documents, the device  
was approved by the FDA as a liquid embolization device that is surgically injected into blood 
vessels to block blood flow to arteriovenous malformations in the brain.   The FDA has approved 
the device only for use inside the brain.  Despite  the  FDAs limited  approval  of  the device, from 
2005 to 2009, sales representatives for the defendant encouraged surgeons to use the device in 
large quantities for unproven and potentially dangerous surgical uses outside the brain.  The  
companys  sales force continued to tout unapproved and potentially dangerous uses of the device  
even after FDA officials told ev3 executives in 2008 that they had specific  safety concerns 
regarding uses of the device outside the brain.  
 
In March 2019, medical device manufacturer Covidien LP (Covidien) agreed to pay $17.5 
million to resolve civil FCA allegations that it provided  free or discounted practice development 
and market development support to physicians located in California and Florida to induce  
purchases of Covidiens vein ablation products in violation of the Anti-Kickback Statute.  The  
government alleged that, from January 2011 through September 2014, Covidien provided 
customized marketing plans for specific vein practices; scheduled and conducted lunch and 
learn meetings and dinners with other physicians to drive referrals to specific vein practices; 
and provided substantial assistance to specific vein practices in connection with planning, 
promoting, and conducting vein screening  events to cultivate new patients for those practices.  In 
 
18  
  addition to the federal recovery, Covidien agreed to pay  an additional $2.5 million to Florida and 
California to resolve state Medicaid liability.  
 
In June 2019, ACell  Inc. (ACell), a Maryland-based medical device  manufacturer, pleaded guilty  
to a misdemeanor count of failure  and refusal to report a medical  removal, regarding its 
MicroMatrix powder wound dressing product in violation of the Food, Drug and Cosmetic Act 
(FDCA).  Pursuant to a plea agreement, ACell admitted that it learned in January 2012 that more  
than 30,000 MicroMatrix devices were  contaminated with endotoxin levels that posed a risk to 
patient health.  Due to that health risk, ACell initiated a removal of certain sizes of MicroMatrix  
devices from the market  which it did not report to the FDA.  ACell also admitted that it  
concealed the reason for the product removal from doctors, hospitals, and the companys own 
sales force, and did not notify doctors who had already used MicroMatrix devices from the  
contaminated lots of the  elevated endotoxin levels.  Under the terms of the plea agreement, 
ACell agreed to pay a fine of $3  million  and abide by an agreement with the Department of 
Justice requiring ACell to enact extensive compliance reforms.  ACell also  agreed to pay $12 
million to resolve civil FCA allegations that it marketed MicroMatrix with false and misleading  
messages that MicroMatrix powder was safe  and effective  for both non-topical and internal use 
and paid kickbacks to induce prescribers to order ACell products.    
 
In July 2019, a pain medicine doctor and his wife  were indicted in the Eastern District of 
Missouri for purchasing  non-FDA  approved medical devices and smuggling them into the United 
States.  The couple was also charged with health care  fraud related to billing for the same 
devices, when they knew Medicare and Medicaid would not reimburse for the non-FDA  
approved devices.  The doctor-defendant did not disclose to his patients that they were  receiving  
treatment via a non-FDA approved device.   
 
Diagnostic Services  
 
In May 2019, two owners of diagnostic testing facilities each pleaded guilty  in the Eastern 
District of New York to one count of health care  fraud and one  count of conspiracy to defraud 
the lawful functions of the  IRS.  The defendants, a married couple, were the co-owners of several 
diagnostic testing facilities.   As part of their guilty  pleas, the defendants admitted that they  
submitted fraudulent health care  claims for diagnostic testing services.   The defendants admitted 
that they paid approximately $18.5 million in kickbacks for the referral of beneficiaries who 
submitted themselves to diagnostic testing and other purported medical services.   The defendants 
falsely reported to the  IRS that the illegal kickback payments were legitimate business expenses, 
which caused relevant tax forms to falsely under-report business income and claim deductions.  
 
Drug Companies  
 
In December 2018, Actelion Pharmaceuticals US, Inc. (Actelion), based in San Francisco, 
California, agreed to pay  $360 million to resolve  civil FCA allegations that it illegally used a  
foundation, which claims 501(c)(3) status for tax purposes,  as a  conduit to pay the copays of 
thousands of Medicare patients taking Actelions pulmonary  arterial hypertension (PAH) drugs.  
From 2014 to 2015, Actelion donated  to the foundation, which, in turn, used those donations to 
pay  copays of patients prescribed the PAH drugs.   The government alleged that Actelion 
 
19  
  routinely obtained data from the foundation detailing how much the foundation had spent for  
patients on each drug; it then used this information to decide how much to donate to the 
foundation and to confirm that its contributions were sufficient to cover the copays of only  
patients taking Actelions PAH drugs.   The  government also alleged that, meanwhile, Actelion 
had a policy of not permitting Medicare patients to participate in its free drug program, which 
was open to other financially needy patients, even if those Medicare patients could not afford 
their copays.   Instead, to generate revenue from Medicare and induce purchases of the PAH  
drugs, the government alleged that Actelion referred such Medicare patients to the foundation, 
which allowed the patients copays to be paid and resulted in claims to Medicare  for the 
remaining  cost.   
 
In April 2019, Astellas Pharma US  Inc. (Astellas)  agreed to pay $100 million to resolve civil 
FCA allegations that it illegally used two foundations as conduits to pay the copays of thousands 
of Medicare patients taking Astellass drug Xtandi, an androgen receptor inhibitor (ARI) used to 
treat certain prostate  cancer.  The  government alleged that, in May 2013, Astellas asked two 
foundations about the creation of copay assistance  funds to cover the  copays for Medicare  
patients taking ARIs, but not for other types of prostate cancer drugs.  In July 2013, both 
foundations opened ARI-only copay funds; Astellas was the sole donor to both funds.  The  
government alleged that Astellas knew that Xtandi would likely account for the vast majority of 
utilization from each fund, and, in fact, Medicare  patients taking Xtandi received nearly all of the  
copay assistance from the two ARI funds. As part of the resolution, Astellas  entered into a  five-
year CIA that requires Astellas to implement  measures,  controls and monitoring designed to promote  
independence from any patient assistance program to which it donates.   
 
In April 2019, three  pharmaceutical companies in Massachusetts (Jazz Pharmaceuticals  plc, 
Lundbeck LLC, and Alexion Pharmaceuticals Inc.) agreed to pay a total of $122.6 million to 
resolve civil allegations that they  each violated the FCA by illegally paying  the Medicare or 
Civilian Health and Medical Program copays for their own products, through purportedly  
independent 501(c)(3)  foundations  that the companies used as mere conduits.  The foundations 
operated funds that pay the copayments of certain patients, including Medicare patients.  Jazz  
and Lundbeck each entered into a five-year CIAs  in connection with its respective settlement.   
 
In May 2019, the founder and four former  executives of a  pharmaceutical company  were  
convicted in the District of Massachusetts in connection with bribing medical practitioners to 
prescribe  a  highly  addictive  sublingual fentanyl spray intended for cancer patients experiencing  
breakthrough pain, and for defrauding Medicare and private insurance carriers.  Prior to the start 
of the trial, two other high-level executives with the company pleaded guilty and testified during  
the trial.  From May 2012 to December 2015, the defendants conspired to bribe practitioners, 
many of whom operated pain clinics, in order to induce them to prescribe the companys 
fentanyl-based pain medication to patients often when medically unnecessary.  The defendants 
used pharmacy data to identify practitioners who either prescribed unusually high volumes of 
rapid-onset opioids, or had demonstrated a  capacity  to do so, and bribed and provided kickbacks 
to the practitioners to increase the number of new prescriptions, and to increase the dosage and 
number of units of the medication.  The defendants also measured the success of their criminal 
enterprise by  comparing  the net revenue earned from targeted practitioners with the total value of 
bribes and kickbacks paid.  The defendants used this information to reduce or eliminate bribes 
 
20  
  paid to practitioners who failed to meet satisfactory  prescribing requirements, which they  
determined to be the net revenue  equal to at least twice the amount of bribes paid to the 
practitioner.  
 
In June 2019, Insys Therapeutics (Insys), based in Arizona, agreed to pay $225 million to resolve 
criminal and civil liability  relating to its marketing of the opioid drug Subsys.  As part of the 
criminal resolution, Insys agreed to enter into a deferred prosecution agreement with the  
government, Insyss operating subsidiary agreed to plead guilty to five  counts of mail fraud, and 
the company agreed to pay  a $2 million fine and $28 million in forfeiture.  Insys also agreed to 
pay $195 million to settle civil FCA allegations that Insys paid kickbacks to induce physicians 
and nurse practitioners to prescribe Subsys for their patients. In addition to payments for sham 
speaker programs, the kickbacks also allegedly took the form of jobs for the prescribers  
relatives and friends, and lavish meals and entertainment.  The government also alleged that 
Insys improperly encouraged physicians to prescribe Subsys for patients who did not have  
cancer, and lied to insurers about patients diagnoses in order to obtain reimbursement for 
Subsys prescriptions that had been written for Medicare  and TRICARE beneficiaries.  As part of  
the resolution, Insys entered into a  five-year CIA and Conditional Exclusion Release with HHS-
OIG that includes several novel provisions, such as enhanced material breach provisions.    
 
In July 2019, Reckitt Benckiser Group plc (RB Group) agreed to pay $1.4 billion to resolve 
criminal and civil liability  related to the marketing of the opioid addiction treatment drug  
Suboxone, which is a formulation of buprenorphine.  Until December 2014, RB Groups wholly  
owned subsidiary, Indivior Inc. (formerly known as Reckitt Benckiser Pharmaceuticals, Inc.), 
marketed and sold Suboxone throughout the United States.  To resolve criminal allegations 
regarding  Indiviors promotional conduct, RB Group executed a non-prosecution agreement that 
requires the company to forfeit $647 million in proceeds and not to manufacture, market, or sell  
Schedule I, II, or III  controlled substances in the  United States for three  years.  RB Group also 
agreed to pay $500 million to the United States to resolve civil FCA allegations that, from 2010 
through 2014, RB Group directly or through its subsidiaries knowingly: (a) promoted the sale 
and use of Suboxone to physicians who were writing prescriptions without any  counseling and 
for uses that were unsafe, ineffective, and medically  unnecessary; (b) promoted Suboxone Film 
to physicians and state Medicaid agencies with false and misleading claims that it was less 
susceptible to diversion, abuse, and accidental pediatric exposure than other buprenorphine 
products; and (c) took steps to delay the entry of generic  competition for Suboxone in order to 
improperly  control pricing of Suboxone.  In addition to the federal recovery, RB  Group agreed to 
pay up to $200 million to resolve state Medicaid liability and $50 million to resolve claims that it  
engaged in unfair methods of competition in violation of the Federal Trade Commission Act.  
 
In September 2019, Avanir Pharmaceuticals (Avanir), a pharmaceutical manufacturer based in 
Aliso Viejo, California, was charged for paying kickbacks to a physician to induce prescriptions 
of its drug Nuedexta.  To resolve the one-count indictment, Avanir agreed to a deferred 
prosecution agreement, under which Avanir admits that it paid the doctor to induce him to not  
only maintain but increase his prescription volume.   Under the agreements terms, Avanir will 
pay  a monetary penalty in the amount of $7.8 million, and a forfeiture in the amount of $5  
million.   The United States will defer prosecuting  Avanir for a period of three  years to allow the  
company to comply  with the agreements terms.   Avanir also agreed to pay  $95.8 million to 
 
21  
  resolve civil FCA allegations that it paid kickbacks to induce prescriptions and engaged  in false 
and misleading marketing of Nuedexta to providers in long-term care facilities to induce them to 
prescribe it for behaviors commonly associated with dementia patients, which is not an approved 
use of the drug.  In addition to the federal recovery, Avanir agreed to pay  an additional $7 
million to resolve state Medicaid claims.  As part of the resolution, Avanir entered into a  five-
year CIA that requires Avanir to implement additional controls around its interactions with 
physicians and conduct internal and external monitoring of promotional and other activities.   It 
also increases individual accountability  by requiring compliance-related certifications from its 
Board and key  executives.      
 
Drug Distributor  
 
In January 2019, a medical company executive was sentenced in the Eastern District of Virginia  
to 26 months in prison for conspiring to smuggle misbranded pharmaceuticals into the United 
States and for the unlicensed wholesale distribution of prescription drugs.  According to court 
documents, the defendant instructed subordinates to smuggle misbranded prescription drugs and 
devices into the United States, including oncology drugs, orthopedic injections, and cosmetic  
devices.  These products were not approved by the FDA and did not contain the labels, warnings, 
and instructions required by the FDA.  In order to smuggle these products into the United States, 
employees used false names and false customs forms, and broke large shipments into multiple 
smaller shipments.  At the defendants direction, co-conspirators in the United States stored the 
products in their private residences, often in violation of safety regulations requiring the 
pharmaceuticals to be stored at cool temperatures.  
 
Durable Medical Equipment (DME)  
 
In April 2019, the former  CEO of a pain management company was found  guilty  for his role in 
an illegal kickback scheme involving approximately $4 million in tainted DME claims to 
Medicare.  According to evidence presented at trial, the defendant abused his position as CEO of  
the pain management company to arrange for  referrals of Medicare DME orders to a co-
conspirator.   Evidence showed that the defendant operated a shell company, which he had 
registered in the name of  his wife.   Despite having  no involvement with the shell company  and 
performing no work, the  shell company  received over $770,000 in illegal kickbacks.   Together, 
the defendant and his co-conspirator pocketed over $2.4 million dollars in improper 
reimbursement from Medicare.   The defendant used funds from his company to  pay bonuses to 
providers who ordered DME for Medicare beneficiaries and referred those  orders to his co-
conspirator.   
 
(SF) In January 2019, a  former owner and CEO of a Tennessee-based DME company, pled 
guilty  for her role in a $4.6 million kickback scheme. Charges stem from an agreement by  which 
the defendant paid a physician 60 percent of all Medicare proceeds earned from billings of 
Medicare DME orders referred by providers from the physicians practice, a 12-state, 60-office  
pain management provider. The physician obstructed efforts from his Board and employees to 
obtain Medicare DME billing numbers for  each office and instructed them that the defendants 
DME company was the exclusive Medicare DME provider for the entire practice.  In August 
2019, the defendant was sentenced to 42 months in prison and ordered to forfeit approximately  
$600,000.  
 
22  
  In May 2019, the CEO of a string of DME companies based in Savannah, Georgia, was 
sentenced to 3 years and 4 months in prison for his role in a scheme that defrauded Medicare out 
of millions of dollars  and was  ordered to pay more than $1.9 million in restitution.  The CEO  
oversaw a multi-year scheme resulting in nearly $10 million in billed Medicare  claims.  Working  
with others, the CEO operated a network that paid  kickbacks to obtain patient information, 
specifically that of Medicare patients.  Using  a third-party biller, the CEO would then bill Part B  
and Part C plans for medically unnecessary medical equipment and orthotics, including a variety  
of back and knee braces that were not ordered as medically necessary by a physician.  The CEO  
also billed for equipment not provided and utilized sales representatives to promote equipment to 
Medicare patients.  Agents determined the CEO and his affiliates were linked to the larger 
nationwide scheme known as Operation Brace Yourself (described in more detail in the HHS-
OIG section of this report.)  The CEO is the first defendant sentenced under the ongoing  
investigation.  
 
Electronic Health Records  
 
In February 2019, Greenway Health LLC (Greenway), a Tampa, Florida-based developer of  
electronic health records (EHR) software, agreed to pay $57.2 million to resolve civil FCA 
allegations that Greenway  caused its users to submit false claims to the government by  
misrepresenting the capabilities of its EHR product Prime Suite and providing unlawful 
remuneration to users to induce them to recommend Prime Suite.  The government contended 
that Greenway falsely obtained a certification for Prime Suite when it  concealed from its 
certifying entity that Prime Suite did not fully  comply with the requirements for  
certification.   Among other things, Greenways product did not incorporate the standardized 
clinical terminology necessary to ensure the reciprocal flow of information concerning patients 
and the accuracy of electronic prescriptions.  The  government further alleged that a version of  
Prime Suite caused users to falsely  attest that they  were  eligible  for EHR incentive payments 
when, in fact, they had not met all necessary use requirements.  The  government also alleged that 
Greenway violated the Anti-Kickback Statute by  paying money  and incentives to its client 
providers to recommend Prime Suite to prospective new customers.  As part of the resolution, 
Greenway  entered into a  five-year CIA with HHS-OIG requiring, among other things, that 
Greenway retain an Independent Review Organization to assess Greenways compliance systems 
and to review  arrangements with health care providers.     
 
Home Health Providers  
 
(SF) In October  2018, two home health agency  (HHA)  owners near  Detroit, Michigan, were  
sentenced to a total of 16  years in prison for their roles in a  Medicare fraud scheme by billing for 
home health services that were never provided.  The owners  were ordered to pay  restitution of 
$9.6 million and $4.4 million, respectively, jointly and severally  with their co-conspirators.  The  
defendants each pleaded guilty to conspiracy to commit  health care  fraud and wire fraud and 
conspiracy to pay  and receive health care  kickbacks; they admitted that they paid illegal 
kickbacks in exchange  for the referral of Medicare beneficiaries to HHAs  that they owned.  
Between 2009 and 2017, they  also submitted false Medicare claims for home health services that 
were never provided.  The individuals  were  charged along with three other individuals.  Two 
individuals  pleaded guilty  and are pending sentencing; one  remains a  fugitive.  
 
23  
  (SF)  In January  2019, the  owner and operator of Amex Medical Clinic and a doctor in Texas 
were  convicted of charges resulting from their involvement in a Medicare fraud scheme.  From 
about December 2011 through about August 2015,  the individuals conspired to defraud Medicare  
out of payments for medical services.  The owner  sold medical orders and other documents 
signed by  the doctor  to HHAs  in and around Houston.  In these medical orders, the doctor  falsely  
certified information about the patients medical condition and need for  home health services.  
Co-conspirators at HHAs  then used the false paperwork to bill to, and receive payment from, 
Medicare for services that were not medically necessary or not provided.  The owner  also caused 
Amex to bill  Medicare for purported physician services that were actually provided by an 
unlicensed practitioner, if at all.  The individuals  were sentenced to a combined 55 years in 
prison and ordered to pay up to $26.7 million in restitution, jointly and severally.  
 
In April 2019, a former medical doctor and his business partner were  each sentenced to 33 
months in prison in the District of Nevada  for their roles in a $7.1 million Medicare  health care  
fraud scheme that occurred at three  Las Vegas hospice and home health care  agencies.  The  
defendants filed false enrollment documents with Medicare to enable the former doctor to 
operate hospice and home care agencies through nominees despite his prior exclusion from all 
federal health care programs.  Furthermore, they submitted fraudulent hospice care claims for  
people who were not terminally ill and did not require hospice care.  
 
(SF) In April 2019, the owner of two home health agencies, Exceptional Home Health and 
Mobility Home  Health Care, was sentenced to 84 months in prison and ordered to pay $8.3 
million in restitution, following a May 2018 guilty plea.  The charges stem from the defendants 
role in a fraud scheme involving illegal kickbacks for Medicare beneficiary referrals and the  
provision of medically unnecessary  services not eligible for reimbursement.  Medicare paid 
approximately $8.3 million for claims submitted by  the defendants home health agencies.  
 
(SF) In April 2019, the former co-owner of Elder  Care Home Health Care  Services, a now-
defunct home health company located in Garland, Texas, was sentenced to 188 months in prison 
after an October 2018 conviction.  The charges stem from the defendants involvement in an 
approximately $3.5 million home health fraud scheme.  Three co-defendants also were sentenced 
to 97, 85, and 60 months in prison.  
 
(SF) In May 2019, a patient recruiter for multiple  Houston-area home health agencies and owner 
of Circuit Wide, was sentenced to 188 months in prison, followed by  three  years of supervised 
release, and was ordered to pay $12.9 million in restitution. The charges stem from a $20 million 
scheme to pay illegal health care  kickbacks to physicians and Medicare beneficiaries in order to 
fraudulently bill for medically unnecessary home health services, and to launder the proceeds.  In 
April 2019, a nurse was sentenced  to 120 months for her involvement in a related case.  
 
(SF) In September 2019, the former owner Hexagon Home Healthcare, was sentenced to 36 
months in prison, after her March 2019 convictions at trial on ten counts, including conspiracy to 
commit health care  fraud, conspiracy to pay  and receive kickbacks, and visa fraud. The  
defendants company fraudulently billed Medicare approximately $3 million.  
 
   
 
24  
  Hospice Care  
 
In October 2018, the owner and operator of a  series of hospice organizations pled guilty to 
hospice fraud in the  Northern District of Mississippi.  The Defendant admitted that she 
fraudulently submitted claims to Medicare  and Medicaid for hospice services that were not 
medically necessary or that were not provided to the hospice patients as claimed.   She further  
admitted that she illegally  recruited patients who were not hospice eligible.  The Government 
alleged at the change of plea hearing that the defendant submitted more than $11 million in 
fraudulent claims to Medicare  and more than $2 million in fraudulent claims to Medicaid.  
 
In December  2018, SouthernCare, Inc.  in Pennsylvania  entered into a  FCA  settlement agreement 
to resolve allegations that,  between January 2009 and December 2014, it  submitted false claims  
to Medicare  for certain patients at SouthernCares Pennsylvania offices when the patients did not 
meet applicable Medicare eligibility  requirements or documentation for the hospice benefit was 
not satisfied.  SouthernCare agreed to pay over  $5.8 million to resolve its alleged liability.  
 
Hospitals and Health Systems  
 
In November  2018, a  Health Management Associates, Inc. (HMA) subsidiary, Carlisle HMA, 
LLC  pled guilty to conspiracy to commit health care  fraud  in Tennessee.  Up until 2017, Carlisle  
operated an acute care hospital in Carlisle, Pennsylvania.  In September 2018, HMA entered into 
a three-year Non-Prosecution Agreement (NPA) with the DOJs  Criminal Division in connection 
with a corporate-driven scheme to defraud Federal  health care  programs by  unlawfully  
pressuring and inducing  physicians serving HMA hospitals to increase the number of emergency  
department  (ED)  patient admissions regardless of the medically  necessity.  The scheme involved 
HMA hospitals billing and obtaining reimbursement for higher-paying inpatient hospital care, as 
opposed to observation or outpatient care, from Federal health care  programs, increasing HMAs 
revenue.  Under the  NPA  terms, HMA will pay a  $35 million monetary penalty and a criminal 
fine of $2.5 million.   Community Health Systems, Inc, HMAs parent company, also agreed to 
cooperate with the investigation, report allegations of evidence of violations of Federal health 
care  offenses, and ensure that its  compliance and ethics program satisfies the requirements of an 
amended and extended CIA  between Commonwealth  and HHS-OIG.  This is part of a  global 
resolution, including eight FCA  cases filed against HMA, and included a  civil resolution where  
HMA agreed to pay over $261 million to resolve these matters.  
 
In February 2019, Union General Hospital agreed to pay $5 million to resolve civil FCA 
allegations in the Northern District of Georgia engaged  in improper financial relationships with 
referring physicians.  The settlement resolved allegations that the hospital engaged in several 
different improper financial relationships with physicians between 2012 and 2016, in violation of 
the Stark Law, which  forbids hospitals from billing Medicare for  certain services referred by  
physicians who have  a financial relationship with the hospital unless the relationship falls within 
a defined exception.  The United States alleged that the relationships the hospital had with 
certain physicians were prohibited because the hospital compensated the physicians in amounts 
that were  above or inconsistent with fair market value or in a manner that took into account the  
volume or value of the physicians referrals.  
 
25  
  In February 2019, a hospital owner and a doctor were convicted of  conspiracy to commit  health 
care  fraud, 17 counts of health care  fraud, and three counts of money laundering.  During trial, 
the jury heard evidence that the two defendants unlawfully  enriched themselves by submitting  
false and fraudulent claims for medical tests that were not medically necessary, not provided or 
both and then billed at the hospital at a higher reimbursement rate.  The hospital owner also 
instructed his employees to falsely bill the  medical services at the hospital and other associated 
entities, when, in fact, the patients never received services from the hospital and the other  
entities.  
 
In March 2019, MedStar  Health Inc. (MedStar) in Columbia, Maryland, MedStar Union 
Memorial Hospital, and MedStar Franklin Square Medical Center  agreed to pay $35 million to 
resolve civil FCA allegations that MedStar paid kickbacks to MidAtlantic Cardiovascular  
Associates (MACVA), a  cardiology  group based in Pikesville, Maryland, in exchange for  
referrals, through a series of professional services contracts at Union Memorial and Franklin 
Square Hospitals in Baltimore.  The  government alleged that Medstar paid kickbacks to 
MACVA under the  guise of professional services agreements, in return for MACVAs referrals 
to Union Memorial of lucrative cardiovascular procedures, including  cardiac surgery and 
interventional cardiology procedures, from January  1, 2006, through July 31, 2011.  The  
settlement also resolved allegations that MedStar received Medicare payments  from Jan. 1, 2006, 
through December  28, 2012, for medically unnecessary stents performed by  a doctor employed 
by MACVA who was later employed by MedStar.   
 
In July 2019, Eagleville Hospital  agreed to pay $2.85 million to resolve civil FCA allegations in 
the Eastern District of Pennsylvania that, from January 2011 through December 2018,  it had 
submitted  claims to Medicare, Medicaid, and the Federal Employees Health Benefits Program 
(FEHBP) for hospital-level detoxification treatment services when the patients were ineligible  
for admission to receive  such services or lacked documentation to support the claims.  In his qui 
tam complaint, the whistleblower alleged that the hospital admitted certain groups of its 
substance use disorder treatment patients  for the higher-reimbursing hospital-level detoxification 
treatment, rather than the residential-level treatment, without satisfying the medical necessity  
requirements to do so. The whistleblower alleged that this practice resulted in false claims to 
Medicare, Medicaid, and FEHBP.  
 
(SF) In September 2019, a hospital administrator at Atrium Medical Center  and Pristine  
Healthcare, was sentenced to 120 months in prison and ordered to pay $6.3 million in restitution, 
for his role in a $16.9 million Medicare fraud scheme. The defendant and his co-conspirators 
paid and received kickbacks and bribes in exchange  for the referral of Medicare beneficiaries, 
who did not meet the Medicare qualifications for  or need partial hospitalization program (PHP) 
services. PHP is a form of intensive outpatient treatment for severe mental illness.  
 
Identity Theft  
 
In October 2018, a man pled guilty in the Southern District of Florida to one count of money  
laundering in connection with a fraud scheme that ran from 2013 through 2015.  During this 
period, the defendant caused the cashing of checks that were the proceeds of fraudulent activity, 
including identity-theft tax refund fraud, health care  fraud, and mortgage  fraud.   On numerous 
 
26  
  occasions, the defendant cashed individual fraudulent Medicare checks exceeding $200,000 and 
individual U.S. Treasury  tax refund checks exceeding $150,000.   The defendant knew that the 
checks had been obtained from fraudulent activity  and, on occasion, knowingly accepted fake  
identification documents.   
 
In August 2019, a doctor pled guilty in the Northern District of New York to conspiring to 
distribute controlled substances, health care  fraud, aggravated identity theft, and obstruction of  
justice.  As part of her guilty plea, the defendant, an  obstetrician-gynecologist, admitted that 
between 2015 and 2017, she wrote numerous prescriptions for oxycodone, morphine, and 
hydromorphone to third parties, for no legitimate medical purpose, and then instructed a co-
conspirator to fill those prescriptions by impersonating the named patients at pharmacies, 
knowing that health care  benefit programs would pay the cost of the drugs.   In pleading  guilty, 
the defendant also admitted that she attempted to obstruct the federal investigation into her 
activities by instructing a co-conspirator to falsely  testify before  a federal grand jury that she (the 
defendant) was the subject of extortion.   As the defendant admitted in her guilty plea, she was 
not the subject of an extortionate scheme, and was a willing member of the  conspiracy to 
distribute opioids for no legitimate medical purpose.  The defendant further admitted that she had 
agreed to pay her co-conspirator for false testimony in the hope of minimizing her criminal 
exposure and keeping her medical license.  
 
Laboratories  
 
In December  2018, GenomeDx Biosciences Corp, a genetic testing company  headquartered in 
Vancouver, British Columbia, agreed to pay just under $2 million to resolve civil FCA 
allegations in the Southern District of California that it had submitted improper claims to 
Medicare  for  a post-operative genetic test for prostate cancer patients.  The United States alleged 
that the company had knowingly submitted claims for the Decipher test to Medicare between 
September 2015 and June 2017 that were not medically reasonable and necessary because the  
prostate cancer patients did not have risk factors necessitating the test, including pathological 
stage  T2 disease  with a positive surgical margin, pathological stage T3 disease or rising Prostate-
Specific Antigen (PSA) levels after  an initial PSA nadir.  
 
In January 2019, pathology laboratory company  Inform Diagnostics, formerly known as Miraca  
Life Sciences Inc., which is headquartered in Irving, Texas, agreed to pay $63.5 million to 
resolve civil FCA allegations that it engaged in improper financial relationships with referring  
physicians.  The  government alleged that the company violated the Anti-Kickback Statute and 
the Stark Law by providing to referring  physicians  subsidies for electronic health records (EHR) 
systems and free or  discounted technology consulting services.   Although regulations adopted by  
HHS in 2006 included provisions that allowed laboratories to provide EHR donations to 
physicians under certain conditions, the United States alleged that the defendant violated those  
conditions.   HHS withdrew those exemptions for laboratories in 2013.   
 
In June 2019, a doctor agreed to pay more than $900,000 to resolve civil FCA allegations in the 
Western District of Pennsylvania that he received improper payments for making referrals to a  
drug testing laboratory, and caused false claims to be submitted to Medicare for drug testing  
services.  The United States alleged that the lab paid the doctor to refer patients to the lab for  
 
27  
  drug tests; the lab then submitted claims to Medicare  for the drug testing services.  The United 
States alleged that the financial arrangement between the doctor and the lab violated the  
physician self-referral law, commonly known as the Stark Law, and the Anti-Kickback Statute.  
 
In July 2019, the owner of two medical laboratories was sentenced to 30 months in prison in the 
Eastern District of Missouri for conspiracy to commit health care  fraud and to pay illegal 
kickbacks for  health care  services.  The defendant paid illegal kickbacks to marketers for urine  
and saliva specimens sent to the labs for testing.  In some instances, doctors names were used on 
orders for the tests, although the doctors had never seen or evaluated the patients and did not  
know their names were being used on the orders.  During the  conspiracy, many disabled and 
elderly patients living in residential care facilities were  repeatedly subjected to medically  
unnecessary testing.  The defendant usually paid the marketers $150$200 for each specimen 
that Medicare and Medicaid paid  for  testing.  
 
Managed Care  
 
In April 2019, Sutter Health LLC, a California-based health care  services provider, and several 
affiliated entities, Sutter East Bay Medical Foundation, Sutter Pacific Medical Foundation, Sutter 
Gould Medical Foundation, and Sutter Medical Foundation (Sutter), agreed to pay $30 million 
to resolve allegations that the  affiliated entities submitted inaccurate information about the health 
status of beneficiaries enrolled in Medicare Advantage  Organization (MAO)  plans, which 
resulted in the plans and providers being overpaid.  The government alleged that Sutter and its 
affiliates submitted unsupported diagnosis codes for certain patient encounters of beneficiaries 
under their care.   These unsupported diagnosis scores inflated the risk scores of these  
beneficiaries, resulting in the MAO plans being overpaid.  
 
In July 2019, Beaver Medical Group L.P. (Beaver), which is headquartered in Redlands, 
California, and one of its physicians agreed to pay  $5.1 million to resolve civil FCA allegations 
that they reported invalid diagnoses to Medicare Advantage plans and thereby caused those plans 
to receive inflated payments from Medicare.      
 
Medical Devices  
 
In October  2018, a doctor in Kentucky  was found guilty of health care  fraud and sentenced to 
three  years and six  months in prison and ordered to pay $257,515 in restitution.  The doctor  
defrauded Medicare, Medicaid, and other insurers by implanting medically unnecessary  
pacemakers in patients and causing unnecessary procedures and follow-up care to be billed to 
health insurance programs.  Between 2007 and 2011, the doctor  implanted approximately 234 
pacemakers in patients at St. Joseph London hospital.   Dozens of those patients pacemakers 
were medically unnecessary  under well-established national guidelines and Medicare coverage  
rules.  Several patients testified that the  doctor  pressured them into getting the procedures and  
told them misleading information about their health conditions.  
  
Nursing Homes and Facilities  
 
In January 2019, Conway  Lakes NC, LLC, a skilled nursing  facility  in Orlando, Florida, a, 
physician, and related providers agreed to pay $1.5 million to resolve  civil FCA  allegations in 
 
28  
  the Middle District of Florida that they engaged in a kickback scheme related to the referral of 
Medicare and TRICARE patients.  The United States alleged that the skilled nursing facility  and 
its managers conspired to pay the physician under a sham medical director agreement to 
induce him to illegally refer Medicare and TRICARE patients to the facility for rehabilitation 
services that were billed to the United  States.  
 
In February 2019, Vanguard Healthcare  LLC, and related Vanguard companies (Vanguard)  
agreed to pay more than $18 million in allowed claims to resolve a civil FCA lawsuit brought by  
the United States and the State of Tennessee for billing the Medicare  and Medicaid programs for  
grossly substandard nursing home services.   Vanguards CEO and former director of operations 
also agreed to pay $250,000 to resolve allegations against them.  The United States and 
Tennessee  alleged that the five Vanguard nursing  facilities failed to administer medications as 
prescribed; failed to provide standard infection control; failed to provide wound care  as ordered; 
failed to take prophylactic measures to prevent pressure ulcers; used unnecessary physical 
restraints on residents; and failed to meet residents basic nutrition and hygiene  
requirements.   The lawsuit further alleged that the  defendants were  responsible for the  
submission of hundreds of preadmission forms by  these  facilities to Tennessees Medicaid 
Program, which contained forged nurse or physician signatures.   As part of the resolution, 
Vanguard agreed to enter into a five-year, chain-wide, quality of care CIA with HHS-OIG.  
 
In February 2019, Tennessee Health Management, Inc., a skilled nursing  facility management 
company, agreed to pay  more than $9.7 million to resolve civil FCA allegations in the Middle 
District of Tennessee that it submitted false claims for payment to TennCare, Tennessees 
Medicaid program, related to nursing facility services.  TennCare requires that a placement 
evaluation be conducted and certified by a physician for each patient entering a nursing  
home.   This settlement resolved allegations by the  United States and the State of Tennessee that 
during the period of January 1,  2010 through December 31, 2017, the defendant submitted pre-
admission evaluations with photocopied or pre-signed physician signatures on the required 
certifications for claims rendered to TennCare beneficiaries at its associated Tennessee skilled 
nursing  and rehabilitation facilities.  
 
(SF)  In April 2019, an individual  in Florida  was convicted for his role in the largest health care  
fraud scheme ever charged by  the DOJ, involving $1.3 billion in fraudulent claims.   The  
individual worked as a physicians assistant at skilled nursing facilities  (SNF)  owned by his co-
defendant.  According to the investigation,  the co-defendant  led an extensive  health care  fraud 
conspiracy involving a network of assisted living  facilities and SNFs  that he owned.   The co-
defendant bribed physicians to admit patients into his facilities, and then cycled the patients 
through his facilities, where they often failed to receive appropriate medical services, or received 
medically unnecessary services, then billed to Medicare  and Medicaid.   Several witnesses 
testified that  poor conditions in the facilities and the inadequate care patients received, which the 
co-defendant  concealed  from authorities by bribing an employee of a Florida  State  regulator  for  
advance notice of surprise inspections scheduled to take place.   The individual  facilitated the  
fraud scheme by prescribing medically unnecessary  prescriptions for treatment at SNFs.  The  
individual pleaded guilty to conspiracy to commit health care  fraud and wire fraud and was 
sentenced to six  years and eight months in prison and ordered to pay $12.5 million in restitution.  
Six defendants involved in the scheme were previously sentenced to a combined two years and 
 
29  
  three  months in prison and ordered to pay $425,470.  The co-defendant is awaiting sentencing.  
In June 2019, the United States announced that a  Chicago-area physical therapy center, its 
owner, and four nursing facilities had resolved civil FCA allegations that they provided 
unnecessary services to increase Medicare payments for $9.7 million.  The settlements resolved 
allegations that skilled therapy service provider Quality Therapy  & Consultation Inc. and its 
owner worked with four  skilled nursing facilitiesThe Carlton at the  Lake  Inc., Ridgeview  
Rehab and Nursing Center, Lake Shore Healthcare and Rehabilitation Centre, LLC, and 
Balmoral Home  Inc.to increase Medicare reimbursements by upcoding their patients 
Resource Utilization Group scores.   The  allegations also contend that the providers rendered 
skilled therapy to patients who did not need it or could not benefit from it, as part of an effort to 
bill the highest possible amount to Medicare.  As part of the resolution, the owner of Quality  
Therapy  & Consultation also agreed to be excluded from all participation as a provider in 
Medicare, Medicaid, and all federal health care programs for a period of  five  years.  
   
Pharmacies  
 
(SF) In November 2018, a pharmacist and marketer was sentenced to 16 months in prison, after  
pleading  guilty for his involvement in a compounding prescription scheme to defraud 
government health care  benefit programs, including TRICARE.  To date, 11 people have been 
charged and 8 convicted for the largest health care  fraud scheme ever investigated and 
prosecuted in the State of Mississippi.  
 
(SF)  In December  2018,  a pharmacy owner  was sentenced to seven years and three  months in 
prison and  ordered to pay $8.4 million in restitution  for engaging  in an  $8.4 million Medicare  
fraud scheme in the Miami, Florida  area.  The individual  owned A.R.A Medical Services Inc.  
pharmacy  (which did business under the name Valles Pharmacy Discount).  Between January  
2011 and August 2017, the individual allegedly  engaged in a conspiracy to defraud Medicare  
Part D.  The individual  paid  illegal health care  kickbacks to Medicare beneficiaries in exchange  
for a promise from the beneficiaries to fill their prescriptions at Valles, and to allow Valles to 
submit  Medicare  claims for prescription drugs that were not provided to the beneficiaries.  
During the course of the  scheme, Valles submitted over $32 million in Medicare  claims for  
prescription drugs, of which approximately $8.4 million was for medically  unnecessary  
prescription drugs that Valles never purchased and were never provided to beneficiaries.  
 
In January 2019, Walgreens Boots Alliance, Inc. (Walgreens) agreed to pay  $269.2 million to 
resolve civil FCA allegations in two matters.  In the first, Walgreens agreed to pay  $168 million 
to resolve allegations that Walgreens routinely submitted false days-of-supply data to federal 
health care  programs when it sought federal reimbursement for insulin pens it dispensed to 
federal beneficiaries who did not need them.  Walgreens admitted that when a federal health 
program denied a claim from Walgreens because the  reported days of supply  for a full carton of  
five insulin pens exceeded the federal programs days-of-supply limit, it was  Walgreenss  
practice to dispense and bill for the full carton and reduce the reported days of supply to conform 
to the programs days-of-supply limit; and Walgreens thus repeatedly  reported days-of-supply  
data to federal health programs that were different from, and lower than, the days-of-supply  
calculated according to the standard pharmacy billing formula.  In addition to the federal  
recovery, Walgreens agreed to pay up to $41.2 million to resolve state Medicaid liability.   
 
30  
   
In the second settlement, Walgreens agreed to pay  $32 million to resolve civil FCA allegations 
that Walgreens operated a program called the Prescription Savings Club (the PSC) that 
resulted in overbilling Medicaid.  Walgreens admitted that Medicaid regulations directed 
Walgreens to seek Medicaid reimbursement only at the lowest of certain drug price points, 
including the usual and customary price  which is often defined as the price offered through 
discount programs like the PSC.  Contrary to these requirements, Walgreens did not disclose to 
Medicaid the discount drug prices it offered customers through the PSC when it sought 
reimbursement from Medicaid, resulting in inflated reimbursements from Medicaid.   In addition 
to the federal recovery, Walgreens agreed to pay  up to $28 million to resolve state Medicaid 
liability.  As part of these  resolutions, Walgreens entered into a  five-year CIA with HHS-OIG.  
 
In February 2019, a former pharmaceutical representative pleaded guilty in the Western District 
of Texas for  her role in a scheme to defraud health care  benefit programs by paying over 
$400,000 in kickbacks and bribes to health care  providers that prescribed compounded 
medications to individuals who did not need the medications. The Defendant and her co-
conspirators attempted to disguise the kickbacks and bribes to health care  professionals by  
writing fictitious and back-dated consulting agreements.  In many instances, the Defendant and 
her co-conspirators submitted prescriptions to compounding pharmacies for patients that had 
never seen a medical professional.   Moreover, the  Defendant and her co-conspirators would 
occasionally forge the signature of a medical professional on prescriptions.   The Defendant 
admitted that she conspired with two compounding pharmacies that would submit claims for  
reimbursement to health care  benefit programs, including TRICARE, for compounded 
medications based on the prescriptions.   In exchange  for her role in the conspiracy, the two 
compounding pharmacies paid the Defendant approximately $1.1 million.   From approximately  
February 2013 through December 2014, health care  benefit programs reimbursed the two 
compounding pharmacies approximately $8.8 million  based on the claims  submitted in 
connection with the compounded medications.  
 
(SF) In February  2019, the owner of California-based, Akhtamar Pharmacy, was sentenced to 48 
months in prison.  A federal jury found the defendant guilty for her role in a scheme in which the  
pharmacy submitted $1.5 million in false claims to Medicare Part D plan sponsors for 
prescription drugs that the pharmacy never ordered from wholesalers and never dispensed to 
beneficiaries.  The defendant attempted to cover up the scheme through the use of false 
wholesaler invoices.  
 
(SF) In March 2019, the pharmacist of A to Z Pharmacy, in New Port Richey, Florida, was 
sentenced to 120 months  in prison, followed by  three  years of supervised release, and was 
ordered to pay $3.2 million in restitution, as well as $1.4 million in forfeiture.  The defendant 
was convicted on January  11, 2019, after a four-day trial on nine counts, for their role in a  
scheme to defraud Medicare, TRICARE, and private insurance companies through a  
compounding pharmacy  scheme.  The defendant and co-conspirators submitted false and 
fraudulent claims through A to Z Pharmacy for compound medications, primarily pain and scar 
creams, by  paying kickbacks to doctors for prescriptions, billing for compound medications that 
were more expensive than what the pharmacy actually used, and waiving  millions of dollars 
 
31  
  worth of copays.  In total, the defendant and co-conspirators stole more than $157 million 
through the scheme.  All co-conspirators have pled guilty.  
(SF)  In August 2019, two pharmacy owners were convicted in the Central District of California 
for participating in a $35 million health care  fraud and money laundering scheme to bill 
Medicare for medications that were never provided and to launder the proceeds of the fraud.  
According to the evidence presented at trial, from 2012 to 2015, the defendants fraudulently  
billed Medicare  and CIGNA for prescription medications that were not actually dispensed to 
beneficiaries by the pharmacy they owned.   To hide the fraud, the defendants obtained fake  
invoices from a co-conspirator to make it appear as if their pharmacy had purchased the  
medicines it had billed Medicare for when it had not.   The  evidence further established that the 
defendants also used these fake invoices to launder the proceeds of the  fraud through the co-
conspirator.  
 
In August 2019, a pharmacist was sentenced to 63 months in prison in the  Central District of 
California for illegally distributing prescription opioids and money laundering.  The  defendant 
filled at least 345 fraudulent prescriptions for oxycodone during a one-year period that ended in 
July 2017. The prescriptions were written under the name and DEA registration number of a  
retired doctor. When she  pleaded guilty, the pharmacist admitted knowing the prescriptions were  
fraudulent, outside the usual scope of professional practice, and without a legitimate medical 
purpose.  
 
In September 2019, Diabetic  Care Rx  LLC, also known as Patient Care America  (PCA), two of  
its executives, and private equity  firm Riordan, Lewis & Haden Inc. (RLH)  agreed to pay $21.4 
million to resolve civil FCA allegations that they  paid kickbacks to generate referrals of 
prescriptions for  expensive pain creams, scar creams, and vitamins.  The government alleged 
that: PCA paid kickbacks to outside marketers to target military members and their families for  
prescriptions for  compounded creams and vitamins, which were formulated to  ensure the highest 
possible reimbursement from TRICARE; marketers paid telemedicine doctors who prescribed 
the creams and vitamins without seeing the patients, or in some cases, even speaking to them; 
PCA and a marketer routinely jointly paid the copayments owed by patients referred by the 
marketer, without any verification of the patients financial needs, and then disguised the  
payments as coming from a sham charitable organization; and PCA continued to claim  
reimbursement for prescriptions referred by the marketers despite regularly receiving complaints 
from patients that prescriptions were being  generated without patient consent or a valid patient-
prescriber relationship.  RLH, the private equity firm that managed PCA on behalf of its 
investors, allegedly knew of and agreed to the plan to pay outside marketers to generate the  
prescriptions and financed the kickback payments to the marketers.  
 
Physical Therapy  
 
In June 2019, Encompass Health Corporation (Encompass), formerly known as HealthSouth 
Corporation, agreed to pay  $48 million to resolve civil FCA allegations that some of its inpatient 
rehabilitation facilities (IRFs) provided inaccurate information to Medicare to maintain their 
status as an IRF  and to earn a higher rate of  reimbursement, and that some admissions to its IRFs 
were not medically necessary.  The  government alleged that beginning in 2007, to ensure  
compliance with Medicares rules regarding  classification as an IRF, and to increase Medicare  
 
32  
  reimbursement, some Encompass IRFs falsely diagnosed patients with what they referred to as 
disuse myopathy when there was no clinical evidence for this diagnosis.  Additionally, 
Encompass IRFs allegedly  admitted patients who were not eligible for admission to an IRF  
because they were too sick or disabled to participate in or benefit from intensive inpatient 
therapy.  
 
In August 2019, Baldwin Bone  & Joint, P.C., an orthopedic and physical therapy practice, agreed 
to pay $1.2 million to resolve civil FCA allegations in the Southern District of Alabama that it 
billed  Medicare  and TRICARE for physical therapy services performed by unauthorized 
providers, including  athletic trainers and an exercise physiologist, who are  prohibited from 
billing these programs.   The government also alleged that the practices direct compensation 
arrangements with its shareholder physicians violated the Stark Law because the compensation 
paid to its shareholder physicians directly or indirectly related to the volume of each shareholder 
physicians referrals for  designated health  services such as physical therapy, X-rays,  and MRIs.  
 
Physician and Other Practitioners  
 
In October 2018, a doctor was sentenced in the District of Oregon to six months  probation for  
illegally purchasing foreign-sourced Botox and Juvaderm on the internet and administering both 
to patients in her home.  According to court documents, beginning in 2008, the defendant 
provided medical services from her home as a supplement to her full-time position with an 
outside medical practice.  The doctor would purchase Botox and Juvaderm from websites that 
were manufactured for distribution in foreign countries, but not approved for use in the  United 
States.  She would then administer Botox and Juvaderm to clients from her home office.  
 
In November 2018, a doctor was sentenced to two years probation in the Eastern District of 
Missouri, after previously  pleading  guilty to obstructing an investigation by  the FBI regarding  
whether he billed the Medicare program and private insurers for face-to-face  office visits 
performed on dates when he was actually traveling outside of Missouri, and sometimes traveling  
outside of the United States.   The Court further imposed a fine of $45,000 and restitution in favor 
of Medicare and several private insurance companies.   According to his plea agreement, the 
defendant created medical records using a template which falsely  recited patients symptoms and 
histories, and sometimes recorded vital signs (e.g.,  pulse rates) that did not  change between 
patients visits.   Moreover, from time to time, the defendant traveled to various destinations, 
including Punta Cana in the Dominican Republic and Florida.   For these timeframes when the 
defendant was out of town, he created office notes with false entries reflecting that he had seen 
patients in his office, using his electronic signature.   These medical records did not discuss the  
role of the other  employees in his office during the out-of-town visits, or his absence  from the  
office on the dates of service.   The  government  served the defendants office with a subpoena  
requesting medical records regarding his office visits in late 2016.  In response to the subpoena, 
the defendant produced medical records to the FBI in which he had made false entries about 
face-to-face office visits, in an effort to impede, obstruct, and influence the FBIs billing  
investigation.  
 
In December  2018,  Coordinated Health Holding  Company, LLC together  with its direct and 
indirect subsidiaries, including but not limited to CHS Professional Practice, P.C.  and CH 
 
33  
  Hospital of Allentown, LLC (collectively, Coordinated Health) and its owner  in Pennsylvania  
agreed to pay $12.5 million to resolve civil FCA allegations.  The  government alleged  that (1) 
from January 2007 through May 2014, Coordinated Health submitted claims to federal health 
care  programs  for orthopedic surgical procedures that were improperly unbundled using  
Modifier 59; and (2) from April 2009 through December 2009, the owner  submitted claims to 
federal health care  programs for orthopedic surgical procedures that were  improperly unbundled 
using Modifier 59.  As part of the resolution, Coordinated Health also entered into a  five-year 
CIA  with HHS-OIG.  
 
In April 2019, National Spine and Pain Centers (NSPC), and Physical Medicine Associates 
(PMA), with pain management clinics in northern Virginia, Glen Allen and Fredericksburg, 
agreed to pay approximately $3.3 million to settle civil FCA allegations.  The government 
alleged that NSPC and PMA billed Medicare  and other federal health care  providers for medical 
services performed by physician assistants and nurse practitioners as if physicians had provided 
the services, submitted claims for urine drug tests in violation of the Stark Law and/or the  Anti-
Kickback Statute, and ordered medically unnecessary urine drug tests.  
 
(SF) In June 2019, a federal jury found a physician and a marketer  guilty of a total of thirteen 
and nine counts of conspiracy to commit health care  fraud and health care  fraud respectively.  
The charges stem from a  fraud scheme in which the physician billed Medicare for clinic services 
that patients did not need or did not receive and referred Medicare beneficiaries for home health, 
hospice, and DME services  that were unnecessary  or were never rendered.  The defendants were  
charged with two co-conspirators, an office manager and co-owners of a home health agency. 
Later in June, the co-conspirators were sentenced to 120 and 78 months in prison.  Together, the 
defendants submitted and caused to be submitted claims of approximately $33 million, of which 
Medicare paid approximately $22 million.  
 
In July 2019, a doctor pleaded guilty in the District of Alaska to one count of conspiracy to 
commit controlled substance fraud and one count of health care  fraud.   The defendant knowingly  
and intentionally distributed controlled substances outside the usual course  of professional 
practice  and without a legitimate medical purpose.   According to court documents, from May  
2015 to March 2018, the defendant issued 465 prescriptions of meperidine  to 30 different 
recipients, totaling 32,109 meperidine pills, knowing that the recipients did not truly need the  
medication for a legitimate medical purpose.   The  investigation revealed that the defendant 
issued the meperidine prescriptions as part of  a conspiracy in which the recipients filled the  
meperidine prescriptions and, then, distributed the meperidine to the defendant.   In exchange for 
the recipients diverting the meperidine to the defendant, he provided prescriptions for controlled 
substances, including  fentanyl and oxycodone, to the recipients.   The investigation further 
revealed that the defendant failed to make and preserve accurate records regarding  approximately  
790 prescriptions for  controlled substances, and failed to keep any medical records whatsoever 
regarding five patients to whom he wrote prescriptions for controlled substances.   In a scheme to 
obtain money from Medicaid, the defendant caused claims to be submitted to Medicaid regarding  
these 790 prescriptions, resulting in Medicaid paying $3,286  to his medical practice.   Further, 
Medicaid paid $3,601  to pharmacies for these 790 controlled substance prescriptions.   
 
   
 
34  
  Prescription Drugs  and Opioids  
 
In December  2018, a  physician assistant in California was found guilty of conducting a scheme 
to unlawfully distribute prescription drugs.   The  individual intentionally prescribed drugs to five 
different patients, knowing that the prescriptions were outside the usual course  of professional 
practice  and without a legitimate medical purpose.  On two occasions, a patient asked the 
individual  to double his prescriptions for powerful opioids so that the patient could sell the drugs.  
The individual  doubled the prescriptions and discussed with the patient how to do it in a way to 
avoid scrutiny by pharmacies or law  enforcement.  The individual  wrote false medical records of  
those visits  to cover up what he was doing  and falsified records of  other patients, detailing exams  
and reviews of  lab work  that never took place.  A jury  found  the individual  guilty of 39 counts of 
unlawful distribution of controlled substances, and he was sentenced to 10 years in prison.  
 
In March 2019, a marketer was sentenced to 51 months imprisonment for creating fraudulent 
prescriptions for oxycodone using  a physicians stolen prescription template and then facilitating  
the sale of the oxycodone pills that resulted in the diversion of at least 10,000 30 mg pills of 
oxycodone on the black market in Orleans and Jefferson Parishes.    
 
(SF) In March 2019, an individual was sentenced to 51 months in prison for conspiracy to obtain 
possession of oxycodone by fraud and to distribute oxycodone. The defendant created fraudulent 
prescriptions for oxycodone using  a physicians stolen prescription template and facilitated the  
sale of the pills on the black market. The defendants cooperation lead to nine guilty pleas of co-
conspirators.  
 
In March 2019, a pharmacy marketer pled guilty in the Southern District of Texas in connection 
with her role in a multi-million dollar illegal kickback conspiracy involving a pharmacy in the  
Rio Grande Valley  and doctors throughout Texas.  The defendant admitted that as part of her 
role as a purported marketer, she recruited physicians to write prescriptions for expensive 
compound drugs to be filled by Pharmacy A  and for which the pharmacy would bill federal 
health care programs.  During an approximately two-year period starting in late 2014, the owner 
of Pharmacy A paid the  defendant approximately  $7.5 million in return for compound drug  
prescriptions written by  physicians the defendant recruited.  In turn, the defendant paid a  cut of 
the payments from Pharmacy A to the prescribing physicians.  
 
In April 2019, a doctor in Michigan pleaded guilty to conspiracy to distribute and possess with 
intent to distribute controlled substances and was sentenced to 11 years and three  months in 
prison.  The doctor and his co-conspirators engaged in an $18 million health care  fraud scheme 
involving the illegal distribution of prescription drugs.  The doctor wrote  medically unnecessary  
and highly addictive controlled substance prescriptions  (e.g., Hydrocodone-Acetaminophen, 
Oxycodone)  in return for cash payments.  The  doctor prescribed more than 2,700,000 dosage  
units of Schedule II, III  and IV controlled substances during the course of the conspiracy.  The  
doctor  used patient recruiters to bring  fake patients to his office; recruiters paid cash to 
acquaintances to act as patients and paid the doctor  cash at each office visit for the prescriptions 
provided.  After a cursory  examination or no examination at all, the doctor  always prescribed the 
requested controlled substances.  The patient recruiters ultimately took control of the controlled 
substances prescribed by  the doctor  for illegal distribution in Michigan and elsewhere.  Six  
 
35  
  defendants involved in the scheme were previously  sentenced to a combined eight years and four  
months in prison.  
 
(SF) In June 2019, a physician was sentenced to 60 months imprisonment for writing medically  
unnecessary oxycodone  prescriptions in exchange for cash. The defendant prescribed more than 
693,000 mg. of oxycodone in a 19-month period from the homes of his two co-defendants and 
other patient recruiters, who provided lists of patients and cash in exchange for receiving opioid 
prescriptions.  
 
(SF) In June 2019, the owner of  a pain clinic and a pharmacy in South Florida, was sentenced to 
78 months in prison for his role in a $2.2 million scheme involving medically unnecessary  
physician visits and prescriptions. The defendant allowed physicians employed at his clinic to 
continue prescribing  at inappropriately high levels, even after learning of a  physician-patient 
sexual relationship.  
 
(SF) In August 2019, a doctor was sentenced to 48 months of imprisonment, followed by  five  
years of supervised release, and was ordered to pay  $4.3 million in restitution. The defendant 
plead guilty in November 2017 to one count of conspiracy to distribute controlled substances 
charged in an information. Medicare was billed for physician office services, tests that were  
never performed, and durable medical equipment that was not medically necessary, resulting in 
$8.6 million worth of false claims. The defendants co-conspirators were convicted at trial.  
 
Private Health Insurance  Fraud  
In May 2019, in the Eastern District of Louisiana, a corporation and two individuals, who 
operated a multiple employer welfare  arrangement (MEWA), pleaded guilty  to making and 
conspiring to make false statements in connection with the operation of the MEWA; money  
laundering conspiracy; and conspiracy to defraud the United States causing losses which may  
exceed $48 million.   The scheme involved defrauding participants in the enrollment and payment 
for health care  coverage  by falsely representing to employers and employees that their costs  
would be greatly reduced by a loan arrangement used to fund benefits.   Defendants admitted that 
they never obtained a loan or health insurance policy  and the contributions, loan and insurance  
policy were merely paper transactions to improperly  reduce participants taxable wages and 
employers  FICA payments without their  knowledge of the impropriety.   Participants were  also 
exposed to adverse financial consequences of unpaid taxes, fees, and penalties; reduced Social 
Security payments; and ineligibility for certain government programs, such as unemployment 
benefits.   Defendants agreed to forfeit approximately $6.3 million and pay  restitution for the loss 
which may total more than $48 million.   An accountant previously pleaded guilty to conspiracy  
to make false statements in the marketing of the health care arrangement.  
 
Psychiatric and Psychological Testing and Services  
 
In March 2019, a psychiatrist and his medical practice agreed to pay more than $3.3 million to 
resolve civil FCA claims in the District of Connecticut.  The government alleged that the 
psychiatrist submitted claims to Medicare for multiple units of urine drug screening tests, when 
they knew or should have known that only one unit of service could be billed per patient 
 
36  
  encounter.   By coding their claims using multiple units, instead of a single unit, the government 
alleged that the psychiatrist submitted false claims to the Medicare program and received 
payments that he and his  practice  were not entitled to receive.  In addition, the government 
alleged that the psychiatrist submitted claims to Medicaid  for  alcohol tests conducted on patient 
urine samples that  they know or should have known were a component of the urine drug  
screening test for which the psychiatrist and his practice were  already being paid by Medicare.  .  
Finally, the  government alleged that the psychiatrist defrauded the Connecticut Medicaid 
program by submitting claims for definitive urine  drug tests (also known as quantitative or 
confirmation tests) that were not actually performed, and by improperly  submitting claims to 
Medicaid for specimen validity testing of urine samples.  
 
(SF) In May  2019, a clinic owner was sentenced to 360 months in prison for her involvement in 
a fraudulent Medicaid billing scheme. The defendant and her co-conspirator stole identities of 
licensed counselors and Medicaid recipients to submit false claims for psychotherapy services 
that were never provided. The defendant carried out this scheme while awaiting sentencing on a  
prior health care  fraud conviction.  
 
In August 2019, a psychologist agreed to plead guilty in the  Northern District of Alabama to 
defrauding  the Alabama Medicaid Agency by filing false claims for  counseling services that 
were not provided.  An investigation was initiated by the Program Integrity Division of the  
Alabama Medicaid Agency  after an audit showed that the defendants billings to the Medicaid 
Agency had increased from $99,000 in 2015 to more than $2.2 million in 2017.  The Program 
Integrity  Division referred its findings to the  Alabama Attorney Generals Medicaid Fraud 
Control Unit after the defendant submitted falsified records during the Program Integrity audit.  
A subsequent investigation was conducted by the Medicaid Fraud Control Unit and the Office of 
Investigations of HHS-OIG.  This investigation determined that the majority  of claims submitted 
by the defendants practice during 2016 through 2018 were  fraudulent and that defendant 
submitted and directed her employees to submit claims for counseling services that never 
occurred, and in some instances for individualsincluding family members and friends of  
employeeswho never received services at all.   
 
Transportation  
 
In November  2018,  the owner of Tonieann EMS and Rosenberg EMS  in Texas  was convicted of 
charges resulting  from his involvement in a  Medicare fraud scheme.  The individual  admitted to 
submitting false claims to Medicare for  ambulance transport services that were not provided and 
not medically necessary.  The  individual  submitted ambulance  claims for  Medicare beneficiaries 
transported by vans, not  ambulances, to routine psychotherapy  appointments and for at least one 
other beneficiary who did not require ambulance transportation.  The  individual  also instructed a  
licensed emergency medical technician to create fake ambulance transport records,  which 
included fake vital signs, patient narratives,  and transport mileage.  Additionally, more than 
2,000 fake ambulance transport records contained the name of another technician  who never  
worked for him.  The individual  pleaded guilty to conspiracy to commit health care  fraud, was 
sentenced to four years in prison,  and ordered to pay $1.09 million in restitution.  
 
37  
  In January  2019, Fort Bend entered into a settlement agreement with HHS-OIG  wherein Fort 
Bend agreed to pay $4.5  million  to resolve allegations that Fort Bend knowingly presented to 
Medicare, TriCare, the Department of Veterans Affairs/Champus, and the Railroad Retirement 
Board claims for items or services that Fort Bend knew or should have known were not provided 
as claimed and were false or fraudulent.  From October 2009 to January 2016, Fort Bend 
submitted claims for ambulance transportation services provided to beneficiaries, which were  
improper because  it failed to obtain necessary beneficiary  authorization for the transports.  Fort 
Bend self-disclosed this conduct pursuant to HHS-OIGs Self-Disclosure Protocol.  
 
38  
  DEPARTMENT OF HEALTH AND  HUMAN SERVICES  
 
 
 
Office of Inspector General 
 
The HHS-OIG mission is to protect the integrity of HHS programs and the  health and welfare of 
the people they serve.  As established by the Inspector General Act of 1978, HHS-OIG is an 
independent and objective organization that fights fraud, waste, and abuse and promotes 
efficiency, economy, and effectiveness in HHS programs and operations.  
 
HHS-OIGs vision is to drive positive change in HHS programs and in the lives of the people 
they serve.  HHS-OIG pursues this vision through independent oversight of HHS programs and 
operations and by providing HHS and Congress with objective, reliable information for use in 
policymaking.  HHS-OIG assesses the Departments performance, administrative operations, and 
financial stewardship.  HHS-OIG also evaluates risks to HHS programs and recommends 
recovery of misspent funds and program improvements.  HHS-OIGs law enforcement 
component investigates fraud and abuse against HHS programs and holds wrongdoers 
accountable  for their  actions.  In addition to safeguarding  Federal funds, HHS-OIG takes 
oversight and enforcement action to promote the safety and quality of services delivered by HHS  
programs.   
 
As the leading oversight agency specializing in health care  fraud, HHS-OIG employs a multi-
disciplinary  approach and uses data-driven decision-making to produce outcome-focused results.   
HHS-OIG strives to be  a  flexible and efficient organization that adapts to the needs of the time.  
HHS-OIG deploys resources as optimally  as possible to keep pace with the  fast-changing nature  
of health care programs and the corresponding  changes in fraud, waste, and abuse.  To do so, 
HHS-OIG leverages sophisticated data analysis to identify and target potential fraud schemes 
and areas of program waste and abuse  and to provide quality, timely, and actionable data to 
frontline staff, as well as to its Government and, as appropriate, private sector partners.  HHS-
OIG combines data analysis, field intelligence, and state-of-the-art investigative techniques to 
combat fraud and abuse.  HHS-OIG also continues to modernize its infrastructure capacity to 
deliver high quality, timely, actionable data to produce these  results.  HHS-OIGs Chief Data 
Officer, the first in the Inspector General community,  has focused the organization on 
developing data-driven key performance indicators and helped achieve  results in priority  areas 
and measures that further the goals of HHS-OIGs work.  
 
With respect to HCFAC funds, HHS-OIG focuses on combating Medicare  and Medicaid fraud, 
waste, and abuse, including in priority areas, such as protecting beneficiaries from prescription 
drug  abuse, including opioid abuse; enhancing program integrity in non-institutional care  
settings, such as home health and hospice; and strengthening Medicaid program integrity, 
including working with State partners to enhance the effectiveness of the Medicaid Fraud 
Control Units (MFCUs).  HHS-OIG is also strengthening oversight of managed care in the  
Medicare Advantage, Medicaid managed care programs, new value-based models, and 
technology  and cybersecurity.   
 
 
39  
  A certain portion of the funds appropriated under HIPAA are, by law, set aside for Medicare  and 
Medicaid activities of HHS-OIG.  In FY 2019, the Secretary and the Attorney  General jointly  
allotted $195.8 million to HHS-OIG after accounting for a sequester reduction of $12.9  
million.   HHS-OIG was allocated an additional $14.6 million in HCFAC mandatory funds from 
the Secretary.  Additionally, Congress appropriated $87.2 million in discretionary  funding for  
HHS-OIG HCFAC activities.  
 
Results  
 
HHS-OIG delivers financial savings to taxpayers while protecting beneficiaries and safeguarding  
programs from mismanagement and fraud.   
 
In FY 2019, HHS-OIG investigations resulted in 747 criminal actions against individuals or 
entities that engaged in crimes related to Medicare and Medicaid; and 684 civil actions, which 
include false claims and unjust-enrichment lawsuits filed in federal district court, CMP  
settlements, and administrative recoveries related to provider self-disclosure matters.  In 
addition, during FY 2019, HHS-OIG excluded a total of 2,640 individuals and entities, the 
details of which are below.  
 
HHS-OIGs investigations, audits, and evaluations frequently reveal vulnerabilities, misspent 
funds, 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 
may recommend legislative proposals or other  corrective actions that, when enacted or 
implemented, close loopholes and reduce improper payments or conduct.  The savings from 
these efforts can be substantial.  For FY 2019, 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 $27.5  
billion$27.0 billion in Medicare savings and $495 million in savings to the federal share of 
Medicaid.  HHS-OIGs  expected recoveries from its involvement in health care  audits and 
investigations totaled over $5.7  billion, which resulted in a ROI of about $13 to $1.12  
 
Additional information about savings achieved through such policy  and procedural changes may  
be found in the HHS-OIG fall Semiannual Report to Congress, online at https://oig.hhs.gov.    
 
OIG  Priority Outcomes  
 
With a $1.2 trillion portfolio to oversee, HHS-OIG sets priority outcomes to achieve the greatest 
impact across HHSs diverse programs.  In the FY 2019 Presidents Budget, HHS-OIG 
                                                 
12  This  ROI  uses  a 3-year  average of  expected  recoveries, fines,  penalties, and  stolen  and  misspent funds  relating  to  
HHS-OIGs  health  care oversight and  is  compared  with  HHS-OIGs  annual obligations.   This  ROI  differs  from  the 
HCFAC  ROI,  which  uses actual dollars  returned  to  the government.  HHS-OIG expects  the ROI  to  fluctuate over  
time due to  factors  including  the type and  size of  settlements  and  identified  disallowances,  complexity  of  schemes 
that are the subject of  HHS-OIG scrutiny  in  a given  year,  and  heightened  focus  on  high-value but lower-dollar  work  
addressing  patient safety  and  quality  of  care.  
 
40  
  introduced its key performance indicators that align with HHS-OIGs priority outcomes.  HHS-
OIGs current priority outcome areas were selected based on  past and ongoing work, top 
challenges facing HHS as identified annually by  HHS-OIG, ability to collect data, and ability to 
influence outcomes.  HHS-OIGs priority outcome areas fall into two broad categories:  
 
1.   Minimize  risks to beneficiaries  
   Protect beneficiaries from prescription drug abuse, including opioids  
   Ensure health and safety  of children served by HHS grants13  
 
2.   Safeguard programs from improper payments and fraud  
   Promote patient safety and accuracy of payment in home and community settings  
   Strengthen Medicaid protections against fraud and abuse  
 
Enforcement  
 
HHS-OIG works with its law enforcement partners to conduct criminal and civil investigations 
involving the Medicare  and Medicaid programs and participates in the settlement of FCA cases,  
including through the negotiation of  Corporate Integrity Agreements  (CIAs).  HHS-OIG works 
with the MFCUs to address fraud and abuse in the  Medicaid program.   In addition to 
investigating criminal and civil matters, HHS-OIG imposes civil monetary  penalties (CMPs)  for  
a variety of health care related offenses.  
 
Combatting the Opioid Epidemic  
Fighting the opioid crisis and protecting beneficiaries from prescription drug abuse is among  
HHS-OIGs top priorities.  Opioids related matters are a substantial portion of HHS-OIGs 
investigations.   
 
In April 2019, HHS-OIG and its Federal and State law enforcement partners led the first ARPO 
Strike Force Takedown.  The takedown resulted in enforcement actions involving 60 charged 
defendants across 11 Federal districts, including 31 doctors, 7 pharmacists, 8 nurse practitioners, 
and 7 other licensed medical professionals, for their alleged participation in the illegal 
prescribing and distributing of opioids and other dangerous narcotics and for health care fraud 
schemes.  Since June 2018, HHS-OIG has excluded more than 650 providers based on conduct 
related to opioid diversion and abuse.  
 
HHS-OIG also provides critical support in the establishment and ongoing  work of the new 
Opioid Fraud and Abuse  Detection Units established by the Attorney General in collaboration 
with HHS-OIG, FBI, and DEA.   These units focus specifically on opioid-related health care  
fraud using data to identify  and prosecute individuals, such as prescribers of opioids, and entities, 
such as clinics, pill mills, and pharmacies, which are contributing to the opioid epidemic.   HHS-
OIG has assigned Special Agents to support 12 prosecutors identified by DOJ to focus solely on 
investigating and prosecuting opioid-related health care  fraud cases.14  
                                                 
13  HHS-OIGs  work  in  this  area  is  outside the scope of  HCFAC  work.  
14  As  of  October  2018,  OIG has assigned  Special Agents  to  support 13  prosecutors  with  the newest addition  of  the 
Appalachian  Regional Prescription  Opioid  Strike Force.  
 
41  
  Strike Force Operations  
In FY 2019, HHS-OIG continued to staff and support Strike Force operations working 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 and 
Tampa, Florida; Dallas and Houston, Texas; Los Angeles, California; Detroit, Michigan; 
Brooklyn, New York; Baton Rouge and New Orleans, Louisiana; Chicago, Illinois; and Newark, 
New Jersey/Philadelphia, Pennsylvania; along with a Corporate Strike Force in Washington, 
D.C.  HHS-OIG supports Strike Force operations by providing investigative, analytic, and 
forensic resources.   
 
Among other fraudulent conduct, 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 Government health care programs.  For example, in 
April 2019, HHS-OIG and its law enforcement partners announced their efforts in dismantling  
one of the largest health care  fraud schemes ever investigated, in terms of amount billed to 
Medicare.   Twenty-four  defendants in 17 Federal districts were charged for allegedly  
participating in the scheme, in which fraudsters submitted over $1.7 billion in Medicare  claims  
and were paid $900 million.   In the alleged scheme, medical professionals working  with 
fraudulent telemedicine companies received illegal kickbacks and bribes from medical 
equipment companies.   In exchange, the medical equipment companies obtained prescriptions 
for medically unnecessary  orthotic braces and used them to fraudulently bill Medicare.   The  
continued support of Strike Force operations is a top priority for HHS-OIG.  
 
Program Exclusions  
One important mechanism for safeguarding program beneficiaries and helping ensure the quality  
of care provided to them is through exclusion of providers and suppliers who have engaged in 
crimes related to Medicare or Medicaid, patient abuse or neglect, financial misconduct, 
controlled substances, or as a result of license revocation.   This list of conduct is not  exhaustive  
but identifies the most prevalent causes underlying HHS-OIGs exclusions of individuals or 
entities.   The  effect of an HHS-OIG exclusion is  that no Federal health care program payment may  
be made for any items or services furnished (1) by an excluded person or (2) at the  medical direction 
or on the prescription of an excluded person.   HHS-OIG completed the deployment of a new 
service for Medicaid Fraud Control Units to report convictions through a  central web based 
portal for exclusion.  HHS-OIG is also responsible for reinstating providers who apply  and have  
met the requirements of their exclusions.  
 
In FY 2019, HHS-OIG excluded a total of 2,640 individuals and entities.  In addition to those  
mentioned in the Program Accomplishments section above, exclusion actions by HHS-OIG 
included:  
 
   In November 2018, the owner of  a pain management clinic in Maryland was excluded for 
a minimum of 50 years for conspiracy to distribute controlled substances, violation of the 
drug kingpin statute, and conspiracy to keep a  common nuisance.  The owner and his co-
conspirators ran a pill mill, dispensing controlled substances without a legitimate medical 
purpose.  From about January 2013 to about April  2017, the owner was responsible for 
issuing prescriptions signed by  a co-conspirator for oxycodone, morphine, and Tramadol 
 
42  
  that were not medically necessary.  Patients would pay the owner cash to receive these  
prescriptions.  The owner was sentenced to 20 years in prison based on his conviction.  
 
   In December 2018, a certified nursing  assistant in Kansas was excluded for a minimum 
of 20  years based for attempted aggravated criminal sodomy and mistreatment of a  
dependent adult.  While working in a skilled nursing home, the individual sexually  
abused patients in the facility.  The individual was sentenced to seven years and seven 
months in prison.  
 
   In June 2019, an employee of several testing facilities in Texas was excluded for a  
minimum period of 50 years for conspiracy to commit health care fraud and conspiracy to 
commit money laundering.  The individual conspired with others to defraud Medicare  
and Medicaid by submitting claims for services that had not been performed or were not 
medically  necessary.  As part of the scheme, the individual rented offices for testing  
facilities but kept the actual spaces empty.  No patients were seen, and no testing was 
performed at the offices.  To further deceive Medicare  and Medicaid, the individual hired 
people to pose as patients to sit in the empty offices and answer the phones as though the 
facility was open and operational.  The court sentenced the individual to 20 years in 
prison and ordered her to pay  approximately $15.2 million in restitution.  
 
   In July 2019, a pediatrician in Pennsylvania  was excluded for a minimum period of 75 
years for indecent assault, corruption of minors, endangering the welfare of children, 
unlawful contact with minors and aggravated indecent assault.  The pediatrician sexually  
assaulted 31 minor victims, most of them patients.  The court sentenced the pediatrician 
to serve 79 to 158 years in prison.  The Pennsylvania State Board of Medicine also 
suspended the pediatricians license to practice  as a medical doctor.  
 
Civil Monetary Penalties  
HHS-OIG has the authority to seek CMPs, assessments, and exclusion under the Civil Monetary  
Penalties Law (CMPL) against an individual or  entity based on a  wide variety of prohibited 
conduct.  OIG brings cases under the CMPL in order to emphasize HHS-OIG  guidance, enhance  
HHS-OIG work such as audits and evaluations, fill enforcement gaps, and level the playing field 
for compliant providers.  HHS-OIG uses these authorities in three common ways:  false claims 
and kickback affirmative enforcement, Emergency  Medical Treatment and  Labor Act 
(EMTALA)  enforcement, and the Self-Disclosure  Protocol.  In FY 2019, HHS-OIG concluded 
cases involving more than $68.3 million in CMPs and assessments.  
 
Affirmative Litigation and Exclusion  
HHS-OIG may seek a CMP  or exclusion against individuals or entities that present claims to 
Federal health care programs that the individual or entity knows or should know are  for items or 
services that were not provided as claimed or  were false or  fraudulent.  HHS-OIG may also seek 
a CMP or exclusion against individuals or entities who knowingly and willfully violate the Anti-
Kickback Statute by: (1)  offering or paying remuneration, directly or indirectly, to induce  
referrals of Federal health care program business; or (2) soliciting  and receiving remuneration, 
directly or indirectly, in return for referrals of Federal health care program business.  In FY 2019, 
HHS-OIG recovered more than $11.5  million in false claims and kickback affirmative  
 
43  
  enforcement actions.  HHS-OIG also excluded 31 individuals and entities from participation in 
Federal health care programs based on conduct at issues in these health care fraud cases.   
 
Affirmative litigation examples include:  
 
   In October 2018, the Miami Urogynecology Center in South Miami, Florida, entered into 
about a $173,768 settlement agreement with HHS-OIG to resolve its liability under the  
CMPL  for submitting claims to Medicare for items or services that it knew or should 
have known were not provided as claimed and were false or  fraudulent.  The center 
allegedly submitted claims for (1) diagnostic electromyography services using CPT code  
51784 when therapeutic  services, not diagnostic services, had been provided; (2) pelvic  
floor physical therapy services using CPT codes 97032 and 97110 when those services 
were provided by an unqualified individual; and (3) evaluation and management services 
using CPT codes 99213 and 99214 that were billed in conjunction with pelvic floor 
therapy procedures when no separate and identifiable services were provided.  
 
   In December 2018, a doctor and his practice entity, the Center for Pain and Rehabilitation 
Medicine, in San Jose, California, agreed to pay $60,406 to resolve HHS-OIGs 
contentions that the doctor submitted claims for Healthcare Common Procedure Coding  
System codes where he did not perform the pathology consultations represented by the 
code (i.e., no consultation request had been made, no written narrative report by a  
consultant pathologist was produced, and no exercise of medical judgment by a  
consultant pathologist was required).   
 
   In June 2019, Ethos Laboratory in Kentucky  entered into about a $1.3 million CMPL  
settlement agreement with HHS-OIG.  The settlement agreement resolves allegations that 
Ethos submitted claims to Medicare for specimen validity testing, a non-covered service.  
 
   In June 2019, Midland Medical, Inc., and its subsidiary, Midland Medical-Broward, Inc., 
(collectively, "Midland) entered into a $102,204 CMPL settlement agreement with 
HHS-OIG in Florida.  The settlement agreement resolves allegations that Midland 
received remuneration from laboratory companies Health Diagnostic Laboratory, Inc. 
(HDL) and Singulex, Inc., in the form of "process and handling" payments related to the  
collection of blood.  Midland allegedly received the remuneration from HDL  and 
Singulex in exchange for employees referring patients for laboratory testing services to 
HDL and Singulex, for which the Medicare program paid.  
 
Patient Dumping  
HHS-OIG may  also seek a CMP against any hospital that negligently violates its obligations 
under EMTALA, known as the patient dumping  statute, which requires a  hospital to stabilize  
and treat, or appropriately  transfer if the hospital lacks the specialized capabilities necessary to 
stabilize the person, anyone who presents to the ED with an emergency medical condition.  In 
FY 2019, HHS-OIG recovered more than $380,000 in cases under the EMTALA statute.   
 
   
 
44  
  Patient dumping examples include:  
 
   In December  2018, Hartford Hospital in Hartford, Connecticut, entered into a $50,000 
settlement agreement with HHS-OIG to resolve allegations that it violated EMTALA.  
The hospital failed to provide an appropriate medical screening examination to a 21-year-
old woman who was 23.5 weeks pregnant who presented to Hartfords ED with 
symptoms of preeclampsia, an emergency medical condition.                 
 
   In December 2018, Mobile Infirmary Medical Center in Mobile, Alabama, agreed to pay  
$80,000 to resolve its potential liability under EMTALA.  Mobile failed to provide an 
appropriate medical screening  examination and stabilizing treatment for two patients.  In 
the first instance, a 24-year old male presented to Mobiles ED by  ambulance, 
complaining of weakness and altered mental status.  The patient was purportedly  
noncompliant with staff directions, which led to him leaving the ED, where he collapsed 
on the way out and a security officer wheeled him off hospital property.  Approximately  
four hours later, the patient was found cold and unresponsive where the security officer 
had left him.  The patient was then taken to another hospital where he later died.  In the  
second instance, a 35-year old male arrived at Mobiles ED complaining of shortness of 
breath and chest pain.  After allegedly becoming  verbally abusive to staff, the patient was 
escorted out of the  ED.  Shortly thereafter, he was brought back to the ED, reportedly  
having suffered a seizure.  Mobile staff refused to help the patient out of the vehicle, and 
the patient and driver were asked to leave the property.  The patient was then driven to 
another hospital and pronounced dead within 20 minutes of his arrival.   
 
   In May 2019, Park Royal Hospital in Florida entered into a $52,414 settlement agreement 
with HHS-OIG to resolve allegations that Park Royal violated the EMTALA.  The  
hospital, which has specialized psychiatric capabilities, failed to accept a transfer of a  
patient with an unstabilized emergency medical condition from another hospitals ED.  
The patient was presented to the ED following  a suicide attempt and was diagnosed with 
lacerations to the wrist and an emergency psychiatric condition.  Park Royal refused to 
accept the transfer because the patient's insurance  was out of network, despite having  the 
specialized capabilities to stabilize the patient and the capacity  at the time of transfer.   
 
   In June 2019, Transylvania Regional Hospital (TRH), MH Transylvania Regional 
Hospital, LLLP, and Transylvania Community Hospital, Inc., entered into a $25,000  
settlement agreement with HHS-OIG in North Carolina to resolve allegations that TRH 
violated the EMTALA.  The patient presented to TRH's ED complaining of abdominal 
pain and pain radiating bilaterally to his lower extremities and had an elevated blood 
pressure  and respiratory rate.  TRH discharged the patient without providing an adequate 
medical screening examination or stabilizing treatment.  The patient returned to TRH's 
ED later the same day via ambulance, complaining of paralysis of the lower extremities, 
leg pain, and leg swelling.  TRH ultimately transferred the patient to another hospital.   
 
Self-Disclosure   
HHS-OIG maintains the  Self-Disclosure Protocol (Protocol) whereby providers may voluntarily  
identify, disclose, and resolve instances of potential fraud involving  Federal health care programs 
 
45  
  for resolution under the CMPL.  The Protocol incentivizes providers to detect and prevent fraud 
internally  and to bring potential fraud to HHS-OIGs attention.  Under the  Protocol, HHS-OIG 
provides these entities and individuals with speedy  resolutions, reduced CMPs, and other  
benefits as compared to affirmative cases brought by HHS-OIG or  DOJ for similar conduct.  In 
FY 2019, HHS-OIG collected $61.3  million under the Protocol.   
 
Self-disclosure examples include:  
 
   In December 2018, after self-disclosing  conduct to HHS-OIG, the Cancer Treatment 
Centers of America, headquartered in Florida, agreed to pay more than $8.2 million to 
resolve its alleged liability  under the CMPL.  The  organization paid improper 
remuneration in the form of Treatment Rate Bonuses to certain physicians.   
 
   In December 2018, after self-disclosing  conduct to HHS-OIG, WellDyneRx, LLC, and 
HillCour, Inc., in Florida, both mail order pharmacies and pharmacy benefit managers, 
agreed to pay  more than $7 million to resolve potential anti-kickback liability under a  
prior arrangement when WellDyneRx was privately-owned and controlled by WellDyne, 
Inc. (now known as HillCour, Inc).  The disclosing parties and Express Meds Rx, LLC, 
d/b/a Reliance  Meds had a set of improper arrangements, addenda, and amendments to 
provide a variety of pharmacy services to Prestige Health Choice, a  Florida managed care  
plan.  The pharmacies paid remuneration to Reliance under these arrangements, including  
a percentage of compensation received from Prestige, although Reliance did not perform 
some or all of the services assigned under the  arrangements.   
 
   In April 2019, after self-disclosing conduct to HHS-OIG, Great River Health System, Inc. 
(GRHS), Great River Foundation (GRF), Riverview System, Inc., (RSI) Great River  
Medical Center  (GRMC), and Great River Physicians and Clinics, Inc., (GRPC) agreed to 
pay over $3.0 million0 for allegedly violating the  CMPL including provisions applicable 
to kickbacks in Iowa.  GRHS,  GRF, RSI, and GRPC paid remuneration to a physician in 
the form of excessive compensation in exchange  for referrals.  In addition, GRHS, 
GRMC, and GRPC submitted or caused to be submitted false claims to Medicare, 
Medicaid, and TRICARE, for medically unnecessary and improperly  coded hyperbaric  
oxygen therapy  and wound care services provided by the physician.  
 
Corporate Integrity Agreements (CIA)  and Enforcement  
Many health care providers elect to settle their cases before litigation.  HHS-OIG provides 
information on its website that identifies how it evaluates future  risk to Federal health care  
programs from providers who settle health care fraud cases (called the Fraud Risk Indicator).  As 
part of the settlements, providers often agree to enter into CIAs with HHS-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.  HHS-OIG monitors providers compliance with these  
agreements.  HHS-OIG may impose penalties on entities that fail to comply  with the  
requirements of their CIAs, as shown in the examples below:  
 
46  
   
   In November 2018, HHS-OIG discovered while onsite that OSD Management, LLC, 
located in Texas, failed to screen its Covered Persons as required by the  CIA.  HHS-OIG 
issued a Demand Letter for Stipulated Penalties, and OSD paid Stipulated Penalties of  
$35,000 for failure to screen its covered Persons in accordance with the requirements of 
the CIA.  In October 2014, OSD, its owner, the One Step Independent  Diagnostic Testing  
Facilities (IDTFs), and the One Step holding  companies agreed to pay $1.2 million and 
entered into a CIA to resolve One Steps alleged FCA liability for  entering into personal 
services arrangements with physicians and chiropractors in the form of medical 
directorships and consulting agreements as incentives to induce patient referrals to the 
IDTFs.  Additionally, the owner allegedly paid the physicians/chiropractors well above  
fair market value to perform quality reviews for images produced at the  IDTFs.   
 
   In November 2018, HHS-OIG excluded Tri-County  Ambulance in Indiana, for a period 
of five years based on a  material breach of its CIA.  HHS-OIG issued a letter demanding  
stipulated penalties of $25,000 based on Tri-County's failure to submit its Annual Report.  
After Tri-County failed to pay the stipulated penalties and cure the breach or request a 
hearing by an HHS Administrative  Law Judge, HHS-OIG issued a notice  of material 
breach and intent to exclude in January 2019.  Under the terms of the CIA, Tri-County  
had 25 days to request a hearing with an Administrative  Law Judge.  Tri-County did not  
request a hearing.  HHS-OIG excluded Tri-County  effective April 3, 2019.   
 
   In June 2019, North Broward Hospital District in Florida paid a stipulated penalty of 
$690,000 for failing to comply with certain CIA requirements.  Specifically,  Broward 
Health failed to: (1) develop and implement written policies designed to promote  
compliance with the Anti-Kickback Statute and the Stark Law; (2) provide all employees 
with general compliance  training; (3) implement and comply with all of the arrangements 
procedures and arrangements requirements of the  CIA; and (4) comply with certain 
disclosure program requirements.  Effective August 31, 2015, Broward Health entered 
into a CIA with HHS-OIG to promote compliance with the statutes, regulations, and 
written directives of Medicare, Medicaid, and all other Federal health care programs.   
 
Audits and  Evaluations  
HHS-OIG promotes the economy, effectiveness, and efficiency of HHS programs through audits 
and evaluations.  HHS-OIG uses a dynamic, data-driven work planning process and makes 
adjustments throughout the  year to meet evolving  priorities and to anticipate and respond to 
emerging issues with the  resources available.  HHS-OIGs work is informed by mandatory  
requirements set forth in laws, regulations, or other directives; requests made or concerns raised 
by Congress, HHS  management, or the Office of Management and Budget; or alignment with 
strategic goals, etc.  With respect to Medicare and Medicaid, HHS-OIG assesses relative risks to 
identify the areas most in need of attention and, accordingly, to set priorities for the sequence  and 
proportion of resources to be allocated.  
 
Throughout FY  2019, HHS-OIG issued 163 audit reports and 46 evaluations, resulting in 582 
new recommendations issued to HHS operating divisions.  HHS operating  divisions also 
implemented 341 recommendations during  FY 2019.   
 
47  
   
HHS-OIGs audit and evaluation findings in FY 2019 are listed below and organized by HHS-
OIGs two broad priority outcomes to: 1) minimize risks to beneficiaries, and 2) safeguard 
programs from improper payments and fraud.  
 
Minimize Risks to Beneficiaries  
Oversight of Opioid Prescribing and Monitoring of Opioid Use: States Have Taken Action To 
Address the Opioid Epidemic.  HHS-OIG identified actions that eight selected States (Nebraska, 
Nevada, New Hampshire, Tennessee, Texas, Utah, Washington  State, and West Virginia) that 
took action related to their oversight of opioid prescribing  and their monitoring of opioid use.  
The States have  created policies and procedures and passed laws and regulations related to 
opioids and are using opioid-related data to perform data analytics, as well as performing  
outreach to providers and patients.  The States have implemented a number  of opioid-related 
prevention, detection, and treatment programs and have taken many other  actions to address the  
opioid epidemic.  (A-09-18-01005)  
 
National Review of Opioid Prescribing in Medicaid Is Not  Yet Possible.  Thirty-two States were  
missing data for variables needed to review opioid prescribing in Medicaid.  Limitations of data 
from the Transformed Medicaid Statistical Information System, the national Medicaid claims 
database, impede identification of individual beneficiaries for national opioid analysis.  Until  
data are complete in all States and limitations across States are addressed, it will not be possible  
to conduct a national evaluation of Medicaid beneficiaries at risk of opioid misuse or overdose.  
(OEI-05-18-00480)   
 
Concerns About Opioid Use in Medicare Part D in the Appalachian Region.   Thirty-six percent 
of beneficiaries in five States in the Appalachian region (Alabama, Kentucky, Ohio, Tennessee, 
and West Virginia) received a prescription opioid through Medicare Part D  in 2017.  Almost 
49,000 beneficiaries in these States received high amounts of opioids, far exceeding levels CDC 
says to avoid.  Of these, nearly 6,000 beneficiaries were  at serious risk of opioid misuse or  
overdose and received extreme amounts of opioids or appeared to be doctor shopping.  Ensuring  
the appropriate use and prescribing of opioids is essential to protecting the health and safety of 
beneficiaries and the integrity of Part D.  (OEI-02-18-00224)  
 
Opioid Use Decreased in Medicare Part D, While Medication-Assisted Treatment Increased.   
Nearly 3 in 10 Medicare  Part D beneficiaries received opioids in 2018, a decrease from the  
previous 2  years.  At the  same time, the number of beneficiaries receiving drugs for medication-
assisted treatment for opioid use disorder steadily  increased and reached almost 174,000 in 2018.  
The number of beneficiaries receiving naloxone, a drug that can reverse the effects of an opioid 
overdose- through Part D more than doubled from 2017 to 2018.  Nearly 354,000 beneficiaries 
received high amounts of opioids in 2018, with about 49,000 of them at serious risk of opioid 
misuse or overdose.  About 200 prescribers  had questionable opioid prescribing for the  
beneficiaries at serious risk.  (OEI-02-19-00390)  
 
Opioid Use in Medicare  Part D in Missouri.  One-third of beneficiaries in Missouri received an 
opioid through Part D in 2018, which is higher than the national rate.  In addition, almost 10,000 
beneficiaries in Missouri received high amounts of opioids.  About 1,400 beneficiaries in 
 
48  
  Missouri are at serious risk of opioid misuse or overdose.  The severity of the national opioid 
crisis makes it imperative that States, including  Missouri, take effective steps to address the  
epidemic.  HHS-OIG supports State and Federal efforts to combat the opioid crisis, such as 
efforts  to implement and enforce strong prescription drug monitoring programs that require  
prescribers and pharmacies to check a database before prescribing and dispensing opioids.   (OEI-
02-19-00391)  
 
Hospice Deficiencies Pose Risks to Medicare  Beneficiaries.   Over 80 percent of hospices had at 
least one deficiency.  The most common types of deficiencies involved poor care planning, 
mismanagement of aide services, and inadequate assessments of beneficiaries.  Further, one-third 
of hospices had complaints filed against them.  Over 300 hospices were poor performers in that 
each had at least one serious deficiency or at least one substantiated severe  complaint in 2016.  
(OEI-02-17-00020)  
 
Safeguards Must Be Strengthened To Protect Medicare Hospice Beneficiaries From Harm.   
Some beneficiaries have  been seriously harmed when hospices provided poor care or failed to 
take action in cases of abuse.  These cases reveal vulnerabilities in beneficiary protections that 
CMS must address, including strengthening reporting requirements, to better ensure that 
beneficiary harm is identified, reported, addressed, and, ultimately, prevented.  (OEI-02-17-
00021)  
 
CMS Guidance to State Survey Agencies on Verifying Correction of Deficiencies Needs To Be  
Improved To Help Ensure the Health and Safety of Nursing Home Residents.   In a series of 
audits, HHS-OIG found that seven of nine State agencies did not always verify that nursing  
homes corrected deficiencies, as required.  These  State agencies did not obtain evidence of 
nursing homes  correction of deficiencies or maintain sufficient evidence that they had verified 
deficiency  correction for 326 of the 700 sampled deficiencies.  For less serious deficiencies, six  
of the seven State  agencies accept a nursing homes correction plan as confirmation of  
substantial compliance with Federal participation requirements without obtaining evidence of 
correction from the nursing home. Further, three of the seven State  agencies had technical issues 
with maintaining supporting documentation; as a result, they did not have sufficient evidence of 
deficiency  correction.  As a result,  the health and safety of nursing home residents may be placed 
at risk.  (A-09-18-02000)  
 
Data Brief: Trends in Deficiencies at Nursing Homes Show That Improvements Are Needed To 
Ensure the Health and Safety of Residents.  HHS-OIGs analysis of nursing home deficiencies 
identified by State survey  agencies found that: (1) the number of nursing home surveys and 
deficiencies slightly increased each year from 2013 through 2016, then slightly decreased in 
2017; (2) 94 percent of deficiencies had less serious ratings while 6 percent had more  
serious ratings; (3)  approximately 31 percent of nursing homes had a deficiency type that was 
sited at least five times during the review period; and (4) 10 States accounted for half of the  
deficiencies identified; the top  10 of 340 deficiency  types accounted for more than forty percent 
of deficiencies.  Analysis results do not clearly indicate whether the quality  of care and safety of 
nursing home residents improved during its review period.  (A-09-18-02010)  
 
 
49  
  New  York Should Improve Its Oversight of Selected Nursing Homes' Compliance  With Federal 
Requirements for Life Safety And Emergency Preparedness.   New York did not ensure that 
selected State nursing homes that participated in the Medicare or Medicaid programs complied 
with CMS life safety and emergency preparedness requirements.  Deficiencies were identified in 
areas related to life safety  and emergency preparedness at the 20 nursing homes that it inspected 
onsite.  Specifically, 205 areas of noncompliance  were identified with life  safety requirements 
(e.g., building exits and fire barriers, fire detection and suppression systems, etc.) and 219 areas 
of noncompliance were identified with emergency preparedness requirements (e.g., written 
emergency plans, emergency supplies and power, etc.).  As a  result, nursing home residents were  
at increased risk of injury or death during a  fire or other emergency.  (A-02-17-01027)   
 
Adverse Events in Long-Term-Care Hospitals: National Incidence Among Medicare  
Beneficiaries.   Twenty-one percent of Medicare patients in long-term-care  hospitals experienced 
adverse  events as a result of medical care; an additional 25 percent of patients experienced 
temporary harm events.  This rate of patient harm is higher than in other settings and may be due, 
in part, to longer stays and high patient acuity.  Nevertheless, these  events endanger patient 
health and reviewers determined over half to be preventable.  (OEI-06-14-00530)  
 
Four States Did Not Comply With Federal Waiver and State Requirements in Overseeing Adult 
Day Care Centers and Foster Care Homes.  Previous HHS-OIG reviews found violations of 
health and safety and administrative requirements at 96 of the 100 centers and homes reviewed 
in Minnesota, Illinois, Wisconsin, and Mississippi.  About 1,141 instances of noncompliance  
were identified with health, safety,  and administrative requirements.  (A-05-19-00005)  
 
Kentucky Did Not Comply  With Federal Waiver and State Requirements at 14 of 20 Adult Day  
Health Care Facilities Reviewed.   Kentucky did  not fully comply with Federal waiver and State  
requirements in overseeing providers that serve vulnerable adults receiving adult day health care  
services through the program.  Of the 20 providers reviewed, 12 did not comply with 1 or more  
health and safety requirements, and 10 did not comply with 1 or more  administrative  
requirements.  (A-04-18-00123)  
 
California Needs To Improve Oversight of Community-Based Adult Services Providers'  
Compliance  With Health and Safety and Administrative Requirements.   Californias oversight 
did not ensure that providers serving vulnerable adults who received services through its 
Community-Based Adult Services Program complied with Federal waiver and State  
requirements.  All 24 providers HHS-OIG reviewed did not comply with 1  or more health and 
safety or administrative  requirements. Each of the  24 providers reviewed had from 1 to 21 
instances of noncompliance.  In total, HHS-OIG found 290 instances of noncompliance with 
health and safety and administrative requirements.  (A-09-18-02002)  
 
CMS Could Use Medicare Data To Identify Instances of Potential Abuse or Neglect.  HHS-OIG  
identified 34,664 Medicare claims that contained diagnosis codes indicating the treatment of 
injuries potentially caused by abuse or neglect of Medicare beneficiaries during its audit period.  
An estimated 30,754 of these claims were supported by medical records that contained evidence  
of potential abuse or neglect.  Additionally, of the  claims associated with incidents of potential 
abuse or neglect, 2,574 were allegedly perpetrated by a health care worker; 3,330 occurred in a 
 
50  
  medical facility; and 9,294 were not reported to law enforcement.   CMS did not identify similar 
incidents of potential abuse or neglect during the review period, but it took some corrective  
actions in response to HHS-OIGs Early Alert sent to CMS.  According to CMS officials, it did 
not identify the claims because it did not extract data consisting of Medicare claims containing  
the 17 diagnosis codes related to abuse or neglect.  The lack of a data extract impeded CMS or 
public or patient safety organizations ability to pursue appropriate remedies to ensure the safety, 
health, and rights of Medicare beneficiaries.  (A-01-17-00513)  
 
Incidents of Potential Abuse and Neglect at SNFs Were Not Always Reported and Investigated.  
An estimated one in five  high-risk hospital ER Medicare  claims for treatment provided in CY 
2016 were the result of potential abuse or neglect, including injury of unknown source, of 
beneficiaries residing in a SNF.  SNFs failed to report many of these incidents to the Survey  
Agencies in accordance  with applicable Federal requirements.  Several Survey Agencies failed to 
report some findings of substantiated abuse to local law enforcement.  Lastly, CMS does not  
require  all incidents of potential abuse or neglect and related referrals made to law enforcement 
and other agencies to be  recorded and tracked in the Automated Survey Processing  Environment 
Complaints/Incidents Tracking System.  (A-01-16-00509)   
 
Provider Shortages and Limited Availability of Behavioral Health Services in New Mexico's 
Medicaid Managed Care.  New Mexicos Medicaid managed care program has limited 
availability of behavioral health services for its enrollees, including  few behavioral health 
providers and difficulty  arranging services.  The  challenges faced by New Mexicoincluding  
provider shortages and limited availability of behavioral health servicesare likely shared by  
other States and will require both State and national attention.  (OEI-02-17-00490)  
 
Princeton Place Did Not Always Comply  With Care Plans for Residents Who Were Diagnosed 
With Urinary Tract Infections.  Based on HHS-OIGs medical record review of a sample of 
Medicaid-eligible residents assessed with urinary  tract infections from January 5, 2014, through 
October 21, 2015, Princeton Place did not always provide services to Medicaid-eligible residents 
diagnosed with the infections in accordance with their care plans, as required by  Federal 
regulations.  Specifically, staff did not always document that they monitored the residents' urine  
appearance at the frequencies specified in their care plans.  It also did not have policies and 
procedures to ensure that its staff provided services in accordance  with its residents'  care plans.  
As a result, residents were at increased risk for contracting the infections and incurring  
complications, including  requiring hospitalization.   (A-06-17-02002)  
 
Alaska Did Not Fully Comply  With Federal and State Requirements for Critical Incidents 
Involving Medicaid Beneficiaries With Developmental Disabilities.  Alaska did not fully  comply  
with Federal Medicaid waiver and State  requirements for reporting  and monitoring critical 
incidents involving Medicaid beneficiaries with developmental disabilities residing in 
community-based settings.  Specifically, Alaska did not ensure that community-based providers 
reported all critical incidents to the State.  For the  303 judgmentally selected claims, 68 percent 
(205 claims) were not reported to Alaska as critical incidents.  (A-09-17-02006)  
 
Many Medicaid-Enrolled Children Who Were Treated for Attention Deficit Hyperactivity  
Disorder (ADHD) Did Not Receive Recommended  Follow-up  Care.   HHS-OIGs review of 
 
51  
  Medicaid claims data from all States and the District of Columbia found over 500,000 Medicaid-
enrolled children newly  prescribed an ADHD medication did not  receive followup care  within 
the timeframes outlined in the national quality measures.  Follow-up care is an important part of 
treatment for ADHD, as the disorder can affect all aspects of a  childs academic and health 
outcomes.  (OEI-07-17-00170)  
 
Safeguard Programs from Improper Payments and Fraud  
Midwood Ambulance  &  Oxygen Service, Inc.  Billed for Nonemergency Ambulance Transport 
Services That Did Not Comply  With Medicare  Requirements.  Midwood did not comply with 
Medicare requirements for billing nonemergency  ambulance transport services for 89 of the 100 
claims HHS-OIG reviewed.  Midwood incorrectly billed Medicare  for beneficiaries whose  
conditions did not meet medical necessity requirements and billed for services that did not meet 
documentation requirements.  These errors occurred because Midwood did not have adequate 
controls to prevent the incorrect billing of nonemergency ambulance transport claims.  Midwood 
received estimated overpayments of at least $19.2 million for the audit period, including claims  
with payment dates outside of the Medicare 4-year claim-reopening period.  (A-02-16-01021)  
 
Medicare Payments to Providers for Polysomnography Services Did Not Always Meet Medicare  
Billing Requirements.   Medicare made payments to providers for polysomnography services that 
met Medicare billing requirements for 117 beneficiaries with 276 corresponding lines of service  
out of 200 randomly selected beneficiaries.  However, Medicare made payments for the 
remaining 83 beneficiaries with 150 corresponding lines of service that did not meet 
requirements, resulting in $56,668 in net overpayments.  Medicare made overpayments of $269 
million for polysomnography services during the audit period.  These  errors occurred because  
CMS oversight was insufficient to ensure that providers complied with Medicare  requirements or 
prevent payment of claims that did not meet those requirements.  Without periodic reviews of  
claims for these services, Medicare Administrative Contractors (MAC) were unable to determine  
whether providers had received payments for claims that did not meet requirements or to take  
remedial action.  (A-04-17-07069)  
 
Accountable Care Organizations Strategies for Transitioning to Value-Based Care: Lessons 
from  the Medicare Shared Savings Program.   As part of their transition to value-based care, 
Medicare Shared Savings Program accountable care organizations reported a number of 
successful strategies in reducing Medicare spending and improving quality  of care for patients.  
These strategies should inform CMSs broader efforts to transform the health care system from 
fee-for-service to value-based care.  (OEI-02-15-00451)  
 
Significant Vulnerabilities Exist in the  Wage Index System for Medicare Payments.  Significant 
vulnerabilities exist in the  wage index system, including: (1) absent misrepresentation or 
falsification, CMS lacks the authority to penalize hospitals that submit inaccurate or incomplete  
wage data; (2) MAC limited reviews do not always identify inaccurate wage data; (3) the rural 
floor decreases wage index accuracy; and (4) hold-harmless provisions in Federal law and CMS  
policy pertaining to geographically reclassified hospitals' wage data decrease wage index  
accuracy.  As a result, wage indexes may not always accurately reflect local labor prices and, 
therefore, Medicare payments to hospitals and other providers may not be appropriately  adjusted 
to reflect local labor prices.  (A-01-17-00500)  
 
52  
  Medicare Could Have Saved Millions of Dollars in Payments for Three-Dimensional Conformal 
Radiation Therapy Planning Services.  From CYs 2008 through 2017, Medicare made $576.9 
million in payments to 1,454 hospitals for development of Three-dimensional conformal 
radiation therapy  (3D-CRT) treatment plans.  Medicare  could have saved $125.4 million by  
implementing billing requirements and system edits to prevent additional payments for  
separately billed 3D-CRT planning services.  These services were primarily  billed on a different 
date of service from the procedure code for development of a treatment plan.  (A-09-18-03026)   
 
Payments Made by Novitas Solutions, Inc., to Hospitals for Certain Advanced Radiation Therapy  
Services Did Not Fully Comply  With Medicare  Requirements; Payments Made by National 
Government Services, Inc., to Hospitals for  Certain Advanced Radiation Therapy Services Did 
Not Fully Comply  With Medicare Requirements.  Novitas Solutions, Inc., the MAC responsible 
for processing Medicare  payments for outpatient services in Jurisdictions H and L, and National 
Government Services, Inc., the MAC responsible for processing payments in Jurisdictions 6 and 
K, incorrectly paid hospitals for  IMRT services provided to nearly all of the beneficiaries 
associated with HHS-OIGs review.  For unallowable IMRT services, hospitals in Jurisdictions 
H and L received Medicare overpayments of at least an estimated $7.2 million and hospitals in 
Jurisdictions 6 and K received at least $5.7 million.  (A-02-16-01006); (A-02-16-01007)  
 
CMS Did Not Always Ensure Hospitals Complied With Medicare Reimbursement Requirements 
for Graduate Medical Education.  In seven of HHS-OIGs eight audits teaching hospitals did not 
always comply with Federal requirements when claiming Medicare  graduate medical education 
reimbursement for residents.  Specifically, hospitals in  the six reviewed MAC jurisdictions 
claimed reimbursement for residents who were  claimed by more than one hospital for the same 
period and whose total full-time equivalent (FTE) count exceeded one, totaling almost $4 million 
in excess reimbursement.  This occurred because  CMS did not have adequate procedures to 
ensure that hospitals do not count residents as more than one  FTE.  For example, CMS did not  
review hospital resident data to detect whether  a resident had overlapping  rotational assignments 
or require the MACs to perform this work.  (A-02-17-01017)  
 
Medicare Improperly Paid Suppliers for DME, Prosthetics, Orthotics, and Supplies Provided to 
Beneficiaries During Inpatient Stays.  From the January 2015 through December 2017 audit  
period, Medicare should not have paid suppliers for any of the $34 million for DME, prosthetics, 
orthotics, and supplies provided during inpatient stays.  Beneficiaries were  also held responsible 
for unnecessary deductibles and coinsurance of $8.7 million paid to the suppliers for these items.  
Medicare overpaid the suppliers because of inadequate system edits that should have prevented 
or detected the overpayments.  If system edits had been designed properly since 2008, Medicare  
could have saved $223.1 million, and beneficiaries could have saved $56.3 million in deductibles 
and coinsurance that may have been incorrectly collected.  (A-09-17-03035)  
 
First Coast Service Options, Inc., Paid Providers for Hyperbaric Oxygen Therapy  (HBO)  
Services That Did Not Comply  With Medicare  Requirements.  Of the 120 sampled outpatient 
claims totaling $415,513, First Coast Service Options, Inc., made payments for HBO therapy that 
did not comply with Medicare  requirements for 110 claims (92 percent), resulting in 
overpayments for HBO totaling $351,970 during the audit period.  First Coast made payments 
for HBO therapy that did not always comply  with Medicare requirements because it had limited 
 
53  
  policies and procedures in place to ensure that it made correct payments.  First Coast overpaid  
providers in Jurisdiction N an estimated $39.7 million for HBO therapy that did not comply  with 
Medicare requirements.  (A-04-16-06196)  
 
Medicare Paid Twice for Ambulance Services Subject to SNF Consolidated Billing 
Requirements.  Medicare made Part B payments to ambulance suppliers for transportation 
services that were  also included in Part A SNF payments as part of consolidated billing  
requirements.  Medicare  made Part B payments that were incorrect for 78 of 100 beneficiary  
days HHS-OIG sampled with dates of service from July 2014 to June 2016.  Medicare overpaid 
the ambulance suppliers because the Common Working  File edits were not designed to prevent 
or detect Part B overpayments for all transportation subject to consolidated billing.  Ambulance  
suppliers also did not have the necessary  controls to prevent incorrect billing.  Medicare made  a  
total of $19.9 million in Part B overpayments to ambulance suppliers for transportation services 
for beneficiaries in Part A SNF stays.  Beneficiaries also incurred  an estimated $5.2 million in 
coinsurance and deductible liabilities related to these payments.  (A-01-17-00506)  
 
Medicares Oversight of  Ambulatory Surgical Centers (ASC).  CMS has made progress in 
strengthening oversight of ASCs and addressing vulnerabilities that we previously identified, and 
more can be done.  Most  ASCsknown as nondeemed ASCsundergo a  State agency survey to 
demonstrate they meet Medicare requirements; othersknown as deemed ASCsundergo a  
survey from an approved accreditor.  States largely  met Medicares requirement to survey 25 
percent of nondeemed ASCs in FY 2017, and nearly half met its requirement to have surveyed 
all ASCs within the prior 6 years.  However, infection control deficiencies found in State surveys 
continue to be a concern.  From FYs 2013 to 2017, States received complaints for fewer than 4 
percent of all ASCs (deemed and nondeemed) each year, but the share of those complaints 
requiring an onsite survey  more than tripled.  (OEI-01-15-00400)  
 
CMS Improperly Paid Millions  of Dollars for SNF Services When the Medicare 3-Day  Inpatient 
Hospital Stay Requirement Was Not Met.  To be  eligible for  coverage of posthospital extended 
care services, a Medicare beneficiary must be an inpatient in a hospital for not less than 3 
consecutive calendar days (3-day rule) before being discharged from the hospital. CMS  
improperly paid 65 of the 99 SNF claims HHS-OIG sampled when the 3-day  rule  was not met. 
Improper payments associated with these claims totaled $481,034.  CMS improperly paid $84 
million for SNF services that did not meet the 3-day  rule from 2013 through 2015.  These  
problems will not be corrected until CMS requires a consistent documentation standard for SNFs 
that provides verifiable evidence of a qualifying hospital stay, which  it can use to certify  
allowable reimbursements or detect and recover improper reimbursements.  (A-05-16-00043)  
 
Medicare Part D Is Still Paying Millions for Drugs Already Paid for Under the Part A Hospice  
Benefit.  Medicare Part D paid for drugs during 2016 that hospices should have paid for under 
the Part A hospice benefit.   On the basis of sample results, the Part D total cost was $160.8 
million for drugs that hospice organizations should have paid for under the  Part A  
benefit.   Although hospices stated they should not have paid for the drugs associated with the 
remaining $261.9 million of the $422.7 million total cost, a review of CMS communications 
with hospices and sponsors between 2012 and 2016 indicates otherwise.  Hospice organizations 
or beneficiariesnot Part Dlikely should have  paid for many of these drugs.  (A-06-17-08004)  
 
54  
  Vulnerabilities Exist in State Agencies Use of Random Moment Sampling To Allocate Costs for  
Medicaid School-Based Administrative and Health Services Expenditures.  Ten State  agencies 
claimed a total of $435.4 million in school district administrative claiming (SDAC) and school-
based health services (SBHS) costs that were not in accordance  with Federal requirements and 
guidance.  Of the 10 State agencies, 5 claimed unallowable SDAC and SBHS costs, 3 claimed 
SDAC costs without having properly submitted cost allocation plans that described their random 
moment time studies methodologies, and all 10 did not correctly develop the methodologies used 
to allocate costs.  In addition, some annual cost settlements performed by three State agencies 
did not take all interim payments into account and three State agencies could not provide medical 
record documentation to support the responses provided by study participants.  HHS-OIG could 
not determine whether services for  which the State agencies had claimed SBHS costs had 
actually been performed, nor which portions of an additional $325.1 million of SDAC and SBHS 
costs were  allowable in two States whose methodologies used sample universes that were or may  
have been inaccurate.  (A-07-18-04107)  
 
Medicaid Fraud Control Units Fiscal Year 2018 Annual Report.  The number of convictions in 
FY 2018 resulting from MFCU cases remained similar to those in recent years.  Forty-five  
percent of the 1,109 MFCU fraud convictions involved personal care services attendants and 
agencies.  Fraud cases accounted for 74 percent of the MFCU convictions, while 26 percent 
involved patient abuse or neglect.  MFCUs were  responsible for 810 civil settlements and 
judgments, 27 percent of which involved pharmaceutical manufacturers.  MFCUs reported $859 
million in criminal and civil recoveries.  (OEI-09-19-00230)  
 
Problems Remain for Ensuring All High Risk Medicaid Providers Undergo Criminal 
Background Checks.   Thirteen States had not implemented fingerprint-based criminal 
background checks for their high-risk Medicaid providers as of January 1,  2019.  Unscrupulous 
providers could exploit loopholes in the provider  enrollment process to enroll in Medicaid 
without undergoing these checks.  If not all high-risk providers undergo criminal background  
checks,  the  Federal and State governments are vulnerable to unscrupulous providers  intent on 
defrauding the Medicaid program.  (OEI-05-18-00070)  
 
Several States Did Not Comply with Federal and State Requirements Prohibiting Medicaid 
Payments for Inpatient Hospital Services Related to Provider-Preventable  Conditions.   HHS-
OIG conducted a series of reviews to determine compliance with Federal and State requirements 
prohibiting Medicaid payments for inpatient hospital services related to treating certain provider-
preventable  conditions (PPCs).   PPCs are reasonably preventable  conditions caused by medical 
accidents or errors in a health care setting.   New Yorks State Medicaid agency did not provide  
sufficient evidence that it properly identified claims containing PPCs or determined whether the  
payments for the related services should have been reduced.  In four other States (Louisiana, 
Rhode  Island, Massachusetts, and Pennsylvania), the Medicaid agencies did not comply or 
ensure compliance with Federal and State requirements prohibiting Medicaid payments for  
inpatient hospital services related to treating  certain provider-preventable conditions.   (A-02-16-
01022, A-06-16-02003, A-01-17-00004, A-01-17-00003, A-01-17-00003, A-03-16-00205)  
 
   
 
55  
  Medicaid Could Save Hundreds of Millions by Excluding Authorized Generic Drug Transactions 
from Brand Name Drugs Average  Manufacturer Price  (AMP) Calculations.  By including  
authorized generic drug transactions to secondary  manufacturers in the brand name drugs AMP  
calculations, Medicaid received 46 percent less in rebates than it otherwise  would have for the  
nine brand name drugs HHS-OIG reviewed, amounting to $595 million for CY 2017.  (A-06-18-
04002)  
 
Medicare Part B Drug Payments: Impact of Price Substitutions Based on 2017 Average Sales 
Prices (ASP).  On the basis of 2017 data, CMS lowered Medicare Part B reimbursement for 14  
drugs, saving Medicare and its beneficiaries $7 million over 1 year.  This finding highlights the  
success of HHS-OIGs mandated quarterly comparisons of ASPs with AMPs and 
implementation of CMSs current price-substitution policy.  (OEI-03-19-00260)  
 
Reasonable Assumptions in Manufacturer Reporting of AMPs and Best Prices.   Under current 
practices, CMS never assesses the majority of the  reasonable assumptions that it allows 
manufacturers to make  when calculating AMP and best price.  Historically, CMS has provided 
little formalized oversight of the reasonable assumptions process, specifically instructing  
manufacturers not to submit their reasonable assumptions to CMS.  Ensuring the accuracy of 
manufacturer-reported AMPs and best prices is vital given that these prices are the primary  
benchmarks that the  Federal Government uses to calculate the  rebates and discounts available to 
Medicaid and certain safety-net providers.  (OEI-12-17-00130)  
 
New  York Claimed Federal Reimbursement for Some Assertive Community  Treatment Services 
That Did Not Meet Medicaid Requirements.   New York claimed  Federal reimbursement for some  
Assertive Community Treatment (ACT) services that did not comply with certain Medicaid 
requirements.  These deficiencies occurred because providers did not always ensure ACT 
services were provided in accordance with a beneficiarys treatment plan nor verify that the 
required number of contacts needed to claim the ACT full payment rate was provided.  Further, 
certain providers failed to maintain or provide documentation to support ACT services claims.  
New York improperly claimed at least an estimated $4.4 million in Federal Medicaid 
reimbursement for ACT services from April 2011 through March 2016.  (A-02-17-01008)  
 
CMS Had Not Recovered More Than a Billion Dollars in Medicaid Overpayments Identified by  
OIG Audits.  CMS did not collect $1.6 billion in overpayments identified in 77 current period 
HHS-OIG audits and $188.6 million in overpayments identified in 7 prior HHS-OIG audits.  
CMS is in discussions with State officials regarding 26 reports and 51 outstanding overpayments 
that continue to be in the disallowance process.  CMS also did not ensure that States correctly  
reported Medicaid overpayments on the Quarterly Medicaid Statement of Expenditures for the 
Medical Assistance Program Form CMS-64.  Finally, HHS-OIG could not  verify the accuracy of 
$2.7 million that CMS stated was reported by States because CMS disposed of documents 
supporting that overpayments were recovered.   (A-05-17-00013)  
 
California Made Medicaid Payments on Behalf of Non-Newly Eligible Beneficiaries Who Did 
Not Meet Federal and State Requirements.  California made Medicaid payments of an estimated 
$959.3 million ($536 million Federal share) on behalf of 802,742 ineligible beneficiaries and 
$4.5 billion ($2.6 billion Federal share) on behalf of 3.1 million potentially ineligible  
 
56  
  beneficiaries.  HHS-OIG also identified a weakness in Californias procedures related to 
determining  eligibility of individuals who may not have intended to apply for Medicaid.  (A-09-
17-02002)  
 
Wisconsin Did Not Report and Refund the Full Federal Share of Medicaid-Related Settlements 
and a Judgment.  Wisconsin did not report and return $27.6 million (Federal share) of Medicaid-
related settlements and a  judgment from October 2008 through September 2016.  Wisconsin did 
not properly report the settlements and a judgment because it lacked policies that addressed the  
reporting of recoveries from State actions taken because of harm to its Medicaid program and it 
did not have procedures to help ensure it reported recoveries on Form CMS-64.  (A-05-17-
00041)  
 
Virginia Received Millions in Unallowable Bonus Payments.  Some of the Childrens Health 
Insurance Program Reauthorization Act of 2009 bonus payments that Virginia received for FYs 
2011 through 2013 were  not allowable in accordance with Federal requirements.  Most of the  
data used in Virginias bonus payment calculations were in accordance with Federal 
requirements.  However, Virginia overstated its current enrollments in its bonus requests to CMS  
because it improperly inflated its current enrollment by a fixed percentage  estimate to account 
for potential retroactive enrollment, instead of using actual enrollment and the adjustment 
process to account for  actual retroactive enrollment.  CMS guidance instructed Virginia to 
calculate current enrollment based on actual enrollment.  As a result of the  overstated numbers, 
CMS overpaid Virginia  approximately $13.8 million in bonus payments.  (A-04-17-08060)  
 
New Mexico Did Not Always Appropriately Refund the Federal Share of Recoveries from 
Managed Care Organizations (MCO).  New Mexico appropriately made recoveries when 
Medicaid MCOs profits exceeded contract-established limits.  However, for CYs 2014 and 2015 
it incorrectly calculated the Federal share of recoveries and underreported the Federal share by  
$4.4 million.  It also did not perform reconciliations of capitation payments for community based 
long-term care services as required under its contracts with MCOs.  (A-06-18-09001)  
 
Missouri Claimed Some Unallowable Medicaid Payments for Targeted Case Management 
Services.  Missouri claimed Federal Medicaid reimbursement of almost $3.8 million for  
unallowable targeted case management services payments which it made  during  FYs 2014 and 
2015.  Missouris policies and procedures did not ensure providers complied with Federal and 
State requirements for documenting  case managers qualifications and for documenting  and 
claiming these services.  In addition, it did not have policies and procedures to ensure that it  
correctly  reported recouped payments to the Federal government.  (A-07-17-03219)  
 
New Jersey Did Not Provide Adequate Oversight of Its Medicaid Delivery System Reform 
Incentive  Payment (DSRIP)  Program.  DSRIP programs allow States to receive Medicaid 
reimbursement for incentive payments made to providers for meeting performance  goals.  In an 
audit of the New Jersey  DSRIP program, HHS-OIG could not determine  what portion of pay-for-
performance incentive payments, totaling  approximately $51 million ($25 million Federal share) 
was appropriate.  Specifically, no documentation was  found to support the achievement of 
Medicaid claims-related performance  goals, and that hospitals had reported information 
inconsistent with performance measurement criteria.  (A-02-17-01007)  
 
57  
  Medicaid MCOs Received Capitation Payments After Beneficiaries  Deaths.  HHS-OIG 
conducted several State  audits as part of its ongoing work to identify unrecovered managed care  
payments for services after beneficiary death.  States made payments after beneficiaries died and 
did not recover the payments.  The estimated  Federal share of these unallowable payments 
included over $38 million in Ohio, and over $53  million in California.  (A-05-17-00008, A-04-
18-06220, A-05-18-00026, A-04-15-06183)  
 
Medicare Part D Rebates for Prescriptions Filled at 340B Contract Pharmacies.  If the Part D  
prescriptions for the sponsors in HHS-OIGs review had been filled at non-340B pharmacies, 
sponsors calculated that manufacturers would have paid rebates of up to over $74.7 million for  
554,549 claims in 2014.  Manufacturers did not pay  these  rebates because, as sponsors reported, 
rebate agreements did not require manufacturers to pay  rebates for Part D  drugs filled at a 340B  
pharmacy.  Because 340B identifiers are not on claims and prescription drug event records, 
sponsors do not  have the data to distinguish whether prescriptions dispensed at a 340B pharmacy  
were  filled using 340B drugs.  Therefore, the possible up to $74.7 million additional rebate 
amount is for both 340B  and non-340B drugs filled at 340B pharmacies.  Part D costs could 
potentially be reduced if sponsors were to collect rebates for claims for drugs dispensed by 340B  
pharmacies but not purchased under the 340B Program.  (A-03-16-00002)    
 
Some Medicare Part D Beneficiaries Face  Avoidable Extra Steps that Can Delay or Prevent 
Access to Prescribed Drugs.  In 2017, Part D insurance  companies rejected millions  of 
prescriptions that beneficiaries tried to fill at pharmacies and overturned a  large number of drug-
coverage denials when beneficiaries appealed.  Some rejections and denials were  avoidable or 
inappropriate, creating unnecessary extra steps for beneficiaries to obtain needed medications.  
Extra steps can delay or deter beneficiaries access to medications if those beneficiaries are  
unable or unwilling to spend time navigating the approval process.  (OEI-09-16-00411)  
 
Rebates for Brand-Name Drugs in Part D  Substantially Reduced the Growth in Spending from 
2011 to 2015.  Overall, increases in rebates substantially reduced the percentage increase in 
reimbursement for  brand-name drugs in Part D  from 2011 to 2015.  Although rebates reduced the 
growth of total Part D spending, they did not prevent increased overall Part D spending  for  
brand-name drugs from 2011 to 2015, as Medicare still spent $2 billion more for brand-name  
drugs with rebates in 2015 than in 2011.  At a drug-by-drug level, unit rebates did not always 
increase as unit reimbursement increased for brand-name drugs reviewed.  In fact, while unit  
reimbursement increased for nearly  all drugs, rebates declined as unit reimbursement grew for 
39  percent of drugs reviewed.  (OEI-03-19-00010)  
 
New  York Did Not Correctly Determine Medicaid Eligibility for Some Non-Newly Enrolled 
Beneficiaries.  New York did not consider all available, relevant information or failed to  comply  
with its Medicaid State plan or verification plan when determining Medicaid eligibility.  
Additionally, New Yorks enrollment system did not always query  all electronic data sources to 
ensure individuals were reporting  all sources of countable income when applying for Medicaid.  
Lastly, New York did not always maintain documentation to support eligibility determinations. 
New York made estimated Federal Medicaid payments of $520.3 million on behalf of 383,893 
ineligible beneficiaries and $1.3 billion  on behalf of 618,057 potentially ineligible beneficiaries 
during HHS-OIGs 6-month audit period.  (A-02-16-01005)  
 
58  
  New  York Claimed Federal Reimbursement for Some Payments to Health Home Providers That 
Did Not Meet Medicaid Requirements.  New Yorks health  home providers did not provide  
services according to a comprehensive individualized patient-centered care plan, ensure that 
beneficiaries participated in the development and execution of their care plan, maintain 
documentation to support services billed, bill correctly for services, and bill only for services 
actually provided.  New York also claimed reimbursement for services that duplicated similar 
ones provided under a different Medicaid-funded program New York improperly  claimed at least 
an estimated $65.5 million in Federal Medicaid reimbursement for payments made to health 
home providers.  (A-02-17-01004)  
 
New  York Incorrectly Claimed Enhanced Federal Medicaid Reimbursement for Some  
Beneficiaries.  New York incorrectly  enrolled beneficiaries in eligibility  categories for which 
services were  reimbursed at an enhanced Federal Medical Assistance Percentage rate despite  
case file documentation indicating that they should have been enrolled in a group for which 
services qualified under the standard rate or  were  not eligible for  reimbursement.  For these  
beneficiaries, New York failed to correctly apply  Federal and State requirements or consider all  
available, relevant information when enrolling beneficiaries in the new adult group.  Staff also 
did not comply  with the  States approved verification plan when verifying  Medicaid eligibility  
and did not maintain documentation to support its determinations of beneficiary  eligibility  for  
enhanced Medicaid reimbursement.  The State incorrectly claimed enhanced Federal Medicaid 
reimbursement of  an estimated $116.9 million on behalf of 184,590 Medicaid beneficiaries 
enrolled in the new adult group during  HHS-OIGs 6-month audit period.  (A-02-15-01023)   
 
Some Diagnosis Codes That Essence Healthcare, Inc., Submitted to CMS Did Not Comply  With 
Federal Requirements.   Some of the diagnosis codes that Essence submitted to CMS for use in 
CMSs risk adjustment program did not comply  with Federal requirements.  For 75 of the 218 
enrollee-years, the diagnosis codes (48 acute stroke and 27 major depressive disorder) that 
Essence submitted to CMS either were not supported in the medical records (70) or could not be  
supported because Essence could not locate the medical records (5).  These errors occurred 
because  Essences policies and procedures to detect and correct noncompliance with CMSs 
program requirements, as mandated by Federal regulations, were not always effective.  As a  
result, Essence  received $158,904 of overpayments for the 75 enrollee-years.  (A-07-17-01170)  
 
Ohio Made  Medicaid Capitation Payments That Were Duplicative or Were Improper Based on 
Beneficiary Eligibility Status or Demographics.   Ohio did not always make capitation payments 
for its Medicaid managed care program in accordance with Federal and State requirements. 
HHS-OIG reviewed a sample of capitation payments and estimated that Ohio made improper 
payments totaling at least $10.6 million ($6.7 million Federal share) for the audit period from 
July 2014 through June 2015.  (A-05-16-00061)  
 
Other HHS-OIG  Fraud and Abuse Prevention  Activities  
 
Data Analytics  
As described above, HCFAC funding supported HHS-OIGs continued enhancement of  HHS-
OIGs technology  and data analysis capabilities for detecting health care fraud.   For example, 
HHS-OIG continues to use  several approaches for monitoring and analyzing health care  
 
59  
  payments and trends, and sophisticated data analytics and statistical modeling to better target 
OIGs resources for overseeing the Medicare  and Medicaid programs.   HHS-OIG has developed 
analytic  tools to largely  automate work formerly conducted by multi-disciplinary teams.  These  
tools use near real time data to examine Medicare  data for high-risk providers, conduct peer 
comparisons, calculate analytic metrics for services rendered and ordered, as  well as other 
assessments on demand.  When united with the expertise of HEAT and other partners, HHS-
OIGs data analysis supports a highly effective combination of cutting-edge technologies, 
analytic approaches, and traditional skills to fight against fraud, waste, and abuse.   
 
HHS-OIG data analysis  has supported several health care  cases and initiatives.  For instance:  
 
HHS-OIG analysts examined Medicare and Medicaid claims to identify the full scope of a South 
Florida health care facility  owners activities in orchestrating a decades-long scheme to pay  
kickbacks and launder money in connection with fraudulent claims to Medicare  and Medicaid 
for services deemed medically unnecessary.  Following an eight-week jury  trial, an individual 
was found guilty in April 2019 of conspiracy to defraud the United States, of receipt of 
kickbacks in connection with a Federal health care program, of making payment of kickbacks in 
connection with a Federal health care program, conspiracy to commit money  laundering, money  
laundering, conspiracy to commit Federal program bribery and obstruction of justice.  In 
September 2019, a  Federal district judge sentenced the individual to 20 years in prison and 3 
years of supervised release.  Forfeiture  and restitution hearings remain pending.  
 
HHS-OIG data analytics supported or helped to initiate several criminal cases across the nation 
that involved individual prescribers of Subsys for  patients who lacked cancer diagnoses, and 
other opioid prescribing  cases.  In December 2018, a physicians assistant was sentenced to 10 
years in prison after a jury  in the Northern District of California found the individual guilty on 39 
counts of unlawful distribution of controlled substances, after a two-week trial.  An HHS-OIG 
data analytics staff member testified at trial to support analysis that showed, among physicians 
who prescribed opioids to 50 or more Medicare patients, the defendant was the highest prescriber 
of opioids in California in 2015 and 2016.   
 
Additionally, HHS-OIGs data analytics work has helped to inform cases filed as part of the 
Appalachian Regional Opioid Strike Force  efforts.  
 
Industry Outreach and  Guidance  
 
HHS-OIG strives to cultivate a culture of compliance in the health care industry through various 
educational and outreach efforts.  
 
Advisory Opinions    
HIPAA established 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 2019, HHS-OIG, in 
consultation with DOJ, issued 8 advisory opinions.  A total of 374 advisory  opinions and 21 
modifications to advisory opinions have been issued, four opinions have been terminated, and 
one opinion has been rescinded during the 23 years of the HCFAC program.  
 
60  
  Collaborations with Private Sector Partners  
HHS-OIG regularly engages with public stakeholders to combat fraud.  For example, HHS-OIG 
is an active partner in the HFPP, described in more detail elsewhere in this report, and with the  
National Healthcare  Anti-Fraud Association, both of which are publicprivate partnerships that 
address health care fraud by sharing data and information for the purposes of detecting and 
combatting fraud and abuse in health care programs.  HHS-OIG frequently  shares information 
about prescription-drug  fraud schemes, trends,  and other matters related to health care fraud, as 
appropriate.  As a further example, HHS-OIG has collaborated with the DEA to provide anti-
fraud education at numerous Pharmacy Diversion Awareness Conferences held across the United 
States.  The conferences were designed to assist pharmacy personnel with identifying and 
preventing diversion activity.  Since 2013, HHS-OIG has presented at conferences in 50 States 
and Puerto Rico.  
 
HHS-OIG also engages with stakeholders to seek insight on how to promote compliance, while 
encouraging innovation in the health care industry.  For instance, HHS-OIG published a Request 
for  Information seeking to identify ways that it could modify or add safe harbors to the  Federal 
anti-kickback statute  and exceptions related to the CMP for beneficiary inducements to foster 
arrangements that would promote care coordination and value-based care, while also protecting  
against harms caused by  fraud and abuse.15  
 
HHS-OIG hosted a roundtable with industry compliance professionals to discuss methods for  
measuring the effectiveness of compliance programs.  The ideas discussed at the roundtable were  
compiled into a resource  guide for other industry participants to consider when evaluating their  
own compliance programs.  In addition to the compliance roundtable, HHS-OIG regularly  
presents at various health care  compliance  conferences throughout the country.  
 
 
Centers for Medicare & Medicaid Services  
 
In FY 2019, CMS received an allocation of $8.5  million by HHS and was appropriated $599.4 
million in discretionary funds by Congress to support its comprehensive program integrity  
strategy for Medicare, Medicaid, the Childrens Health Insurance Program (CHIP), and the 
Health Insurance  Exchanges.  In FY 2019, Congress required HHS to fund  the Administration 
for Community  Livings (ACL) Senior Medicare  Patrol  (SMP) Program; therefore, $18.0 million 
of CMSs $599.4 million in discretionary funding  was allocated to ACL to support the program. 
More information on the  SMP Program activities and  accomplishments  are discussed  in  ACL  
section of  this report on page  85.   With the  HCFAC  funds, CMS  works  to ensure that accurate 
payments  are made  to legitimate individuals and entities for allowable services or supplies 
provided to 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. 
This includes activities such as  Medicare  fee-for-service  (FFS) improper payment  rate 
                                                 
15  HHS-OIG,  Medicare and  State Health  Care Programs: Fraud  and  Abuse; Request for  Information  Regarding  the 
Anti-Kickback  Statute and  Beneficiary  Inducements  CMP,  83  Fed.  Reg.  43,607  (Aug.  27,  2018).  
 
61  
  measurement and program integrity activities such as  the Recovery Audit Program, prior 
authorization, medical review, and provider outreach and education. These activities are  
discussed at length in the annual Medicare  and Medicaid Integrity  Programs  Report to Congress, 
which can be found on the CMS website16.  
 
Address the Full Spectrum of Fraud, Waste, and Abuse  
 
CMS defines program integrity very simply: pay  it right.   Program integrity focuses on paying  
the right amount, to legitimate providers  and suppliers, for covered, reasonable and necessary  
services provided to eligible beneficiaries while taking aggressive actions to eliminate fraud, 
waste and abuse. Federal health programs are quickly evolving; therefore, CMSs  program 
integrity strategy must keep pace to address emerging challenges.  
 
CMS has developed a five-pillar program integrity strategy to modernize the Agencys approach 
and protect its programs for future  generations:   
 
   Stop Bad Actors. CMS  works with law enforcement agencies to identify  and take action 
on those who defraud federal health programs. This collaboration allows CMS to 
maximize efforts to identify, investigate, and pursue providers and suppliers who might 
otherwise endanger program beneficiaries or commit fraud on Federal programs.  
   Prevent Fraud.  CMS continues to focus on moving away from an expensive and 
inefficient pay and chase model to preventing  fraud, waste and abuse on the front end. 
This includes making system changes to avoid similar fraudulent activities in the future, 
as well as  developing policies, regulations, and processes to prevent vulnerabilities from 
being  exploited before claims are paid.  
   Mitigate  Emerging Programmatic  Risks.  CMS  recognizes the need to be vigilant in 
monitoring new and emerging areas of risk, and developing methods to address these  
risks. This includes maintaining flexibility to respond to future data and trends and tailor 
strategies accordingly, and to use new approaches for high vulnerability services. CMS is 
also exploring ways to identify  and reduce program integrity risks related to value-based 
payment programs by looking to experts in the health  care  community for lessons learned 
and best practices.  
   Reduce  Provider Burden.  While CMS strengthens program integrity, the agency  is also 
taking  steps to ensure that these efforts do not create unnecessary time and cost burden on 
providers  and suppliers. Efforts in this area include targeted medical review with 
individualized education to assist rather than punish providers who make  good faith claim 
errors. CMS is working to make access to our coverage  and payment rules more easily  
accessible to providers  and suppliers, as well as streamlining  and reducing  documentation 
requirements  that are duplicative or unnecessary. CMS is also exploring ways to 
centralize provider screening and provider monitoring across Medicare and Medicaid   
   Leverage New Technology. CMS is looking to leverage new, innovative  strategies and 
technologies, perhaps  involving artificial intelligence and/or machine learning, to 
modernize and automate our program integrity efforts. This new technology  could allow 
the Medicare program to review compliance on more claims  with less burden on 
                                                 
16  https://www.cms.gov/About-CMS/Components/CPI/CPIReportsGuidance  
 
62  
  providers and less cost to taxpayers. These innovations could be used in both our current 
payment models, as well  as in new payment models.  
This section describes the wide range of program integrity activities  funded by the HCFAC 
account  that CMS utilizes to comprehensively address fraud, waste, and abuse.  These activities 
include many different approaches to program integrity, such as data analysis, investigations and 
audits, recovery actions, and outreach and education.  
 
Unified Program Integrity  Contractors (UPICs)  
One way CMS investigates instances of suspected fraud, waste, and abuse in Medicare, as well  
as Medicaid, is through the activities of the UPICs.  The UPICs develop investigations and take  
actions to prevent inappropriate payments from being made to Medicare providers and suppliers.  
UPICs undertake activities including provider and beneficiary interviews and site visits, 
initiating appropriate administrative actions (e.g., prepayment edits, payment suspensions, 
revocations), and performing program integrity  reviews  of medical records and documentation.  
While a variety of other contractors also perform medical review, UPIC  reviews are uniquely  
focused on fraud detection and investigation.  For example, the UPICs look for possible  
falsification of documents that may be  associated with an attempt to defraud the Medicare  
program. Various UPIC  administrative actions result in Medicare savings, including automated 
edit claim denials, non-automated review  claim denials, provider revocations and deactivations, 
overpayment recoveries, and law enforcement referrals.  Currently, the UPICs are carrying out 
program integrity activities in all  five  geographic  jurisdictions: Midwest, Northeast, West, 
Southeast and Southwest.  
Fraud Prevention System (FPS)  
The Fraud Prevention System is the predictive analytics technology required under the Small 
Business Jobs Act of 2010.17  FPS analyzes  FFS claims using sophisticated algorithms to target 
investigative resources; generate alerts for suspect claims or providers and suppliers; and provide 
information to facilitate and support investigations of the most egregious, suspect, or aberrant 
activity.  HHS uses the FPS information to prevent and address improper payments using a  
variety of administrative  actions, including claim denials, payment suspensions, Medicare billing  
privilege  revocations, and law enforcement referrals.  
 
During  FY 2019, the  FPS generated leads that resulted in 766 new investigations and augmented 
information for 575 existing investigations. The UPICs reported initiating FPS-attributable 
actions against 509 providers in FY 2019.  
National Correct Coding  Initiative (NCCI)  
The National Correct Coding  Initiative (NCCI) consists of edits designed to reduce improper 
payments in Medicare Part B and Medicaid.  NCCI Procedure-to-Procedure edits prevent 
inappropriate payment for billing code pairs that should not be reported together by the same  
provider for the same beneficiary  and date of service, while NCCI Medically Unlikely Edits   
prevent payment for an inappropriate quantity of the same service  rendered by the same provider  
for the same beneficiary  on the same date of service.   Estimated savings from Medicare  NCCI  
                                                 
17  Public Law  111-240.  
 
63  
  edits are published in the annual Report to Congress on the Medicare and Medicaid Integrity  
Programs.  
 
Section 1903(r) of the Social Security Act requires states to use NCCI methodologies to 
process applicable Medicaid claims.   CMS provides assistance for  state Medicaid 
agencies to use NCCI methodologies in their Medicaid programs.  
 
Integrated Data Repository  and the One Program Integrity (One PI) Portal  
The  Integrated Data Repository (IDR) contains  Medicare Part A, Part B  (including DME), MA 
(encounter),  Part D  prescription drug events, beneficiary, and provider data.  This  robust data 
warehouse supports program integrity  analytics, such as  the development of FPS  models.  CMS  
uses  the IDR to provide broader and easier access to data and enhanced data integration while 
strengthening  and supporting CMSs analytical capabilities.  
CMS is also working to incorporate state Medicaid data into the  IDR through standard 
Transformed Medicaid Statistical Information System (T-MSIS) data formats, while also 
working  with states to improve the quality and consistency of the data from each state, described 
more fully below.  
 
CMS  augments  the data available in the IDR to provide a comprehensive view of Medicare  and 
Medicaid data including  claims, beneficiary data, and prescription drug information.  CMS has 
added Shared Systems location data for pre-adjudicated claims, claims submitter, and medical 
review utilization data.   
 
CMS uses the One PI web-based portal in conjunction with  the IDR to provide access to robust 
business intelligence  analytical tools and to facilitate data sharing with program integrity  
contractors and law enforcement.  One PI  provides a single access point to the data within the  
IDR, as well as tools to conduct data analysis.  
The Command Center  and Coordinated Program Integrity Activities  
The  CMS  Command Center opened in July 2012 and provides an opportunity for Medicare and 
Medicaid policy experts, law enforcement officials from HHS-OIG and the DOJ, including  FBI, 
state law enforcement officials,  clinicians, and CMS  staff and program integrity contractors  to 
collaborate in real time  before, during,  and after the development of fraud leads.  These  
collaborative activities enable CMS to more quickly and efficiently  take administrative actions 
such as revocations of Medicare billing privileges and payment suspensions.  
 
In FY 2018,  CMS began a Major Case Coordination (MCC) initiative that includes 
representation from the  HHS-OIG, DOJ, CMSS. This initiative provides an opportunity for  
Medicare and Medicaid policy experts, law  enforcement officials, clinicians, and fraud 
investigators to collaborate before, during, and after the development of fraud leads.  This level 
of collaboration has contributed to several successful coordinated law enforcement actions and 
helped CMS to better identify national fraud trends and program vulnerabilities.  
 
As a result of the MCC, there has been a marked increase in the number  and quality of law 
enforcement referrals  from CMS.   Since implementation  of the MCC, there have been over 1,400 
MCC reviews  and 800 law enforcement referrals.  CMS  program integrity  activities and 
 
64  
  investigations will continue to contribute to law enforcement investigations, CMS administrative  
actions and CMS  initiatives.  In FY 2019, CMS  conducted 42 MCC meetings  in the Command 
Center  that included participants from CMS and law enforcement partners.  
 
Other examples of ways in which CMS  has  provided support to  the OIG and DOJ throughout 
Fiscal Year 2019  include:     
   In April 2019, CMS implemented over 130  administrative actions simultaneously with 
HHS-OIG and DOJs Operation Brace Yourself.  CMS implemented payment 
suspensions on 130 DME suppliers. As of August 2019, CMS suspended payments of 
approximately  $74 million and revoked  five  suppliers from Medicare,  a direct result  of 
the takedown.  
   In connection to the April 2019 coordinated law enforcement actions of the Appalachian 
Regional  Opioid Strike Force (ARPO), CMS  suspended payments for eight  enrolled 
providers and revoked the Medicare enrollment of  two  providers.      
   In September 2019, CMS took administrative action in connection with federal law 
enforcement actions involving five federal districts against 35 defendants associated with 
dozens of telemedicine companies and cancer genetic testing laboratories.   
   In addition to the administrative actions CMS  implemented, the Agency also  developed 
new edits to claims systems to prevent future  improper payments, and worked to update  
regulations to help minimize fraud, waste and abuse.  
 
Durable Medical Equipment Prosthetics, Orthotics, and Supplies (DMEPOS) Initiatives  
DME suppliers pose a high risk of  fraud to the Medicare program and CMS has undertaken an 
aggressive strategy to address this risk.  UPICs have continued to conduct site visits and 
interviews of DME suppliers, providers, and beneficiaries receiving DME products in high 
billing areas for DME supplies and products.  In FY 2019, these additional funds supported 
DME investigations  consisting of site visits to, and interviews of, suppliers, doctors, and patients 
identified as potentially suspicious or high risk.  
 
Electronic Visit Verification  
Section 12006(a) of the 21st  Century Cures Act, signed into law on December 13, 2016, added 
section 1903(l) to the Social Security Act, which mandates that states require electronic visit 
verification (EVV) use  for Medicaid-funded personal care services (PCS) and home health care  
services (HHCS) for in-home visits by  a provider.  Specifically, states must use an EVV system 
to substantiate the type of service performed, the individual receiving the service, the date of the 
service, the location of service delivery, the individual providing the service, and the time the 
service begins and ends. The Congressional Budget Office estimates that EVV will save states 
$290 million over a 10-year period.  
 
States were required to implement EVV for PCS by January 1, 2020 and for HHCS by January 1,  
2023. Otherwise, the state is subject to incremental reductions in Federal Medical Assistance  
Percentage (FMAP) matching of PCS and HHCS  expenditures,  which eventually reaches one  
percent. There is a limited exception for the first year of the requirement if the state had both 
made a good faith effort to comply with the EVV requirements and encountered  unavoidable  
delays in implementation of an EVV system. States with approved good faith effort exceptions 
will not have their FMAP matching reduced for the first calendar year.  All states except for  
 
65  
  Tennessee had approved good faith effort requests by December 2019, meaning they will  
implement EVV for PCS by January 1, 2021.  Implementation of EVV applies to PCS provided 
under the state plan or a  waiver of the plan, including under sections 1905(a)(24), 1915(c), 
1915(i), 1915(j), 1915(k), and 1115 of the Social Security  Act, and HHCS provided under 
section 1905(a)(7) of the  Social Security Act or under a waiver or demonstration project (e.g.,  
section 1915(c) or 1115 of the Social Security Act).  
 
Proactively Manage  Provider Screening and Enrollment  
 
Provider enrollment is the gateway to the Medicare and Medicaid programs and is the key to  
preventing ineligible providers and suppliers from entering either program.  CMS is committed 
to maintaining operational excellence in its provider enrollment and screening process.  Through 
provider screening and enrollment, CMS continues to prevent and reduce  fraud, waste, and abuse  
in the Medicare and Medicaid programs and ensure that only  eligible providers are caring for  
beneficiaries and receiving payment.  
 
Medicare Provider Screening and Site Visits  
CMS regulations  establish three levels of provider  and supplier enrollment risk-based screening: 
limited, moderate, and high, and each provider and supplier specialty  category is assigned 
to one of these three screening levels.  Providers and suppliers designated in the limited risk 
category undergo verification of licensure  and a  wide range of database checks to ensure  
compliance with all provider- or supplier-specific  requirements.  Providers and suppliers 
designated in the moderate risk category  are subject to unannounced site visits in addition to 
all the requirements in the limited screening level  providers and suppliers in the high  risk 
category  are subject to fingerprint-based criminal background checks (FCBCs) in addition to all  
of the requirements in the limited and moderate screening levels.  In FY 2019, CMS denied 
approximately  769  enrollments and revoked 11  enrollments as a result of the FCBCs or a failure  
to respond.  
 
The Advanced Provider Screening system (APS) automatically screens all  current and 
prospective providers and suppliers against a number of data sources, including provider and 
supplier licensing  and criminal records to identify  and highlight potential program integrity  
issues for proactive investigation by CMS.  In FY 2019, APS resulted in more than 1.6  million 
screenings.  These screenings  generated  more than 46,198  potential licensure alerts, and more  
than  3,000  criminal  alerts for potentially  fraudulent providers and suppliers for further review by  
CMS.  APS  review resulted in approximately  85  criminal revocations  and over 77  licensure  
revocations.  
 
Site visits are a screening mechanism used to prevent questionable providers and suppliers from 
enrolling or maintaining  enrollment in the Medicare program.  CMS-authorized site-visit 
contractors validate that the provider or supplier complies with Medicare enrollment 
requirements during these visits.  In FY 2019, the  initiative resulted in 30,668  site visits 
conducted by the National Site Visit Contractor (NSVC), which conducts site visits for most  
Medicare FFS providers and suppliers, and 26,438  conducted by the National Supplier 
Clearinghouse (NSC), which conducts site visits for Medicare DME suppliers.  This work 
 
66  
  resulted in about 232  revocations due to non-operational site visit determinations for all  
providers and suppliers.  
 
CMSs provider screening and enrollment initiatives in Medicare have had a significant impact 
on removing ineligible providers and suppliers from the program.  In FY 2019, CMS deactivated 
146,638  enrollments, and revoked 2,253  enrollments.  Site visits, revalidation, and other  
initiatives have contributed to the deactivation18  and revocation19  of more than one million 
enrollment records since  FY 2012, when CMS started implementing these  screening  and  
enrollment requirements.  
 
Provider Enrollment, Chain and Ownership System (PECOS)  
PECOS is the system of record for all Medicare Provider/Supplier enrollment data, which 
includes Part A, Part B, and DME. It is the Internet-based system that providers and  suppliers 
use to enroll, revalidate, or make changes to their enrollment information in the Medicare FFS  
program.  PECOS stores all information furnished by providers and suppliers; tracks all  
enrollment processing and the results of Medicare  Administrative Contractor (MAC) evaluation;  
and provides feeds to FFS claims payment systems which are used in processing all claims. 
Medicare FFS claims processing  cannot occur without provider/supplier enrollment information 
from PECOS. All provider/supplier updates  and validations, both systematic and those  
performed manually by  MACs, are stored and sent by PECOS. It is integrated with and supports 
multiple enterprise systems and CMS operations for  the Merit-Based Incentive Payment System 
(MIPS), demonstrations and model tests,  and DMEPOS competitive bidding, providing direct 
access to information on the relationships between individuals and organizations stored in 
enrollment records. PECOS is a critical part of CMSs  program integrity strategy and it is the  
base data used by the Fraud Prevention System (FPS) as well as many  program integrity partners 
including the Unified Program Integrity Contractors (UPICs), Recovery Audit Contractors 
(RACs), the HHS-OIG, and state  program integrity  programs.  
 
PECOS is the source for vetting CMSs Accountable Care Organization programs and models 
and provides information that is used as a primary  factor to determine program and model 
eligibility. PECOS supports data transparency through interfacing with programs such as: Open 
Payments, Physician Compare, and Nursing Home Compare, and also supports CMS data 
management initiatives through Master Data Management (MDM)  and Integrated Data 
Repository (IDR). State Medicaid programs also rely on data-sharing efforts to support 
requirements for screening providers  and suppliers. CMS is focused on transitioning PECOS to a 
modernized, enterprise  resource that is a platform for all provider/supplier enrollments across 
Medicare, Medicaid, and  other CMS  programs. This single platform is intended to allow for 
streamlining and consistency in user workflows, as well as the ability to standardize interfaces 
with systems internal and external to CMS.  
 
In FY 2019, CMS made  significant changes to PECOS to simplify access,  improve the usability  
and enhance the security  of the system, including the following  changes:  
                                                 
18  Deactivation  means  the providers  or  suppliers  billing  privileges were stopped,  but can  be restored  upon  the 
submission  of  updated  information.   See 42  CFR  424.540.  
19  Revocation  means  the providers  or  suppliers  billing  privileges are terminated.   See  42  CFR  424.535.  
 
67  
     Added initial features necessary to facilitate the future implementation of Multi-Factor 
Authentication  
   Implemented the enhancements necessary to ensure all enrollment data that flows to the 
claims system comes directly  from PECOS  
   Continued enhancing and streamlining the process that expedites the enrollment 
processing for users by allowing digital upload of the signature pages  
   Implemented enhancements to the provider enrollment  Process to support the 
implementation of the final rule  CMS-6058  titled  Program Integrity Enhancements to 
the Provider Enrollment Process  
   Implemented a Medicare  ID Search tool in the provider interface to ease the process of 
finding the Medicare billing  numbers to assist the  provider community  with any inquiries  
 
Medicaid Screening and Enrollment  
As part of its oversight role in Medicaid, CMS works closely with state Medicaid Agencies 
(SMAs) to provide regulatory  guidance, technical assistance, and other support with respect to 
provider screening and enrollment.  SMAs can comply with federally required Medicaid 
screening  and enrollment  requirements by using CMSs Medicare screening results for dually-
enrolling providers, thus eliminating the need and burden associated with states re-screening  
such applicants.  States may use Medicare screening data, including site visits, payment of  
application fees, and FCBCs.  For Medicaid-only FFS providers, SMAs must at a minimum 
follow the same risk-based screening procedures as required for Medicares screening and 
enrollment process.  
 
During  FY 2019, CMS continued to expand its efforts to assist states with meeting Medicaid 
screening  and enrollment requirements.  These efforts include enhanced sharing of Medicare  
enrollment and screening data with states, enhancing the data compare service to help states 
identify providers for which the state is able to rely  on Medicares screening, providing technical 
assistance to states through site visits, publishing additional guidance in the Medicaid Provider 
Enrollment Compendium (MPEC), continuing monthly Technical Assistance Group (TAG) 
calls, and establishing  a  TAG call dedicated solely  to screening and enrolling Medicaid managed 
care network providers.  
 
CMS shares the Medicare provider  enrollment record via the PECOS administrative interface  
and in bulk data extracts from PECOS.  Additionally,  CMS launched the PECOS States page in 
January 2017, and included provider  enrollment information such as Medicare enrollment status, 
site visit information, fingerprint results, change of ownership information, reassignments, 
Medicare risk levels, and more.  Since May 2016, CMS has offered the data compare service that 
allows a state to rely on Medicares screening, in lieu of conducting  state screening.  Using the 
data compare service, a state provides an extract of its actively  enrolled provider population  to 
CMS and then CMS returns information to the state indicating for which providers the state is 
able to rely on Medicares screening.  CMS has made enhancements to this service, which 
include tailoring the type of comparison to meet a states specific needs (for example, comparing  
provider ownership information between Medicare and Medicaid).  Lastly, in FY 2019, CMS  
launched the Data  Exchange  (DEX) system, which is used to share data among CMS and the 
separate Medicaid programs of every state.  The new system stores all state-submitted 
 
68  
  terminations as well as all Medicare  revocations, and HHS-OIG exclusion data, and enhances 
collaboration, improves reporting, and creates transparency through this process.  
 
CMS provides ongoing  guidance, education, and outreach (state  visits and targeted  technical 
assistance) to states on federal requirements for Medicaid screening and enrollment 
requirements.  In addition, CMS published updates to the MPEC in FY  2018, which is sub-
regulatory  guidance designed to assist states in applying certain regulatory  requirements. The  FY 
2018  update focuses on applying screening and enrollment requirements to the Medicaid 
managed care network provider population.  
 
Medical Review   
 
   Accuracy reviews  
CMS uses the Medical Review Accuracy Contractor (MRAC) to conduct medical 
reviews of claim determinations made by Medicare and Medicaid Medical Review   
Contractors (MRCs).  MRCs include the MACs, UPICs, and the Supplemental Medical 
Review Contractor (SMRC).  The MRAC helps CMS  by measuring the accuracy  rate for  
each contractor, ensures the contractors are  consistent in their  medical review decisions, 
feeds information into the Award Fee Component for the MACs and determine where  
policy/issues/medical review  inconsistencies may  be present.  CMS performs a number of 
accuracy  reviews using clinicians; however, the MRAC is able to complete more  
accuracy  reviews and provides additional analysis to CMS.  
 
   Prior Authorization  
In a final rule, CMS established an initial Master List of certain Durable Medical 
Equipment Prosthetics,  Orthotics,  and Supplies (DMEPOS) that are frequently subject to 
unnecessary utilization and established a prior  authorization process for these items. CMS  
announced the first two codes for  two types of power wheelchairs subject to prior  
authorization as a condition of payment, which began on March 20, 2017, in four states. 
Prior authorization for these codes expanded nationally on July 17, 2017. In FY 2018, 
CMS transitioned the Power Mobility Device demonstration into the national program.  
 
In FY 2019, CMS selected 12 additional DMEPOS items for required prior authorization. 
Beginning  on July 22, 2019, nationwide, seven additional PMD codes required prior  
authorization.  Also beginning on this date, five codes for  pressure reducing support 
surfaces required prior  authorization in California, Indiana, New Jersey, and North 
Carolina. Prior authorization for these codes expanded nationwide on October 21, 2019.  
The  DME MACs review requests for prior authorization for the noted items, 
communicate decisions with suppliers and physicians, and provide ongoing education 
and customer service.  
 
   Comparative Billing Reports  
Comparative Billing Reports (CBRs) are educational tools providers can use to support 
efforts to protect the Medicare Trust Funds. These  reports compare an individual provider  
or suppliers billing and/or prescribing practices for a specific billing code, policy  group,  
or service  with the billing and/or prescribing practices of that provider  or suppliers  peers 
 
69  
  in the same state and/or specialty, and national averages. CBRs inform providers about 
Medicare coding, billing, and coverage  guidelines and strategies for implementing self-
audit processes into their  practices, where appropriate.  Currently, CBRs are available for 
download by the provider  or supplier  on a secure  electronic portal as well  as mailed in 
full via postal mail.  Since 2011, CBRs have been issued on topics such as physical 
therapy, opioids, and orthoses claims. Typically,  CBRs are sent to approximately  5,000 
outliers providers per topic based on data analysis  for a defined period of time. Topics are  
based on GAO/OIG reports, Comprehensive Error Rate Testing program findings and 
through agency  and contractor data analysis.  A CBR does not necessarily indicate 
improper billing  and/or prescribing by the provider and only in select instances are  
providers  and suppliers  referred for additional review or education.   
 
Continue to Build States Capacity to Protect Medicaid  
 
CMS assists states in building their internal capacity to conduct program integrity  activities for 
Medicaid.  CMS continues to use HCFAC program discretionary funds and other funding  
sources to develop and implement enterprise systems that support Medicaid. In particular, the  
Medicaid and CHIP  Business Information Solution (MACBIS) initiative, will improve the CMS  
and states ability to gather and analyze data that will support program integrity activities.  
MACBIS is a CMS enterprise-wide initiative to modernize  and transform the information and 
data exchanges with states and other key stakeholders.  The MACBIS initiative is comprised of 
four key areas of improvement to help prevent fraud, waste, and abuse; program data  (such as T-
MSIS), operational data, quality data, and business process performance data.   HCFAC funding  
also supports the preparation and dissemination of educational toolkits for states to use to 
enhance awareness of Medicaid fraud, waste, and abuse among providers, beneficiaries, 
managed care organizations, and others.  States participate in and receive support and technical 
assistance and education from CMS through:  
 
   Medicaid Technical Advisory Groups  
   Voluntary state assistance site visits  
   Webinars  
   Medicaid Integrity  Institute (MII)  
   Provider screening and enrollment strategies  
   Onsite focused program integrity reviews  
   Consolidation of provider audits and investigations through the five Unified Program 
Integrity Contractors  
   Desk reviews of state processes and procedures  
 
CMS also identifies areas of improvement and works with the states to make sure their integrity  
programs are robust.  
 
Health and Welfare Special Review Teams  
The Health and Welfare  Special Review Teams (H&W SRT) project began in late September  
2018. The purpose of  this project is to ensure that state quality monitoring  methodologies are  
efficiently and effectively  preventing, detecting, and remediating all instances of abuse and/or 
neglect to beneficiaries in home and community based settings including  group homes,  and 
 
70  
  assisted living programs.  The H&W SRT began to analyze  all statewide HCBS data available  
for 15 states to identify states to receive the initial onsite reviews.  Five  states that would benefit 
from onsite reviews were identified based on the potential to generate promising practices, 
expectations of a waiver renewal submission in the near term, or awareness of potential areas 
needing improvement.  Through the end of  FY 2019, onsite reviews were  conducted in Ohio, 
Massachusetts, Maryland, Oregon, and the District of Columbia.   The H&W SRT also developed 
and presented two trainings entitled Risk Assessment & Mitigation Strategies  and Balancing  
Choice & Risk and supported CMS in presenting  an introductory training for states on the  
H&W SRT.   A data tracker tool that will house all of the state findings including promising  
practices was developed.  The H&W SRT will continue to conduct analyses, onsite visits and 
trainings to help CMS identify, prevent  and address any systemic problems in the states  
implementation of and compliance with health &  safety oversight systems within these settings.  
 
Medicaid Enterprise System  
State Medicaid agencies develop, implement, operate and maintain information technology  
systems to support their  program operations.  The systems generally include eligibility  and 
enrollment, managed care payment, encounter data and/or claims processing, pharmacy  
management, etc. These  systems work in concert with one another and must adhere to Federal 
regulation20  and guidance, including  the Medicaid Information Technology  Architecture (MITA)  
framework, several standards and conditions21, and certification criteria.  Adhering to these  
mandates promotes the consistency of business and technical processes and  IT platforms, as well  
as standards across the Medicaid Enterprise.  As noted above, CMS is working closely with 
states to support the delivery of comprehensive digital service products for  MACBIS.   MACBIS  
is an enterprise-wide initiative to empower Medicaid states and federal government users to 
perform monitoring and oversight, inspect program integrity, evaluation demonstrations, perform 
actuarial and quality of care analysis, negotiate waivers, and enable the sharing of 
comprehensive program data with states, stakeholders, and the research community.  
 
CMS provides independent technical assistance to states 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.  Required technical 
artifacts are  analyzed and tracked to assess state progress.  Gap analyses are done on a regular  
basis and risk registers are studied to identify opportunities to better ensure  project success.   As 
systems enter production operations (aka go-live), they are reviewed in-depth by CMS to 
ensure that the system functions appropriate to implement the policy  requirements (e.g., for 
provider enrollment or for eligibility  and enrollment, etc.). Certain state systems also undergo a  
certification review  conducted by CMS as an additional step in ensuring proper operation.    
 
Federal and state  governments have invested heavily in the development and operations of 
Medicaid claims processing and information retrieval systems that engage in high volume  
transactions.   In 2016, CMS released an update to the MMIS Certification process in the form of  
MECT 2.0 to ensure a more comprehensive analysis of CMS funded state systems functionality. 
                                                 
20  Mechanized  Claims  Processing  and  Information  Retrieval Systems  (90/10)  Final Rule 
(https://www.federalregister.gov/documents/2015/12/04/2015-30591/medicaid-program-mechanized-claims-
processing-and-information-retrieval-systems-9010)  
21  https://www.medicaid.gov/medicaid/data-and-systems/mita/index.html  
 
71  
  Moving forward, CMS is focused on increasing accountability and state flexibility by creating an 
outcomes based oversight model for  state systems certification. This approach will focus on 
producing timely and accurate claims payment results, properly screening  and enrolling  
providers, member management, and comprehensive data analytics and reporting capabilities 
including timely  and accurate submissions of required federal reporting such as T-MSIS.    
 
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  Act of 2010 (IPERA)  and the Improper Payments Elimination and 
Recovery  Improvement Act of 2012 (IPERIA), requires each agency to periodically review  
programs it administers and identify programs that may be susceptible to significant improper 
payments.  For those programs determined to be susceptible, the agency is required to 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 being  at risk for significant improper payments.  CMS estimates improper payment 
rates in Medicaid and CHIP through the Payment Error Rate Measurement (PERM) program.  
The improper payment rates are based on reviews of the FFS, managed care, and eligibility  
components of Medicaid and CHIP in the  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.  
 
As described in the PERM final  rule (82 FR  31158, July 5, 2017),  CMS  resumed the eligibility  
component measurement for the first cycle of 17 states and reported an updated national 
eligibility improper payment estimate for FY 2019. Between FY 2015 and FY 2018, CMS  did 
not conduct the eligibility  measurement component of PERM; refer to page 72 of the Health 
Care Fraud and Abuse Control Program Annual Report for Fiscal Year 2018  for additional 
information.22   The  PERM final rule also sets  forth the standard provisions for a revised 
Medicaid Eligibility Quality Control (MEQC)  program,  which operates during  off-cycle PERM 
years. The MEQC program  provides states additional opportunities to review  eligibility  
determinations to allow for continuous oversight and helps states determine corrective  actions  for  
eligibility determinations that  are not reviewed in  the  PERM program, such as  denials and 
terminations.   
 
In the HHS FY 2019 Agency Financial Report (AFR)23, CMS reported the national Medicaid 
improper payment rate based on measurements conducted in FYs 2017, 2018, and  
2019.24   The FY 2019  national Medicaid improper payment rate was 14.90  percent, representing  
$57.36  billion in gross federal improper payments.  The FY 2019 national improper payment 
rates by component are  16.30  percent for Medicaid FFS,  0.12 percent for Medicaid managed 
care, and 8.36 percent for Medicaid eligibility.   The Medicaid improper payment rate increased  
from 9.79  percent in FY 2018, but the Medicaid improper payment rates between FY 2018 and 
                                                 
22  https://oig.hhs.gov/publications/docs/hcfac/FY2018-hcfac.pdf  
23  https://www.hhs.gov/about/agencies/asfr/finance/financial-policy-library/agency-financial-reports/index.html   
24  The national eligibility  improper  payment rate still includes  a proxy  estimate for  the remaining  34  states that have 
not yet been  measured  since  the reintegration  of  the PERM eligibility  component.  
 
72  
  FY 2019 are not comparable  as the measurement has changed dramatically  because of the  
reintegration of the PERM eligibility component for FY 2019.  
 
Since FY 2014, the Medicaid improper payment rate has been driven by  errors due to state non-
compliance with provider screening, enrollment, and National Provider Identifier (NPI) 
requirements.  Most  improper payments cited on claims  are those where  a newly  enrolled 
provider had not been appropriately screened by the state, a provider did not have the required 
NPI on the  claim, or a provider was not enrolled. Although these  errors remain a driver of the  
Medicaid rate, state compliance has improved as the Medicaid FFS improper payment rate for 
these errors decreased from 7.21  percent in FY 2018 to 6.28  percent in FY 2019.  
 
While the screening errors described above are for newly  enrolled providers, states must  also 
revalidate the  enrollment and rescreen all  providers at least every  five  years. States were required 
to complete the revalidation process of all existing providers by September 25, 2016. In FY 
2019, CMS measured the  second  cycle of states for compliance with requirements for provider 
screening  at revalidation.  Improper payments cited on claims where  a provider had not been 
appropriately screened at revalidation is a new major source of error in the  Medicaid improper 
payment rate. CMS will complete the measurement of all states for compliance with provider 
revalidation requirements in FY 2020.  
 
Another area driving the FY 2019 Medicaid improper payment estimate is the reintegration of  
the PERM eligibility  component, mentioned above. This is the first time in the history of the  
program that the eligibility component measurement has been conducted by  a  federal contractor; 
previously states conducted the measurement and self- reported results to CMS  for reporting the 
national rate. This allows for consistent insight into the accuracy of Medicaid eligibility  
determinations and increases the oversight of identified vulnerabilities. Based on the 
measurement of the first cycle of states, eligibility errors are mostly due to insufficient 
documentation to verify  eligibility or noncompliance with eligibility  redetermination 
requirements.  The majority of the insufficient documentation errors represent both situations 
where the required verification was not done at all and where there is indication that the 
verification was initiated but there was no documentation to validate the verification process was 
completed. These insufficient documentation situations are related primarily to income or  
resource verification.  CMS  will complete the measurement of  all states under the new eligibility  
component and establish a baseline in  FY 2021.  
 
CMS also reported in the FY 2019  AFR the national CHIP improper payment rate that is based 
on measurements conducted in FYs 2017, 2018, and 2019.  The FY 2019 national CHIP  
improper payment rate was 15.83  percent, representing $2.74  billion in gross federal improper 
payments.  The national improper payment rates by  component are  13.25  percent for CHIP FFS,  
1.25  percent for CHIP managed care, and 11.78 percent for CHIP  eligibility. The  CHIP improper 
payment rate increased  from 8.57  percent in FY 2018, but the CHIP improper payment rates 
between FY 2018 and FY 2019 are not comparable  as the measurement has changed 
dramatically because of the reintegration of the PERM eligibility component for FY 2019.  
 
One area driving the FY 2019 CHIP  improper payment estimate is the FY 2019 reintegration of  
the PERM eligibility  component, mentioned above.  This is  the first time in the history of the  
 
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  program that the eligibility component measurement has been conducted by  a  federal contractor; 
previously states conducted the measurement and self-reported results to CMS for reporting the 
national rate. This allows for consistent insight into the accuracy of CHIP eligibility  
determinations and increases the oversight of identified vulnerabilities.  Based on the 
measurement of the first cycle of states, eligibility errors are mostly due to insufficient 
documentation to verify  eligibility or noncompliance with eligibility  redetermination 
requirements. The majority of the insufficient documentation errors represent both situations 
where the required verification was not done at all and where there is indication that the 
verification was initiated but there was no documentation to validate the verification process was 
completed. These insufficient documentation  situations are related primarily to income 
verification. The CHIP improper payment rate was also driven by claims  where the beneficiary  
was ineligible  for CHIP, but was eligible  for Medicaid, again, mostly  related to beneficiary  
income. HHS will complete the measurement of  all states under the new eligibility component 
and establish a baseline in FY 2021.  
 
Additionally, since  FY 2014, improper payments cited on claims where a newly  enrolled 
provider or a  provider due for revalidation had not been appropriately enrolled and screened by  
the state or a provider did not have the required NPI on the claim have also driven the CHIP rate. 
Although these  errors remain a driver of the CHIP rate, state compliance  with the newly  enrolled 
provider requirements has improved as the CHIP  FFS improper payment rate for these errors 
decreased from 7.73 percent in FY 2018 to 6.02 percent in FY 2019.  
 
Medicaid 1115  Financial Oversight  
The Medicaid section 1115 demonstration is an increasingly important vehicle for state  
innovation in Medicaid  program development, expansion and financing.  Three quarters of states 
operate at least one 1115 demonstration, and there  are approximately 70 active demonstrations 
representing  estimated federal outlays in the amount of $150.9 billion in  FY 2018.  The  
Medicaid portfolio of section 1115 demonstrations continues to grow in number, federal outlays, 
and policy importance  and complexity.  CMS has committed additional staff and reorganized 
section 1115 demonstration work to develop and implement a more robust approach to 
monitoring and oversight of these demonstrations.    
 
CMS activities in FY 2019 included the rollout to states of the information in the FY 2018 State 
Medicaid Director Letter documenting CMSs approach to various aspects of Medicaid 1115 
budget neutrality  calculations.25   This included changes in budget neutrality policy that CMS has 
been implementing  which base project expenditures that are  compared to estimated 
demonstration costs to more current and realistic expenditure growth  assumptions.  CMS  
continues to implement its revised uncompensated care pools policy which resizes the states 
uncompensated care (UC) pools based on data submitted by states, reflecting charity care only, 
on the Hospital and Hospital Health Care Complex  Cost Report.  CMS does not provide UC  
funds to substitute for payment that could be provided by Medicaid through payment of 
appropriate rates.  In addition, CMS continues to build and test standard operating procedures 
and reporting tools to strengthen section 1115 fiscal and program monitoring and internal 
controls, including the budget neutrality  workbook  that was rolled out to states throughout 
                                                 
25  https://www.medicaid.gov/sites/default/files/federal-policy-guidance/downloads/smd18009.pdf  
 
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  FY2019 to standardize budget neutrality  reporting and to improve level of review of that data.  
The budget neutrality workbook resides in the Performance Metrics Database and Analytics 
(PMDA) system that supports Section 1115 demonstration workflows and is accessible to states.     
 
CMS continues to build performance measurement sets for high priority demonstrations such as 
for substance use disorders, severe mental illness and community engagement.   CMS also works 
with states to include these measures in the demonstration design and reporting requirements, 
and then monitor demonstration progress against them. The same staff continue to further 
advance an information management system introducing stronger and more reliable internal 
controls, and that is beginning to strengthen federal monitoring and analysis of performance  
trends across states and over  time.  The sixth version of this system was released in June 2019.    
 
Home and Community-Based Services Rate Review and Fiscal Integrity Project  
The Rate Review  and Fiscal Integrity Project improves the efficiency  and effectiveness of rate 
setting oversight and financial reporting for the Programs of All-inclusive  Care for the Elderly  
(PACE), and Home and Community  Based Services (HCBS) waiver and state plan programs. 
Project tasks include rate methodology review and analysis, assessing  compliance with statute 
and regulations, data  compilation and validation, and education and training for states and CMS  
staff.  Specifically,  this includes:  
 
   Ensuring that states are in compliance with the HCBS assurances as described in Section 
1915(c) of the Act  
   Analyzing states  fiscal integrity systems; conducting analyses of HCBS personal care  
services requirements and tracking and trending states protections against waste, fraud, 
and abuse   
   Providing education and training related to financial accountability, rate development, 
and pre and post payment review methods  
   Conducting environmental scans of states incident management systems to identify  
methods to detect unnecessary and/or recurrent hospitalizations and methods for  
monitoring the health and safety of Medicaid participants  
 
From September 30, 2018 to September 29, 2019, CMS completed 119 reviews of HCBS  
waivers for 36 states and  compiled reports with findings pertaining to the waivers fiscal and 
quality components for each.  A survey of states incident management systems for HCBS  
waivers was also completed during  FY 2019. Findings from fiscal and quality reviews are  
aggregated in an annual report each year which helps inform technical assistance activities and 
guide program improvements. Since 2016, 25 presentations have been completed and made  
available to state staff via technical assistance calls and web posting. They covered topics such as 
fiscal protections in personal care services, preventing unallowable costs in HCBS programs, 
financial accountability of HCBS, rate sufficiency, and HCBS rate development.  Thirty-two 
PACE reviews spanning  26 states were also conducted during this time.  
 
Extend Work in Medicare  Parts C and D  
 
CMS is committed to expanding program integrity  activities in capitated, managed care  
programs in Medicare.  For example, CMS has strengthened oversight of Medicare Part C and 
 
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  Part D plan sponsors by  conducting  audits that detect whether plans are delivering the 
appropriate health care services and medications for which they are being paid.  
 
National Benefit Integrity  (NBI)  Medicare  Drug  Integrity Contractor (NBI  MEDIC)  and 
Investigations MEDIC  (I-MEDIC)  
CMS split  its Medicare Parts C and D program integrity initiatives between two contractors: The  
National Benefit Integrity  (NBI) Medicare  Integrity Contractor (NBI MEDIC) and Investigations 
MEDIC  (I-MEDIC).   The NBI MEDIC has a national focus related to plan oversight pertaining  
to the following Part C and Part D program integrity initiatives:   identification of program 
vulnerabilities, data analysis, health plan audits, outreach/education and law enforcement support 
which includes requests for information (RFI). As a result of the NBI MEDICs data analysis  
projects including Part D plan sponsor self-audits, HHS recovered $3.8  million in the first nine  
months of FY 2019 from Part D sponsors.   
 
The primary purpose of the  I-MEDIC is to detect, prevent, and proactively  deter fraud, waste, 
and abuse for high risk prescribers/pharmacies in Medicare Parts C and D by focusing primarily  
on complaint intake and response, data analysis, investigative  activities, referrals to law  
enforcement partners, and law enforcement support which includes RFIs.   
 
Medicare Parts C and D Marketing Oversight   
Each year CMS  analyzes Annual Notice of Change (ANOC) and Evidence  of Coverage  (EOC) 
documents and takes compliance action against  Part C Medicare  Advantage Plans, Part D  
Prescription Drug Plans (PDPs), Section 1876 Cost Plans, and Medicare-Medicaid Plans 
(MMPs) that fail to send timely ANOC documents and accurate ANOC or  EOC documents to 
Medicare enrollees.  Both documents provide Medicare  enrollees with vital information that can 
impact their ability to make informed choices concerning their Medicare health care and 
prescription drug options.   
 
In FY 2019, CMS issued a total of twenty-three (23) notices of non-compliance (NONCs) to 
nineteen (19) parent organizations as part of a timeliness review.  Thirteen (13) NONCs were  
issued to plans that failed to enter dates that their  ANOCs or EOCs were mailed, three  (3)  
NONCs were issued for incorrect coding of ANOC or EOC materials, and six (6) were issued for  
failing to send timely ANOCs to enrollees, and one (1) was issued for sending an incorrect 
ANOC.    
CMS issued twenty-three (23) NONCs to twenty-three (23) parent organizations and one (1)  
warning letter (WL) to one (1) parent organization during the accuracy review. The NONCs and 
WL  were based on substantive inaccuracies (e.g., benefits, cost-sharing) contained in ANOC or 
EOC documents issued to Medicare enrollees.       
 
Program Audits  
CMS conducts program audits of Parts C and D plan sponsors (including organizations offering  
Medicare-Medicaid Plans) and Programs of All-Inclusive Care for the Elderly  (PACE)  
organizations  to evaluate their delivery of health care services and medications to beneficiaries.  
In order to conduct a comprehensive audit of a sponsors operation and maximize CMSs 
resources, scheduled program audits in 2019, as well as in prior  years, occur at the parent 
organization level.  
 
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Sponsors have all program areas audited when possible, unless a protocol was not applicable to 
their operation  or CMS is conducting  a focused audit. Each  sponsor that has deficiencies cited in 
its  audit report is  required to correct all of the deficiencies and undergo a validation audit to 
ensure the issues have been corrected before the program audit can be closed.  
 
In general, program audits give CMS reasonable assurance that sponsors and PACE 
organizations deliver benefits in accordance with the terms of their  contracts and plan benefit 
packages.  However, CMS also has the authority to take enforcement actions, up to and including  
termination, if warranted, for findings that involve direct beneficiary harm or the potential to 
result in such harm.  
 
CMS has greatly increased the level of transparency  with respect to audit materials, the  
performance of audits, and the results of those audits, including any enforcement actions that 
may result.  CMS believes that program audits and consequences of possible  enforcement actions 
are continuing to drive improvements in the industry and are increasing sponsors compliance  
with core program functions in the Medicare Parts C and D  and PACE programs.    
 
Compliance and Enforcement  
CMS has a number of tools, including the imposition of administrative enforcement actions, to 
encourage program compliance. These actions include:  
 
   Civil money penalties (CMPs)  
   Intermediate sanctions (i.e., suspension of marketing, enrollment, payment)  
   CMS initiated contract terminations  
 
CMS has the authority to take enforcement or contract termination actions against a Part C or 
Part D plan sponsor for program violations, including:  
 
   Substantially  failing to comply with program and/or contract requirements   
   Performance under a  contract with CMS in a manner that is inconsistent with the efficient 
and effective  administration of the Medicare Part C and Part D program requirements  
   Failure to substantially meet the applicable conditions of the Medicare Part C and D 
program  
Part C Benefits Review  Activities  
Each year, CMS requires  Part C organizations to submit bids and plan benefit packages detailing  
how their Part C plans will provide coverage to beneficiaries for the following  year.  More than 
5,600  Part C  plans submitted plan benefit packages on June 3, 2019 and project to cover more  
than 24.0  million beneficiaries in contract year 2020.  Bid and plan benefit submissions are  
reviewed to ensure they  do not discriminate against beneficiaries and comply with CMS  
regulations.  Plan requirements are established and communicated annually  and the following  
reviews are performed:  
 
   Low Enrollment Plans Each year, CMS evaluates existing  Part C  plans that have low 
total enrollment to make sure these plans are sustainable over time and protect  
beneficiaries from selecting a potentially unsustainable plan.  
 
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   Total Beneficiary Cost (TBC) Evaluate increases in beneficiary cost sharing or 
decreases in plan benefits from one year to the next.  This evaluation makes sure  
beneficiaries receive value in their benefit package selection and protects them from large  
increases in out of pocket costs.  
 
   Maximum Out of Pocket Costs (MOOP)This review examines the maximum out-of-
pocket costs for  enrollees in Part C  and protects beneficiaries from very high out  of 
pocket medical costs.  
 
   Service Category Cost-Sharing Standards Each  year, CMS evaluates the cost-sharing  
plans include in their bids and plan benefit packages to ensure the plans do not exceed 
established limits and are not discriminatory.   
 
   Actuarial Equivalence  CMS also reviews bids to make certain the estimated cost 
sharing presented in the  bid is actuarially equivalent to the cost-sharing levels under FFS.  
CMS currently  examines four categories for actuarial equivalence and this review helps 
guard against plans imposing discriminatory cost-sharing on beneficiaries.  
 
   Supplemental Benefits There  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.  
 
All of these reviews are carefully conducted by CMS to make certain that plans make all  
necessary changes to their bids and plan benefit packages.  These reviews are conducted between 
early June and August and involve communications with Part C organizations to correct issues 
and resubmit their bids and plan benefit packages as necessary.  Following  bid and plan benefit 
approval, Part C  organizations must complete the contracting process with CMS and may market 
to beneficiaries beginning October 1st  of each year.  Part C  benefits requirements and review  
processes are intended to protect beneficiaries from discrimination and to make sure that Part C  
plans provide value to enrollees.  
 
   
 
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  Part C Encounter Data Processing System Contract  
In the FY 2009 inpatient prospective payment system (IPPS) final rule, CMS revised regulations 
to require Part C organizations to submit encounter data for each item and service provided to 
Part C plan enrollees.   Consistent with such regulations, CMS requires Part C organizations to 
submit encounter data for dates of service beginning January 3, 2012.  Part C organizations are  
required to submit data for all institutional, professional, and DME services provided to Part C 
plan enrollees on or after that date. CMS established and maintains the Encounter Data System 
(EDS) to collect and process encounter  data.  To date, the EDS has collected almost 4.5  billion 
encounter data records (EDRs).    
 
The encounter data detail each item and service  provided to enrollees of Part C 
organizations.   These records are  comparable in format and detail to claims  submitted to the 
MACs by FFS providers.   The encounter data collected by Encounter Data Processing System 
(EDPS) will allow CMS  to make more accurate payments reflecting the patterns of care and the  
predicted costs of diseases for Part C enrollees.  CMS is also able to use the information to 
evaluate service utilization, assess quality of care, and assess the performance of Part C  
organizations.  
 
Beginning in FY 2015, CMS began to use  encounter data as an additional source of diagnoses to 
risk adjust payments to Part C organizations.  In CY 2016, CMS continued the transition and 
calculated risk scores using both Risk Adjustment Processing System (RAPS) and encounter 
data, with RAPS-based risk scores weighted at 90% and encounter data-based risk scores 
weighted at 10 percent  CMS has continued transitioning  from  reliance on diagnoses to  encounter  
data in payment.  In calendar year 2019, CMS increased  the use of encounter data for calculating  
risk scores with encounter data-based risk scores receiving a weight of 25 percent and RAPS-
based risk scores a weight of 75 percent.  CMS anticipates ultimately using  encounter data as the 
sole source of plan-submitted diagnosis information.    
 
Encounter Data Oversight and Integrity Activities  
Since complete and accurate encounter data are integral to risk adjustment payments and other 
uses of encounter data, CMS has developed an encounter data oversight and integrity plan to 
support efforts to ensure  the completeness and accuracy of the Part C data that are  collected by  
CMS.  This plan is aligned with direction provided by the GAO and lays out an incremental 
approach to assess and drive encounter data submission and quality over multiple  years.  Major 
components of the plan include: outreach, analysis, monitoring, and compliance of Part C plans   
encounter data submissions.  
 
Improper Payment Rate Measurement and Increased Accountability in Medicare Advantage  
(Part C) and Medicare  Prescription Drug  Benefit Programs (Part D)  
Each year, CMS publishes national improper payment rates for Medicare  Part C and Part D in 
accordance with the  IPIA, as amended by  IPERA and IPERIA.  
 
The Part C gross improper payment estimate  reported for  FY 2019 (the latest year for which 
CMS has data, which is based on the 2017  payment year) was 7.87  percent or $16.73  billion.  
The Part C methodology  estimates improper payments resulting from errors in beneficiary risk 
scores.  The primary component of most beneficiary  risk scores is based on clinical diagnoses 
 
79  
  submitted by the plan.  If the diagnoses submitted to CMS are not supported by medical records, 
the risk scores will be inaccurate and result in payment errors.  The Part C payment error 
estimate is based on medical record reviews conducted under CMSs annual National Risk 
Adjustment Data Validation (RADV) process, where CMS identifies unsupported diagnoses and 
calculates corrected risk scores.   
 
In an effort to improve the Part C improper payment rate, CMS has implemented three key  
specific corrective actions described below:  
 
   Contract-Level Audits:  Contract-level RADV audits are CMSs primary corrective  
action to recoup overpayments.  RADV verifies, through medical record review, the 
accuracy of enrollee diagnoses submitted by Part C organizations for risk adjusted 
payment.  CMS expects that payment recovery  will have a sentinel effect on the quality  
of risk adjustment data submitted by plans for payment, as contract-level RADV audits 
increase the  incentive  for Part C organizations to submit valid and accurate diagnosis 
information.  Payment recovery for the pilot audits has been completed, totaling $13.7 
million.  After completing the pilots, contract-level RADV audits of payment years 2011 
through 2013  were  completed and recovery efforts are pending based on CMS finalizing  
its draft RADV rule.   CMS launched  the payment year 2014 RADV audit in April 2019.  
 
   Overpayment Recoveries Related to Regulatory Provisions:  As required by the Social 
Security  Act, Part C  organizations are required to report and return identified 
overpayments.  HHS believes that this requirement will reduce improper payments by  
encouraging  Part C  organizations to submit accurate payment information.  In FY 2019, 
Part C  organizations reported and returned approximately $44.66  million in self-reported 
overpayments.  
 
   Training:  Historically, CMS has conducted fraud, waste, and abuse in-person and 
webinar training sessions for Medicare Part C and DMA plans.  In FY 2019, CMS  
conducted  two small in-person Medicare Part C & D Fraud, Waste and Abuse   
Collaboration Missions (October 2018 and March 2019), a large in-person fraud, waste, 
and abuse  training (July  2019) and two opioid missions (April 2019 and August 2019) 
three in-person missions (one in October 2017 and two in April 2018) and a large in-
person fraud, waste, and abuse  conference in July  2018.  The missions included multi-
disciplinary teams of experts and decision makers from HHS and its partners, and 
allowed them to undertake collaborative  efforts to protect the Medicare Part C and D 
programs.   
 
The Part D  gross improper payment estimate  reported for  FY 2019 (based on CY 2017) the latest 
year for which CMS has data, was 0.75 percent or $607.94 million, which represents payment 
error related to prescription drug  event (PDE) data.  CMS measures the inconsistencies between 
the information reported on PDEs and the supporting documentation submitted by Part D  
sponsors: prescription record hardcopies (or medication order, as appropriate), and detailed 
claims information.   Based on these reviews, each PDE in the audit sample is assigned a  gross 
drug  cost error, which is imputed onto the corresponding PDE records of  a  representative sample  
of beneficiaries The estimated error is calculated for this sample of beneficiaries and the result is 
 
80  
  extrapolated onto the payments of the remaining Part D beneficiaries to determine the Part D 
improper payment estimate.   
 
To improve the Part D error rate, CMS has implemented three key specific corrective  actions 
described below:   
 
   Training:  CMS continued its national training sessions for Part D sponsors on payment 
and data submission.  For example, CMS continued to offer training sessions with 
detailed instructions for  Part D sponsors submitting  documentation to support their  
Prescription Drug Events (PDEs) as part of the improper payment estimation process.  
Historically, CMS has also conducted fraud, waste, and abuse in-person and webinar  
training sessions for Medicare Part C and Part D sponsors.  In FY 2019 CMS  conducted 
two small in-person Medicare Part C & D Fraud, Waste and Abuse Collaboration 
Missions (October 2018 and March 2019), a large in-person fraud, waste, and abuse  
training (July 2019),  two opioid missions (April 2019 and August 2019),  three in-person 
missions (one in October 2017 and two in April 2018),  and a large in-person fraud, waste 
and abuse training  conference in July 2018.   The  missions included multi-disciplinary  
teams of experts and decision makers from HHS and its partners, and allowed them to 
undertake  collaborative  efforts to protect the Medicare Part C and D programs.   
 
   Outreach:  CMS continued formal outreach to plan sponsors for invalid/incomplete 
documentation.  CMS distributed Final Findings Reports to all plan sponsors 
participating in the national payment error estimate.  This report provided feedback on 
the number of PDE records successfully validated, and, if applicable, identified PDEs 
that CMS had determined were not substantiated by supporting documentation and 
therefore found to be in error.  
 
   Overpayment Recoveries Related to Statutory Provisions:  As required by the Social 
Security  Act, HHS requires Part D sponsors report and return all identified overpayments.  
HHS believes that this overpayment statute  contributed to increased attention to data 
accuracy by Part D sponsors.  In FY 2019, Part D  sponsors self-reported and returned 
approximately $1.5 million in overpayments.  
 
Central Data Abstraction Tool  
CMS uses diagnosis information submitted by Medicare Advantage  Organizations to risk adjust  
payments to plans.  The  more diagnosis information a plan submits, typically the higher their 
payments from Medicare.  Each year, CMS conducts RADV audits to measure the accuracy of 
the plan-submitted diagnostic information.  As required by statute, CMS uses the results of these  
audits to estimate and recover overpayments for individual Medicare  Advantage plans.  The  
Central Data Abstraction Tool is the main system that CMS uses to support the RADV audits.  
 
CMS Exchange Program  Integrity  
The Federally-facilitated Exchanges (FFEs) and the State-based Exchanges (SBEs) have  
increased their focus on program integrity.   In FY 2019, CMS  triaged thousands of consumer 
complaints, worked with health insurance issuers to cancel fraudulent policies, performed data 
analysis  and license verifications to identify potentially noncompliant insurance  agents and 
 
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  brokers, conducted investigations, and referred egregious cases to the  HHS-OIG.   CMS  also 
reviewed  cases of agent and broker misconduct and taking administrative actions including  
terminating CMSs agreements with agents and  brokers and imposing  civil monetary penalties 
on those agents and brokers who were found to have engaged in misconduct.  CMS  and its 
program integrity contractors continuously analyze plan enrollment  and other types of data to 
identify early warning signs of fraud.  CMS  hosts meetings with SBEs every other month to 
share best practices for identifying and deterring  fraud and coordinate with states Departments 
of Insurance (DOIs) to understand agent and broker licensing requirements and report 
noncompliance.   Lastly, CMS  supports ongoing  OIG and DOI investigations by fulfilling  
requests for  records regarding consumer enrollments and financial assistance, complaints, and 
results of CMS  investigations.  
 
Provide  Greater Transparency into Program Integrity Issues within  Medicare and  
Medicaid  
 
CMS is dedicated to providing  greater transparency  into program integrity issues through 
education, outreach, partnership, strategic communications, and data releases.  CMS is well-
positioned to work with its partners and stakeholders to share best practices and lessons learned 
in program integrity.  Increased transparency  and accountability  ensure program efficiency  and 
effectiveness.  
 
Outreach and Education  
One of the  goals of CMSs provider education and outreach is to reduce the Medicare and 
Medicaid improper payment rates by  giving Medicare and Medicaid providers the timely  and 
accurate information they  need to bill correctly the first time.  The Medicare FFS claims  
processing contractors, known as MACs, educate  Medicare providers and their staff about 
Medicare policies and procedures, including local coverage policies, significant changes to the  
Medicare program, and issues identified through review of provider inquiries, claim submission 
errors, medical review data, and Comprehensive Error Rate Testing program data.  The MACs  
use a variety of strategies and communication channels to offer Medicare providers and suppliers 
a broad spectrum of information about the Medicare program.  
 
CMS  continues to work with providers, states, and others to protect CMS programs from fraud, 
waste and abuse schemes.   CMS  is focused on safeguarding programs and protecting  
beneficiaries from fraud, waste and abuse, while also working to minimize unnecessary  provider 
burden.  Providing  education and training  opportunities that are responsive  to stakeholder needs 
will  continue to protect the financial security of CMS programs by reducing improper payments 
and curtailing emerging  fraud schemes.  By offering regular in-person and virtual events and 
trainings, as  well as clear and concise information online, CMS  continues to provide needed 
information that is responsive to the realities of clinical practice.  
 
In FY 2019, CMS continued to enhance its digital presence with the addition of the Medicaid 
Program Integrity Strategy  webpage.   This webpage  focuses on strengthening  the  fight against  
Medicaid fraud with new and enhanced initiatives. To learn more, please visit  
https://www.cms.gov/About-CMS/Components/CPI/Medicaid-PI-Strategy.  The  Medicaid 
Program Integrity Strategy  includes stronger audits and oversight  functions, increased data 
 
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  sharing  and partnerships, and additional education, technical assistance, and collaboration  (to 
learn more: https://www.cms.gov/About-CMS/Components/CPI/Medicaid-PI-Strategy).  
The  Medicaid Program Integrity Strategy includes stronger audits and oversight  functions, 
increased data sharing and partnerships, and additional education, technical assistance, and 
collaboration.). CMS also coordinated multiple training events focusing on  current Medicare  
Parts C and D fraud schemes, fraud prevention techniques, and anti-fraud, waste and abuse  
activities for Medicare Advantage Organizations and Prescription Drug Plans.  These sessions 
integrated group discussions, information-sharing  exercises, presentations and panel discussions 
that focused on the latest fraud, waste and abuse issues.  
 
Additionally, in an effort to increase transparency  and seek input into innovative program 
integrity solutions to meet the challenges of the new Medicare landscape, CMS held Request for  
Information (RFI) listening sessions related to two RFIs: the Future of Program Integrity and 
Using Advanced Technology in Program Integrity.26  
 
Healthcare  Fraud Prevention Partnership (HFPP)  
In July 2012, the Secretary of HHS and the U.S. Attorney  General announced a  groundbreaking  
partnership to fight fraud, waste, and abuse across the health care system.   The HFPP is a 
voluntary, public-private partnership consisting of the Federal Government, state agencies, law  
enforcement, private health insurance plans, and health care anti-fraud associations.   The overall  
mission of the HFPP is to position itself as a leading body for the health care industry to reduce  
fraud, waste, and abuse by:    
 
   Providing an unparalleled cross-payer data source, representing the full spectrum of the  
health care industry, to enable the performance of  sophisticated data analytics and 
information-sharing for the benefit of all partners  
   Achieving meaningful participation by partners and establishing strategic collaborations 
with diverse stakeholders  
   Leveraging Partnership resources and relationships to generate real-time, comprehensive 
approaches that materially  impact efforts to reduce health care  fraud, waste, and abuse  
 
In FY 2019, the  HFPP reached a total membership level of 144  partner organizations, comprised 
of 12  federal agencies, 13  associations,  71  private payers, and 48  state and local partners.  
 
The HFPP uses a diverse variety of approaches to identify vulnerabilities in Partner data.  These  
methods include standard searches to detect anomalies that may implicate the existence of fraud, 
waste,  and abuse; scanning of incoming claims information against existing data sets, such as 
lists of deactivated providers; creation of reference files that list providers that may be suspect 
based on known risks; and creation of informational content to support stakeholders in 
addressing vulnerabilities (e.g., white papers).  The HFPP has also expanded its study  
methodology to collect frequently updated data, including personally identifiable information 
(PII) and protected health information (PHI).   The HFPP  is currently using professional and 
institutional claims and is planning to expand to collect pharmacy  and dental claims in the future.  
 
                                                 
26  https://www.cms.gov/blog/future-medicare-program-integrity.   
 
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  Over 9.9 billion  professional claim lines were submitted by partners through  FY 2019 for the  
purpose of conducting  cross-payer analyses, and by  the end of  FY 2019, the HFPP has 
commenced or completed more than 25 studies since program inception.  
 
Examples of studies initiated in FY 2019 include the identification of:  
 
   Potentially problematic sleep study providers  
   Providers with deactivated National Provider Identifiers (NPIs) that continue to 
submit claims for payment  
   Providers that perform more services during a 24-hour period or during off hours (i.e., 
weekends and holidays) than would be expected  
 
The HFPP also continued its efforts to foster collaboration among partners in FY  2019 by  
hosting four in-person information-sharing sessions and an Annual Executive Board meeting. 
These meetings were used to share fraud schemes and provider  alerts, provide updates on law 
enforcement activities, and strategize on how to broaden the HFPPs impact in the private and 
public sectors.    
 
State Engagement to Address Opioid Overprescribing and Misuse  
A critical component of addressing the opioid crisis is to identify  and mitigate abusive  
prescribing practices and overutilization of prescription opioids.  In an effort to combat the 
opioid epidemic, CMS, other federal agencies, and states are  collaborating to review and 
improve state delivery system reform, treatment programs, and policy.  As of September 2018,  
New Hampshire has collaborated with  CMS to develop and implement performance indicators, 
advanced analytics, and private-public partnerships to identify potential opioid overprescribing  
and misuse, and to enable data-driven interventions.   This pilot project will give CMS a deeper 
understanding of state data, privacy and data sharing policy, and  policy, and lessons learned that 
can be  adapted by other states to bolster their efforts to address program integrity  concerns in the 
opioids crisis.    
 
Open Payments  
Open Payments is a statutorily required-national transparency program designed to provide the 
public with information regarding the financial relationships between applicable manufacturers 
and group purchasing organizations (GPOs), collectively referred to as reporting entities and 
physicians and teaching  hospitals.  Open Payments data includes payments and other transfers of 
value (such as gifts, honoraria, consulting fees, research grants, and travel reimbursements) that 
drug or device companies provide to physicians and teaching hospitals, as well  as the ownership 
and investment interests  held by physicians or their immediate family members in 
these  companies.  
 
HHS is required to collect and display this information, which is self-reported annually by  
reporting entities, on the  public website.  The public can search, download, and evaluate the 
reported data.  
 
For Program Year  2018, CMS published information regarding $9.2  billion in payments and 
ownership and investment interests that were made from applicable manufactures and GPOs to 
 
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  physicians and teaching  hospitals.  This amount is comprised of  11.4  million total records 
attributable to  627,000 physicians and 1,180  teaching hospitals.    
Payments in the three major reporting categories included:  
 
   $3.0  billion in general (i.e., non-research related) payments  
   $4.9  billion in research payments  
   $1.3 billion of ownership or investment interests held by physicians or their immediate 
family members.  
 
Since the programs inception, CMS has published 64.8 million records, accounting for $43  
billion in payments and ownership and investment interests.  
 
 
 
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 2019, HHS allocated   
$18 million in HCFAC appropriations, plus an additional $63,877 in carryover funding from FY 
2018 to the Administration for Community  Living (ACL) to support SMP program infrastructure  
and provide grants to SMPs in 54 states and territories.  
 
Until FY 2016, ACL  received funding from a separate Congressional appropriation (the Older 
Americans Act) to support SMP grants.  However, the Consolidated Appropriations Act of 2016 
required the SMP program to be fully-funded by  CMS discretionary  HCFAC appropriations 
beginning in FY 2016.  This language was modified in FY 2018 to require that the program be  
funded at no less than $17,621,000, still from CMS discretionary HCFAC appropriations.  In   
FY 2019, the Secretary  allocated $18 million from these appropriations to the SMP program.    
 
SMP  Project Activities and Outcomes  
 
ACL uses the majority of its HCFAC allocation to fund SMP projects in every state, the District 
of Columbia, Puerto Rico, Guam, and the U.S. Virgin Islands.  During FY  2018, ACL held a  
new SMP grant competition and awarded $15.5 million in funding to 54 SMPs nationwide, 
including eight new SMP grantees.  In FY 2019,  ACL provided continuation awards to the  54 
grantees totaling $15.5 million.  Each SMP grantee received a standard, base amount of funding  
to support the operation of their project, as well as an additional, variable amount of funding  
based on the number of Medicare beneficiaries residing in the state and the rural areas of the  
state.  SMP  projects will use this funding to educate and empower Medicare beneficiaries to 
prevent, detect, and report Medicare  fraud, errors, and abuse.   
 
Genetic Testing  Fraud Schemes  
Genetic testing fraud has become a  widespread issue nationally  with company representatives 
approaching seniors and other Medicare beneficiaries to solicit genetic tests at senior and 
community centers, health/senior fairs, other  community  events, and senior housing complexes.  
The SMP grantees have received reports of  company representatives going  door-to-door in the  
 
85  
  community and within housing complexes in addition to extensive advertising on Facebook and 
other social media platforms.  
 
ACL first became aware  of these schemes in early 2019 through reports from the SMP grantees, 
and were the first to alert our partners at the OIG and CMS of the emerging  trends.  ACL has led 
HHSs outreach and education effort to warn the  public and protect beneficiaries from becoming  
victims of these schemes.  This outreach includes national social media campaigns conducted by  
the SMP grantee network to get the word out to the public as quickly as possible.  The SMP  
National Resource Center has also developed sample press releases, outreach materials, and an 
infographic on the topic that can be used by partners and SMP state grantees to conduct outreach 
on the local level.   
 
In addition to the outreach efforts being  conducted nationally, ACL worked closely  with CMS  
and the OIG to provide cases and complaints directly to investigators upon receipt to ensure the 
cases are  getting in the right hands as quickly  as possible.  These efforts led to a federal law 
enforcement action involving dozens of companies and cancer genetic testing laboratories in 
September.  The September 27, 2019, takedown resulted in charges against 35 individuals for  
their alleged participation in health  care  fraud schemes involving $2.1 billion in losses.  The  
coordinated federal investigation targeted an alleged scheme involving the payment of illegal 
kickbacks and bribes by  cancer genetic testing laboratories in exchange  for  the referral of 
Medicare beneficiaries by  medical professionals working  with fraudulent companies for  
expensive cancer genetic tests that were medically unnecessary.    
 
Annual SMP OIG Report   
Each year, the HHS Office of the  Inspector General (HHS-OIG) completes an annual 
performance  report on the SMP projects.  In CY 2018, the SMP projects had a total of 6,935 
active team members who conducted 26,932 group outreach and education events, reaching an 
estimated 1.7 million people.  In addition, the projects had 278,761 individual interactions with, 
or on behalf of, a Medicare beneficiary.  For 2018, the SMP projects reported $15,136 in 
expected Medicare recoveries and $5,734 in expected Medicaid recoveries.   Cost avoidance  
totaled $602,063, while savings to beneficiaries and others totaled $27,689.  Further, additional 
Medicare expected recoveries totaled $11.9 million.  These recoveries came from three projects 
that validated information for existing cases regarding two home health fraud schemes and one  
individual physician who provided unnecessary services and falsified records.  
 
Since SMPs inception, the program has educated almost 40.2 million beneficiaries through 
414,247 group education and outreach sessions.  The primary focus of these sessions is on 
education, prevention, and teaching beneficiaries how to protect themselves and avoid fraud in 
the first place.  This is the true value of the SMP program.  However, the impact of these  
education and prevention activities is extremely difficult to quantify in dollars and cents.  As 
HHS-OIG indicated in their 2019 report on the SMP program:  
 
We note that the projects may not be receiving full credit for recoveries, savings, and cost 
avoidance 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  
 
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  the potentially substantial savings derived from a sentinel effect whereby  Medicare  
beneficiaries scrutiny of their bills reduces fraud and errors.   
 
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 over $126.8 
million in savings attributable to the SMP program since its inception in 1997.  
 
SMP Infrastructure and Program Support  
 
SMP Resource Center  
During  FY 2019, ACL  awarded year three of a three-year grant to the National SMP Resource  
Center.  The SMP Resource Center has provided technical assistance, support, and training to the  
SMP projects since 2003.  The goal of the Center is to provide professional expertise and 
technical support, serve as an accessible and responsive central source of information, maximize  
the effectiveness of the SMP projects in health care fraud outreach and education, and ensure a  
fully consolidated national approach to reaching  Medicare beneficiaries.  The Center has also 
been instrumental in supporting ACL efforts to forge national visibility  for  the SMP program.   
 
SMP Information and Reporting System (SIRS)  
In FY 2016, ACL implemented a new SMP data reporting system (SIRS) to support the evolving  
needs of the SMP projects.  SIRS is expected to last at least 10 years and provides SMPs with 
advanced reporting features and data analytics to help them better manage  their programs.  In FY 
2019, ACL worked with SMPs to prioritize and implement ongoing system improvements to 
ensure SIRS continues to meet their needs and best support their programs.   
 
SMP Customer Satisfaction Survey   
During  FY 2019, ACL implemented the second year of the first national survey to ascertain the  
quality and effectiveness of the services provided by the SMP program.  Historically, SMPs have  
only tracked output and outcome measures, such as number of SMP team members, group 
outreach and education events, individual interactions, and savings.  As a result, there is no 
current understanding of the link between the quality of the information received and the 
likelihood to avoid health care  fraud, errors, and abuse.  The results from the survey will help 
measure satisfaction among individuals who attend SMP group education sessions and determine  
how the program can be improved to better serve  Medicare beneficiaries, their families, and 
caregivers.  
 
ACLs SMP Customer Satisfaction Survey received OMB  approval in August 2017.  Survey  
implementation began in early FY 2018 and will continue over a three-year period.  One-third of 
the SMP projects will be surveyed during  each year of the project.  At the conclusion of the 
project, survey  results will be available at the national level, as well as for  each SMP project.  
 
Preliminary national results from the first two years of the project are positive and include the 
following findings:  
 
   97  percent  of participants were satisfied with the SMP group education session they  
attended;   
   97  percent  of participants felt the presentation provided them with useful information; 
 
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  and   
   96  percent  of participants would recommend the presentation to others.   
 
Preliminary results also show that based on what they learned during an SMP group education 
session, participants report they will take the following actions:   
 
   84  percent  of participants will hang up on anyone  who calls and asks for their Medicare  
number or personal information;    
   80  percent  of participants will report suspected Medicare  fraud, errors, or abuse;  
   80  percent  of participants will share what they learned with their family or friends;  and  
   76  percent  of participants will review their Medicare Summary Notices (MSNs) or plan 
statements for possible errors or fraudulent charges.  
 
Final survey  results and findings will be available in FY 2020, at the conclusion of the three-year 
customer satisfaction survey project.  
 
 
Office of the General Counsel  
 
In FY 2019, HHS allocated the Office of the  General Counsel (OGC) $7.3  million in HCFAC 
funding to support OGCs program integrity activities.  Such activities focused on litigation 
aimed at the recovery  of program funds and review of CMS programs to strengthen them against  
potential fraud, waste, and abuse.  OGCs HCFAC activities in FY 2019 helped the Government 
establish over $1.6  billion in judgments, settlements, or other types of recoveries, savings, or 
receivables.     
 
FCA and Qui Tam Actions  
OGC supports DOJs FCA work by interpreting  complex Medicare and Medicaid rules and 
policies, which assists DOJ in discerning which allegations involve program violations and helps 
focus Government resources on the matters that are most likely to result in recovery.  In addition, 
OGC provides significant litigation support by assisting DOJ in interviewing and preparing CMS  
personnel who may  act as witnesses and in responding to requests for documents and 
information.   
 
In FY 2019, OGC worked collaboratively with DOJ and OIG on numerous FCA matters 
regarding  a variety of issues such as: kickbacks and other unlawful marketing practices in 
connection with the marketing of an addictive opioid painkiller; kickbacks related to medically  
unnecessary stent procedures; material misrepresentations made by  an IT subcontractor during  a  
state health benefits  exchange contract award process; and the submission of inaccurate 
information about health status of Medicare Advantage beneficiaries. OGC efforts on these and 
other FCA matters in FY 2019 helped the Federal Government recover approximately $1.5  
billion.  
  
Civil Monetary Penalties  
CMS is responsible for administering CMP legislation that is aimed at combatting fraud, waste, 
and abuse.  OGC, in turn, advises CMS on its development and imposition of CMPs.  OGC also 
 
88  
  defends CMS in numerous administrative appeals and judicial litigation related to the imposition 
of CMPs.  The decisions in such cases can immediately impact the quality of care provided to 
affected beneficiaries, save program funds, and set precedents that demonstrate HHSs 
commitment to policing  this area.  
 
OGC obtained several favorable outcomes regarding the imposition of CMPs during FY 2018.  
For example, OGC assisted CMS in obtaining a CMP recovery  against long-term care facility  for  
failure to satisfy the quality of care  requirements under 42 C.F.R.  483.25.  In this instance, the  
facility had failed for eight consecutive months to arrange for one of its residents to receive a  
necessary procedure to extract the residents teeth, all of which had rotted and decayed.  
 
Provider/Supplier Suspensions and Enrollment Revocations or Denials  
Payment suspensions, enrollment revocations, deactivations and denials all play  a critical role in 
protecting program funds.  These actions help protect the trust funds by ensuring that 
inappropriate providers and suppliers are not given or do not retain the ability to submit claims.  
OGC assists with this work by:  advising CMS on whether to suspend payment to Medicare  
providers and suppliers; interpreting CMS enrollment regulations; reviewing  proposed 
enrollment rules, manual changes, and correspondence related to enrollment issues; and 
providing litigation support and program guidance in defense of suspensions, revocations,  and 
denials.  For example, in FY 2019, OGC worked with CMS to prevail  on an enrollment denial 
decision to a physician who had pled guilty to soliciting $1.3 million in bribes from contractors 
in Afghanistan and to participating in a conspiracy to traffic heroin.   
 
Part C and Part D Compliance  
During  FY 2019, OGC provided extensive advice  to CMS on a variety of Part C and Part D-
related contract compliance issues, including identifying enforcement options against plan 
sponsors that are noncompliant or violate program rules.  OGC also continued its review of 
compliance-related correspondence that CMS issues to Part D sponsors and Part C plans, which 
include warning letters, corrective  action plan letters, intermediate sanctions, CMP notices, and 
non-renewal or termination notices.   
 
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 over $282,067  in 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 2019, OGC 
petitioned these agencies to recover funds in matters in which Medicare  was a victim of fraud.  
     
Regulatory Review and Programmatic Advice  
In FY 2019, OGC advised CMS on a variety of regulatory  and program issues aimed at 
combating fraud and preventing the wrongful disbursement of program funds in the first 
instance.  For example, OGC:  
 
 
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     Provided counsel to CMS on program integrity issues in the  Medicare Shared Saving  
Program (MSSP), including advice regarding  a final rule, program integrity screenings 
for applicants to the program, and appeals of application denials.  
  
   OGC reviewed a proposed rule that would allow CMS to use extrapolation in Part C risk 
adjustment data validation (RADV) audits and which noted that CMS finds it is 
unnecessary to apply a fee-for-service adjuster to contract level RADV audits.   OGC also 
reviewed several Federal Register Notices, which extended the comment period on these  
proposed provisions and addressed the release of the underlying data.  
 
   OGC reviewed a final rule that made several changes to CMSs preclusion list 
regulations, which prohibit certain suspect providers and prescribers from receiving  
reimbursement under Medicare Part C or having  their prescriptions covered under 
Medicare Part D.   The new regulations revised and clarified several requirements 
regarding placement on the preclusion list, the effect of preclusion, notice, and appeals.  
 
   Continued to counsel the CMS  Innovation Center, which is testing innovative payment 
and service delivery models to reduce  expenditures and preserve or enhance quality of 
care  for Medicare, Medicaid, and CHIP beneficiaries.  OGC advises the Innovation 
Center on topics including, model design, fraud and abuse waivers, the imposition of  
corrective action plans, participant screening, and recovery of funds for such models.  
 
Physician Self-Referral  
In FY 2019, OGC provided extensive counsel to CMS related to the issuance of its proposed 
rule, Modernizing and Clarifying the Physician Self-Referral Regulations  (CMS-1720-P), a rule  
intended to help providers embrace innovative care delivery by modernizing and clarifying  
regulations that interpret the Stark Law.  The proposed rule intends to simplify compliance for 
health  care providers across the industry, and would open additional avenues for physicians and 
other health  care providers to coordinate the  care  of the patients they serve to ensure patients 
receive the highest quality  of care.   In addition, as discussed above, OGC continued to provide  
guidance to CMS and DOJ in navigating the complexities of the physician self-referral law in 
FCA cases.  These  consultations help build stronger cases and focus investigatory  efforts, 
leading to successful results for the  Government.   
 
Medicare Secondary Payer (MSP)  
OGCs efforts to recover Medicares conditional payments that are the primary responsibility of 
other payers directly support the HCFAC statutory  goal of facilitating the enforcement of all  
applicable legal remedies for program fraud and abuse.  As part of this work in FY 2019, OGC 
assisted DOJ in its efforts to protect federal Medicare  and Medicaid interests in federal opioid 
lawsuits as HHS continues to find ways to abate the opioid epidemic.   
 
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 2019, OGC played a major role in advising CMS regarding the  
 
90  
  development and implementation of these types of program integrity measures and defended 
CMS in litigation brought by providers and suppliers challenging these efforts.   
 
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 Medicare provider agreements as 
executory  contracts, and petitioning for administrative costs where  appropriate.  OGC also 
handles change of ownership issues related to bankrupt  Medicare providers to ensure successor 
financial liability and to protect patient health and safety.   For example, in FY 2019, OGC  
negotiated stipulations for the transfer of the Medicare Part D Coverage Gap Discount Program 
and Medicaid Drug Rebate Agreements from a debtor pharmaceutical company to the new 
owners who acquired debtors assets and agreements.  
 
State Medicaid Disallowances  
Upon identifying an increasing number of questionable state financing schemes over the past 
several years designed to maximize federal payments under Medicaid, CMS has taken an 
increased number of Medicaid disallowances.  Correspondingly, OGC continues to see a  
significant increase in its workload regarding proposed disallowances, requested 
reconsiderations, and defense against Medicaid disallowance  appeals before the Departmental 
Appeals Board (DAB).  
 
As a result of OGCs advocacy, CMS has prevailed in numerous matters in FY 2018 that have  
upheld millions of dollars in disallowances.  For example, CMS  secured a favorable decision 
against the state of Maine involving disallowances of $72.1 million in Federal Financial 
Participation for Disproportionate Share Hospital (DSH) payments and traditional Medicaid 
payments for services.  
 
In summary, OGCs efforts in FY 2019 directly supported the HCFAC programs goals.   As part 
of its program integrity  work, OGC  coordinated with CMS, DOJ and OIG to enforce various 
statutes and regulations applicable to health care fraud and abuse, to the benefit of the Medicare  
and Medicaid programs.  
 
 
Food  and Drug  Administration  Pharmaceutical Fraud Program  
 
In  FY 2019, $5.9 million  in HCFAC funding was made available for  the U.S. Food and Drug  
Administration (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  Food and Drug Division (OGC-FDD).  OCI, 
with the  support of  OGC-FDD, investigates criminal violations of the  Federal Food, Drug, and 
Cosmetic Act (FDCA), 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- 
 
91  
  related violations concerning biologics, drugs, and  medical devices.  The  goal of the program is 
the early  detection and prosecution of  such fraudulent  conduct, which furthers FDAs  public  
health mission by protecting the public from potentially dangerous medical products, helping to 
reduce  health care  costs, in most cases before they are incurred,  and deterring  future  violators.  
By  initiating investigations  of  medical product  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 264 criminal HCFAC investigations.  
In FY 2019, FDAs tenth fiscal year of HCFAC Program activity, OCI, through its PFP, opened 
26 criminal investigations, including investigations involving drug compounders, clinical trials, 
and foreign and domestic medical-product manufacturers.   
 
The investigations opened in FY 2019 consist of allegations involving:  
 
   Application fraud, involving individuals or companies who may have submitted false 
or fraudulent information to FDA in order to obtain an approval or clearance; or who 
did not submit the required information to legally  market or test drugs, devices or 
biologics.  Application fraud investigations opened in FY 2019 involve drug  
manufacturers and medical device manufacturers.    
  
   Questionable manufacturing practices, involving the distribution of foreign-
manufactured active pharmaceutical ingredients (APIs), drug compounding  
pharmacies, and biologic tissue products.   
 
   Clinical trial fraud, involving possible falsification of study documents and/or 
fraudulent study subject enrollments.  The investigations consist in part of  individuals 
suspected of falsifying  and/or manipulating clinical trial data or conducting clinical 
trials without FDA oversight.     
 
   Fraudulent marketing schemes, involving the promotion of products through false or  
misleading claims, including opioid pain medications and stem cell biologic  products.  
 
As noted in previous requests, the types of criminal investigations conducted through the PFP are  
typically complex investigations, such as application fraud and marketing fraud, requiring  
extensive document review.  It is not unusual for these  complex fraud investigations to last for  
five  years or more  from initiation to conclusion.  Yet investigations under the PFP have produced 
numerous prosecutions.  
 
In December 2018, in the District of Massachusetts, the co-owner and four former employees of 
a compounding pharmacy  were  convicted by a jury, in connection with a nationwide fungal 
meningitis outbreak that killed 64 and caused infections in over 750 patients.   Two former  
pharmacists were convicted of racketeering and mail fraud.  Another pharmacist was convicted 
of misdemeanor misbranding violations, for helping to fill prescriptions using fake patient 
 
92  
  names.  In May 2019, one of the pharmacists was sentenced to 30 months in prison; one 
pharmacist was sentenced to 24 months of probation; and another was sentenced to 12 months of 
probation.  On this same case, two additional pharmacists were  convicted by  a jury in May 2019, 
on felony misbranding violations.  Another defendant in this case, a former hospital pharmacy  
buyer, was sentenced in January  2019 to 12 months of probation and ordered to forfeit $40,000.  
This investigation is being conducted jointly with the FBI; a Health Care  Fraud Unit of a U.S. 
Attorneys Office; and other federal law enforcement agencies.  In total, fourteen defendants 
were  charged in the case.     
 
In December 2018, in the District of New Jersey, a foreign multinational company that 
manufactured medical devices pled guilty to an information charging three  misdemeanor counts  
of misbranding medical devices, in violation of the FDCA.  The company  was sentenced to pay  
an $80 million criminal fine and another $5 million in criminal forfeiture.  The companys 
former Division Manager for Quality Assurance  also pled guilty to one misdemeanor count of 
misbranding; and was subsequently sentenced to 12 months of probation  as well as  ordered to 
pay  a $5,000 fine.  The case resulted from a failure by the defendants to file required Medical 
Device Reports (MDRs) with the FDA.  MDR reports are one of the post-market surveillance  
tools used by  the FDA to detect potential device-related safety issues.      
 
In February 2019, in the  Eastern District of Pennsylvania, an Allentown pharmaceutical 
company agreed to a $4 million civil settlement to resolve False Claims Act liability, in 
connection with an alleged scheme to avoid paying fees associated with new drug applications 
filed with the FDA.  Knowing it was ineligible for a fee  waiver, the pharmaceutical company  
allegedly developed a scheme with two other companies to avoid paying the new drug  
application fees.  The arrangement made between the defendant and these other two companies 
was never disclosed to the government, despite the governments request for such information.  
 
In April 2019, in the Southern District of Indiana, the former CEO  and owner of an Indiana  
compounding pharmacy  was convicted in a jury trial of conspiracy to defraud the FDA  and nine 
counts of adulterating drugs.  The defendants conviction resulted from distributing over- and 
under-potent drugs to hospitals and lying to the FDA inspectors to conceal out-of-specification 
drug potency test results.  The former CEO was sentenced in September 2019 to 33 months in 
prison, plus one year of probation, and ordered to pay  a $25,000 fine.  Another defendant in this 
case, a  former compliance director, was sentenced in April 2019 to five months incarceration, 
plus three  years of probation, after pleading  guilty  to adulterating drugs and conspiracy to 
defraud  the  FDA.  
  
In May 2019, in the Central District of California, the owner of  a Glendora  medical marketing  
business pled guilty to health care  fraud and subscribing to a false federal income tax return, in 
connection with a scheme to defraud a public health care benefit program.  The scheme involved 
soliciting and paying health insurance beneficiaries to participate in a purported clinical trial.  
The defendant and others then submitted fraudulent claims for reimbursement for medications on 
behalf of the beneficiaries.    
 
In June 2019, in the District of Maryland, a medical device manufacturer pleaded guilty to one 
misdemeanor count of failure and refusal to report a medical device removal from the market, in 
 
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  violation of the Federal  FDCA.  The manufacturer removed its  device  from its point of use after 
learning that more than 30,000 devices were  contaminated with endotoxin levels that posed a  
risk to patient health.  The market removal of the device was never reported to the FDA and the  
reason for the product removal was concealed from doctors, hospitals, and the companys own 
sales force.  To resolve both criminal and civil liability, the defendant agreed to pay a $3 million 
criminal fine, plus $12 million to settle civil liability for  causing false claims to be submitted to 
government health care programs.  This investigation is being conducted jointly with the HHS-
OIG, the  FBI, and the Department of Defense Criminal Investigative Service.  
 
Furthermore, the FDA believes that various investigations already initiated under the PFP may  
lead to future judicial action that may include  criminal prosecution and monetary recoveries.  
These investigations include drug manufacturers and clinical investigators under investigation 
for data integrity and other violations, which possibly pose  a risk to the publics health and 
safety.  
 
Finally, the  FDA continues to train its employees and conduct outreach activities to maximize  
the agencys ability to prevent and detect fraud involving medical products.   In March 2019, the  
FDA conducted  a one-day  training session for supervisory criminal investigators.  This training  
covered health care  fraud and PFP-related topics, including case-related fraud schemes.  On 
another occasion, in March 2019, the FDA conducted a one-day training session for  newly hired 
criminal investigators.  This training also covered health care fraud and PFP-related topics, 
including case-related fraud schemes.  
 
In May 2019, the FDA conducted a one-day training session for criminal investigators in the  
Miami Field Office.   This training covered health care  fraud control and  clinical trial fraud cases.  
 
In July 2019, the FDA sent criminal investigators to a week-long  the FDA sponsored Clinical 
Bioresearch Monitoring training, to train alongside consumer safety officers who  conduct 
regulatory inspections at clinical trial study sites.  This training covered PFP-related topics, such 
as identifying  evidence of fraud and data falsifications.  
 
In August 2019, the FDA sent criminal investigators to participate in a three-day training  
program sponsored by the National Health Care Anti-Fraud Association (NHCAA), entitled 
Schemes for the Health Care Fraud Investigators & Analyst.  FDA  criminal investigators 
trained with other law  enforcement and private partners involved in health care  anti-fraud efforts.  
 
In September 2019, the FDA conducted a one-day  training session for criminal investigators in 
the Chicago Field Office.  This training covered health care fraud and PFP-related topics.  On 
another occasion, in September 2019, the FDA presented on the PFP to other law enforcement 
and insurance investigators at the National Insurance Crime Bureau in Melville, New York   
   
 
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  DEPARTMENT OF JUSTICE  
 
United States  Attorneys  
 
In FY 2019, the  United States Attorneys Offices (USAOs) were allocated $56.9  million in 
HCFAC funding for  civil and criminal health care  fraud enforcement efforts.  These funds 
supported attorneys, paralegals, auditors, and investigators, as well as litigation expenses for  
health care fraud investigations and cases.  The 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 through fraud, 
waste, and abuse.  The  USAOs 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, 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.  The USAOs also coordinate with CMS regarding  
the imposition of potential civil monetary penalties against a provider.  
 
To ensure a  focused and coordinated approach to health care fraud enforcement, each USAO has 
designated criminal and civil health care fraud coordinators.  These  coordinators work  closely  
with outside investigative agencies and with trial attorneys in the Departments Civil and 
Criminal Divisions on health care  fraud matters.  While the USAOs receive many health care  
fraud referrals directly from investigative agencies, they also receive referrals from the Civil 
Divisions Commercial Litigation Branch (Civil Fraud Section) and through the filing of qui tam 
(or whistleblower) complaints.  Qui tam cases either are handled jointly with trial attorneys in the  
Civil Fraud Section or are  delegated to the USAO to handle independently.  The USAOs also 
handle most criminal and civil litigation at the federal appellate level.  
 
The USAOs also partner with the Departments Criminal Division on Medicare  Fraud Strike  
Forces Teams which currently operate in twelve areas across the country.  Each Strike Force  
team consists of dedicated AUSAs and support personnel from the USAO, as well as from the  
Criminal Division.  Examples of successful Strike Force cases are noted earlier in this report.   
 
In addition, in October 2018, the Department announced the formation of the Appalachian 
Regional Opioid Strike Force (ARPO Strike Force), a joint law enforcement effort that brings 
together the resources and expertise of the Health Care Fraud Unit in the Criminal Divisions 
Fraud Section (HCF Unit), the USAOs for nine  federal districts in five states,27  as well as law 
enforcement partners at the FBI, U.S. Department of Health and Human Services Office of the  
Inspector General (HHS-OIG) and DEA.   The mission of the ARPO Strike Force is to identify  
and investigate health care fraud schemes in the Appalachian region and surrounding  areas, and 
to effectively  and efficiently prosecute medical professionals and others involved in the illegal 
prescription and distribution of opioids.  
                                                 
27  The USAOs  are the Northern  District of  Alabama,  Eastern  District of  Kentucky,  the Western  District of  
Kentucky,  the Southern  District of  Ohio,  the Eastern  District  of  Tennessee,  the Middle District of  Tennessee,  the 
Western  District of  Tennessee,  the Northern  District of  West  Virginia,  and  the Southern  District of  West Virginia,  
 
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  To ensure that USAO personnel are knowledgeable and up-to-date on the law and tools for  
combatting health care fraud, HCFAC funding is used to train AUSAs and trial attorneys, as well  
as paralegals, investigators, and auditors on a wide variety of health care fraud enforcement 
matters.  In FY 2019, the Office of Legal Education (OLE) offered a course entitled Emerging  
Issues in Health Care  Fraud at the National Advocacy Center which was attended by  
approximately 90 Assistant United States Attorneys and which provided training on a variety of 
topics related to health care fraud.  In addition, the  Executive Office  for United States Attorneys 
(EOUSA) presented multiple webinars during  FY 2019 focusing on health care  fraud issues.  
Many  AUSAs, analysts, auditors, investigators, and paralegals participated in other federal, state, 
and private health care fraud seminars.   
 
EOUSA also launched its SIRIS Resource Center  in FY 2019, which gives USAO personnel 
access to the National Health Care Anti-Fraud Associations (NHCAA) Special Investigation 
Resource and Intelligence System (SIRIS) database.  The SIRIS database contains data 
contributed by  NHCAA  members (which include  private insurers as well as federal and state law 
enforcement and regulatory officials with jurisdiction over health care  fraud).  Using the SIRIS  
Resource Center, USAO  personnel can conduct inquiries as to particular providers or schemes to 
determine whether other NHCAA members have  contributed relevant information to the 
database.  
 
Criminal Prosecutions28  
 
In FY 2019, the  USAOs opened 1,060 new criminal health care fraud investigations and filed 
criminal charges in 485 cases involving 814 defendants.  During that same  time period, 528 
defendants were  convicted of health care fraud-related crimes.    
 
Civil Matters and Cases29  
 
In FY 2019, the  USAOs opened 1,112 new civil health care fraud investigations and had 1,343 
civil health care fraud matters pending  at the end of the fiscal year.  
 
 
Civil Division  
 
In FY 2019, the Civil Division received approximately $41  million in FY 2019 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.  In FY 2019, the Fraud Section and the United 
States Attorneys Office  won or negotiated more than $2.6 billion under the FCA.    
   
                                                 
28  FY 2019  numbers  are actual data  through  the end  of  September  2019.  This  data includes  records  classified  either  
with  the primary  or  tertiary  03G   Health  Care Fraud  program  code.    
29  FY 2019  numbers  are actual data through  the end  of  September  2019.  This  data includes those records  classified  
under  with  the FRHC    Health  Care Fraud  civil code.  
 
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  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 civil FCA to recover money on behalf of defrauded 
federal health care programs including Medicare, Medicaid, TRICARE, the Department of 
Veterans Affairs (VA), and the Federal Employee Health Benefits Program (FEHBP).  The  
Fraud Section works closely with the United States Attorneys Offices and often teams with 
other law enforcement partners to pursue  allegations of health care fraud.   
 
The Fraud Section investigates and resolves matters involving a wide  array of health care  
providers and suppliers.  First and foremost, the Fraud Section takes seriously matters which 
raise the potential for patient harm, particularly in our vulnerable elderly population.  For 
example, the Vanguard Health case resolved allegations that five  Vanguard nursing facilities 
failed to administer medications as prescribed; failed to provide standard infection control, which 
led to infections; failed to provide wound care  as ordered; failed to take prophylactic measures to 
prevent pressure ulcers, such as turning and repositioning; used unnecessary  physical restraints 
on residents; and failed to meet basic nutrition and hygiene requirements of residents.  Similarly, 
the Avanir case discussed above resolved allegations that Avanir targeted false and misleading  
marketing to long-term care facilities to induce prescriptions  of  its drug  for unapproved uses.    
 
The Fraud Section continues to pursue  opioid-related fraud schemes, such as the Reckitt 
Benckiser Group (RB Group) matter, which resolved allegations that RB  Group and its 
subsidiaries promoted its opioid product, Suboxone, using false and misleading claims that 
Suboxone Film was less susceptible to diversion and abuse than other buprenorphine products 
and that Suboxone Film was less susceptible to accidental pediatric  exposure than tablets.  In 
another example, the Fraud Section resolved allegations that Insys used sham speaker programs, 
jobs for the prescribers relatives and friends, and lavish meals and entertainment to encourage  
physicians to prescribe  Insyss opioid product, Subsys, notwithstanding the drugs high risk of  
abuse.  
 
The Fraud Section continues to vigorously pursue  pharmaceutical manufacturers who engage in 
illegal practices that contribute to soaring drug pricing.  The Fraud Section has resolved a  
number of cases, including the Actelion and Astellas matters discussed above, alleging that 
pharmaceutical manufacturers are illegally using  foundations,  which claim 501(c)(3) status for  
tax purposes, as conduits to pay the copays of Medicare patients.  Under these arrangements, 
which violate the Anti-Kickback Statute (AKS), the manufacturers funnel money to the  
foundation to be used specifically to pay the copays for Medicare patients and Medicare is billed 
for the remaining  cost.     
 
The Fraud Section has pursued other schemes that violate the AKS, which prohibits the willful 
solicitation or payment of remuneration to induce  the purchase of a  good or service for which 
payment may be made under a federal health care program.  AKS violations are pernicious 
because of their potential to subvert medical decision-making.  For example, the Fraud Section 
resolved allegations that Patient Care America, a  compounding pharmacy, paid kickbacks to 
generate referrals of prescriptions of expensive pain creams, scar creams, and vitamins, which 
were  reimbursed by TRICARE, the federal health care program for military  members and their  
 
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  families.  Other matters relating to AKS violations involved medical device manufacturers 
(Covidien and ACell), hospitals (MedStar Health), and laboratories (Inform Diagnostics).  
 
Electronic health record (EHR) systems are  a  growing segment of the health care industry, and 
EHR related fraud schemes remain a  focus of the  Fraud Sections work.  This year, the  Fraud 
Section resolved matters alleging that EHR  companies had caused its users to submit false claims  
to the government by misrepresenting the capabilities of its EHR product (Greenway) and  had 
paid kickbacks to induce  use of its products (Greenway and Inform Diagnostics).  
 
As in years past, the  Fraud Section also resolved a  number of matters in which providers billed 
federal health care programs for medically unnecessary services or services not rendered as 
billed.  Such matters involved allegations that providers, including hospices, inpatient 
rehabilitation facilities, pediatric dental providers, and cardiac clinics billed for services that the  
patients did not need (such as the SouthernCare, Encompass Health Corporation,  ImmediaDent, 
and  matters discussed earlier)).  The Section has also committed significant resources to 
litigating  claims against a number of nursing homes and health care providers relating to 
rehabilitation therapy administered to elderly residents who did not require or could not benefit 
from such therapy.   
 
The Fraud Section also has successfully sought to hold individuals responsible for defrauding  
federal health care programs.  Representative of these efforts, a number of  corporate settlements 
required individuals, particularly senior executives or owners, to pay  a portion of the settlement 
amount (such as the Patient Care America, Quality Therapy  & Consultation, and Vanguard 
Health, matters discussed above).  
 
Because the Fraud Section receives every FCA complaint filed by whistleblowers (otherwise  
known as relators) across the country, 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 on the FCA and health care fraud issues to AUSAs 
and agents.  The Section works closely with the HHS Office of the  Inspector General (HHS-
OIG),  including its Office of Counsel, in all settlements  of health care fraud allegations 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.   
 
Finally, the Elder Justice Initiative, which is overseen by the Civil Division, coordinates and 
supports law enforcement efforts to combat elder abuse, neglect, and financial exploitation.  The  
Initiative helps 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 
 
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  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  Department on Interagency  Working Groups such 
as the Elder Justice Coordinating Council.  The Civil Division maintains the Elder Justice  
Website (www.elderjustice.gov), a valuable  resource for elder abuse victims and their families, 
state and local prosecutors, elder abuse  researchers, as well as practitioners.  On March 30, 
2016,  the Department of Justice announced the launch of ten regional Elder Justice Task 
Forces.   These teams bring together federal, state  and local prosecutors, law enforcement, and 
agencies that provide services to the elderly, to  coordinate and enhance efforts to pursue nursing  
homes that provide grossly substandard care to their residents.   The Elder Justice Task Forces are  
led by representatives from the U.S. Attorneys Offices, state Medicaid Fraud Control Units, 
state and local prosecutors offices, the Department of Health and Human Services (HHS), state 
Adult Protective Services agencies, Long-Term Care Ombudsman programs, and law  
enforcement.  The ten districts are the Northern District of California, Northern District of 
Georgia, District of Kansas, Western District of Kentucky, Northern District of Iowa, District of 
Maryland, Southern District of Ohio, Eastern District of Pennsylvania, Middle District of 
Tennessee, and the Western District of Washington.   
 
The  Consumer  Protection Branch  
 
The Consumer Protection Branch enforces consumer protection laws to end dangerous practices 
that harm Americas most vulnerable populations, such as the sick and elderly.   The  Branch 
aggressively pursues cases against those who market unsafe pharmaceuticals, medical devices, 
and dietary supplements that endanger the health and safety of patients.   The Branch works 
closely with the  Food and Drug Administration (FDA), the Drug Enforcement Administration 
(DEA), and other law  enforcement agencies to investigate a wide  range of health care fraud cases, 
including those involving opioids and the promotion and distribution of unapproved and 
adulterated drugs and medical devices. It also collaborates with U.S. Attorneys  Offices and the  
Commercial Litigation Branchs Fraud Section on major health care fraud cases.  Under the  
Departments regulations, the Branch is the primary  component charged with enforcement of the 
Food, Drug, and Cosmetic Act (FDCA) in the federal court system.  
 
The Consumer Protection Branch is advancing  a  number of Department priorities to combat the  
nations opioid crisis, pursuing wrongdoers throughout the entire opioid distribution chain, 
including pharmaceutical manufacturers, wholesale distributers, pharmacies, and  health care  
providers.  The  Branch is a leading member of the  Departments Prescription Interdiction and 
Litigation (PIL) Task Force established in February  2018 to combat the opioid crisis at every  
level of the distribution system.  The  Branch is actively working on numerous criminal and civil 
investigations and litigation related to opioid manufacturers.  For example, in April 2019, the 
Branch and the U.S. Attorneys Office  for the Western District of Virginia indicted Indivior Inc., 
a wholly owned subsidiary of Reckitt Benckiser  Group, for health care fraud and other offenses 
relating to its marketing  of Suboxone.  In addition, in July 2019, together with the Frauds Section 
and the U.S. Attorneys Office  for the Western District of Virginia, the Branch reached a  
 
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  landmark resolution with Reckitt Benckiser Group, which agreed to pay $1.4 billion to resolve its 
potential criminal and civil liability related to its marketing of Suboxone.  Reckitt Benckiser 
Group executed a non-prosecution agreement that required it to forfeit $647 million of proceeds it 
received from Indivior and it entered into civil and administrative settlements totaling $750 
million.  The company also agreed not to manufacture, market, or sell Schedule I, II, or III  
controlled substances in the United States for three  years and to cooperate fully with all Suboxone  
investigations and prosecutions by the Department.  The resolution was the largest recovery by  
the United States in an opioid drug case.   
 
Using a variety of data sets and advanced analytics, the Consumer Protection Branch is advancing  
an effort to take all appropriate action against pharmacies, pharmacists, and health care providers 
fueling the diversion of prescription opioids.  The  Branch has brought a number of civil injunctive 
and penalty actions under the CSA to stop dangerous dispensing and prescribing conduct in 
advance of potential criminal prosecutions.  Recent actions include a case filed against two 
doctors in the Northern District of Texas and a case against two rural pharmacies, their owner, 
and three pharmacists in the Middle District of Tennessee.  The  Branch also is advising numerous 
USAOs on techniques and theories for initiating  and conducting their own investigations.   
 
In addition to its opioid enforcement efforts, the Consumer Protection Branch prosecutes 
pharmaceutical and medical device manufacturers and their executives when they violate the  
FDCA  in the manufacture and marketing of their products   conduct that often puts patient safety  
at risk.  For instance, in FY 2019, the Branch played a leading role in the prosecution of three  
major medical device manufacturers.  In one matter, medical device manufacturer ev3, Inc. 
pleaded guilty  and was sentenced to pay a criminal fine and forfeiture of $17.9 million related to 
Onyx, a liquid agent designed to solidify in malformed blood vessels that was used in minimally  
invasive brain surgeries to correct a potentially fatal vascular  condition.   Following FDAs 
approval of Onyx  for use in the brain, ev3 sales representatives trained, encouraged, and guided 
surgeons to use Onyx in larger doses in other parts of the body without FDA approval or 
appropriate clinical trials.   As part of the plea agreement, Medtronic, which acquired ev3 
subsequent to the course  of criminal conduct, also agreed to prospective  compliance measures to 
prevent future misconduct.   
 
In December 2018, together with the U.S. Attorneys Office for the District of New Jersey, the 
Branch prosecuted foreign multinational medical device manufacturer Olympus Medical Systems 
Corp. and its former top regulatory official, for failing to file required adverse event reports 
involving infections connected to the companys duodenoscope device.  The company pled guilty  
to an information charging three counts of misbranding and the former top regulatory official also 
pled guilty in connection with the  case.  The convictions stemmed from a series of incidents in 
which multiple patients at hospitals in Europe and the United States experienced serious 
infections after being treated with the companys medical device.  
 
Together with the U.S. Attorneys Office for the District of Maryland, the Branch prosecuted 
medical device manufacturer ACell for its failure  and refusal to report the removal of its 
MicroMatrix powder wound dressing product from the market in violation of the FDCA.  
Pursuant to a plea agreement, ACell admitted that it learned in January 2012 that more than 
30,000 MicroMatrix devices were contaminated with endotoxin levels that posed a risk to patient 
 
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  health.  The company never reported the removal of its medical device to FDA and it concealed  
the reason for the product removal from doctors, hospitals, and the companys own sales force.   
Moreover, it did not notify  doctors who had already  used MicroMatrix devices from the  
contaminated lots of the  elevated endotoxin levels.  In addition to paying a  $3 million fine, under 
the terms of the plea  agreement, ACell agreed to enact extensive compliance reforms.  ACell also 
agreed to pay $12 million to resolve civil FCA allegations that it marketed MicroMatrix with false 
and misleading messages that it  was safe for internal use and paid kickbacks to induce prescribers 
to order ACell products.  
   
In another  case that put patients at risk, the Branch partnered with the U.S. Attorneys Office in 
the Southern District of Indiana to prosecute the former CEO and owner of an Indiana  
compounding pharmacy  who was ultimately  convicted by  a jury of conspiracy to defraud the 
FDA and adulterating drugs.  The defendants conviction resulted from distributing over- and 
under-potent drugs to hospitals and lying to FDA  inspectors to conceal out-of-specification drug  
potency test results.  Another defendant in this case, a  former compliance director, was sentenced 
in April 2019 to five months incarceration, plus three  years of probation, after pleading  guilty to 
adulterating drugs and conspiracy to defraud FDA.   
 
As the Department of Justice component charged with enforcing laws that ensure the integrity of 
Americans food and drug supply, the Consumer Protection Branch is advancing an initiative to 
bring civil and criminal enforcement actions against dietary supplement manufacturers and 
importers who bring illicit ingredients and unregulated synthetic chemicals from China and 
elsewhere into the country  for inclusion in misbranded supplements.   The  Consumer Protection 
Branchs civil actions aim to bring swift action to stop those entities and individuals who make or 
distribute dietary supplements as unapproved new drugs and/or fail to comply with current good 
manufacturing practice (CGMP) requirements imposed by  FDA  regulations.  The Branch in these  
cases typically pursues civil injunctions that require the individuals and entities to cease operating  
until they have  established their compliance with the law.  Many  cases involve firms that make  
unsupported claims that their dietary supplements can treat or prevent a host of serious conditions, 
such as cancer or heart disease.  Cases may also assert that defendants failed to ensure their  
products meet CGMP specifications for identity, purity, strength, and composition.  The Branch 
brought numerous  civil actions against dietary supplement makers and distributors this past  year.   
The Consumer Protection Branchs criminal actions seek to hold those companies and executives 
who knowingly distribute dangerously tainted products or sell products made with undisclosed 
illicit ingredients smuggled into the United States.  In March 2019, for example, the Branch 
brought criminal charges against six individuals and two companies that sold hundreds of 
thousands of illegal products, including anabolic steroids, fraudulently representing that those  
products were high-quality, legal dietary supplements.  Earlier in November 2018, the Branch 
charged two California residents in connection with a long-running scheme to smuggle illicit 
dietary supplement ingredients into the United States from China.  And in March 2019, 
culminating  years of investigation and litigation, multiple defendants pleaded guilty in Dallas to 
felony  charges in connection with a massive fraudulent scheme to sell popular workout 
supplements known as Jack3d and OxyElite Pro.  The indictment alleged that the defendants 
misrepresented the nature and origin of the active  ingredients in their products.  OxyElite Pro was 
recalled in 2013 after the FDA linked it to a deadly  outbreak of serious liver injuries.  The  
 
101  
  individual defendants, together with the companies, agreed to pay criminal fines and forfeitures 
totaling about $60 million.  
 
Finally, the  Consumer Protection Branch has long  pursued fraudsters who prey on 
servicemembers and veterans.  This work, conducted in partnership with the Defense Criminal 
Investigative Service  (DCIS) and other military  and law enforcement entities, involves, among  
other things, the theft of  servicemembers identity, websites that deceptively  pose  as military  
recruitment sites, and other forms of  fraud and criminal conduct including  health care benefits 
fraud.  As an example of this work, in August, an indictment was unsealed in San Antonio, Texas, 
charging five individuals with coordinating  an identity theft and fraud scheme targeting  
servicemembers and veterans.  The charged defendants, who were  based both in the Philippines 
and the United States, are alleged to have used the stolen personal identifying information (PII) of 
thousands of military members to access Department of Defense and Veterans Affairs benefits 
sites and steal millions of dollars.    
 
 
Criminal Division  
 
In FY 2019, the Criminal Division was allocated $32.1  million in HCFAC funding to support 
criminal  health care fraud litigation and interagency  coordination, which is carried out primarily  
by the Fraud Sections Health Care  Fraud Unit and, to a lesser extent, the Organized Crime and 
Gang Section.   
 
The Fraud Section  
 
The Fraud Sections Health Care Fraud Unit (HCF Unit)  employs criminal prosecutors who 
focus exclusively on investigating  and prosecuting health care fraud and related offenses.  The  
HCF Units core mission is to investigate and prosecute health care fraud and illegal prescription 
opioid schemes that harm the public in two ways.  First, a significant number of the HCF Units 
charged cases and active  investigations focus on harm to federal health care program 
beneficiaries, including opioid abuse and drug  diversion.  Second, all of the cases investigated 
and prosecuted by the HCF Unit involve substantial losses to federal health care programs and 
the public fisc.  The HCF Unit also supports the U.S. Attorneys Office community by providing  
legal, investigative and data analytics support, guidance  and training on criminal health care  
fraud matters.   
 
Beginning in March 2007, the Fraud Section, working with the local USAO, the FBI, HHS-OIG, 
and state and local law enforcement agencies, launched the Medicare Fraud Strike Force in 
Miami-Dade County, Florida, to investigate and prosecute individuals and entities that do not  
provide legitimate health care services but  instead  defraud Medicare and other government 
health care programs.  In FY 2019, the HCF Units Strike Force program provided attorney  
staffing, litigation support, and leadership and management to the Health Care  Fraud and 
Prescription Opioid Strike Forces operating in 24  federal judicial districts across the United 
States.  The current strike forces  include  Miami and Tampa/Orlando, Florida; Nashville, 
Tennessee; Ft. Mitchell, Kentucky; Los Angeles, California; Detroit, Michigan; Houston, San 
Antonio and Dallas, Texas; Brooklyn, New York; Baton Rouge and New Orleans, Louisiana; 
 
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  Chicago, Illinois; Newark, New Jersey/Philadelphia, Pennsylvania, along  with a Corporate Strike  
Force located in Washington, D.C.  
 
The  Strike  Forces in Nashville and Fort Mitchell  were  added this fiscal year as part of the 
Appalachian Regional Prescription Opioid (ARPO)  Strike  Force, announced by Assistant 
Attorney  General Brian Benczkowski on October 25, 2018, as a joint effort between DOJ, HHS-
OIG, FBI, DEA, and local law enforcement partners to combat health care fraud and the opioid 
epidemic in 9 federal districts. Following  the ARPO Takedown on April 17, 2019, ARPO was 
expanded to include the  Western District of Virginia. FY 2020 will see  a  Strike  Force expansion  
to  the Rio Grande Valley, including parts of the Southern and Western District of Texas, such as  
San Antonio, Texas. Since the inception of the Strike Force program in 2007, the HCF Unit and 
its Strike Force partners have charged over 4,200  defendants who have  collectively billed the  
Medicare program approximately  $19.2  billion.   
 
In FY 2019 alone, the HCF Unit achieved the following results:   
 
   Filed 170  indictments, criminal informations and complaints involving charges against  
344  defendants who allegedly  collectively billed federal health care programs 
approximately $4.1 billion;    
 
   Obtained 157  guilty pleas and litigated 20 jury trials, with guilty verdicts against  
23  defendants;  and   
 
   Sentenced 163  defendants, with an average sentence of over 60  months.  
 
Each year, the HCF Unit coordinates large-scale, law enforcement actions with its partners.   In 
FY 2019, the HCF Unit successfully completed 11 coordinated law enforcement actions.  
 
   On April 9, 2019, the investigation called Operational Brace  Yourself culminated in 
charges against  24 defendants, including the CEOs, COOs and others associated with five  
telemedicine companies, the owners of dozens of durable medical equipment (DME) 
companies and three licensed medical professionals, engaged  in a Telemedicine and 
DME scheme involving  over $1.2 billion in losses.   In conjunction with this effort, the 
Centers for Medicare &  Medicaid Services, Center for the Program Integrity (CMS/CPI), 
announced it took  adverse  administrative action against more than 130 DME companies.  
 
   On April 17, 2019,  Attorney  General William P. Barr and Department of Health and 
Human Services (HHS) Secretary Alex  M. Azar II, announced the results of the first 
Takedown for the  ARPO Strike Force.   This Takedown resulted in charges against 60 
defendants, including 53 licensed medical professionals across 11 federal districts.  This 
effort also marked the first time the DOJ, DEA, HHS-OIG, HHS Substance Abuse and 
Mental Health Services Administration (SAMHSA), Centers for Disease  Control and  
Prevention (CDC), and all impacted State  Departments of Health deployed  a coordinated 
public health response to address patient harm and insure continuity of care  following a  
law enforcement action.  
 
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     On September 27, 2019, charges involving fraudulent genetic  cancer testing were brought 
against 35 individuals responsible for over $2.1 billion in losses in one of the largest 
health care fraud schemes ever charged.   The scheme involved the payment of illegal 
kickbacks and bribes by  cancer genetic testing laboratories in exchange  for  the referral of 
Medicare beneficiaries by  medical professional working with fraudulent telemedicine  
companies for medically  unnecessary cancer genetic tests.  Among those charged were  
10 medical professionals, including nine doctors.   In conjunction with this effort, the  
Centers for Medicare &  Medicaid Services, Center for Program Integrity (CMS/CPI), 
announced it took adverse administrative action against cancer genetic testing  companies 
and medical professionals.  
 
   From August 28 to September 27, 2019, eight regional takedowns were  carried out. 
These regional takedowns resulted in charges against over 345 individuals who allegedly  
billed federal health care  programs for more than $1 billion and allegedly  
prescribed/dispensed approximately 50 million controlled substance pills in Houston, 
across Texas, the West Coast, the Gulf Coast, the  Northeast, Florida and Georgia, and the 
Midwest.  Charges include those  against 105 defendants  for opioid-related offenses.  
 
The HCF Unit also provided legal guidance to FBI  and HHS-OIG agents, health program agency  
staff, Assistant U. S. Attorneys, and other Criminal Division attorneys on criminal tools to 
combat health care fraud.   Throughout FY 2019, the HCF Units prosecutors met with federal 
prosecutors and agents across the United States to provide training, investigative leads based on 
data analysis, and related support.  The HCF Unit 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.  
 
As part of the HCF Units efforts to lead a coordinated,  national approach to combating health 
care  fraud, the HCF Unit bolstered the HCF  Unit Data Analytics Team in FY 2019.  This team 
allows the HCF Unit to better assist prosecutors in effectively and efficiently  identifying and 
prosecuting individuals and entities, and to examine emerging health care fraud, opioid fraud, 
and drug diversion trends in the field.  The HCF Unit Data Analytics Team also provides U.S. 
Attorneys  Offices with customized HCF data analytic training and ongoing case-specific  
investigation and prosecution assistance.  The HCF Data Analytics Team will continue to 
strengthen the HCF  Units partnerships with U.S. Attorneys  Offices across the country in 
combating health care fraud.   
 
Furthermore, the HCF  Units  cases  are  also  increasingly  complex, both in cases investigated and 
charged in the individual Strike Force locations and in cases handled by the Corporate Strike  
Force.  Specifically, the Corporate Strike  Forces  mission is to investigate and prosecute  
corporate fraud cases involving  major health care  providers that operate in multiple jurisdictions, 
 
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  including major regional health care providers operating in the Strike  Force cities, with a focus 
on investigations and prosecutions of individuals.  The Corporate Strike  Force coordinates with 
the Civil Divisions Fraud Section and Consumer Protection Branch, U.S. Attorneys Offices 
across the country, state  Medicaid Fraud Control Units, the FBI, and HHS-OIG in order to 
identify, investigate, and prosecute significant corporate health care fraud cases.  In addition, 
numerous Strike Force prosecutions involve sophisticated money laundering and financial fraud 
schemes involving the use of shell companies and intermediaries to conceal ownership interests, 
kickback payments, and assets.  The  HCF  Units expertise enables  it to pursue  these  complex  
cases,  many of which involve hundreds of millions of dollars in fraudulent claims  to the  federal  
health care  benefit programs.  
 
Based on the Criminal Division, Fraud Sections prosecutions in FY 2019, the below chart sets 
forth the projected amounts the Medicare Program saved over specific  amounts of time.   For 
example, had the defendants charged by the Fraud Section in FY 2019 continued defrauding the 
Medicare program, this would have resulted in an additional $4.5 billion loss after 5 years, and 
$7.1  billion loss after 10 years.   The  Impact of Investment shows that over  10 years, every dollar 
spent on the Criminal Division, Fraud Section in FY 2019, resulted in $209 in savings to the  
Medicare program.    
 
 
 
Time  Frame   Monies Saved   Impact of Investment  
1-year   $1.117 billion   $33 saved/ $1 spent  
3-year   $3.009 billion   $88 saved/ $1 spent  
5-year   $4.520 billion   $133 saved/$1 spent  
8-year   $6.236 billion   $183 saved/$1 spent  
10-year   $7.097 billion   $209 saved/$1 spent  
 
 
The Organized Crime and Gang Section (OCGS)  
 
The Criminal Divisions Organized Crime and Gang Section (OCGS) supports and conducts 
investigations and prosecutions of health care fraud and abuse targeting private sector health 
plans as well as health care fraud and abuse perpetrated by domestic and international organized 
crime  groups.  OCGS supports and conducts enforcement efforts combatting fraud and abuse  
directed at the 2.3 million private sector health plans sponsored by employers and/or labor 
organizations,  which cover some 143 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 and provides 
legal advice  and necessary  approvals in the use of the Racketeer Influenced and Corrupt 
Organizations (RICO) statute to combat health care fraud and abuse.  
 
In FY 2019, five OCGS attorneys conducted health care  fraud prosecutions and investigations.   
 
In Knoxville, two OCGS attorneys worked with the United States Attorneys Office  for the 
Eastern District of Tennessee on an opioid pill-mill prosecution of seven individuals including  
 
105  
  two leaders in Italy, for illegally operating pain clinics in Tennessee  and Florida,  which 
prescribed vast quantities of opioids.  In July 2019, one defendant pleaded guilty to RICO 
conspiracy.  Four individuals went to  trial in October 2019 on charges including RICO 
conspiracy  and drug  trafficking conspiracy to distribute and dispense oxycodone, oxymorphone  
and morphine outside the scope of professional practice, not for a legitimate medical purpose and 
resulting in death.  All four defendants are charged under enhanced penalty  provisions for  
distribution of oxycodone or oxymorphone  resulting in overdose deaths,  which carries a sentence  
of 20  years to life.  The indictment alleges that approximately 700 clinic patients have died and  a 
significant portion of those deaths resulted directly  or indirectly from overdosing on narcotics 
prescribed by the enterprise.  This partnership between OCGS and the Eastern District of 
Tennessee has resulted in the investigation and prosecution of over 140 individuals.  This case is 
summarized above in the  Highlights of Significant Criminal and Civil Investigations.  
 
In Washington, D.C., two OCGS attorneys handled the prosecution of a former union official 
and an outside lobbyist for health care fraud conspiracy and health care fraud.  The union official 
allegedly arranged for the lobbyist to be fraudulently placed on the unions health plan even 
though the lobbyist was not a full-time employee  of the union and therefore not eligible to 
participate in the health plan.   Thereafter the lobbyist allegedly obtained more than $66,000 in 
medical insurance reimbursements to which she  was not entitled.  Trial is scheduled in FY 2020.  
 
Additional OCGS attorneys were  engaged in investigations of health care fraud, kickbacks, 
embezzlements and other criminal abuses involving large collectively bargained health plans, 
third party  administrators to private sector health plans, pharmacy benefits managers, health 
plans funded through prevailing wage  government contracts, and health plans provided through  
multiple employer welfare arrangements.  
 
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) including  fraud schemes by corrupt entities that sell unlicensed group health insurance.  
Private sector employment-based group health plans are the leading source  of health care  
coverage for individuals not covered by Medicare  or Medicaid.  OCGS provides litigation 
support as requested at any stage  of the prosecution from indictment through trial and appeal.  
For example, an OCGS attorney provided assistance to the complex investigation and 
prosecution in the Eastern District of Louisiana of two individuals and a corporation operating  a  
multiple employer welfare arrangement (MEWA)  who were indicted on charges of fraud and 
false statements in the marketing and sale of employee  group health care coverage  causing losses 
exceeding $41 million.  The operators of the MEWA, an accountant and the corporation have  
pleaded guilty.  As part of their guilty pleas, the defendants agreed to forfeit approximately $6.3 
million in assets and to pay  restitution for the amount of loss.   This case is summarized above in 
the Highlights of Significant Criminal and Civil Investigations.  
 
OCGS attorneys 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, FBI and IRS.  Such training and guidance  
covers prosecutions involving abuse of private sector employee health plans subject to ERISA 
 
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  and health plans sponsored by labor organizations, as well as fraud and abuse committed in 
connection with the operation of MEWAs.  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 RICO statute in 
prosecutions of racketeering enterprises involved in the distribution of opioids, fentanyl and 
other pharmaceuticals, Medicare and Medicaid frauds, and private sector health care  frauds.   
 
 
Civil Rights Division  
 
In FY 2019 the Civil Rights Division was allocated $4.5 million in 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, and conducts investigations to eliminate abuse and grossly substandard care in 
public, Medicare, and Medicaid funded long-term care  facilities.  Consistent with the ADAs 
integration mandate set forth in 28 C.F.R.  35.130(d), and the Supreme Courts ruling in 
Olmstead v. L.C., 527 U.S. 581 (1999), the Division also works to prevent the unnecessary  
segregation 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 enforcing  the Civil Rights of 
Institutionalized 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  facilities, and initiation of  
a civil action for injunctive  relief to remedy a pattern or practice violation of the Constitution or  
federal statute.  In addition, both the Special Litigation Section and the Disability Rights Section 
have engaged in interagency  coordination with the goal of combatting the misuse of  Medicaid 
funding related to the unnecessary segregation of  persons with disabilities.  
 
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 the 
investigation of allegations of discrimination by public entities against individuals with 
disabilities, including discrimination in the form of unnecessarily segregating persons who 
require health care supports and services.  See  Olmstead, 527 U.S. 581.  Title II  also authorizes 
the initiation of civil actions to remedy discrimination in violation of the ADA.  In addition to 
violating the civil rights of individuals with disabilities, such unnecessary segregation often 
increases Medicaid costs.  Both the Disability Rights Section and the Special Litigation Section 
enforce the ADAs prohibition on unnecessary segregation.  
 
The Educational Opportunities Section of the Civil Rights Division also participates in the  
HCFAC Program to address the use of Medicaid funding for  youth with disabilities who are  
unnecessarily placed in segregated education settings, including segregated residential 
placements, in violation of the ADA.  The Special  Litigation, Educational Opportunities, and 
Disability Rights Sections work collaboratively with the USAOs and with HHS.  
 
   
 
107  
  FY 2019 Accomplishments  
 
Key litigation and enforcement accomplishments in FY 2019 of  the Civil Rights Division are:  
 
   Number of matters in active enforcement:  15;  
   Cumulative estimate of individuals with disabilities affected:  59,090; and  
   Number of institutional facilities affected:  2,094.  
 
Special Litigation Section  
 
In Fiscal Year 2019, the Special Litigation Section litigated two large cases involving the alleged 
unlawful institutionalization of, and denial of  community-based services to, individuals with 
disabilities, continued monitoring compliance with five statewide settlement agreements, and 
began monitoring  a sixth statewide agreement.  During  FY 2019, the Sections active  
enforcement efforts affected more than 1,400 health care  facilities in seven states.    
 
In September, 2019, the Section obtained a key victory  following  a month-long bench trial in 
Mississippi.   United States v. Mississippi,  No. 3:16-CV-622-CWR-FKB, 2019 WL  4179997 
(S.D. Miss. Sept. 3, 2019).   The court ruled that Mississippi violates the ADA by  
institutionalizing thousands of persons with serious mental illness in State psychiatric hospitals 
when they could be served in integrated settings in the community.  Litigation regarding  a  
remedial order is ongoing.   
 
In May, 2019, the Section entered into an agreement with West Virginia  to address allegations 
that the State violates the ADA by failing to serve  children with mental health conditions in the 
most integrated setting appropriate to their  needs.  The agreement is expected to affect more than 
1,000 children statewide.   
 
In October  and November, 2018, the Section conducted a five-week bench trial regarding our 
claim that Texas violates the ADA by unnecessarily  institutionalizing thousands of people with 
intellectual and developmental disabilities in nursing facilities.  Post-trial briefing was completed 
in January 2019.  The  case is under submission with the Court.  
 
The Section also continued monitoring implementation of settlements in Louisiana, New 
Hampshire, Virginia, Texas, and Georgia that are  helping individuals with intellectual, 
developmental, and mental health disabilities avoid unnecessary institutionalization.   
 
The Section continued to work toward a resolution of the Divisions investigative  conclusion that 
South Dakota fails to serve older adults and people with disabilities in the  most integrated setting  
appropriate to their needs.  
 
Disability Rights Section  
In FY 2019, the  Disability  Rights Section monitored compliance of five settlement agreements, 
under which more than 16,100 people collectively will obtain relief; investigated whether 
another state  provides services to individuals with physical disabilities in the most integrated 
 
108  
  setting appropriate to their needs; and continued its litigation of another  case involving  
unnecessary segregation of people with disabilities.  
 
The Section continued to monitor the implementation of its settlement agreement with the State  
of North Carolina, under  which the State is providing opportunities to individuals with mental 
illness in adult care homes to transition to less costly, integrated service settings.   As of June 30, 
2019, 3,038 individuals had been diverted or moved from large  adult care homes to permanent 
supported housing since the agreement went into effect in 2012.   One thousand two hundred 
twenty-eight individuals were diverted from adult care homes upon discharge  from a state 
psychiatric hospital or upon being  considered for admission to an adult care home, and 1,670 
individuals moved out of adult care homes into the community.   Of the 3,038 individuals who 
have moved into permanent supported housing, 2,114 (or 70 percent) continue to receive 
services in the community.   In addition, 5,626 individuals were receiving ACT services and 
2,222 individuals in the agreements target population had received supported employment 
services over the course  of the agreement.  
 
The Section 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 2,600 individuals with IDD by  
2024, and roughly 3,500 individuals will benefit from changes to the States employment and 
day service systems.   On September 26, 2019, the District Court dismissed the case  against the 
City  of Providence  early  in response to a joint request from the Department and City.  A year 
ahead of schedule, the Court Monitor found that the City was in substantial compliance with all 
provisions.   The City now provides transitional services and supports to students with IDD at 
Mount Pleasant High School, including community experiences, to enable  those students to 
prepare for  and obtain competitive jobs in businesses in the community.  The State has also made  
significant progress, including meeting or exceeding two of three Supported Employment 
placement targets ahead of schedule.   Thus far, 838 individuals have obtained competitive, 
integrated employment over the course of these agreements.  
 
The  Section, along with the U.S. Attorneys Office for the Eastern District of New York,  
continued monitoring the  second amended settlement agreement with the State of New York and 
private plaintiffs regarding New Yorks mental health service system.   The  agreement benefits at 
least 2,500 people and remedies discrimination by the State in the administration of its mental 
health service system.   Pursuant to the agreement, individuals with serious mental illness who 
reside in 22 large institutional settings known as adult homes in New York City  are provided the 
opportunity  to receive services in the most integrated setting appropriate to their needs consistent 
with the ADA and Olmstead.   Under the agreement, these individuals can choose to live and 
receive services in the community, thus enabling them to live, work, and participate fully in 
community life.   To date, more than 850 former adult home residents are living and receiving  
services in the community, and more than 2,000 additional adult home residents have expressed 
interest in doing so.    
 
The Section is working  with class plaintiffs to monitor a settlement agreement with the State of 
Oregon.   Pursuant to the settlement agreement, the State is decreasing its reliance on segregated 
 
109  
  employment settings and increasing supported employment services to help individuals with 
IDD obtain competitive integrated employment.   The State committed to provide supported 
employment services and related employment services so that by June 30, 2022, 1,115 working-
age individuals receiving sheltered workshop services would newly obtain  competitive integrated 
employment.   The State  also agreed that by July 1, 2022, it would provide employment services 
to at least 4,900 youths aged 14 to 24, and Individual Plans for Employment to at least half of  
those youths.  The State  has reported that  as of March 2019, it had reduced the census of 
segregated sheltered workshop settings to 296 and the total number of hours worked in such 
settings to 13,233.  The State has also reported that through the end of June 2019, it had provided 
supported employment services and related employment services so that 914 individuals 
receiving sheltered workshop services have newly obtained competitive integrated employment, 
3,712 transition-aged youths have received at least one new employment service, and 3,239 of 
those  youths received an Individual Plan for Employment.   
 
In 2013, the Section commenced litigation against the State of Florida, alleging among other  
things, that the State administers its Medicaid service system for children with significant 
medical needs in violation of Title II of the ADA  by unnecessarily segregating them in nursing  
facilities, when they  could, and want to, be served at home or in other community-based 
settings.   On September  20, 2016, U.S. District Court for the Southern District of Florida issued 
an order dismissing the United States claims.  The United States filed a notice of appeal with the 
U.S. Court of Appeals for the Eleventh Circuit, which on September 17, 2019, issued an opinion 
reversing the District Courts order of dismissal and remanding the case to the District Court.  
C.V. v. Dudek,  209 F. Supp. 3d 1279 (S.D. Fla. 2016), reversed and remanded sub nomine  
United States v. Fla.,  938 F.3d 1221 (11th Cir. 2019), petition for rehearing  filed.  
 
Educational Opportunities Section  
 
The Educational Opportunities Section (EOS) has participated in the HCFAC Program for the  
past five years.  The Section has carefully  analyzed the legal issues related to unnecessary  
segregation in the context of K-12 schools.  The Sections pending litigation against the State of  
Georgia, alleging that the State is violating Title II of the ADA regarding its use of segregated 
educational services for approximately 5,000 Georgia students with emotional and behavioral 
disabilities, has been stayed pending resolution of United States v. Florida, noted above.  
 
 
Office of Inspector General  
 
In FY 2019, the Office of the Inspector General (OIG) was allocated $0.5  million in HCFAC 
funding to address health care  fraud as it directly impacts DOJ  operations.   The DOJ spends over 
$1 billion a  year to provide health care to inmates of the Federal Bureau of Prisons and the U.S. 
Marshals Service and over $115 million a year in annual workers compensation payments 
related to disabled DOJ employees and informants.  The OIGs Investigation Division has one  
full time special agent, one part-time special agent, two analysts, and two supervisors to assist in 
identifying and investigating health care fraud.   Additionally, the OIGs Office of Data Analytics 
has the equivalent of three  personnel that collect, clean, validate, analyze, and store  health care  
claims data related to DOJ programs to identify  health care  fraud issues for  audit or 
 
110  
  investigation.  These  efforts have resulted in the initiation of eleven cases for the  Investigations 
Division and also a Procedural Reform Recommendation to the Bureau of Prisons (BOP) that 
they move toward electronic billing for health care data at all their facilities.  
 
Given the DOJs critical role in combating  health care  fraud, the OIG has also prioritized 
detecting  health care  claim fraud within DOJ operations.  The OIG has used HCFAC funding to 
support the salary costs of staff performing analytics on the  health care  claims data, investigating  
potential leads, and cover  health care  fraud training.  The  OIG has also stood up a separate 
enclave to store sensitive data received from components and private  entities and collaborated 
with other inspector general offices in health care  working  groups.  
 
The OIGs efforts to combat health care  fraud has primarily focused on identifying fraud 
schemes through data-driven proactive  analysis.   The Office of Data Analytics began regularly  
collecting biweekly feeds of the DOJ workers  compensation claims in FY2019 and referred 
leads to agents based on data-driven tests.   The OIG also increased the oversight of BOP inmate  
health care  spending in FY  2019 by obtaining additional data directly from the private companies 
and hospitals providing  health care  services to inmates under BOP Comprehensive Medical 
Services contracts.   The  Investigations Division has opened multiple BOP related cases as a  
result of fraud analytics.  Through data-driven testing, the OIG has also identified investigative  
leads and audit risk from analyzing the USMS  health care  claims data.  The OIG plans to expand 
its data-driven testing by  collecting  additional data, expand tripwire testing, and increase the 
number of data analytic tools available to agents and analysts.  
 
 
 
111  
  APPENDIX  
 
Federal Bureau of Investigation  
 
In FY 2019, the  FBI was allocated $138.3 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 814 positions (487 Agent, 327 Support).  In addition, the FBI  
received $4.4 million of the DOJ HCFAC funding.  
 
In FY 2019, the  FBI initiated 677 new Health Care Fraud (HCF) investigations and had 2,174 
pending investigations.  Investigative  efforts produced 612 criminal HCF convictions and 771 
indictments and informations.  In addition, investigative  efforts resulted in over 558 operational 
disruptions of criminal fraud organizations and the dismantlement of the criminal hierarchy of 
more than 151 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 has 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  
among  FBI components, but also with its 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.  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  Health care  
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   to include the  
rising prescription drug abuse epidemic, 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 threats.   For example, a  FBI case from the  Knoxville Field Office had 
130 indictments to include RICO charges on multiple subjects for their  roles in a conspiracy to 
 
112  
  distribute and dispense oxycodone, oxymorphone,  and morphine outside the scope of 
professional practice  and not for a legitimate medical purpose; maintenance of drug-involved 
premises; distribution of oxycodone resulting in death; and money laundering.   All are accused 
of being  responsible for the distribution of a quantity of oxycodone, oxymorphone, and morphine  
sufficient to generate clinic revenue of at least $17.5 million.   Nine deaths were  charged in the  
case and over $2 million was seized.  
 
FBI field offices throughout the U.S. address the  HCF threat through joint investigative efforts; 
intelligence  collection, sharing, and analysis; and the utilization of advanced and sophisticated 
investigative techniques.  FBI field offices participate in HCF Task Forces and/or working  
groups with partners including local US  Attorneys Office, HHS-OIG, DEA, IRS, FDA, other  
federal, state, and local law enforcement agencies, 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 56 field offices  to mitigate the health care  fraud threat.  In support of joint agency  
activities and general threat mitigation efforts, the HCFU developed and supports four initiatives, 
including the Health Care Fraud Prevention and Enforcement Action Team (HEAT), Large  Scale 
Conspiracies, Major Provider Fraud, and the Prescription Drug  Initiative.  
 
HEAT is a DOJ, FBI 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, FBI  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 funding, resource  
allocation, Strike Force expansion, target  identification, training, and operations.  The FBI  
supports eleven Strike Forces located in Miami, Detroit, Houston (also includes McAllen, 
Texas), New York City (Brooklyn), Tampa, Los Angeles, Chicago, Dallas, Philadelphia, 
Newark, and Southern Louisiana  (Baton Rouge and New Orleans).  In addition to funding agent 
resources, the FBI  funds undercover operation expenses, financial and investigative analysis  
support, offsite and evidence storage locations, operational travel, 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.  In FY19, the  FBI participated in ten DOJ  
regional HCF takedowns charging 268  subjects, including 101 doctors, nurses and other licensed 
medical professionals, for their alleged participation in HCF schemes involving approximately  
$2.6 billion in false billings.  The  continued support of Strike Force operations is a top priority  
for the FBI.   Additionally, the FBI coordinates and shares intelligence  with HHS and DOJ  
components on other prevention and enforcement activities, to include efforts associated with the 
Large Scale Conspiracies, Major Provider Fraud, and Prescription Drug  Initiatives.  
 
   
 
113  
  In October 2018, the U.S. Attorney Generals Office announced the creation of the Appalachian 
Regional Prescription Opioid (ARPO) Strike Force.  The  ARPO Strike Force operates in 
Cincinnati, Louisville, Pittsburgh, Knoxville, Memphis, and Birmingham to investigate illegal 
opioid prescriptions in the surrounding areas.  ARPO is an extension of the Strike Force, which 
investigates and prosecutes Medicare fraud nationwide in partnership with the FBI, HHS-OIG, 
and the DEA.  As part of  this initiative, DOJ appropriated additional funding to the  FBI to 
support the deployment of dedicated Special Agents to identify, investigate, and prosecute  
individuals who divert prescription opioids in judicial districts in states such as Tennessee, North 
Carolina, West Virginia, and Alabama.  On April 17, 2019, the  FBI and DOJ announced criminal 
charges against 60 defendants, including 53 doctors, pharmacists, nurse practitioners, and other  
medical professionals who allegedly  gave thousands of opioid prescriptions to addicted patients. 
The effort was the largest law enforcement action to date against illegal opioid prescribers.  The  
arrests and charges were  among the first cases brought against medical providers as part of the  
ARPO Strike Force.    
 
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.  Investigative assistance provided to field offices as part of the  
initiative include support for undercover operations, source identification and support, and 
funding of investigative  costs.  An example of these types of cases includes the FBI-led 
investigation of a  call center operating out of the  Philippines by a  US Citizen.  The call center  
fraudulently produced and sold durable medical equipment (DME) orders to over 200 DME 
companies operating  around the U.S.  The majority  of fraudulent DME prescriptions were  
obtained through tele-doctors.  Approximately 18,000 DME orders were being submitted per 
week to Medicare  for an approximate $16 million weekly reimbursement.   Conspirators billed 
Medicare for $2.3 billion  since 2015 and Medicare paid $1.2 billion  based on these claims.  
 
In April 2019, twenty FBI  field offices participated in a national takedown where 37 individuals 
were indicted, 130 DMEs across the nation were shut down, 83 search warrants were  executed, 
and over 180 seizure  warrants were served.   In Virginia, an individual operating a fraudulent 
sleep study  clinic was convicted of Conspiracy to Commit Health Care Fraud, Health Care  
Fraud, and False Tax Returns for submitting over $83 million in claims to Medicare and private  
insurers. The defendant was sentenced to 84 months imprisonment and $21 million in restitution 
was ordered by the court.   
 
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 is the FBI-led investigation of  Insys Therapeutics (Insys)  alleging  Insys 
 
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  systematically  and illegally promoted its prescription drug Subsys for off-label usage.   Subsys is  
a fast acting drug  approved by the FDA for the management of  cancer pain in patients who are  
opioid tolerant.   Additionally, the Insys sales force offered financial inducements, such as 
excessive speakers fees, to physicians to prescribe Subsys in violation of the False Claims Act 
and the Federal Anti-Kickback Act.  The total amount paid to eight physicians was 
approximately $1.2  million.  The case resulted in a $225 million global resolution of criminal 
and civil  investigations.  In addition, Insys Pharma, a subsidiary of Insys was sentenced to a fine 
of $2 million, and asset forfeiture of $28 million.  The FBI  coordinated efforts in this case with 
HHS-OIG, FDA, DEA, OPM-OIG, the Office of Personnel Management, Veterans Affairs, 
DCIS, the Postal Inspection Service, USPIS-OIG, and the Department of Labor.  
 
The Prescription Drug  Initiative identifies and targets criminal enterprises and other  groups or  
individuals engaged in prescription drug schemes, and prosecutes improper prescribing and 
dispensing practices of controlled substances.  These schemes are a significant crime problem 
and impact public health and safety.  Examples include a  Birmingham physician who was 
convicted of various counts of unlawful distribution of controlled substances, health care fraud, 
and money laundering.  In Houston, over 30 individuals related to the health care industry  were  
arrested and over 20 searches were executed regarding a medical clinic that was involved in 
illegal prescription and diversion of controlled substances.  With the Attorney  Generals 
allocation of funds to the FBI as part of the Opioid Fraud and Abuse Detection Unit, the FBI is 
dedicated to prioritizing  prescription drug scheme investigations, particularly in at-risk federal 
judicial districts, with enhanced support from the  Prescription Drug  Initiative.  
 
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 Agents 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 2019, more than 300 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 814 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.  
   
 
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  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  5).    
 
   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.  
 
 
 
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  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 2019, 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 2019    
Office of Inspector General   $195,754,924    
Health and Human Services Wedge2   37,440,473    
Medicare Integrity Program3   897,714,523  
 
MIP/Medicare (non-add)   828,659,560  
 
Medi-Medi (non-add)   69,054,963  
 
Department of  Justice Wedge2   61,120,076  
Federal Bureau of Investigation4   138,343,622    
Subtotal, Mandatory HCFAC   1,330,373,618    
     
Discretionary Resources    
 
Office of Inspector  General   $87,230,000  
 
CMS Program  Integrity   599,389,000  
Senior Medicare Patrols (ACL Non-Add)5   18,000,000    
Department of  Justice   78,381,000    
Subtotal, Discretionary HCFAC   765,000,000    
Grand Total, HCFAC   $2,095,373,618    
 
 
 
 
                                                 
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  Mandatory  Medicare Integrity  Program  (MIP)  and  Medicaid  Integrity  Program  fund  fraud  prevention  and  detection  
activities  within  Medicare and  Medicaid,  and  are not part of  this  report to  Congress.   A  separate report to  Congress  
addresses 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  The Department of  Defense and  Labor,  Health  and  Human  Services,  and  Education  Appropriations  Act of  2019 
and  Continuing  Appropriations  Act  of  2019  requires that the  Secretary  provide not less  than  $17,621,000  for  the 
Senior  Medicare Patrol program  using  discretionary  HCFAC  funds.  
 
117  
  Glossary  of Common Terms  
 
The AccountThe Health Care Fraud and Abuse  Control Account  
 
ACA   Affordable Care Act  
 
AKS  Anti-Kickback Statute  
 
ACLDepartment of Health and Human Services, Administration for Community  Living  
 
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    
 
CPICenter  for Program Integrity  
 
CYCalendar Year  
 
DEADrug Enforcement Administration  
 
DMEDurable Medical Equipment  
 
DOJThe Department of Justice  
 
FBIFederal Bureau of Investigation  
 
FCAFalse Claims Act  
 
FDAFood and Drug Administration  
 
FFSFee-for-Service  
 
FYFiscal Year  
 
HCFACHealth Care Fraud and Abuse Control Program or the Program  
 
HEATHealth Care  Fraud Prevention & Enforcement Action Team  
 
 
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  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  
 
MAOMedicare Advantage Organization  
 
MFCUMedicaid Fraud Control Unit  
 
MEDICMedicare Drug  Integrity Contractors  
 
OCGSOrganized Crime and Gang Section  
 
OGCOffice of the General Counsel, Department of Health and Human Services  
 
PECOSProvider Enrollment, Chain and Ownership System  
 
PERMPayment 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  
 
UPICUnified Program  Integrity Contractor  
 
USAOUnited States Attorneys Office  
 
 
 
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