HHS OIG Semiannual Report 
to Congress 
October 1, 2015  March 31, 2016 
    HHS Office of Inspector General 
Semiannual Report to Congress | Spring 2016  Page ii 
 
 
OIG Organization 
The Department of Health and Human Services (HHS), Office of Inspector General (OIG) provides 
independent and objective oversight that promotes economy, efficiency, and effectiveness in the 
programs and operations of HHS.  OIGs program integrity and oversight activities are shaped by 
legislative and budgetary requirements and adhere to professional standards established by the 
Government Accountability Office, the Department of Justice (DOJ), and the Inspector General 
community.  OIG carries out our mission to protect the integrity of HHS programs and the health and 
welfare of the people served by those programs through a nationwide network of audits, investigations, 
and evaluations conducted by the following operating components with assistance from OIG counsel and 
management.   
The Office of Audit Services (OAS).  OAS conducts audits of HHS programs and operations through its 
own resources or by overseeing audit work done by others.  Audits examine the performance of HHS 
programs and/or its grantees and contractors in carrying out their respective responsibilities and are 
intended to provide independent assessments of HHS programs and operations.  These assessments 
help reduce waste, abuse, and mismanagement and promote the economy, efficiency, and effectiveness 
of programs and operations throughout HHS. 
The Office of Evaluation and Inspections (OEI).  OEI conducts national evaluations to provide HHS, 
Congress, and the public with timely, useful, and reliable information on significant issues.  These 
evaluations focus on preventing fraud, waste, and abuse and promoting economy, efficiency, and 
effectiveness in HHS programs.  OEI reports also present practical recommendations for improving 
program operations. 
The Office of Investigations (OI).  OI conducts criminal, civil, and administrative investigations of fraud 
and misconduct related to HHS programs, operations, and beneficiaries.  With investigators working in 
almost every State, the District of Columbia, and Puerto Rico, OI coordinates with DOJ and other Federal, 
State, and local law enforcement authorities.  OI also coordinates with OAS and OEI when audits and 
evaluations uncover potential fraud.  OIs investigative efforts often lead to criminal convictions, 
administrative sanctions, or civil monetary penalties (CMP). 
The Office of Counsel to the Inspector General (OCIG).  OCIG provides general legal services to OIG, 
rendering advice and opinions on HHS programs and operations and providing all legal support for OIGs 
internal operations.  OCIG represents OIG in all civil and administrative fraud and abuse cases involving 
HHS programs, including False Claims Act, program exclusion, self-disclosure, and CMP cases.  In 
connection with these cases, OCIG also negotiates and monitors corporate integrity agreements.  OCIG 
renders advisory opinions, issues compliance program guidance, publishes fraud alerts, and provides 
other guidance to the health care industry about the anti-kickback statute and other OIG enforcement 
authorities. 
Executive Management (EM).  EM is composed of the Immediate Office of the Inspector General and 
the Office of Management and Policy.  EM is responsible for overseeing the activities of OIGs 
components; setting vision and direction, in collaboration with the components, for OIGs priorities and 
strategic planning; ensuring effective management of budget, finance, information technology (IT), 
human resources, and other operations; and serving as a liaison with HHS, Congress, and other  HHS Office of Inspector General 
Semiannual Report to Congress | Spring 2016  Page iii 
 
 
stakeholders.  EM plans, conducts, and participates in a variety of cooperative projects within HHS and 
with other Government agencies. 
    HHS Office of Inspector General 
Semiannual Report to Congress | Spring 2016  Page iv 
 
 
A Message from the Inspector General 
I am pleased to submit this Semiannual Report to Congress that summarizes the activities of the Office of 
Inspector General (OIG), Department of Health and Human Services (HHS or the Department), for the 6-
month period that ended March 31, 2016.  OIG advances its core mission of protecting the integrity of 
HHS programs and the people they serve by working to prevent and detect fraud, waste, and abuse.  
When misconduct is identified, OIG takes appropriate enforcement action or makes recommendations to 
improve Department programs and operations. 
One of the ways in which OIG helps to prevent fraud, waste, and abuse is by providing guidance that 
supports the health care industry's compliance efforts.  For example, we issue special fraud alerts and 
bulletins to notify providers of risk areas and problematic conduct.  For this reporting period, OIG issued 
a policy reminder about information blocking and the anti-kickback statute and a policy statement 
regarding self-administered Medicare drugs dispensed in outpatient settings.  Another way that we 
strive to prevent problems is by making recommendations, that, if implemented, would address 
vulnerabilities and prevent recurrence of the identified problem.  For example, OIG recently 
recommended that certain States ensure compliance with Federal health and safety requirements for 
child care providers to help reduce the risk of harm to children. 
Through our work, OIG detects and identifies services that are questionable, undocumented, medically 
unnecessary, or incorrectly coded.  We also identify duplicate payments and payments for services that 
were not provided.  In doing so, OIG uncovers potentially systemic payment vulnerabilities.  For example, 
OIG identified that hospices inappropriately billed Medicare over $250 million for general inpatient care 
and recommended that the Centers for Medicare and Medicaid Services (CMS) increase its oversight of 
hospice claims and review Part D payments for drugs for hospice beneficiaries.  
OIG leverages technology and forensic audit techniques to identify and address emerging fraud trends 
and to support efforts to deter misconduct through administrative actions.  OIG investigations, including 
work on Strike Force cases, target emerging patterns of fraud and help to hold wrongdoers accountable.  
For example, a home health agency owner was sentenced to more than 6 years and ordered to pay $4.5 
million in restitution for billing Medicare for unnecessary home health care and therapy services.  OIG 
uses its administrative tools to complement Department of Justice criminal and civil enforcement efforts 
and has deployed a team dedicated to pursing administrative enforcement actions.  We pursue 
enforcement where appropriate, which helps honest providers flourish by weeding out wrongdoers.    
During this reporting period, we promoted economy, efficiency, and effectiveness of program 
management through a comprehensive case study of HealthCare.gov that identified important lessons 
learned from the CMS's implementation of the website and offered insights that may be used by other 
programs charged with implementing large, complex, and high-profile initiatives.  We expect to apply 
these lessons in management reviews in the future. 
Since its 1976 establishment, OIG has worked diligently with its partners to protect HHS's vital health 
and human services programs.  The achievements of this office would not be possible without the 
dedication and professionalism of all OIG employees.  Once again, I would like to express my 
appreciation to Congress and to the Department for their sustained commitment to the important work 
of our office.  HHS Office of Inspector General 
Semiannual Report to Congress | Spring 2016  Page v 
 
 
Daniel R. Levinson 
Inspector General  
Highlights of Our Accomplishments 
HHS OIGs Semiannual Report to Congress (Semiannual Report) describes significant problems, abuses, 
deficiencies, and investigative outcomes relating to the administration of HHS programs and operations 
that were disclosed during the reporting period.  This edition addresses work completed during the first 
half of fiscal year (FY) 2016 (October-March) and summarizes key accomplishments during the period.      
During the first half of FY 2016, OIG reported expected recoveries of more than $2.77 billion consisting 
of nearly $554.7 million in audit receivables and about $2.22 billion in investigative receivables, which 
include about $336.6 million in non-HHS investigative receivables resulting from our work in areas such 
as the States shares of Medicaid restitution.   
OIG reported 428 criminal actions against individuals or entities that engaged in crimes against HHS 
programs and 383 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.  Our CMP recoveries have increased almost five-fold over the past 3 
years, and OIG is on track to exceed prior recoveries in FY 2016.  We also reported exclusions of 1,662 
individuals and entities from participation in Federal health care programs. 
Health Care Fraud Strike Force Teams and Other Enforcement Actions 
The Health Care Fraud Prevention and Enforcement Action Team (HEAT) was started in 2009 by HHS and 
the U.S. Department of Justice to strengthen programs and invest in new resources and technologies 
aimed at preventing and combating health care fraud, waste, and abuse.  HEAT has continued to identify 
and hold accountable those who seek to defraud Medicare and Medicaid.  Health Care Fraud Strike 
Force teams, a key component of HEAT, coordinate law enforcement operations conducted jointly by 
Federal, State, and local law enforcement entities.  The teams have a record of successfully analyzing 
data to quickly identify, investigate, and prosecute fraud.   
The Strike Force model operates in Miami, Florida; Los Angeles, California; Detroit, Michigan; southern 
Texas; Brooklyn, New York; southern Louisiana; Tampa, Florida; Chicago, Illinois; and Dallas, Texas.  
During the first half of FY 2016, Strike Force efforts resulted in the filing of charges against 87 individuals 
or entities, 100 criminal actions, and $116.8 million in investigative receivables. 
The following is a Strike Force case example: 
Home Health Agency Owner Sentenced to More Than 6 Years in Prison for Falsely Billing 
Medicare 
Amer Ehsan, the owner of Advance Home Health Care Services, Inc. (Advance), was sentenced to 6 years 
and 8 months in prison and ordered to pay $4.5 million in restitution for his guilty plea to health care 
fraud conspiracy.  Ehsan admitted that he billed Medicare for unnecessary home health care and therapy 
services, paid physicians to refer Medicare beneficiaries to Advance and sign medical documents falsely 
certifying that they required home health care, and paid Medicare beneficiaries cash kickbacks in  HHS Office of Inspector General 
Semiannual Report to Congress | Spring 2016  Page vi 
 
 
exchange for signing multiple blank physical therapy records.  Additionally, Ehsan admitted that he 
owned Michigan Rehab and Management Services LLC, which he used to sell information about 
Medicare beneficiaries and corresponding fictitious patient files to other home health care 
agencies.  Ehsan was part of a wide-ranging scheme that involved 12 defendants, all of whom have 
pleaded guilty. 
The following are other investigations case examples: 
Medical Equipment Company Enters into $646 Million Settlement Agreement 
Olympus Corporation of the Americas (Olympus) agreed to enter into a $310 million civil False Claims Act 
settlement with the United States and a comprehensive 5-year Corporate Integrity Agreement (CIA).  The 
settlement was part of a global criminal and civil resolution under which Olympus agreed to pay a total 
of $646 million to resolve kickback allegations.  Olympus is the countrys largest distributor of 
endoscopes and related medical equipment.  Through the civil settlement agreement, Olympus resolved 
allegations that, between January 2006 and December 2011, it paid illegal kickbacks to doctors and 
hospitals to induce them to purchase endoscopes and other medical and surgical equipment.  These 
kickbacks came in the form of consulting agreements, foreign travel, lavish meals, grants, and free 
endoscopes.  As a result, Olympus allegedly caused the submission of false claims to the Medicare, 
Medicaid, and Tricare programs.  The CIA contains several provisions for accountability by Olympus' 
Board of Directors, extensive audit requirements, and requires Olympus to implement an internal risk 
assessment and mitigation program.    
Pharmacy CEO Sentenced to 10 Years in Prison for Health Care Fraud 
Kim Duron Mulder, CEO of Kentwood Pharmacy, was sentenced to 10 years in prison, ordered to pay $8.8 
million in restitution, joint and several, and banned from participation in Federal health care programs 
for 50 years for his guilty plea to conspiracy to commit health care fraud.  According to the investigation, 
Kentwood Pharmacy billed Medicare and private health insurers for prescription drugs that had been 
dispensed to patients and subsequently inappropriately returned to pharmacy stock.  These fraudulent 
actions resulted in the cross-contamination of drugs, improper labeling of drugs, the placement of 
different drug dosages into stock bottles, and the placement of the wrong drugs into stock bottles.  
Public and private insurers paid more than $79 million for adulterated and misbranded drugs that were 
sent to patients at more than 800 nursing and adult foster care homes.   
Inefficient Payments, Policies, and Practices 
Medicare and Medicaid policies or practices sometimes result in inefficiencies when, for example, 
unintended loopholes or other inherent problems invite exploitation or hinder consistent payment 
determinations.  Improper payments occur when the programs do not effectively prevent, deter, 
identify, or address inappropriate and abusive billing by providers and suppliers.  Some, but not all, 
abusive billing is fraudulent.   
The following are examples of our work: 
Average Manufacturer Prices Increased Faster Than Inflation for Many Generic Drugs  
A-06-15-00030  December 2015   HHS Office of Inspector General 
Semiannual Report to Congress | Spring 2016  Page vii 
 
 
Our review found that generic drug price increases exceeded the specified statutory inflation factor 
applicable to brand-name drugs for 22 percent of the quarterly average manufacturer prices we 
reviewed.  If the provision for brand-name drugs were extended to generic drugs, Medicaid would 
receive additional rebates.  Medicaid would have received $1.4 billion in additional rebates for the top 
200 generic drugs, ranked by Medicaid reimbursement, from 2005 through 2014.   
Our findings are consistent with our previous work and support our prior recommendation that CMS 
consider seeking legislative authority to extend the additional rebate provisions to generic drugs.  On 
November 2, 2015, the Bipartisan Budget Act of 2015 (P.L. No. 114-74) was enacted and included 
provisions extending the additional rebate to generic drugs.  The additional rebate for generic drugs will 
apply to rebate periods beginning with the first quarter of 2017.   
CMS Has Not Performed Required Closeouts of Contracts Worth Billions  
OEI-03-12-00680  December 2015 
CMS relies extensively on contractors to carry out its basic mission and spends billions each year in 
contracts for a variety of goods and services.  Our review focused on CMSs Federal Acquisition 
Regulation (FAR) contracts that were active as of February 2014, and its FAR contracts pending closeout 
as of February 2014.  We found that CMS had over 6,000 contracts with a combined value of $25 billion 
that were not closed out as required under the FAR.  CMS continues to have thousands of contracts 
overdue for closeout, with 15 percent of contracts that were completed before FY 2011 at least 10 years 
overdue.  Because the closeout process is generally the last chance for improper contract payments to 
be detected and recovered, delays in the closeout process pose a risk to Government funds.  
Additionally, key pieces of information that CMS could use to manage and oversee contracts, such as 
project description and contract payments, are not easily accessible through its contract management 
system.   
CMS concurred with all of our recommendations to implement additional strategies to meet required 
FAR timeframes for closeout, determine the status of contracts for which closeout status could not be 
determined, improve reports from CMSs contract management system to allow for easier access to 
contract data that would assist in closeout and funds management, and improve coordination and 
collaboration across departmental staff with contract closeout responsibilities. 
Implementation of Health Insurance Marketplaces 
The Patient Protection and Affordable Care Act (ACA) required establishment of health insurance 
marketplaces (also known as health insurance exchanges).  ACA also included requirements for insurance 
affordability and other programs related to the marketplaces.  OIGs oversight of the marketplaces 
focuses on payment, eligibility, management, and IT security issues.  
The following are examples of our work: 
HealthCare.gov:  Case Study of CMS Management of the Federal Marketplace  
OEI-06-14-00350  February 2016  HHS Office of Inspector General 
Semiannual Report to Congress | Spring 2016  Page viii 
 
 
The objective of this case study was to gain insight into CMSs implementation and management of the 
Federal Marketplace, focusing primarily on HealthCare.gov.  We found that HHS and CMS made many 
missteps throughout development and implementation that led to the poor launch of HealthCare.gov on 
October 1, 2013.  Most critical was the absence of clear leadership, which caused delays in decision-
making and a lack of clarity in project tasks.  Additional missteps included devoting too much time to 
developing policy, which left too little time for developing the website, and failing to properly manage its 
key website development contract.  CMSs organizational structure and culture also hampered progress, 
including poor coordination between policy and technical work.  CMS continued on a failing path despite 
signs of trouble, making rushed corrections that proved insufficient.   
Following the launch, CMS and contractors pivoted quickly to corrective action, reorganizing the work to 
improve execution and facilitating health plan enrollment for millions of consumers.  Key factors that 
contributed to recovery of the website included adopting a badgeless culture for the project, wherein 
all CMS staff and contractors worked together as a team, and a practice of ruthless prioritization that 
aligned work efforts with the most important and achievable goals.  CMS recovered the website for high 
consumer use within 2 months and adopted more effective organizational practices.  CMS concurred 
with our recommendation to continue to apply lessons from the HealthCare.gov recovery in its 
management of the Federal Marketplace and broader organization. 
Not All of the State Marketplace's Internal Controls Were Effective in Ensuring That 
Individuals Were Enrolled in Qualified Health Plans According to Federal Requirements 
From October 2015 to March 2016, reports were issued for the following States:  Vermont (A-01-14-
02507), District of Columbia (A-03-14-03301), Minnesota (A-05-14-00043), Washington (A-09-14-01006), 
Colorado (A-07-14-03199), and Kentucky (A-04-14-08036). 
Not all of the internal controls for the marketplaces in Colorado, District of Columbia, Minnesota, 
Vermont, or Washington were effective in ensuring that individuals were enrolled in qualified health 
plans (QHPs) according to Federal requirements.  Kentuckys internal controls were generally effective.  
Internal controls were generally not effective in determining or verifying eligibility of applicants, 
resolving inconsistencies in eligibility data, or maintaining and updating eligibility and enrollment data.  
In addition, internal controls in Colorado, District of Columbia, and Vermont related to verifying 
information were not effective, and Colorados internal controls related to obtaining certain data were 
ineffective.   
As applicable, the marketplaces generally agreed with either our findings or our recommendations that 
they take action to improve their internal controls related to resolving inconsistencies in eligibility data, 
to maintaining and updating eligibility and enrollment data, and to verifying applicants eligibility.  
Minnesota did not agree with our recommendation that it redetermine, if necessary, the eligibility of the 
sample applicants for whom we determined that verifications were not performed according to Federal 
requirements. 
CMS Could Not Effectively Ensure That Advance Premium Tax Credit Payments Made Under 
the Affordable Care Act Were Only for Enrollees Who Paid Their Premiums  
A-02-14-02025 December 2015  HHS Office of Inspector General 
Semiannual Report to Congress | Spring 2016  Page ix 
 
 
CMS could not ensure that advance premium tax credit (APTC) payments made to QHP issuers were only 
for enrollees who had paid their premiums.  CMS:  (1) relied on each QHP issuer to verify that enrollees 
paid their monthly premiums and to attest that APTC payment information was accurate; and (2) had 
sole responsibility for ensuring that APTC payments were made only for enrollees who had paid their 
premiums and did not share these data for enrollees with the Internal Revenue Service (IRS). 
CMS concurred with our recommendation to establish policies and procedures to calculate APTC 
payments without relying solely on QHP issuers attestations that enrollees have paid their premiums.  
CMS did not indicate concurrence or nonconcurrence with our recommendation that once it implements 
an automated process to maintain individual enrollee data, it consult with the IRS to explore sharing 
APTC payment data.   
Child Care and Development Fund 
In 2015 alone, the U.S. Government spent approximately $5.4 billion to help States, territories, and 
tribes subsidize childcare for low-income working families.  Every month, the Governments Child Care 
and Development Fund underwrites the care of nearly 1.5 million children from low-income families so 
their parents can work or attend school.  Childcare providers receiving Federal subsidies must offer a 
safe environment for children.  Gaps in oversight and monitoring can place the health and safety of 
children at risk, as our work has demonstrated. 
The following is an example of our work: 
Some South Carolina, Puerto Rico, and Florida Childcare Providers Did Not Always Comply 
With Health and Safety Requirements 
From October 2015 to March 2016, reports were issued for the following States:  South Carolina (A-04-
14-08031; A-04-14-08032); Puerto Rico (A-02-14-02001; A-02-14-02016); and Florida (A-04-14-08033; A-
04-14-08034). 
We found that childcare providers did not comply with health and safety requirements, including 
physical conditions requirements and record requirements for staff and children.  In addition, some of 
the childcare providers were not available during operating hours to complete our unannounced 
inspections.  South Carolina, Puerto Rico, and Florida generally concurred with our findings and 
recommendations to ensure compliance with health and safety requirements and documentation 
requirements.  
Health Information Technology 
Health IT, including electronic health records (EHRs), offers opportunities for improved patient care, 
more efficient practice management, and improved overall public health.  The American health care 
system is increasingly relying on health IT and the electronic exchange and use of health information, but 
threats to privacy and security are ever-evolving and the Department must remain vigilant.  OIG has 
identified the meaningful and secure exchange and use of electronic information and health IT as a top 
management challenge facing the Department.  HHS Office of Inspector General 
Semiannual Report to Congress | Spring 2016  Page x 
 
 
OIG Policy Reminder:  Information Blocking and the Federal Anti-Kickback Statute 
As HHS focuses on the flow of information across the care continuum, OIG reminded the public about 
how information blocking may affect safe harbor protection under the Federal anti-kickback statute (42 
U.S.C.  1320a-7b(b)).  OIG stated that donations of items or services that have limited or restricted 
interoperability due to action taken by an applicable individual or entity would fail to meet one of the 
conditions of the safe harbor and would be inconsistent with the intent of the safe harbor to promote 
the use of technology that is able to communicate with products from other vendors.  Failure to meet 
this condition would mean that the safe harbor would not apply and the arrangement would be subject 
to case-by-case review under the Federal anti-kickback statute.  As OIG stated, such donations would be 
suspect under the statute. 
The following is an example of our work: 
High-Risk Security Vulnerabilities Identified During Reviews of Information System General 
Controls at Three California Managed-Care Organizations Raise Concerns About the Integrity 
of Systems Used To Process Medicaid Claims  
A-09-15-03004  December 2015 
We summarized the high-risk security vulnerabilities that we identified in our previous reviews of 
information system general controls at three California Medi-Cal managed care organizations (MCOs).  
We identified 74 high-risk security vulnerabilities, most of which were significant and pervasive, in the 
information system general controls at the three Medi-Cal MCOs.   
Our consolidated findings from the individual reports raise concerns about the integrity of the systems 
used to process Medicaid managed-care claims.  California informed us, in comments on the individual 
reports, that it was addressing these vulnerabilities.  The fact that some of the same vulnerabilities were 
identified at all three MCOs suggests that other California Medi-Cal managed-care information systems 
may be similarly vulnerable.  This report is intended to provide information to assist California and CMS 
in strengthening MCOs system security. 
Quality of Care and Beneficiary Access 
Quality of care and beneficiaries access to health care are two areas of accountability that are essential 
to providing a well-managed health care system.  As Americans continue to live longer and with more 
chronic medical conditions, we must ensure that our Medicare and Medicaid beneficiaries, some of 
whom are our most vulnerable citizens, receive high-quality health care. We must also ensure that they 
receive timely access to the health care they need. 
The following is an example of our work: 
Most Children with Medicaid in Four States Are Not Receiving Required Dental Services 
OEI-02-14-00490  January 2016 
We found that three out of four Medicaid children in in California, Indiana, Louisiana, and Maryland did 
not receive all required dental services, with one in four children failing to see a dentist at all.  While 
these States reported that they employ a variety of strategies to address this problem and CMS has  HHS Office of Inspector General 
Semiannual Report to Congress | Spring 2016  Page xi 
 
 
taken some positive steps in this area, we continue to have concerns that children are not receiving 
required dental services.   
CMS fully or partially concurred with the majority of OIGs recommendations including CMS working 
with State to identify area with limited providers, to analyze the effects of Medicaid payments on access 
to dental providers, and to educate families about the importance of dental care.  CMS did not concur 
with our recommendation to work with States to track childrens use of required dental services. 
    HHS Office of Inspector General 
Semiannual Report to Congress | Spring 2016  Page xii 
 
 
OIG Participation in Congressional Hearings 
 
 
3/17/2016  Erin Bliss, Assistant Inspector General, Office of 
Evaluation and Inspections, testified before the 
Senate Finance Committee:  HealthCare.gov:  A 
Review of Operations and Enrollment 
 
02/24/2016  Ann Maxwell, Assistant Inspector General, Office of 
Evaluation and Inspections, testified before the 
Senate Special Committee on Aging:  Opioid Use 
Among Seniors  Issues and Emerging Trends 
 
02/10/2016  John Hagg, Director of Medicaid Audits, Office of 
Audit Services, testified before the House 
Committee on Energy and Commerce, 
Subcommittee on Health:  Examining Medicaid and 
CHIPs Federal Medical Assistance Percentage 
 
 
11/05/2015  Gloria Jarmon, Deputy Inspector General for the 
Office of Audit Services, testified before the House 
Committee on Energy and Commerce, 
Subcommittee on Oversight and Investigations:  
Examining the Costly Failures on ObamaCares CO-
OP Insurance Loans   
10/07/2015  Gary Cantrell, Deputy Inspector General for 
Investigations, testified before the Senate Special 
Committee on Aging:  Protecting Seniors from 
Identity Theft:  Is the Federal Government Doing 
Enough? 
 
 
    HHS Office of Inspector General 
Semiannual Report to Congress | Spring 2016  Page xiii 
 
 
Table of Contents 
 
Centers for Medicare & Medicaid Services  1 
The Medicare Program  1 
The Medicaid Program  4 
Legal and Investigative Activities Related to Medicare and Medicaid  11 
OIG Investigations  11 
Health Care Fraud Prevention and Enforcement 17 
Other Criminal and Civil Enforcement Activities  18 
Public Health Agencies Reviews and Enforcement Activities  26 
Public Health-Related Legal Actions and Investigations  26 
Human Services Agencies Reviews and Enforcement Activities  27 
Administration for Children and Families 27 
Child Support Enforcement Activities  29 
Other HHS-Related Reviews and Investigations  31 
Other Reporting Requirements and Reviews  34 
Implementation of Health Insurance Marketplaces  35 
Appendixes  39 
Appendix A: Questioned Costs and Funds Put to Better Use  39 
Appendix B:  Peer Review Results  46 
Appendix C:  Summary of Sanction Authories  47 
Appendix D:  Reporting Requirements in the  
Inspector General Act of 1978  50 
    HHS Office of Inspector General 
Semiannual Report to Congress | Spring 2016  Page xiv 
 
 
Selected Acronyms and Abbreviations 
ACA  Patient Protection and Affordable Care Act 
ACF  Administration for Children and Families 
CDC  Centers for Disease Control and Prevention 
CIA  corporate integrity agreement 
CMS  Centers for Medicare & Medicaid Services 
CY  calendar year 
DOJ  Department of Justice 
EHR  electronic health record 
FBI  Federal Bureau of Investigation 
FDA  Food and Drug Administration 
FY  fiscal year 
HHS  Department of Health and Human Services 
HRSA  Health Resources and Services Administration 
IRS  Internal Revenue Service 
Marketplaces  health insurance exchanges 
MFCU  Medicaid Fraud Control Unit 
NIH  National Institutes of Health 
OIG  Office of Inspector General 
OMB  Office of Management and Budget 
QHP  qualified health plan  HHS Office of Inspector General 
Semiannual Report to Congress | Spring 2016  Page 1 
 
 
Centers for Medicare & Medicaid Services  
The Medicare Program 
CMS Oversight of Medicare Contractor Performance 
The Centers for Medicare & Medicaid Services (CMS) relies on contractors to administer the Medicare 
program and is responsible for overseeing the contractors performance.  Medicare contractors are 
responsible for administering more than one-half of a trillion dollars in benefits each year.  Medicare 
Administrative Contractors (MACs) process Parts A and B claims; Medicare Advantage (MA) plans provide 
managed care services under Part C; Part D plans provide prescription drug coverage under Part D; and 
various benefit integrity contractors serve to protect Medicare from fraud, waste, and abuse. 
Medicare Payments, Policies, and Practices 
CMS Has Not Performed Required Closeouts of Contracts Worth Billions  
OEI-03-12-00680  December 2015 
CMS relies extensively on contractors to carry out its basic mission and spends billions each year in 
contracts for a variety of goods and services.  Our review focused on CMSs Federal Acquisition 
Regulation (FAR) contracts that were active as of February 2014, and its FAR contracts pending closeout 
as of February 2014.  We found that CMS had over 6,000 contracts with a combined value of $25 billion 
that were not closed out as required under the FAR.  CMS continues to have thousands of contracts 
overdue for closeout, with 15 percent of contracts that were completed before FY 2011 at least 10 years 
overdue.  Because the closeout process is generally the last chance for improper contract payments to 
be detected and recovered, delays in the closeout process pose a risk to Government funds.  
Additionally, key pieces of information that CMS could use to manage and oversee contracts, such as 
project description and contract payments, are not easily accessible through its contract management 
system.   
CMS concurred with all of our recommendations to implement additional strategies to meet required 
FAR timeframes for closeout, determine the status of contracts for which closeout status could not be 
determined, improve reports from CMSs contract management system to allow for easier access to 
contract data that would assist in closeout and funds management, and improve coordination and 
collaboration across departmental staff with contract closeout responsibilities.   
Hoveround Corporation Claimed Millions in Federal Reimbursement for Power Mobility 
Devices That Did Not Meet Medicare Requirements  
A-05-12-00057  December 2015 
Our objective was to determine whether Hoveround Corporation, which received the second largest 
Medicare reimbursement for power mobility devices (PMDs) in 2010, claimed Federal reimbursement 
for PMDs in accordance with Medicare requirements.  Prior OIG reviews found that Medicare 
reimbursement for PMDs can have high incidences of fraud and improper payments.  For this review, we 
found that for 154 of the 200 sampled beneficiaries we reviewed, Hoveround received payments for 
claims that did not comply with Medicare requirements.  For 144 sampled beneficiaries, Hoveround did  HHS Office of Inspector General 
Semiannual Report to Congress | Spring 2016  Page 2 
 
 
not support the medical necessity of PMDs, and for 10 sampled beneficiaries, Hoveround provided 
incomplete documentation to support the PMD claims.  We estimated that Medicare paid Hoveround at 
least $27 million for PMDs that did not meet Medicare requirements during 2010. 
Hoveround disagreed with our recommendations that it refund $27,027,579 to the Federal Government 
and implement internal controls to ensure that Medicare requirements are followed to support 
beneficiaries' medical needs for PMDs and ensure that supporting documentation for PMDs meets 
Medicare requirements before providing PMDs to beneficiaries. 
Medicare Did Not Pay Selected Inpatient Claims for Bone Marrow and Stem Cell Transplant 
Procedures in Accordance With Medicare Requirements  
A-09-14-02037  February 2016 
Our objective was to determine whether Medicare paid selected inpatient claims for stem cell 
transplants in accordance with Medicare requirements.  Recent OIG reviews identified Medicare 
overpayments to two hospitals that did not always comply with Medicare billing requirements for 
inpatient claims for stem cell transplants, resulting in overpayments of approximately $4 million.  For this 
review, we found that 133 of the 143 selected Medicare inpatient claims we reviewed for bone marrow 
and stem cell transplant procedures did not comply with Medicare requirements.  As a result, Medicare 
overpaid the hospitals by $6.3 million.   
CMS concurred or partially concurred with our recommendations to:  (1) direct Medicare contractors to 
recover $4.6 million in overpayments for incorrectly billed claims that are within the 3-year recovery 
period; (2) work with the Medicare contractors to notify providers of potential overpayments outside of 
the 3-year recovery period, which we estimate to be as much as $1.7 million; (3) review the 58 inpatient 
claims from October 2013 through April 2015 for stem cell transplants with lengths of stays of 1 to 2 
days, which could save as much as $2 million; and (4) strengthen hospital controls and educate them on 
the appropriate billing of stem cell transplants. 
Hospices Inappropriately Billed Medicare Over $250 Million for General Inpatient Care 
OEI-02-10-00491  March 2016 
Our review found that hospices billed one-third of general inpatient care (GIP) stays inappropriately, 
costing Medicare $268 million in 2012.  We also found that hospices often did not meet all care planning 
requirements and sometimes provided poor-quality care.  GIP is the second most expensive level of 
hospice care and is intended to be short-term inpatient care for symptom management and pain control 
that cannot be handled in other settings.  Recent OIG investigations have shown instances in which 
hospices inappropriately billed Medicare for GIP, including care being billed but not provided and 
beneficiaries receiving care they did not need.  
Our findings make clear the need to address the misuse of GIP and hold hospices accountable when they 
bill inappropriately or provide poor quality care.  CMS concurred with all of our recommendations, which 
were to increase its oversight of hospice GIP claims and review Part D payments for drugs for hospice 
beneficiaries; ensure that a physician is involved in the decision to use GIP; conduct prepayment reviews 
for lengthy GIP stays; increase surveyor efforts to ensure that hospices meet care planning requirements; 
establish additional enforcement remedies for poor hospice performance; and follow up on 
inappropriate GIP stays, inappropriate Part D payments, and hospices that provided poor-quality care.  HHS Office of Inspector General 
Semiannual Report to Congress | Spring 2016  Page 3 
 
 
Part B Payments for 340B-Purchased Drugs  
OEI-12-14-00030  November 2015 
For this review, we determined how much Medicare Part B spent on 340B-purchased drugs in 2013 by 
identifying paid Medicare claims from covered entities.  Under Medicare Part B, certain eligible health 
care providersgenerally those that serve a disproportionate share of needy patientsare allowed to 
purchase drugs using the 340B Drug Discount Program, thereby receiving sizable statutory discounts.  
Past OIG work has found that Medicare payments to providers for 340B-purchased drugs substantially 
exceeded the providers costs.  In the aggregate, Part B payment amounts for drugs purchased in 2013 
using the 340B Drug Discount Program were 58 percent more than the statutorily based 340B ceiling 
prices, which allowed 340B covered entities to retain approximately $1.3 billion.   
As stakeholders debate the nature of 340B discounts and whether statutory changes should be made to 
enable Medicare and/or Medicaid to share in these savings, this report presents an independent analysis 
to inform the ongoing discussion and to support congressional and Administration decisionmakers 
efforts in striking a balance among the needs of these vital programs.  This report contained no 
recommendations. 
Quality of Care and Beneficiary Access 
National Background Check Program for Long-Term-Care Employees:  Interim Report 
OEI-07-10-00420  January 2016 
This interim report describes the overall implementation status and States results from the first 4 years 
of the National Background Check Program, and provides CMS with information that may assist its 
ongoing administration of this program.  The ACA provides grants to States to implement background 
check programs for prospective long-term-care employees and also requires OIG to conduct an 
evaluation of this grant program.  We found that, 4 years into the National Background Check Program, 
the 25 States that are receiving program grants reported having achieved varying levels of program 
implementation.  For example, only 6 of the 25 States submitted to CMS data sufficient to calculate the 
percentage of prospective employees who were disqualified.  This raises concerns about whether CMS 
can determine program outcomes and conduct effective oversight of the National Background Check 
Program.   
CMS concurred with both of our recommendations to continue working with participating States to fully 
implement their background check programs and continue working with participating States to improve 
required reporting to ensure that CMS can conduct effective oversight of the program. 
 
  HHS Office of Inspector General 
Semiannual Report to Congress | Spring 2016  Page 4 
 
 
The Medicaid Program 
Payments, Policies, and Practices 
To fund their Medicaid programs, States receive Federal grant awards that pay for the Federal share of 
their Medicaid medical and administrative expenditures.  OIG conducts audits on States withdrawals of 
Federal Medicaid funds to determine whether a State submitted an improper claim for Federal 
reimbursement and, therefore, may owe money back to the Federal Government.  If a State disagrees 
with our recommendation to refund questioned costs identified in an audit, CMS still has the authority 
to recoup those costs.  
Wisconsin Inappropriately Withdrew Federal Medicaid Funds for FYs 2010 Through 2012  
A-05-13-00045  October 2015 
Our review of the Wisconsin Department of Health Services Federal Medicaid withdrawals during FYs 
2010 through 2012 determined that these withdrawals did not fully comply with Federal and State 
regulations.  Wisconsin properly withdrew $13.6 billion of the $13.7 billion obtained in Federal Medicaid 
funds, but inappropriately withdrew the difference of $89.6 million to pay for aggregate annual 
projected costs.  According to the approved State waivers, these costs should have been paid solely with 
State funds for the first 3 months of each calendar year during FYs 2010 through 2012.  Additionally, 
Wisconsin lacked formal policies and procedures for withdrawing Federal Medicaid funds from the 
Payment Management System (PMS) account.   
Wisconsin disagreed with our recommendations that it refund $89.6 million to the Federal Government, 
establish formal policies and procedures for withdrawing Federal funds from PMS for Medicaid, and 
ensure that all Federal withdrawals from PMS that occurred after our audit period comply with Federal 
and State requirements. 
New Mexico Received Millions in Unallowable Bonus Payments  
A-04-15-08040   December 2015 
Congress appropriated $3.225 billion for qualifying States to receive performance bonus payments for 
Federal FYs 2009 through 2013 to offset the costs of increased enrollment of children in Medicaid.  We 
reviewed the bonus payments that New Mexico received for FYs 2009 through 2013 because preliminary 
analysis indicated inconsistencies between the enrollment of children in Medicaid that New Mexico 
reported when requesting bonus payments and the enrollment reflected in the Medicaid Statistical 
Information System, maintained by CMS.  New Mexico received more than $23.8 million in bonus 
payments for the FYs we reviewed.   
We found that most of the data used in New Mexicos bonus payment calculations were in accordance 
with Federal requirements, but New Mexico overstated its FYs 2009 through 2013 current enrollment in 
its bonus requests to CMS because it included individuals who did not qualify.  As a result, CMS overpaid 
New Mexico $15.9 million in bonus payments.  New Mexico disagreed with our recommendation that it 
refund $15.9 million to the Federal Government.    HHS Office of Inspector General 
Semiannual Report to Congress | Spring 2016  Page 5 
 
 
New York State Improperly Claimed Medicaid Reimbursement for Some Adult Day Health 
Care Services  
A-02-13-01016   December 2015 
We reviewed New York State Department of Healths claims for Medicaid reimbursement for adult day 
health care (ADHC) services provided by New York providers and found that these providers claimed 
reimbursement for some Medicaid ADHC services that did not comply with certain Federal and State 
requirements.  Of the 100 claims in our random sample, New York claimed reimbursement for services 
that were unallowable for 40.  New York improperly claimed at least $70 million in Federal Medicaid 
reimbursement for ADHC services that did not comply with certain Federal and State requirements. 
New York disagreed with our recommendation that it refund $70 million to the Federal Government.  
New York did not agree or disagree with our recommendation that it improve its monitoring of the ADHC 
program to ensure that providers comply with Federal and State requirements.  
We Could Not Determine Whether West Virginias Severance and Business Privilege Tax on 
Behavioral Health Services Is a Permissible Health-Care-Related Tax 
A-03-14-00200  February 2016 
Our objective was to determine whether West Virginias Severance and Business Privilege Tax is a 
permissible health-care-related tax under Federal requirements.  Revenues from an impermissible 
health-care-related tax may not be used to finance a States share of Medicaid expenditures.  For this 
review, we could not determine whether West Virginias Severance and Business Privilege Tax is a 
permissible health-care-related tax.  CMS agreed with our recommendation that it work with West 
Virginia to determine whether the Severance Tax is a permissible health-care-related tax.  CMS did not 
concur or nonconcur with our recommendation that it deduct the $65.7 million used to pay State 
Medicaid expenditures and recalculate the Federal share, which we estimate was overpaid by $50.6 
million, if the severance tax is impermissible. 
CMS made no official decision whether the tax is an impermissible health-care-related tax.  CMS stated 
that, should West Virginia enact a tax structure consistent with CMSs guidance by June 30, 2016, it will 
not devote further resources to investigate this issue and will not pursue any financial recoveries for 
periods before June 30, 2016. 
Some of New Jerseys Claims for Medicaid Global Options for Long-Term Care Waiver Services 
Were Unallowable  
A-02-14-01008  February 2016 
Our review of New Jerseys Medicaid reimbursement claims for Global Options for Long-Term Care (GO-
LTC) waiver services determined that claims for some of these services did not comply with certain 
Federal and State requirements.  GO-LTC enables Medicaid beneficiaries who are assessed as needing 
nursing facility level of care and who met financial requirements to remain in the community or return 
from institutional care to the community.  Of the 131 beneficiary months in our sample, New Jersey 
improperly claimed Medicaid reimbursement for unallowable GO-LTC waiver services during 62 
beneficiary months.  New Jersey made claims for unallowable services because it lacked clear guidance 
on claiming and documenting Medicaid services for beneficiaries enrolled in the GO-LTC waiver program.   HHS Office of Inspector General 
Semiannual Report to Congress | Spring 2016  Page 6 
 
 
On the basis of our sample results, we estimated that the State agency improperly claimed at least $47 
million in Federal Medicaid reimbursement for unallowable GO-LTC waiver services. 
New Jersey generally concurred with our recommendation that it reinforce guidance to the provider 
community on Federal and State requirements for claiming and documenting Medicaid services for 
beneficiaries.  New Jersey did not concur with our recommendation that it refund $47.3 million to the 
Federal Government.  
Maryland Claimed Unallowable Costs for Medicaid Communicable Disease Care Services  
A-03-14-00150  March 2016 
Our review of Marylands Department of Health and Mental Hygiene found that it did not always comply 
with Federal and State requirements when it claimed costs for communicable disease care services.  Of 
the 124 claim lines that we sampled, 49 complied with Federal and State requirements; however, 75 did 
not.  We estimate that the State claimed at least $16 million (Federal share) in unallowable costs.  The 
State claimed these unallowable costs because it did not have sufficient internal controls to ensure that 
nursing facilities were correctly claiming communicable disease care services. 
The State partially concurred with our findings, which resulted in our recommendation to refund $16 
million to the Federal Government. 
State Medicaid Agencies Can Significantly Reduce Medicaid Costs for Durable Medical 
Equipment and Supplies  
A-05-15-00025  October 2015 
During recent Medicaid audits, we determined that selected durable medical equipment and supplies 
(DME) are available to CMS at a cost well below what is available to State Medicaid agencies.  In our 
audits of four State Medicaid agencies, we found that the States could have saved $18.1 million on the 
purchase of selected DME items if they obtained pricing comparable to pricing under Round 1 of 
Medicare's Competitive Bidding Program.  Since issuing those audit reports, we identified $12 million in 
additional savings for the selected DME items if the four States had used pricing comparable to 
Medicares Round 2 Competitive Bidding and National Mail-Order Programs.  Medicaid provider 
reimbursement rates for selected DME items varied significantly among those States.  Opportunities 
exist for these States to lower provider reimbursement rates, resulting in $30.1 million in potential 
savings for the States and the Federal Government.   
CMS concurred with our recommendations that it seek legislative authority to limit State Medicaid DME 
reimbursement rates to Medicare program rates and encourage further reduction of Medicaid 
reimbursement rates through competitive bidding or manufacturer rebates.  
States Rebates for Some Physician-Administered Drugs 
California Claimed Unallowable Federal Medicaid Reimbursement by Not Billing 
Manufacturers for Rebates for Some Physician-Administered Drugs  
A-09-14-02038  January 2016 
Also the following:  HHS Office of Inspector General 
Semiannual Report to Congress | Spring 2016  Page 7 
 
 
Montana Correctly Claimed Federal Reimbursement for Most Medicaid Physician-
Administered Drugs  
A-07-15-06062  January 2016 
North Dakota Correctly Claimed Federal Reimbursement for Most Medicaid Physician-
Administered Drugs  
A-07-15-06058  January 2016 
South Dakota Claimed Unallowable Federal Reimbursement for Some Medicaid Physician-
Administered Drugs  
A-07-15-06059  February 2016 
We conducted several reviews to determine whether States are complying with Federal Medicaid 
requirements for billing manufacturers for rebates for physician-administered drugs.  For a covered 
outpatient drug to be eligible for Federal reimbursement under Medicaids drug rebate requirements, 
manufacturers must pay rebates to the States for the drugs.  States generally offset the Federal share of 
these rebates against their expenditures and bill the manufacturers for rebates to reduce the cost of 
drugs to the program.  However, previous OIG reviews found that States did not always bill and collect all 
rebates due for drugs administered by physicians.   
We found that California did not bill for rebates for claims for physician-administered drugs associated 
with $31.7 million.  Montana, North Dakota, and South Dakota did not invoice manufacturers for rebates 
associated with $16,000 in physician-administered drugs in Montana, $79,000 in North Dakota, and $1.2 
million in South Dakota. 
Montana and North Dakota agreed with our recommendations, and California and South Dakota partially 
agreed with our recommendations to refund the Federal Government the amounts claimed for 
physician-administered drugs that were ineligible for Federal reimbursement.  California and North 
Dakota agreed and Montana partially agreed, but South Dakota did not agree with our 
recommendations to work with CMS to determine the unallowable portion of other claims for physician-
administered drugs that were ineligible for Federal reimbursement. 
California agreed with our recommendation that it improve oversight of the processes for rebate billing 
and collection to ensure submission to manufacturers of the drug utilization data for claims for 
physician-administered drugs.  Montana and North Dakota concurred with our recommendations that 
they strengthen their internal controls to ensure that all physician-administered drugs eligible for rebates 
are invoiced. 
The Medicaid Program Could Have Achieved Savings If New York Applied Medical Loss Ratio 
Standards Similar to Those Established by the Affordable Care Act  
A-02-13-01036  October 2015 
The objective of this review was to determine potential Medicaid program savings if the New York State 
Department of Health required its Medicaid-managed care plans to meet medical loss ratio (MLR) 
standards similar to those established by the ACA.  The ACA set a standard for the amount of premium  HHS Office of Inspector General 
Semiannual Report to Congress | Spring 2016  Page 8 
 
 
revenue that certain commercial health insurers and Medicare Advantage plans can spend on costs 
other than healthcare-related expenses, which is known as the MLR.  Insurers that do not meet these 
standards must pay rebates.  Some States have applied similar standards to their contracts with 
Medicaid managed care organizations.   
While New York had policies limiting the amount plans could charge for administrative costs as a 
component of their capitated rate, we determined that Medicaid could have saved $76.9 million ($38.5 
million Federal share) in CY 2012 if New York had required its Medicaid managed care plans to meet MLR 
standards similar to those established by the ACA.  New York did not concur or nonconcur with our 
recommendation that it incorporate MLR standards into its contracts with Medicaid managed care 
organizations.  
Average Manufacturer Prices Increased Faster Than Inflation for Many Generic Drugs  
A-06-15-00030  December 2015 
OIG was requested by Congress to examine recent increases in the prices charged for generic drugs and 
the effect these prices have had on generic drug spending in the Medicare and Medicaid programs.  For 
this review, we updated a previous review of generic drug price increases under the Medicaid drug 
rebate program and found that generic drug price increases exceeded the specified statutory inflation 
factor applicable to brand-name drugs for 22 percent of the quarterly average manufacturer prices we 
reviewed.  If the provision for brand-name drugs were extended to generic drugs, Medicaid would 
receive additional rebates.  Medicaid would have received $1.4 billion in additional rebates for the top 
200 generic drugs, ranked by Medicaid reimbursement, from 2005 through 2014.   
Our findings are consistent with our previous work and support our prior recommendation that CMS 
consider seeking legislative authority to extend the additional rebate provisions to generic drugs.  On 
November 2, 2015, the Bipartisan Budget Act of 2015 (P.L. No. 114-74) was enacted and included 
provisions extending the additional rebate to generic drugs.  The additional rebate for generic drugs will 
apply to rebate periods beginning with the first quarter of 2017.  Therefore, we are not making any 
additional recommendations. 
Opportunities for Program Improvements Related to States Withdrawals of Federal Medicaid 
Funds  
A-06-14-00068  March 2016 
CMS has not issued guidance instructing States on the appropriate handling of Medicaid withdrawals.  
All three States that we audited withdrew more funds than necessary to meet immediate cash needs:  
Alabama and Maryland had overdrawn more than $130 million in Medicaid funds that they had not 
refunded to the Federal Government.  Although Illinois refunded overdrawn Medicaid funds, its 
withdrawals exceeded its expenditures by an average of $60 million a quarter. 
CMS concurred with our recommendations that it issue guidance that clarifies and further interprets 
existing requirements concerning the withdrawal of Medicaid funds and publish and enforce formal 
guidance so that States are aware of the appropriate account from which to withdraw or return funds. 
CMS did not indicate concurrence or nonconcurrence with our recommendations that it publish 
regulations that are consistent with the Treasury provisions and educate States and require States to  HHS Office of Inspector General 
Semiannual Report to Congress | Spring 2016  Page 9 
 
 
reconcile total Federal Medicaid funds withdrawn with the Federal share of net expenditures and issue 
appropriate reconciliation guidelines.   
Quality of Care and Beneficiary Access 
Review of Intermediate Care Facilities in New York With High Rates of Emergency Room Visits 
by Intellectually Disabled Medicaid Beneficiaries  
A-02-14-01011  October 2015 
In response to a congressional request, our objective was to determine whether Intermediate Care 
Facilities (ICFs) in New York with high rates of emergency room visits by intellectually disabled Medicaid 
beneficiaries under their care reported on these visits, as required, and whether potential neglect or 
abuse was reported and investigated by the appropriate State agencies.  We found that ICFs in New York 
with high rates of emergency room visits by intellectually disabled Medicaid beneficiaries under their 
care did report on these visits, as required, and potential neglect or abuse was reported and 
investigated.  We also found that the vast majority of emergency room visits we reviewed resulted from 
circumstances associated with the Medicaid beneficiaries underlying medical conditionsnot from 
neglect or abuse.  Accordingly, this report contained no recommendations. 
Most Children with Medicaid in Four States Are Not Receiving Required Dental Services 
OEI-02-14-00490  January 2016 
Our objective was to determine whether Medicaid children in California, Indiana, Louisiana, and 
Maryland were receiving required dental services.  We found that three out of four Medicaid children in 
these States did not receive all required dental services, with one in four children failing to see a dentist 
at all.  While the States reported that they employ a variety of strategies to address this problem and 
CMS has taken some positive steps in this area, we continue to have concerns that children are not 
receiving required dental services.   
CMS fully or partially concurred with the following recommendations:  
  Develop a comprehensive plan to increase the number of children who receive required services. 
  Develop benchmarks for dental services and require States to create mandatory action plans to meet 
them. 
  Work with States to identify areas with limited providers and the barriers preventing providers from 
participating in Medicaid. 
  Work with States to analyze the effects of Medicaid payments on access to dental providers. 
  Work with States to educate families about the importance of dental care and to encourage ongoing 
relationships between children and their dentists. 
  Identify and share effective strategies with States. 
  Ensure that States pay for services in accordance with their periodicity schedules. 
  CMS did not concur with the remaining recommendation to work with States to track childrens use 
of required dental services.  HHS Office of Inspector General 
Semiannual Report to Congress | Spring 2016  Page 10 
 
 
Health Information Technology 
Inadequate Security Management Practices Left Utah Department of Health Sensitive 
Medicaid Data at Risk of Unauthorized Disclosure  
A-07-15-00455   January 2016 
Our reviews of the Utah Department of Healths information system general controls found that Utah 
had not established an effective enterprise security control structure to ensure that adequate 
information system general controls were implemented in conformance with Federal requirements over 
the systems used to support Utah Medicaid eligibility determination and claims processing.  These 
inadequate security management practices put Medicaid systems and data at risk.  State agencies must 
establish appropriate computer system security requirements and conduct biennial reviews of computer 
system security used in the administration of State plans for Medicaid and other Federal entitlement 
benefits.  Utah previously experienced two serious security breaches in its State Medicaid program. 
We identified 39 high-impact, reportable weaknesses during our earlier comprehensive information 
system general controls audit of the systems used to support Utah Medicaid eligibility determination and 
claims processing.  Utah concurred with our recommendations that it implement effective security 
management practices and establish oversight procedures to ensure that adequate information system 
general controls are implemented that correct the security weaknesses identified and comply with 
Federal information system security requirements. 
High-Risk Security Vulnerabilities Identified During Reviews of Information System General 
Controls at Three California Managed-Care Organizations Raise Concerns About the Integrity 
of Systems Used To Process Medicaid Claims  
A-09-15-03004  December 2015 
We summarized the high-risk security vulnerabilities that we identified in our previous reviews of 
information system general controls at three California Medi-Cal managed care organizations (MCOs).  
We identified 74 high-risk security vulnerabilities, most of which were significant and pervasive, in the 
information system general controls at the three Medi-Cal MCOs we reviewed.   
Our consolidated findings from the individual reports raise concerns about the integrity of the systems 
used to process Medicaid managed-care claims.  California informed us, in comments on the individual 
reports, that it was addressing these vulnerabilities.  The fact that some of the same vulnerabilities were 
identified at all three MCOs suggests that other California Medi-Cal managed-care information systems 
may be similarly vulnerable.  This report is intended to provide information to assist California and CMS 
in strengthening MCOs system security.  HHS Office of Inspector General 
Semiannual Report to Congress | Spring 2016  Page 11 
 
 
Legal and Investigative Activities Related to Medicare 
and Medicaid 
OIG Investigations 
OIG investigates allegations of fraud, waste, and abuse in all of the Departments programs.  Our largest 
body of work involves investigating matters related to the Medicare and Medicaid programs, such as 
patient harm; billing for services not rendered, medically unnecessary services, or upcoded services; 
illegal billing, sale, diversion, and off-label marketing of prescription drugs; and solicitation and receipt of 
kickbacks, including illegal payments to patients for involvement in fraud schemes and illegal referral 
arrangements between physicians and medical companies.   
Specific case types include fraud schemes related to: 
  controlled and noncontrolled prescription drugs, 
  home health agencies and personal care services, 
  ambulance transportation,  
  DME, and 
  diagnostic radiology and laboratory testing.   
OIG also conducts investigations involving organized criminal activity, including medical identity theft and 
fraudulent medical schemes established for the sole purpose of stealing Medicare dollars.  Investigators 
are seeing an increase in individuals, including both health care providers and patients, engaging in these 
health care fraud schemes.  Those who participate in these schemes may face heavy fines, jail time, and 
exclusion from participating in Federal health care programs.  
In addition to investigating Medicare and Medicaid fraud, OIG investigates fraud, waste, and abuse in 
other HHS programs, including Indian Health Service (IHS), Administration for Children and Families 
(ACF), Health Resources and Services Administration (HRSA), and Administration for Community Living 
(ACL).  OIG also investigates potential misuse of grants and contracts funds awarded by National 
Institutes of Health (NIH), Centers for Disease Control and Prevention (CDC), Substance Abuse and 
Mental Health Services Administration (SAMHSA), and other HHS agencies.  Under certain 
circumstances, OIG investigates noncustodial parents who fail to pay court-ordered child support.  
Additionally, OIG investigates allegations of employee misconduct, whistleblower reprisals, and 
wrongdoing by HHS agency officials. 
One of the most common types of fraud perpetrated against Medicare, Medicaid, and other Federal 
health care programs involves filing false claims for reimbursement.  False claims may be pursued under 
Federal and State criminal statutes and, when appropriate, under the False Claims Act (FCA).  Depending 
on the types of fraud or other violations involved, OIG investigations may culminate in criminal or civil 
court judgments and decisions, administrative sanctions and decisions, and/or negotiated settlement 
agreements.  Investigative outcomes take many forms, including incarceration, restitution, fines, 
penalties, forfeitures, assessments, and exclusion of individuals or entities from participation in all 
Federal health care programs.  Frequently used exclusion and penalty authorities are described in  HHS Office of Inspector General 
Semiannual Report to Congress | Spring 2016  Page 12 
 
 
Appendix C of this Semiannual Report to Congress and on our website at:  
http://oig.hhs.gov/fraud/enforcement/cmp/. 
For October 1, 2015, to March 31, 2016, we reported 384 criminal and 379 civil actions against 
individuals or entities that engaged in health-care-related offenses.  We also reported over $1.86 billion 
in investigative receivables due to HHS and over $332.6 million in non-HHS investigative receivables, 
including civil and administrative settlements or civil judgments related to Medicare, Medicaid, and 
other Federal, State, and private health care programs.  
For all OIG investigations, the charges contained in an indictment or other charging document are merely 
accusations and a defendant is presumed innocent unless and until proven guilty. 
The following are recently completed actions and settlements organized by allegation or subject type: 
Patient Harm 
Michigan  Kim Duron Mulder, CEO of Kentwood Pharmacy, was sentenced to 10 years in prison, ordered 
to pay $8.8 million in restitution, joint and several, and banned from participation in Federal health care 
programs for 50 years for his guilty plea to conspiracy to commit health care fraud.  According to the 
investigation, Kentwood Pharmacy billed Medicare and private health insurers for prescription drugs that 
had been dispensed to patients and subsequently inappropriately returned to pharmacy stock.  These 
fraudulent actions resulted in the cross-contamination of drugs, improper labeling of drugs, the 
placement of different drug dosages into stock bottles, and the placement of the wrong drugs into stock 
bottles.  Public and private insurers paid more than $79 million for adulterated and misbranded drugs 
that were sent to patients at more than 800 nursing and adult foster care homes.  During the course of 
the investigation, pornographic images were discovered on the computer of Kentwood Pharmacys vice 
president of sales, Richard Clarke.  Clarke was convicted of child pornography as well as health care fraud 
and sentenced to 14 years in prison and ordered to pay $8.8 million in restitution, joint and several.  
Sixteen defendants involved in the scheme were previously sentenced to a combined 22 years in prison 
and were excluded from participation in Federal health care programs for a combined 145 years.  This 
case was initiated based upon fraud tips provided to the HHS OIG Hotline.   
Prescription Drug Fraud 
California  Dr. Kenneth Johnson was sentenced to 9 years in prison and ordered to pay $9.1 million in 
restitution, joint and several, for his guilty plea to conspiracy to commit health care fraud, conspiracy to 
possess at least five identification documents and authentication features with intent to use unlawfully, 
aggravated identity theft, and conspiracy to engage in the misbranding of pharmaceutical drugs.  
According to the investigation, Johnson was involved in a scheme in which fraudulently prescribed 
expensive anti-psychotic medications were repeatedly rebilled to the Government.  Using prescriptions 
that were presigned by Johnson, co-defendants generated thousands of prescriptions for identify theft 
victims, such as elderly beneficiaries of Medicare and Medi-Cal and military veterans, and doctored 
patient files to make it falsely appear that the drugs were necessary and the patients were legitimately 
treated.  The scheme generated fraudulent billings of more than $20 million, of which Medi-Cal and 
Medicare actually paid more than $9 million.  Fifteen defendants involved in the scheme were previously 
sentenced to a combined 46 years and 3 months in prison.  HHS Office of Inspector General 
Semiannual Report to Congress | Spring 2016  Page 13 
 
 
Kickbacks 
New Jersey  Olympus Corporation of the Americas (Olympus) agreed to enter into a $310 million civil 
False Claims Act settlement with the United States and a comprehensive 5-year Corporate Integrity 
Agreement (CIA).  The settlement was part of a global criminal and civil resolution under which Olympus 
agreed to pay a total of $646 million to resolve kickback allegations.  Olympus is the countrys largest 
distributor of endoscopes and related medical equipment.  Through the civil settlement agreement, 
Olympus resolved allegations that, between January 2006 and December 2011, it paid illegal kickbacks 
to doctors and hospitals to induce them to purchase endoscopes and other medical and surgical 
equipment.  These kickbacks came in the form of consulting agreements, foreign travel, lavish meals, 
grants, and free endoscopes.  As a result, Olympus allegedly caused the submission of false claims to the 
Medicare, Medicaid, and Tricare programs.  The CIA contains several provisions for accountability by 
Olympus' Board of Directors, extensive audit requirements, and requires Olympus to implement an 
internal risk assessment and mitigation program.    
Florida  Med Match Pharmacy, LLC agreed to pay more than $4.7 million to resolve its liability under the 
False Claims Act.  The settlement agreement resolves allegations that, from September 2013 through 
February 2015, Med Match knowingly submitted claims to Federal health care programs for 
compounded pharmaceuticals that violated the anti-kickback statute, had items and/or services ordered 
by physicians who failed to have bona fide medical relationships with the beneficiaries for whom the 
items and/or services were ordered, and mailed pharmaceuticals to beneficiaries in States in which Med 
Match failed to have a license to dispense.   
Identity Theft 
Ohio  Sharon Ward was sentenced to more than 5 years in prison and ordered to pay $18.1 million in 
restitution for her guilty plea to health care fraud and aggravated identity theft.  Ward was a registered 
nurse who was excluded in April 2005 after being convicted of Medicaid fraud.  She also let her nursing 
license lapse in 2005.  During the entire time she was excluded and unlicensed, Ward owned Heritage 
Home Health Agency, where she provided nursing services to home-bound clients.  Ward used the 
identity of another nurse with the same name to hide the fact that she was unlicensed.  Heritage billed 
Medicaid exclusively and received more than $20 million in reimbursement.  Sharons mother, Queen 
Ward, was part owner and office manager of Heritage.  Queen Ward was ordered to pay $434,747 in 
restitution for her guilty plea to health care fraud.  Queen Ward created false background check reports 
for Heritage employees who were disqualified from working as home health aides due to their felony 
criminal convictions.   
Home Health Services 
Wisconsin  Deaconess Home Health, Inc., and its owner Lazarus Bonilla agreed to pay $3.7 million to 
resolve their liability for submitting claims to Medicaid for personal care services that were not provided, 
were not provided pursuant to appropriate supervision, or were not medically necessary.  The 
agreement also resolves allegations that personal care services were referred or ordered in violation of 
the Federal anti-kickback statute.  The investigation found that Deaconess paid patient recruiters for 
referrals of patients for personal care services.  OIG negotiated a 15-year voluntary exclusion of both 
Deaconess and Lazarus Bonilla.  HHS Office of Inspector General 
Semiannual Report to Congress | Spring 2016  Page 14 
 
 
Michigan  Jaweed Mohammed, manager at Advance Home Health Care (Advance), was sentenced to 2 
years in prison and ordered to pay $1.4 million in restitution, joint and several, for his guilty plea to 
health care fraud conspiracy.  Advance, which purported to provide home health care services, paid 
marketers to recruit Medicare beneficiaries, who were then paid if they agreed to sign up for home 
health services.  Mohammed and his co-conspirators at Advance submitted fraudulent claims to 
Medicare and concealed the submission of the claims by creating fake patient files.  Mohammed also 
helped sell Advance patient information to other home health care companies once Advance was 
finished billing the patient to Medicare.  Seven defendants involved in the scheme were previously 
sentenced to a combined 25 years and 4 months in prison and ordered to pay a total of $13.6 million in 
restitution. 
Physicians 
New Jersey  Brett Halper was sentenced to 3 years and 10 months in prison, fined $100,000, and 
ordered to forfeit $325,000 for his guilty plea to accepting bribes.  Halper accepted approximately 
$6,000 in bribes per month from Biodiagnostic Laboratory Services (BLS) in return for referring patient 
blood specimens to BLS.  David Nicoll, an owner of BLS, pleaded guilty in 2013 to conspiracy to commit 
bribery and money laundering and is awaiting sentencing.  Eighteen additional defendants have pleaded 
guilty and are awaiting sentencing in connection with the bribery scheme, which investigators believe 
involved millions of dollars in bribes and resulted in more than $100 million in payments to BLS from 
Medicare and private insurance companies.  Twenty defendants were previously sentenced to a 
combined 41 years in prison and ordered to pay $487,250 in fines and $510,695 in forfeiture.  To date, 
OIG has excluded 15 subjects associated with this investigation for a combined total of 111 years. 
Personal Care Services  
Iowa  Teri Lynn Markle was ordered to pay restitution of $8,327 for her guilty plea to tampering with 
records.  Markle was also excluded from participation in Federal health care programs.  According to the 
investigation, Markle billed Medicaid for personal care services that she did not actually perform.  In 
most instances, it was determined that Markle was working for her outside, full-time employer while 
also billing for personal care services that she did not provide.   
Pharmacies 
New Jersey  Vladimir Kleyman, the owner and pharmacist-in-charge of Prescriptions R Us, was 
sentenced to 1 year and 8 months in prison and ordered to pay $476,713 in restitution for his guilty plea 
to conspiracy to pay kickbacks and to commit health care fraud.  Kleyman was also excluded from 
participation in Federal health care programs for 13 years.  According to court documents, Kleyman 
admitted that he paid kickbacks to a physician in return for that physicians referral of Medicare and 
Medicaid patients to Prescriptions R Us for a medically unnecessary compounded pain cream.  The 
physician, James Morales, was paid a kickback for each referral.  Kleyman also admitted that he falsely 
represented the pain cream in order to obtain payment from the insurance carriers as well as making 
false and misleading representations about the quantity of the pain cream that he dispensed and the 
frequency with which he dispensed it.  Morales pleaded guilty to conspiracy to accept kickbacks and 
commit health care fraud and is awaiting sentencing.  HHS Office of Inspector General 
Semiannual Report to Congress | Spring 2016  Page 15 
 
 
Hospitals 
South Carolina  Tuomey d/b/a Tuomey Regional Medical Center and Tuomey Healthcare System 
(Tuomey) agreed to pay more than $72 million and enter into a 5-year CIA with OIG to resolve its liability 
under the False Claims Act.  Tuomey is a 301-bed, nonprofit hospital located in Sumter, South Carolina.  
The Government alleged that Tuomey, fearing that it could lose lucrative outpatient procedure referrals 
to a new, freestanding surgery center, entered into contracts with 19 specialist physicians that ran afoul 
of the physician self-referral law, or Stark law.  Specifically, the Government contended that Tuomey 
required the physicians to refer their outpatient procedures to Tuomey and, in exchange, paid them 
compensation that far exceeded fair market value and took into account the volume or value of their 
referrals to the hospital.  The CIA includes, among other things, provisions requiring Tuomey to retain a 
Legal Independent Review Organization to review the hospitals arrangements with physicians and other 
referral sources.   
Psychiatric and Psychological Services 
Florida  Dean Augustine Butler, owner, director, and administrator of Greater Miami Behavioral 
Healthcare Center (GMBC), was sentenced to 16 years in prison and ordered to pay more than $15.2 
million in restitution after pleading guilty to conspiracy to commit health care and wire fraud.  Butler and 
another defendant devised a scheme to pay kickbacks and bribes to patient brokers in return for 
referring Medicare beneficiaries and falsifying medical records to support claims for services that were 
never provided.  Irina Mora, director of finance for GMBC, was sentenced to 8 years and 1 month in 
prison after pleading guilty to conspiracy to commit money laundering.  Mora and other defendants 
devised a scheme to conduct financial transactions in order to conceal the payment of kickbacks to 
patient brokers.  Two other defendants involved in the scheme were previously sentenced to a combined 
6 years and 4 months in prison and ordered to pay $848,106 in restitution. 
Laboratories 
Massachusetts  Millennium Health, LLC (Millennium), agreed to pay $256 million and enter into a CIA 
with OIG to resolve its liability under the False Claims Act.  The Government alleged that Millennium 
billed Medicare, Medicaid, and other Federal health care programs for medically unnecessary drug 
testing and genetic testing, and provided kickbacks to physicians to induce business.  Specifically, 
Millennium allegedly caused physicians to order excessive numbers of urine drug tests, in part through 
the promotion of custom profiles.  These custom profiles were not customized for individual patients, 
however.  Instead, they were practice-wide standing orders that caused physicians to order a large 
number of tests without an individualized assessment of each patients needs.  The CIA made significant 
changes to its board of directors, including choosing new, independent members.  Under the 5-year CIA, 
OIG will monitor the companys compliance efforts under this new leadership. 
Durable Medical Equipment 
North Carolina  Ramon Fuerlos was sentenced to 3 years and 6 months in prison and ordered to pay 
$2.6 million in restitution for his guilty plea to health care fraud.  According to court documents, Fuerlos 
submitted false claims to Medicare for reimbursement of DME items that were allegedly provided to 
beneficiaries.  As part of the scheme, Fuerlos set up sham DME companies and purchased lists of 
individually identifiable health information.  He used this information to submit false claims without the 
beneficiarys knowledge.  Through this scheme, Fuerlos submitted more than $7 million in false claims 
for reimbursement from Medicare.  HHS Office of Inspector General 
Semiannual Report to Congress | Spring 2016  Page 16 
 
 
Hospice Care 
Mississippi  Sandra Livingston, owner of Sandanna Hospice, Inc., Milestone Hospice, Inc., and Carols 
Hospice & Palliative Services of Shelby, Mississippi, Inc., was sentenced to 3 years in prison and ordered 
to pay $1,098,639 in restitution for her guilty plea to conspiracy to commit health care fraud.  Livingston 
admitted to her involvement in a conspiracy to bill Medicare and Medicaid for hospice services for 
patients who were not terminally ill.  Livingston paid recruiters upwards of $800 per patient and paid 
cash kickbacks to the hospice medical director for him to sign hospice orders for patients that he knew 
were not hospice appropriate.  Lara Thompson, a billing clerk at Sandanna and Milestone, was recently 
sentenced to 1 year and 1 month of incarceration and ordered to pay more than $1 million in restitution, 
joint and several, after pleading guilty to conspiracy to commit health care fraud.  This case was initiated 
based on fraud tips provided to the HHS OIG Hotline. 
Refugee Resettlement Program 
Florida  Leslie Rubero Padilla was sentenced to 1 year and 6 months in prison and ordered to pay 
$11,100 in restitution for her guilty plea to wire fraud.  Padilla worked as a case manager at a nonprofit 
social services agency that provides temporary shelter to Unaccompanied Children (UAC).  The 
defendant defrauded more than 10 family members and/or potential sponsors of UAC who were within 
the custody of the Office of Refugee Resettlement.  Padilla was assigned to take care of UAC and attempt 
to locate their parents or other legal guardians.  As part of her duties, once a parent or guardian was 
located, Padilla made contact with them.  She falsely represented to parents and legal guardians of the 
UAC that if they did not send her the requested amount of money it might take longer to be reunited 
with their children or their children might be deported to their native countries.  
Transportation Services Fraud 
Pennsylvania  Serge Sivchuk, owner of Advantage Medical Transport Inc. (Advantage), was sentenced to 
2 years in prison and ordered to pay a $300,000 fine and $194,378 in restitution, joint and several with 
Advantage, for his guilty plea to false statements in health care matters.  Advantage was also ordered to 
pay a $250,000 fine.  According to court documents, employees at Advantage submitted fraudulent 
claims to Medicare for the transport of beneficiaries to and from dialysis treatment centers.  Sivchuk 
directed Advantages EMTs to complete their trip sheets in a manner that concealed the fact that the 
patients were ambulatory and not eligible for Medicare paid ambulance transport.   
California  Three executives at ProMed Medical Transportation (ProMed) each pleaded guilty to 
conspiracy to commit health care fraud and health care fraud.  They were sentenced to a combined 14 
years of prison and ordered to pay restitution of $804,755, joint and several.  ProMed provided non-
emergency services to Medicare beneficiaries, many of whom were dialysis patients.  The defendants  
Steven Proshak, the owner, operator, and manager of ProMed; Emilia Zverev, the billing manager for 
ProMed; and Michelle Wallace, the EMT supervisor for ProMed  conspired to bill Medicare for 
ambulance transportation services for individuals who did not need such services.  The defendants also 
instructed ProMed EMTs to conceal the patients true medical conditions by altering paperwork and 
creating fraudulent documents to justify the services.  During the course of the conspiracy, ProMed 
submitted at least $1.5 million in false claims to Medicare for medically unnecessary transportation 
services.  This case was initiated based on fraud tips provided to the HHS OIG Hotline.  HHS Office of Inspector General 
Semiannual Report to Congress | Spring 2016  Page 17 
 
 
Health Care Fraud Prevention and Enforcement 
On May 20, 2009, former HHS Secretary Kathleen Sebelius and former Attorney General Eric Holder 
announced the creation of the Health Care Fraud Prevention and Enforcement Action Team (HEAT), an 
interagency effort focused specifically on combating health care fraud.  HEAT includes senior officials 
from DOJ and HHS who are strengthening programs and investing in new resources and technologies to 
prevent and combat fraud, waste, and abuse. 
HEAT Provider Compliance Training  
OIG provides free training on our website for health care providers, compliance professionals, and 
attorneys.  OIGs Provider Compliance Training was an initiative developed as part of HEAT in 2011 that 
continues to reach the health care community with OIGs message of compliance and prevention via 
free, downloadable, comprehensive training materials and podcasts.  OIGs provider compliance training 
resources can be accessed at:  http://oig.hhs.gov/compliance/provider-compliance-training/index.asp.  
Health Care Fraud Strike Force Activities  
Health Care Fraud Strike Force teams began in 2007 in an effort to combine the resources of Federal, 
State, and local law enforcement entities to prevent and combat health care fraud, waste, and abuse.  
These partnerships between OIG and HHS, DOJ, U.S. Attorneys Offices, FBI, and State and local law 
enforcement have a common goal:  to successfully analyze health care fraud data and investigative 
intelligence to quickly identify fraud and bring prosecutions.  Strike Force teams currently operate in nine 
areas:  Miami, Florida; Los Angeles, California; Detroit, Michigan; Houston, Texas; Brooklyn, New York; 
southern Louisiana; Tampa, Florida; Chicago, Illinois; and Dallas, Texas.   
From October 1, 2015, to March 31, 2016, Strike Force efforts resulted in the filing of charges against 87 
individuals or entities, 100 criminal actions, and over $116.8 million in investigative receivables. 
Below are examples of Strike Force cases: 
Michigan  Amer Ehsan, the owner of Advance Home Health Care Services, Inc. (Advance), was 
sentenced to 6 years and 8 months in prison and ordered to pay $4.5 million in restitution for his guilty 
plea to health care fraud conspiracy.  Ehsan admitted that he billed Medicare for unnecessary home 
health care and therapy services, paid physicians to refer Medicare beneficiaries to Advance and sign 
medical documents falsely certifying that they required home health care, and paid Medicare 
beneficiaries cash kickbacks in exchange for signing multiple blank physical therapy records.  
Additionally, Ehsan admitted that he owned Michigan Rehab and Management Services LLC, which he 
used to sell information about Medicare beneficiaries and corresponding fictitious patient files to other 
home health care agencies.  Ehsan was part of a wide-ranging scheme that involved 12 defendants, all of 
whom have pleaded guilty. 
Florida  Nine defendants were sentenced to more than 29 years in prison and ordered to pay a 
combined $22.1 million in restitution for their roles in a scheme to defraud Medicare.  According to court 
records, five of the defendants were the owners of eight pharmacies that submitted more than $20 
million in fraudulent claims to Medicare.  The false claims included prescriptions for drugs that were not 
properly prescribed or provided to the beneficiaries.  The other defendants were involved in schemes in 
which millions of dollars in fraudulent claims were submitted to Medicare.  These conspiracies were  HHS Office of Inspector General 
Semiannual Report to Congress | Spring 2016  Page 18 
 
 
accomplished in part by the use of patient recruiters who received kickbacks in return for referring 
Medicare Part D beneficiaries to the pharmacies. 
New York  Office managers Michelle Lee, Gilbert Kim, and Elaine Kim each pleaded guilty to health care 
fraud conspiracy and were ordered to pay restitution of $5.9 million, joint and several.  Michelle Lee was 
also excluded from participation in Federal health care programs for 15 years, and Elaine Kim was 
sentenced to 1 year and 1 day in prison.  The defendants artificially increased demand for medical 
services by providing beneficiaries with free goods and services and submitting false claims to Medicare 
for medically unnecessary services.  Investigators believe the defendants agreed to pay kickbacks for 
referring beneficiaries for the purpose of billing Medicare.  Upon receipt of payment for the false and 
fraudulent claims, the defendants paid a predetermined percentage of the money from Medicare to 
Elaine and Gilbert Kim, among others.  The defendants created fake medical documents to conceal 
fraudulent claims submitted to Medicare that were induced by kickback, not medically necessary, and 
not provided.   
Other Criminal and Civil Enforcement Activities  
Special Assistant U.S. Attorney Program  
During this reporting period, DOJ and OIG continued their participation in a program in which OIG 
attorneys, some of whom are Special Agents, serve as Special Assistant U.S. Attorneys.  These OIG 
attorneys are detailed full time to DOJs Criminal Division, Fraud Section, for temporary assignments, 
including assignments to the Health Care Fraud Strike Force.  Other attorneys prosecute matters on a 
case-by-case basis.  Both arrangements offer excellent litigation training for OIG attorneys and enhance 
collaboration between the Departments in their efforts to fight fraud.  Under this program, OIG 
attorneys have successfully litigated important criminal cases relating to the fraudulent billing of medical 
equipment and supplies, infusion therapy, and physical therapy, as well as other types of Medicare and 
Medicaid fraud.   
Below is a related case example: 
North Dakota  Lowie Christie, a Medicare beneficiary, was ordered to pay $107,497 in restitution for her 
guilty plea to health care fraud.  Christie admitted that, from January 2007 through July 2013, she 
traveled around the United States to emergency rooms and other medical providers in order to obtain 
prescriptions for narcotics that she did not have a medical necessity for, and she used her Medicare 
benefits to pay for them.  Christie, or other individuals, would then fill the prescriptions.  In order to 
avoid detection, Christie travelled to hundreds of different providers and pharmacies across the country, 
causing approximately 1,830 in claims to be submitted to Medicare for unnecessary medical care.        
Most Wanted Fugitives Listed on OIGs Website  
The OIG Most Wanted Fugitives website continues to garner national and international attention and has 
greatly assisted in helping to capture fugitives charged with defrauding Federal health care programs and 
stealing millions of taxpayer dollars.  The Most Wanted Fugitives website is continually updated and 
features a profile for each fugitive as well as an online tip form and a hotline number for individuals to 
report fugitive-related information to OIG, in English or Spanish, 24 hours a day, 365 days a year.  The  HHS Office of Inspector General 
Semiannual Report to Congress | Spring 2016  Page 19 
 
 
Most Wanted Fugitives list can be accessed at https://oig.hhs.gov/fraud/fugitives.  During this reporting 
period, four fugitives were captured.   
One of OIGs Most Wanted Fugitives is Sandy De La Fe, who was captured during this reporting period.  
De La Fe was indicted in July 2013 on charges of health care fraud.  Investigators believe that De La Fe 
participated in a prescription drug fraud scheme that bilked Medicare out of millions of dollars.  De La Fe 
was the owner of record for Goldenway Pharmacy Discount, Inc., located in Miami, Florida.  According to 
the indictment, De La Fe's co-conspirators paid Medicare beneficiaries to obtain prescriptions for 
pharmaceutical drugs.  These false prescriptions, some of which were worth more than $1,000 per 
prescription, were then billed by Goldenway to Medicare Part D, falsely claiming that these drugs were 
medically necessary, had been prescribed by a doctor, and had been provided by Goldenway to Medicare 
beneficiaries.  As a result of these false claims, Medicare paid Goldenway approximately $2.8 million in 
reimbursement.  De La Fe and his co-conspirators diverted the proceeds from this scheme for their own 
use and to further the fraud.  De La Fe fled to Cuba and remained a fugitive at large until his arrest.  He is 
currently in custody and will face charges stemming from his indictment.  
Because of the success of OIGs Most Wanted Fugitives website, OIG launched its Most Wanted 
Deadbeat Parents website at https://oig.hhs.gov/fraud/child-support-enforcement/index.asp.  The site 
identifies parents who fail to pay court-ordered child support for their children; as a result, an 
unnecessary strain is placed on the custodial parents and the children as well as on agencies that enforce 
these matters.  Examples are provided in the Human Services Agencies Reviews section of this 
Semiannual Report.  
HHS OIG Hotline 
The mission of the HHS OIG Hotline is to support OIG in oversight responsibilities to safeguard the 
integrity of all programs and personnel under purview of HHS and protect them from fraud, waste and 
abuse.  We achieve this through our dedication to timely intake and evaluation of information received 
from various sources, such as the Report Fraud website portal on the HHS OIG Internet page and 
telephone calls to 1-800-HHS-TIPS.  Strategically located within the Office of Investigations, the OIG 
Hotline is the public facing division for the intake of fraud tips.  The OIG Hotline is motivated by the 
constant awareness that our work impacts all Americans, including some of our most vulnerable citizens, 
such as the elderly and others who are often unable to help themselves.   
OIG Hotline Activity (10/01/15-03/31/16): 
Total HHS TIPS Received via Phone-Evaluated for Action: 59,191 
Total HHS TIPS Received via Phone-Referred: 11,456 
Total HHS TIPS Received via Internet: 4,905                                                   
Total HHS TIPS Received via Letters/Faxes: 2,021 
Total Viable HHS TIPS Evaluated: 15,859 
Total Contacts to the HHS OIG Hotline Calls: 75,050  HHS Office of Inspector General 
Semiannual Report to Congress | Spring 2016  Page 20 
 
 
State Medicaid Fraud Control Units  
OIG Oversight of State Medicaid Fraud Control Units 
Medicaid Fraud Control Units (MFCUs or Units) are key partners with OIG in the fight against fraud, 
waste, and abuse in State Medicaid programs.  OIG has oversight responsibility for MFCUs and 
administers grants that provide Federal funding for Unit operations.  The Federal Government 
reimburses 75 percent of the costs of operating a Unit; the States contribute the remaining 25 percent.  
MFCUs investigate and prosecute Medicaid provider fraud and patient abuse and neglect in health care 
facilities or board and care facilities.  
MFCU Funding and Accomplishments in FY 2015  
In FY 2015, combined Federal and State expenditures for the operation of the 50 MFCUs (in 49 States 
and the District of Columbia) totaled $251 million.  The MFCUs employed 1,944 individuals.  Collectively, 
in FY 2015, MFCUs reported 17,665 investigations, of which 14,441 were related to Medicaid fraud and 
3,224 were related to patient abuse and neglect, including misappropriation of patients private funds.  
The cases resulted in criminal charges or indictments involving 1,892 individuals, including 1,387 for 
fraud and 505 for patient abuse and neglect, including patient funds cases.  In total, 1,553 criminal 
actions were reported in FY 2015, of which 1,097 were related to Medicaid fraud and 456 were related 
to patient abuse and neglect, including patient funds cases.  Civil judgments and settlements for FY 2015 
totaled 795, and monetary recoveries in civil cases totaled over $397 million.  (See Medicaid Fraud 
Control Units 2015 Expenditures and Statistics contained in a MapChart.) 
OIG Onsite Reviews of MFCUs   
In addition to an annual recertification review of each MFCU, OIG conducts periodic in-depth reviews of 
a sample of Units.  OIG evaluates MFCU operations in accordance with 12 performance standards and 
assesses compliance with laws, regulations, and OIG policy guidance.  OIG issued reports of onsite 
reviews of the following MFCUs during the reporting period:  
  California State Medicaid Fraud Control Unit: 2015 Onsite Review.  OEI-09-15-00070.  2016 February.  
  Delaware State Medicaid Fraud Control Unit: 2015 Onsite Review.  OEI-07-15-00240.  2016 February. 
  Arizona State Medicaid Fraud Control Unit: 2015 Onsite Review. OEI-07-15-00280.  2015 December.      
The following are case examples of joint efforts with MFCUs: 
Texas  Huey P. Williams, Jr., was sentenced to 5 years and 3 months in prison and ordered to pay $1.96 
million in restitution after a jury found him guilty of healthcare fraud.  Williams owned and operated the 
DME companies Hermann Medical Supplies Inc. and Hermann Medical Supplies II (collectively Hermann 
Medical).  Through these companies, Williams submitted approximately $3.4 million in fraudulent DME 
claims to Medicare.  Specifically, Williams caused Hermann Medical to bill Medicare for components of 
an arthritis kit, which included expensive, rigid braces and orthotics with adjustable joints that 
required fitting and adjustment.  However, in actuality, Williams never purchased any of the expensive 
braces and instead purchased and provided to beneficiaries inexpensive, flimsy neoprene braces and 
equipment, to the extent that he provided any equipment at all.  Medicare paid Hermann Medical $1.96 
million on these claims.  This was a joint investigation with the FBI and the Texas MFCU.  HHS Office of Inspector General 
Semiannual Report to Congress | Spring 2016  Page 21 
 
 
Florida  Edys Illanes was sentenced to 1 year and 6 months in prison and ordered to pay $2.4 million in 
restitution, joint and several, for her role in a Medicare Part C and Medicaid fraud scheme.  Evidence 
showed that, from June 2013 to April 2014, Illanes was a licensed insurance agent employed by a 
Medicare Advantage Organization (an HMO) to market and sell their plans.  Under the scheme, Illanes 
recruited Medicare beneficiaries living in Nicaragua to enroll in a Medicare Advantage plan.  She 
submitted fraudulent enrollment requests to Medicare, falsely representing that the beneficiaries 
actually resided in Florida.  This was a joint investigation with the FBI and the Florida MFCU. 
Advisory Opinions and Other Industry Guidance  
As part of OIGs continuing efforts to promote the highest level of ethical and lawful conduct by the 
health care industry, we issue advisory opinions and other guidance to educate industry and other 
stakeholders on how to avoid fraud, waste, and abuse.  Advisory opinions, which are developed in 
consultation with DOJ, are issued to requesting parties regarding the interpretation and applicability of 
certain statutes relating to Federal health care programs.  The Health Insurance Portability and 
Accountability Act of 1996 (HIPPA),  205, allows OIG to provide case-specific formal guidance on the 
application of the anti-kickback statute and safe harbor provisions and other OIG health care fraud and 
abuse sanctions.  From October 1, 2015, to March 31, 2016, OIG received 23 requests for advisory 
opinions, issued 8 new opinions, modified 9 opinions, and terminated 3 opinions.  
Health Information Technology 
OIG Policy Reminder: Information Blocking and the Federal Anti-Kickback Statute 
As HHS focuses on the flow of information across the care continuum, OIG reminded the public about 
how information blocking may affect safe harbor protection under the Federal anti-kickback statute (42 
U.S.C.  1320a-7b(b)).  OIG stated that donations of items or services that have limited or restricted 
interoperability due to action taken by an applicable individual or entity would fail to meet one of the 
conditions of the safe harbor and would be inconsistent with the intent of the safe harbor to promote 
the use of technology that is able to communicate with products from other vendors.  Failure to meet 
this condition would mean that the safe harbor would not apply and the arrangement would be subject 
to case-by-case review under the Federal anti-kickback statute.  As OIG stated, such donations would be 
suspect under the statute. 
Sanction Authorities and Other Administrative Actions  
Various Federal laws provide authorities the ability to impose administrative sanctions for fraud and 
abuse, as well as other activities that pose a risk to Federal health care programs and their beneficiaries.  
Sanctions include the exclusion of individuals and entities from Federal health care programs and the 
imposition of civil monetary penalties (CMPs) for submitting false and fraudulent claims to a Federal 
health care program or for violating the anti-kickback statute; the Stark law; or the Emergency Medical 
Treatment and Labor Act (EMTALA), also known as the patient dumping statute.  
During this semiannual reporting period, OIG imposed 1,774 administrative sanctions in the form of 
program exclusions or administrative actions for alleged fraud or abuse or other activities that posed a 
risk to Federal health care programs and their beneficiaries.  Exclusion and penalty authorities are 
described in Appendix C and on our website at http://oig.hhs.gov/fraud/enforcement/cmp/index.asp.   HHS Office of Inspector General 
Semiannual Report to Congress | Spring 2016  Page 22 
 
 
Program Exclusions  
During this semiannual reporting period, OIG excluded 1,662 individuals and entities from Medicare, 
Medicaid, and other Federal health care programs.  Most of the exclusions resulted from convictions for 
crimes relating to Medicare or Medicaid, for patient abuse or neglect, or as a result of license revocation.  
OIG is also responsible for reinstating providers who apply and have met the requirements of their 
exclusions.  For a list of excluded individuals and entities, see https://exclusions.oig.hhs.gov/.   
The following are examples of program exclusions: 
Texas  Dennis Barson, Jr., a doctor of osteopathy, was excluded for a minimum period of 25 years based 
on his conviction of conspiracy to commit health care fraud and health care fraud, aiding and abetting.  
Beginning around April 2009 and continuing to about February 2010, Barson conspired with others to 
defraud the Medicare program.  As part of the conspiracy, Barson billed Medicare for procedures and 
services that were never performed.  As a result of this activity, the court sentenced Barton to pay 
$1,188,993 in restitution and serve 10 years in prison.  The Texas State Board of Medicine revoked his 
license to practice and the Virginia State Board of Medicine suspended his license.  
Colorado  Paul Bugaric, a certified nurse assistant, was excluded for a minimum period of 25 years 
based on his convictions for sexual assault.  Bugaric performed sexual acts on a person who had a 
traumatic brain injury that rendered her unable to give consent to the acts.  Bugaric was sentenced to 15 
years of incarceration.  In addition, his license to practice as a certified nurse assistant was revoked by 
the Colorado State Board of Nursing. 
Suspensions and Debarments  
Suspensions and debarments are administrative tools used by HHS and other Federal agencies to protect 
the Government from individuals and entities that have engaged in contract fraud, misused grant funds, 
or are otherwise not presently responsible.  Because these are Governmentwide sanctions, an individual 
or entity that has been suspended or debarred by HHS or any other agency is ineligible from 
participating in any future funding opportunities across the Federal Government for a specified period of 
time.  
OIG refers individuals and entities that have potentially engaged in grant or contract fraud or misconduct 
to the HHS Suspension and Debarment Official, who is responsible for determining whether to impose a 
suspension or debarment.  OIG continues to develop a robust Suspension and Debarment program and 
uses this tool to protect Government programs against fraud, waste, poor performance, and 
noncompliance with contract provisions or applicable law.   
The following are debarment examples:  
California  Vivian Benn, chief executive officer of Family Hope Foster Family Agency, was debarred for a 
3-year period based on her criminal embezzlement convictions.  Family Hope Foster Family Agency was 
an indirect recipient of Federal grant funds from ACF.  According to the investigation, Benn used her 
position of trust to embezzle $450,000 for her personal use.  Benn was sentenced to 3 years and 4 
months of incarceration and ordered to pay $450,000 in restitution. 
Montana  Wilford Harlan Huck Sunchild, acting director of the Wellness Center, a department under 
the Rocky Boy Health Board Clinic for the Chippewa Cree Tribe of the Rocky Boys Reservation, was  HHS Office of Inspector General 
Semiannual Report to Congress | Spring 2016  Page 23 
 
 
debarred for a 3-year period based on his criminal theft convictions.  The Wellness Center is an indirect 
recipient of Federal self-governance compact funds, which are provided by IHS.  While acting as director, 
Sunchild secured an agreement with a program of Nike, Inc., Nike Native Air N7, which was to provide 
Nike N7 shoes and apparel to members of the Chippewa Cree Tribe at a reduced rate to promote 
wellness within the tribe.  Sunchild used his position to set up a bank account for the Nike Native Air N7 
program, but in reality Sunchild diverted Wellness Center contributions into this account for his own 
personal use.  Sunchild was sentenced to 1 year and 1 day of incarceration and ordered to pay $19,735 in 
restitution.  In addition, Sunchild was excluded from Federal health care programs for 5 years. 
Corporate Integrity Agreements  
Many health care providers elect to settle their cases before litigation.  As part of the settlements, 
providers often agree to enter into CIAs with OIG to avoid exclusions from Medicare, Medicaid, and 
other Federal health care programs.  Under a CIA, a provider commits to establishing a program and 
taking other specified steps to ensure future compliance with Medicare and Medicaid rules.  The 
compliance programs are designed, in part, to prevent future fraud.  OIG monitors providers compliance 
with these agreements and may impose penalties on entities that fail to comply with the requirements 
of their CIAs.  Many civil settlements include CIAs with OIG.  Examples of these CIAs are included in the 
case narrative section.  
Civil Monetary Penalties Law  
The Civil Monetary Penalties Law (CMPL) authorizes OIG to impose administrative penalties on and 
assessments against a person who, among other things, submits, or causes to be submitted, claims to a 
Federal health care program that the person knows, or should know, are false or fraudulent.  During this 
semiannual reporting period, OIG concluded cases involving more than $43.8 million in CMPs and 
assessments.   
The following are CMP examples: 
New Jersey  Ascend Laboratories, LLC (Ascend) agreed to pay $1,287,000 to settle allegations that it 
failed to submit drug pricing data to CMS.  The Medicaid Drug Rebate Program requires pharmaceutical 
companies to enter into and have in effect a national rebate agreement with the Secretary of HHS in 
order for Medicaid payments to be available for the pharmaceutical companys covered drugs.  
Companies with such rebate agreements are required to submit certain drug pricing information to CMS, 
including quarterly and monthly average manufacturers price (AMP) data.  OIG can seek penalties 
against manufacturers that misrepresent, or fail to timely report, drug pricing information.  OIG alleged 
that Ascend failed to submit timely monthly and quarterly AMP data for several months in 2013 and 
2014 and for three quarters in 2013.  
Texas  Gustavo Grieco, M.D.; Sohail Siddiqui, M.D.; and Marco Vargas, D.P.M.; agreed to pay $208,000, 
$75,000, and $65,000, respectively, to settle allegations that they received improper remuneration in 
exchange for the referral of patients to an independent diagnostic testing center, OneStep Diagnostic, 
Inc. (OneStep), in the Houston area.  Specifically, OIG alleged that from January 1, 2008, through June 30, 
2012, Grieco, Siddiqui, and Vargas each received improper remuneration from OneStep in the form of 
compensation from a Medical Directorship agreement and that took into account the value and volume 
of referrals made to OneStep.  In October 2014, OneStep agreed to pay $1.2 million and adhere to a 5-
year CIA to resolve their related liability.  HHS Office of Inspector General 
Semiannual Report to Congress | Spring 2016  Page 24 
 
 
Patient Dumping  
Some of the CMPL cases that OIG resolved between October 1, 2015, and March 31, 2016, were pursued 
under the EMTALA, a statute designed to prevent hospitals from denying emergency care to patients and 
to ensure patient access to appropriate emergency medical services.   
The following are EMTALA case examples: 
South Carolina  St. Francis Hospital agreed to pay two maximum penalties of $50,000 each to resolve its 
potential liability under EMTALA.  OIG alleged that St. Francis failed to treat two gunshot victims who 
arrived at its emergency department.  OIG contended that a 32-year-old male arrived at St. Franciss 
emergency department with a gunshot wound to his leg.  The patient required a CT angiogram of his leg 
to assess possible vascular injuries and treatment by a surgeon.  While these services were available at 
St. Francis, they were not provided.  Instead, the patient was transferred to another hospital.  OIG also 
contended that a 29-year-old male arrived at St. Franciss emergency department with a gunshot wound 
to the abdomen.  Although St. Francis had both the capacity and capability to further treat the patient, 
St. Francis instead transferred the patient to another hospital without providing stabilizing care.  In 
addition to the above two instances, CMS found that St. Francis failed to ensure that their emergency 
department EMTALA policies and procedures, Medical Staff By-Laws, or Medical Staff Rules and 
Regulations defined the responsibilities of on-call physicians under EMTALA. 
Mississippi  University of Mississippi Medical Center (UMMC) agreed to pay a maximum penalty of 
$50,000 to resolve its potential liability under EMTALA.  OIG alleged that a 64-year-old woman arrived at 
a hospital in Mississippi with abnormal vital signs and lab results.  A chest x-ray revealed a large right 
pleural effusion, and the patient was diagnosed with atrial fibrillation, pleural effusion, urinary tract 
infection, and congestive heart failure.  She was given numerous medicines, but was determined to need 
a higher level of care than was available at that hospital.  An emergency department physician called 
UMMC and requested a transfer of the patient to UMMC.  OIG contended that when UMMC discovered 
the patient was from Louisiana, it refused to accept the transfer of the patient due to UMMCs new 
policy of not accepting patients from Louisiana.   
Provider Self-Disclosure Protocol  
OIG is committed to assisting health care providers and suppliers in detecting and preventing fraud and 
abuse.  Since 1998, we have made available comprehensive guidelines describing the protocol for 
providers to voluntarily submit to OIG self-disclosures of fraud, waste, or abuse.  The provider self-
disclosure protocol gives providers an opportunity to minimize the potential costs and disruption that a 
full-scale OIG audit or investigation might entail if fraud were uncovered.  The self-disclosure also allows 
the provider to negotiate a fair monetary settlement and potentially avoid being excluded from 
participation in Federal health care programs.  
The protocol guides providers and suppliers through the process of structuring a disclosure to OIG about 
matters that constitute potential violations of Federal laws.  After making an initial disclosure, the 
provider or supplier is expected to thoroughly investigate the nature and cause of the matters uncovered 
and make a reliable assessment of their economic impact.  OIG evaluates the reported results of each 
internal investigation to determine the appropriate course of action.  The self-disclosure guidelines are 
available on the OIG website at https://oig.hhs.gov/compliance/self-disclosure-info/index.asp.   HHS Office of Inspector General 
Semiannual Report to Congress | Spring 2016  Page 25 
 
 
During this reporting period, self-disclosure cases resulted in more than $48.1 million in HHS receivables.   
The following are examples of provider self-disclosure settlements: 
Ohio  The Kroger Company agreed to pay $21,523,047 to resolve its liability under the CMPL for 
conduct disclosed to OIG.  Kroger is an Ohio for-profit corporation that operates more than 2,109 
pharmacies and 2,640 supermarkets and multi-department stores in 34 states.  OIG alleged that Kroger 
employed 14 individuals who were excluded from participation in Federal health care programs.  Kroger 
also filled prescriptions, for which payment was made under a Federal health care program, that were 
written by 84 excluded prescribers.   
Alabama  Community Health United Home Care, LLC (CHUHC) agreed to pay $9,800,707 to resolve its 
liability under the CMPL for conduct it disclosed to OIG.  Specifically, OIG alleged that, from January 1, 
2008, through February 29, 2012, CHUHC submitted claims for hospice services at Center Home Care 
Corporation and Fallbrook Home Care Services without certifications of terminal illness, face-to-face 
encounters, and/or physician narratives, as required by hospice regulations.  
    HHS Office of Inspector General 
Semiannual Report to Congress | Spring 2016  Page 26 
 
 
Public Health Agencies Reviews and Enforcement 
Activities 
Public Health-Related Legal Actions and Investigations 
Health Education Assistance Loan Program 
OIG excludes individuals who have defaulted on Health Education Assistance Loan (HEAL) loans from 
participation in Federal health care programs.  Under the HEAL program, which stopped making loans in 
1998, HRSA guaranteed commercial loans to students seeking education in health-related fields.1  The 
students are allowed to defer repayment of the loans until after they graduate and begin to earn income.  
Although HHSs Program Support Center (PSC) takes steps to ensure repayment, some loan recipients do 
not resolve their indebtedness.  After PSC has exhausted efforts to secure repayment of a debt, it 
declares an individual in default.  The Social Security Act permits exclusion thereafter of such individuals 
from Medicare, Medicaid, and all other Federal health care programs for nonpayment of the loans.  
Exclusion means that the individual may not receive reimbursement under these programs for 
professional services rendered, nor may any other provider receive reimbursement for services ordered 
or prescribed by the excluded individual.  OIG is responsible for excluding individuals who have defaulted 
on HEAL loans from participation in Federal health care programs. 
HEAL Exclusions   
During this semiannual reporting period, 6 individuals and related entities were excluded as a result of 
PSC referral of their cases to OIG.  Individuals who have been excluded as a result of default may enter 
into settlement agreements, whereby the exclusions are stayed while they pay specified amounts each 
month to satisfy their debts.  If they default on these settlement agreements, they may be excluded until 
the entire debt is repaid and they may not appeal the exclusions.  
After being excluded for nonpayment of their HEAL debts, 2,617 individuals chose to enter into 
settlement agreements or completely repay their debts.  That figure includes 21 individuals who entered 
into such settlement agreements or completely repaid their debts during this semiannual reporting 
period.  More than $207 million is being repaid through settlement agreements or through complete 
repayment.  Of that amount, $1.9 million is attributable to this semiannual reporting period. 
Practitioners in three States entered into settlement agreements to repay the amounts indicated: 
Massachusetts  Dentist  $206,570 
California  Medical Doctor  $126,133  
                                                           
1 The HEAL Program, noted in previous Semiannual Reports , was permanently transferred from HHS to the U.S. 
Department of Education as required by the Consolidated Appropriations Act, 2014 (Pub.  L. 113-76).  The transfer 
was completed on July 1, 2014.   HHS Office of Inspector General 
Semiannual Report to Congress | Spring 2016  Page 27 
 
 
California  Chiropractor  $51,277 
Michigan  Osteopath  $14,957 
Human Services Agencies Reviews and Enforcement 
Activities 
Administration for Children and Families 
Hurricane Sandy  Response Preparedness 
The Response to Superstorm Sandy Highlights the Importance of Recovery Planning for 
Childcare Nationwide  
OEI-04-14-00410  December 2015 
We reviewed New Jersey and New Yorks emergency preparedness for, response to, and recovery from 
Superstorm Sandy as related to childcare.  We found that, before Superstorm Sandy, New Jersey and 
New Yorks emergency planning did not include the development of strategies for restoring or rebuilding 
childcare facilities and infrastructure after a disaster, as recommended by ACF.  However, these States 
established post-disaster task forces that assisted childcare providers with the recovery and rebuilding 
process.  Since Superstorm Sandy, ACF has taken steps to improve nationwide emergency preparedness, 
response, and recovery for childcare.  However, fewer than half of all States reported including or 
planning to include the restoration or rebuilding of childcare facilities and infrastructure after a disaster 
in their emergency preparedness and response plans.  Because of legislation enacted in November 2014, 
States are required to have statewide childcare disaster plans; however, the requirements do not 
explicitly specify that these plans must include planning for the restoration or rebuilding of childcare 
facilities and infrastructure after a disaster.   
ACF concurred with our recommendation to require States to include planning for the restoration or 
rebuilding of childcare facilities and infrastructure after a disaster in their statewide childcare-disaster 
plans. 
Childcare Health and Safety Requirements 
ACF provides Federal grants through several programs, including Head Start and the Child Care and 
Development Fund (CCDF).  CCDF (authorized by the Child Care and Development Block Grant Act and 
the Social Security Act  418) assists low-income families, families receiving temporary public assistance, 
and families transitioning from public assistance to obtain childcare so that they may work or obtain 
training or education.  The objective of the reviews below were to determine whether States were 
ensuring that providers receiving CCDF funds complied with State requirements related to the health 
and safety of children.  
Some South Carolina Childcare Centers Did Not Always Comply With State Health and Safety 
Licensing Requirements 
A-04-14-08032  November 2015  HHS Office of Inspector General 
Semiannual Report to Congress | Spring 2016  Page 28 
 
 
Also, Some South Carolina Family Childcare Homes Did Not Always Comply With State Health 
and Safety Requirements 
A-04-14-08031  November 2015 
We found that four childcare providers that we reviewed did not comply with the childcare center 
physical condition requirements, which had previously been cited by South Carolina, or with caregiver 
documentation requirements; one provider did not comply with childrens immunization record 
requirements.  Of the 20 childcare homes we reviewed, 16 did not comply with 1 or more of the 
guidelines for physical conditions, 9 did not comply with guidelines for child records, 4 did not comply 
with training requirements, and 4 were not available during operating hours to complete our 
unannounced inspection. 
South Carolina generally concurred with our recommendations in both reports that it ensure compliance 
with Federal health and safety requirements for CCDF providers; ensure that CCDF homes complete and 
submit training documentation and impose penalties for failures to comply; and ensure that required 
documentation is included in the childrens records.  South Carolina also generally concurred with our 
recommendations in the family childcare homes report that it inspect registered family childcare homes 
annually.  
Puerto Rico Child Daycare Centers Did Not Always Comply With Commonwealth Health and 
Safety Requirements  
A-02-14-02001  October 2015 
Also, Puerto Rico Childcare Home Providers Did Not Always Comply With Commonwealth 
Health and Safety Requirements  
A-02-14-02016  October 2015 
We found that Puerto Rico did not ensure that providers receiving funding from CCDF complied with 
requirements related to the health and safety of children.  Potentially hazardous conditions existed at 
the three daycare center providers we reviewed.  Potentially hazardous conditions also existed at 19 of 
the 20 childcare home providers we reviewed. 
Puerto Rico concurred with our findings in both reports that resulted in our recommendations to 
establish binding health and safety requirements for all CCDF providers in Puerto Rico; have procedures 
in place to ensure that providers receive adequate training on health and safety requirements; develop a 
single comprehensive and specific checklist to aid in its monitoring of providers for compliance with 
health and safety requirements; correct the specific health and safety issues noted in the reports; and 
ensure that providers employ only individuals with proper background certification.  
Puerto Rico also concurred with our findings in the childcare home provider report that resulted in our 
recommendations to update its CCDF State Plan to more accurately describe childcare home types and 
requirements; establish policies and procedures to ensure that onsite inspections are performed at all 
providers at least annually; and establish requirements for all household members to obtain a 
certification that they are not in Puerto Ricos registry of persons convicted of sex crimes and child 
abuse.  HHS Office of Inspector General 
Semiannual Report to Congress | Spring 2016  Page 29 
 
 
Puerto Rico Improperly Claimed Some Childcare and Development Targeted Funds  
A-02-12-02016  February 2016 
We reviewed $18.9 million in CCDF targeted fund expenditures and found that Puerto Rico did not 
comply with Federal requirements for the use of $12.5 million.  Puerto Rico used $10.9 million for 
nontargeted fund activities and $1.6 million in targeted funds for contractor activities not specified as 
targeted.  Puerto Rico did not indicate concurrence or nonconcurrence with our recommendations to 
refund to the Federal Government $12.5 million for expenditures that were not used for targeted fund 
activities, ensure that targeted funds are expended in accordance with funding allocations established by 
ACF, and develop procedures for reconciling accounting records to reports submitted by contractors and 
monitor these reports to ensure that contractors are using targeted funds for targeted activities. 
Some Florida Childcare Centers Did Not Always Comply With State Health and Safety 
Licensing Requirements  
A-04-14-08033  March 2016 
Also, Some Florida Family Childcare Homes Did Not Always Comply With State Health and 
Safety Requirements  
A-04-14-08034  March 2016 
We reviewed four childcare providers and found that all four providers did not comply with the physical 
conditions requirements, two providers did not comply with staff record requirements, and two 
providers did not comply with child record requirements.  Of the 20 childcare home providers we 
reviewed, 15 did not comply with 1 or more of the physical conditions requirements; 11 did not comply 
with child record requirements; 4 did not comply with staff documentation requirements; and 4 were 
not available during operating hours to complete our unannounced inspection, which prevented us from 
assessing the physical conditions and childrens records. 
Florida concurred with our recommendations in both reports to ensure that required documentation is 
complete, current, and included in the childrens files.  Florida also concurred with our recommendation 
in the family childcare centers report that providers meet training requirements.  Florida did not concur 
or nonconcur with our recommendations in the family childcare homes report that the specific health 
and safety issues noted in the report are corrected, the program complies with Federal health and safety 
requirements for CCDF providers, the timing of provider inspections is less predictable and conducted in 
accordance with the new CCDF Block Grant Act requirements, and licensed providers comply with 
background screening or rescreening requirements and staffing requirements.  
Child Support Enforcement Activities 
OIG Investigations   
OIG investigates noncustodial parents who fail to pay court-ordered child support.  OIG works with ACFs 
Office of Child Support Enforcement; DOJ; U.S. Attorneys Offices; the U.S. Marshals Service; and Federal, 
State, and local partners to address egregious child support enforcement cases with appropriate law 
enforcement and prosecutorial action.  During this reporting period, OIG investigations of child support  HHS Office of Inspector General 
Semiannual Report to Congress | Spring 2016  Page 30 
 
 
enforcement cases nationwide resulted in 22 criminal actions and court-ordered restitution and 
settlements of $924,128.   
The following are examples of child support enforcement cases: 
Maine  Glen Caristinos was sentenced to 5 years of probation and ordered to pay $117,601 in 
restitution after pleading guilty to failure to pay child support.  In October 2001, Caristinos was ordered 
to pay $248.16 per week for the support of his son.  However, from 2001 to 2005, Caristinos made 
inconsistent payments to the custodial parent of his child before moving to Florida and virtually ceasing 
to make further payments.   
South Dakota  Michael Paul Marsh was sentenced to 3 years of probation and ordered to pay $103,190 
in restitution after pleading guilty to failure to pay child support.  In 2005, Marsh was ordered to pay 
child support for his three children, and since is more than $100,000 in arrears.  Marsh admitted that he 
was aware that a support order was issued, and that he was physically capable of working and could 
have paid more than he did. 
Engaging the Public in Capturing Deadbeat Parents 
Because of the success of OIGs Most Wanted Fugitives website, OIG launched its Most Wanted 
Deadbeat Parents website.  The site identifies parents who fail to pay court-ordered child support for 
their children and thereby put an unnecessary strain on the custodial parents and the children as well as 
on agencies that enforce these matters.  The site, which is updated frequently, includes information on 
OIGs role in pursuing parents who fail to pay court-ordered child support.  OIGs Most Wanted Deadbeat 
Parents website is at https://oig.hhs.gov/fraud/child-support-enforcement/index.asp.  
    HHS Office of Inspector General 
Semiannual Report to Congress | Spring 2016  Page 31 
 
 
Other HHS-Related Reviews and Investigations 
Grants and Contracts 
New York University School of Medicine Budgeted Costs That Were Appropriate and Claimed 
Allowable Hurricane Sandy Disaster Relief Act Funds  
A-02-14-02011  December 2015 
Our objectives were to determine whether New York University (NYU) School of Medicines Disaster 
Relief Act budgeted costs were appropriate and its claimed costs were allowable in accordance with 
Federal requirements.  On July 1, 2013, nearly 9 months after Hurricane Sandy, NIH began awarding 
Disaster Relief Act funds to NYU School of Medicine for the restoration of its medical scientific research 
activities, which were damaged by Hurricane Sandy.  From July 1, 2013, through September 30, 2015, 
NIH awarded $127.8 million for Grantee Research Programs to NYU School of Medicine.  NYU School of 
Medicine planned to use the funds to restore experiments and reestablish research programs affected by 
the loss of biospecimens, animals, data, and time.  We found that NYU School of Medicine appropriately 
budgeted and claimed allowable Hurricane Sandy Disaster Relief Act funding.  Accordingly, this report 
contained no recommendation.  
Hidalgo Medical Services Did Not Comply With All Federal Requirements Related to Its Capital 
Development Grant  
A-06-14-00056  January 2016 
As part of our ACA oversight activities, OIG is conducting a series of reviews of certain ACA-funded 
capital development grants, funded by HRSA, because of the potential risks associated with expansion 
and construction projects, such as a change of scope, scheduling delays, and cost overruns.  Our review 
of Hidalgo Medical Services (HMS), in Lordsburg, New Mexico, determined that HMS did not comply with 
applicable Federal requirements and grant terms related to its ACA-funded capital development grant.  
HMS also did not provide the community health services described in the application because of changes 
in management after submission of the grant application and a lack of awareness of Federal grant 
policies and procedures.  HMS, a not-for-profit health center in New Mexico, received $8,715,094 in 
HRSA funds to construct a new community health center in Silver City, New Mexico, and to construct a 
senior wellness center in Lordsburg, New Mexico.   
HMS did not concur with our recommendations, but HRSA did concur with our recommendations that it 
either require HMS to refund $898,000 to the Federal Government for the unallowable grant expenses 
or provide HMS with disposition instructions for the wellness center at issue and, upon disposition, 
require HMS to refund to the Federal Government either the wellness centers fair market value or 
$898,000 of the wellness centers cost, whichever is lower, and work with HMS to strengthen its 
financial, property management, and procurement controls over grant funds.  
Grant Fraud 
HHS is the largest grant-making organization and one of the largest contracting agencies in the Federal 
Government.  In FY 2015, HHS awarded more than $412 billion in grants and over $20 billion in contracts 
across all program areas.  OIGs direct annual discretionary appropriation funding is used to conduct  HHS Office of Inspector General 
Semiannual Report to Congress | Spring 2016  Page 32 
 
 
program integrity and enforcement activities with regard to the more than 100 public health and human 
services programs carried out by over 70,000 employees around the world.  The size and scope of 
departmental awards make their operating effectiveness crucial to the success of programs designed to 
improve the health and well-being of the public.  Recent appropriations increased OIGs discretionary 
funding for public health and human services oversight.   
The following are case examples related to misuse of grant funds:  
Florida  The University of Florida entered into a $19.875 million settlement agreement with OIG and 
seven HHS operating divisions that awarded grants to the University.  The University of Florida receives 
millions of dollars in grant funding from HHS on hundreds of grants each year.  The settlement resolves 
allegations that the University overcharged hundreds of grants for the salary costs of its employees, 
charged some of these grants for administrative costs for equipment and supplies when those items 
should not have been directly charged to the grants under Federal regulations, and inflated costs 
charged to HHS grants awarded at its Jacksonville campus for services performed by an affiliated entity, 
Jacksonville Healthcare, Inc. 
Montana  Timothy Rosette, the acting chief executive officer of the Rocky Boy Health Board (RBHB) 
clinic for the Chippewa Cree Tribe of the Rocky Boys Indian Reservation, was sentenced to more than 3 
years in prison and ordered to pay $600,000 in restitution for his guilty plea to bribery and theft from an 
Indian tribal organization.  Investigators believe that Rosette accepted bribes from multiple businesses, 
including TMP Services (a contractor used after the clinic incurred damage from a flood), in exchange for 
the award of tribal contracts.  After the clinic experienced damage from a flood, all the property salvaged 
from the clinic building was stored using FEMA funds with the idea that the property would be used in 
the new clinic building, but it was never used.  Investigators believe that Rosette was a secret partner in 
TMP Services and that bogus claims were generated to reimburse Rosette for the bribes.  Eight 
defendants involved in the scheme were previously sentenced to a combined 15 years and 2 months in 
prison and ordered to pay more than $1.2 million in restitution.   
New York  Dorothy Ogundu was sentenced to between 1 and 3 years of incarceration after a jury found 
her guilty on 29 counts, including grand larceny.  According to court documents, Ogundu owned 
Angeldocs, a not-for-profit medical clinic.  From approximately April 2006 through September 2013, 
Ogundu stole a portion of each of the 12 Government grants that she received, totaling approximately 
$300,000.  Two of the 12 grants in question were congressional earmarks sponsored by a U.S. 
Congressman and administered by the U.S. Department of Housing and Urban Development and the 
CDC.  Ogundu used the money that she stole to pay the mortgage and utilities on a commercial property 
she owned, make improvements to the property to increase its value, purchase and ship vehicles to 
Nigeria, and make other purchases for her personal benefit and for the benefit of her not-for-profit 
business.   
Small Business Innovative Research Program  
The National Defense Authorization Act for Fiscal Year 2012,  5143, requires OIG to annually report on 
the number of cases that were referred with relation to fraud, waste, or abuse in the Small Business 
Innovative Research/Small Business Technology Transfer (SBIR/STTR) program.  OIG must also report on 
the actions taken in each case; justification for not taking action on a case; and an accounting of funds 
used to address waste, fraud, and abuse in this program.  In our December 2015 report delivered to the  HHS Office of Inspector General 
Semiannual Report to Congress | Spring 2016  Page 33 
 
 
three Congressional oversight committees, we reported that OIG spent approximately $236,239 in 
salaries on oversight related to the SBIR/STTR program.  HHS referred two new SBIR/STTR cases to OIG in 
FY 2015. 
Recovery Act Retaliation Complaint Investigations 
The American Recovery and Reinvestment Act (Recovery Act),  1553, prohibits non-Federal employers 
that have received Recovery Act funding from retaliating against employees who disclose evidence of 
mismanagement of Recovery Act funds or any violation of law related to Recovery Act funds.  OIGs are 
required to include in their Semiannual Reports to Congress the retaliation complaint investigations that 
they decided not to conduct or continue during the reporting period.  During this reporting period, OIG 
closed two investigations. 
Contract Audits 
Pursuant to the National Defense Authorization Act for FY 2008,  845, OIGs appointed under the 
Inspector General Act of 1978 are required to submit, as part of their Semiannual Reports to Congress 
pursuant to section 5 of such Act, information on final completed contract audit reports issued during 
the period to the contracting activity containing significant audit findings.  OIG did not issue final reports 
meeting  845 criteria during this semiannual period.   
OIG Reviews of Non-Federal Audits  
OIG reviews audits conducted by non-Federal auditors of entities receiving Federal awards.  In this 
semiannual period, OIGs National External Audit Review Center reviewed 681 reports covering $110.5 
billion in audited costs.  Federal dollars covered by these audits totaled $62.4 billion, of which about 
$523.5 million were HHS funds. 
Office of Management and Budget (OMB) Circular A-133 establishes audit requirements for State and 
local governments, colleges and universities, and nonprofit organizations receiving Federal awards.  
Under this circular, covered entities must conduct annual organizationwide single audits of all Federal 
money they receive.  These audits are conducted by non-Federal auditors, such as public accounting 
firms and State auditors.  OIG reviews the quality of these audits and assesses the adequacy of the 
entities management of Federal funds.   
OIGs oversight of non-Federal audit activity informs Federal managers about the soundness of 
management of Federal programs and identifies any significant areas of internal control weakness, 
noncompliance, and questioned costs for resolution or follow-up.  We identify entities for high-risk 
monitoring, alert program officials to any trends that could indicate problems in HHS programs, and 
profile non-Federal audit findings of a particular program or activity over time to identify systemic 
problems.  We also provide training and technical assistance to grantees and members of the auditing 
profession.  OIG maintains a process to assess the quality of the non-Federal reports received and the 
audit work that supports the selected reports.  OIGs reports on non-Federal audits reviewed during this 
reporting period are categorized in the following table. 
Non-Federal Audits, October 1, 2015, through March 31, 2016  HHS Office of Inspector General 
Semiannual Report to Congress | Spring 2016  Page 34 
 
 
Number of Non-Federal Audits: 
 
Not requiring changes or having minor changes  647 
Requiring major changes  33 
Having significant technical inadequacies  1 
Total  681 
 
The 681 reports included 1,524 recommendations for improving management operations.  In addition, 
these audit reports provided information for 21 OIG special memorandums that identified concerns for 
increased monitoring by management. 
Other Reporting Requirements and Reviews 
Legislative and Regulatory Reviews  
Pursuant to the Inspector General Act,  4(a)(2), OIG is required to review existing and proposed 
legislation and regulations relating to HHSs programs and operations and make recommendations 
concerning their impact on economy and efficiency or the prevention and detection of fraud and abuse.  
Most audits and other reviews that we conduct are designed to test compliance with and/or assess the 
administration and oversight of existing laws and regulations.  Our reports of such reviews describe 
findings, which include questioned costs, inefficiencies, vulnerabilities to fraud, inconsistencies, errors in 
application, or weaknesses in oversight or supporting systems.  Our corresponding recommendations tell 
HHS and its operating or staff divisions what administrative, regulatory, or legislative actions we believe 
are needed to effectively respond to the findings.  Our regularly published core publications reflect the 
relationship between our work and laws and regulations.    
  Our Semiannual Report to Congress describes findings and recommendations from recently 
completed reviews, many of which focus on existing laws and regulations.   
  Our Compendium of Priority Recommendations describes priority findings and recommendations 
from past periods that remain to be implemented.   
  Our annual Work Plan and Mid-Year Update provides citations to laws and regulations that are the 
subject of ongoing or future reviews. 
We also review proposed legislation and regulations related to HHS programs and operations.  HHS 
routinely involves us and its operating and other staff divisions in the review and development of HHS 
regulations through a well-established HHS process.  Our audits, evaluations, and investigations are 
sometimes cited in regulatory preambles as influencing HHS regulations.  In addition, we provide 
independent, objective technical assistance on a bipartisan, bicameral basis to congressional committees 
and members who request it.  HHS Office of Inspector General 
Semiannual Report to Congress | Spring 2016  Page 35 
 
 
Implementation of Health Insurance Marketplaces 
OIG continues to review programs implemented pursuant to the ACA.  OIGs ACA oversight strategy 
focuses on the health insurance marketplaces, reforms in the Medicare and Medicaid programs, and 
public health programs.  Key focus areas for our marketplace oversight include payment accuracy, 
eligibility, management and administration, and security.  In developing our work plan, we coordinate 
with the Government Accountability Office and other Federal and State oversight agencies.    
Federal Marketplace 
HealthCare.gov:  Case Study of CMS Management of the Federal Marketplace  
OEI-06-14-00350  February 2016 
The objective of this case study was to gain insight into CMSs implementation and management of the 
Federal Marketplace, focusing primarily on HealthCare.gov.  We found that HHS and CMS made many 
missteps throughout development and implementation that led to the poor launch of HealthCare.gov on 
October 1, 2013.  Most critical was the absence of clear leadership, which caused delays in decision-
making and a lack of clarity in project tasks.  Additional missteps included devoting too much time to 
developing policy, which left too little time for developing the website, and failing to properly manage its 
key website development contract.  CMSs organizational structure and culture also hampered progress, 
including poor coordination between policy and technical work.  CMS continued on a failing path despite 
signs of trouble, making rushed corrections that proved insufficient.   
Following the launch, CMS and contractors pivoted quickly to make corrective actions, reorganizing the 
work to improve execution and facilitating health plan enrollment for millions of consumers.  Key factors 
that contributed to recovery of the website included adopting a badgeless culture for the project, 
wherein all CMS staff and contractors worked together as a team, and a practice of ruthless 
prioritization that aligned work efforts with the most important and achievable goals.  CMS recovered 
the website for high consumer use within 2 months and adopted more effective organizational practices.  
CMS concurred with our recommendation to continue to apply lessons from the HealthCare.gov 
recovery in its management of the Federal Marketplace and broader organization. 
State-Based Marketplaces 
The ACA requires the establishment of a health insurance exchange (marketplace) in each State and 
District of Columbia.  A marketplace is designed to serve as a one-stop shop at which individuals get 
information about their health insurance options; are evaluated for eligibility for a QHP and, when 
applicable, eligibility for insurance affordability programs; and enroll in the QHP of their choice.  A 
previous OIG review found that not all internal controls implemented by the Federally facilitated 
marketplace and the State marketplaces in California and Connecticut were effective in ensuring that 
individuals were enrolled in QHPs according to Federal requirements.  The reviews below are part of an 
ongoing series that looks at seven State marketplaces across the Nation and determines whether their 
marketplaces internal controls were effective in ensuring that individuals were enrolled in QHPs 
according to Federal requirements.  HHS Office of Inspector General 
Semiannual Report to Congress | Spring 2016  Page 36 
 
 
Not All of the Colorado Marketplaces Internal Controls Were Effective in Ensuring That 
Individuals Were Enrolled in Qualified Health Plans According to Federal Requirements  
A-07-14-03199  December 2015 
Also the following: 
Not All of the District of Columbia Marketplaces Internal Controls Were Effective in Ensuring 
That Individuals Were Enrolled in Qualified Health Plans According to Federal Requirements  
A-03-14-03301  February 2016 
The Kentucky Marketplaces Internal Controls Were Generally Effective in Ensuring That 
Individuals Were Enrolled in Qualified Health Plans According to Federal Requirements  
A-04-14-08036  October 2015 
Not All of the Minnesota Marketplaces Internal Controls Were Effective in Ensuring That 
Individuals Were Enrolled in Qualified Health Plans According to Federal Requirements  
A-05-14-00043  February 2016 
The Vermont Marketplaces Internal Controls Were Not Always Effective in Ensuring That 
Individuals Were Enrolled in Qualified Health Plans According to Federal Requirements  
A-01-14-02507 March 2016 
Not All of the Washington Marketplaces Internal Controls Were Effective in Ensuring That 
Individuals Were Enrolled in Qualified Health Plans According to Federal Requirements  
A-09-14-01006 January 2016 
We found that not all of the internal controls for the marketplaces in Colorado, District of Columbia, 
Minnesota, Vermont, or Washington were effective in ensuring that individuals were enrolled in QHPs 
according to Federal requirements.  Kentuckys internal controls were generally effective.  Internal 
controls were not effective in determining or verifying eligibility of applicants, resolving inconsistencies 
in eligibility data, or maintaining and updating eligibility and enrollment data.  In addition, internal 
controls in Colorado, District of Columbia, and Vermont related to verifying information were not 
effective, and Colorados internal controls related to obtaining certain data were ineffective.   
As applicable, the marketplaces generally agreed with either our findings or our recommendations that 
they take action to improve their internal controls related to resolving inconsistencies in eligibility data, 
to maintaining and updating eligibility and enrollment data, and to verifying applicants eligibility.  
Minnesota did not agree with our recommendation that it redetermine, if necessary, the eligibility of the 
sample applicants for whom we determined that verifications were not performed according to Federal 
requirements.  HHS Office of Inspector General 
Semiannual Report to Congress | Spring 2016  Page 37 
 
 
Payments and Policies 
CMS Could Not Effectively Ensure That Advance Premium Tax Credit Payments Made Under 
the Affordable Care Act Were Only for Enrollees Who Paid Their Premiums  
A-02-14-02025  January 2016 
The objectives of our review were to determine whether:  (1) CMS had a process in place to ensure that 
advance premium tax credit (APTC) payments were made only for enrollees who paid their monthly 
premiums, and (2) CMS shared APTC payment data for enrollees with the IRS when making these 
payments.  We found that CMS could not ensure that APTC payments made to QHP issuers were only for 
enrollees who had paid their premiums.  CMS:  (1) relied on each QHP issuer to verify that enrollees paid 
their monthly premiums and to attest that APTC payment information was accurate, and (2) had sole 
responsibility for ensuring that APTC payments were made only for enrollees who had paid their 
premiums and did not share these data for enrollees with the IRS. 
CMS concurred with our recommendation to establish policies and procedures to calculate APTC 
payments without relying solely on QHP issuers attestations that enrollees have paid their premiums.  
CMS did not indicate concurrence or nonconcurrence with our recommendation that once it implements 
an automated process to maintain individual enrollee data it consult with the IRS to explore sharing 
APTC payment data. 
Information Security   
Public Summary Report:  Connect for Health Colorado Generally Protected Personally 
Identifiable Information on Its Health Insurance Exchange Websites and Databases but Could 
Continue To Improve Information Security Controls  
A-07-15-00454  February 2016 
This public summary report provides an overview of the results of our audit of the information security 
controls at Colorados health insurance exchange, Connect for Health Colorado (C4HCO).  We found that 
C4HCO implemented security controls over its websites and databases, but improvements are still 
needed to fully comply with Federal requirements and to increase protection of personally identifiable 
information.  As of November 2014, C4HCO had not updated the system security plans supporting 
policies or ensured that vulnerabilities identified during prior scans were mitigated in a timely manner.  
We also identified numerous weaknesses regarding user access administration and inadequate security 
settings during our database security scans.  Moreover, C4HCO had not performed incident response 
testing.   
C4HCO concurred with our detailed recommendations and described corrective actions that it had taken 
or planned to take.  Based on the evidence C4HCO provided, we determined that it has successfully 
remediated the issues related to the system security plan and incident response testing and has partially 
remediated the issues related to the application production databases and vulnerability mitigation.  HHS Office of Inspector General 
Semiannual Report to Congress | Spring 2016  Page 38 
 
 
Health Reform Oversight Plan 
Health Reform Oversight Plan Fiscal Year 2015  2015 February 
This FY 2015 Health Reform Oversight Plan (the Plan) describes OIGs current and planned efforts to 
oversee the implementation and management of HHSs programs under the ACA.  The Plan outlines 
OIGs key tactical considerations, key focus areas, and target timeframes for issuing reports on reviews 
related to the Marketplaces.  Key focus areas for ongoing and potential work include the Marketplaces, 
Medicaid expansion and services, Medicare payment and delivery reform, and Medicare and Medicaid 
program integrity. 
 
  HHS Office of Inspector General 
Semiannual Report to Congress | Spring 2016  Page 39 
 
 
Appendixes 
A  Questioned Costs and Funds To Be Put to Better Use 
B  Peer Review Results 
C  Summary of Sanction Authorities 
D  Reporting Requirements in the Inspector General Act of 1978 
Appendix A: Questioned Costs and Funds Put to Better 
Use  
The following tables summarize OIGs monetary recommendations and HHS responses to them.  This 
information is provided in accordance with the Inspector General Act,  5(a)(8) and (a)(9) (5 U.S.C. 
App.  5(a)(8) and (a)(9)), and the Supplemental Appropriations and Rescissions Act of 1980.   
Audit Reports with Questioned Costs 
Questioned costs are those questioned by OIG audits because of an alleged violation of a provision of a 
law, regulation, contract, grant, or other agreement governing the expenditure of funds.  Costs are 
questioned because the expenditure was not supported by adequate documentation or because the 
expenditure was unnecessary or unreasonable.  OIG includes those questioned costs that HHS program 
officials, in management decisions, have agreed should not be charged to the Federal Government, 
commonly referred to as disallowed costs, as part of the expected recoveries in the Accomplishments 
section at the beginning of the Semiannual Report.  Superscripts indicate end notes. 
Table 1  Audit Reports with Questioned Costs 
  Dollar Value  Dollar Value 
Reports  Questioned  Unsupported 
Section 1 
Reports for which no management decisions had  171  $732,926,000  $46,825,000 
been made by the beginning of the reporting 
period1 
Reports issued during the reporting period  58  $353,261,000  $1,155,000   
  Total Section 1  229  $1,086,187,000  $47,980,000 
  HHS Office of Inspector General 
Semiannual Report to Congress | Spring 2016  Page 40 
 
 
  Dollar Value  Dollar Value 
Reports  Questioned  Unsupported 
Section 2 
Reports for which management decisions were       
made during the reporting period2, 3  
  Disallowed costs  136  $*598,018,000     $27,226,000 
  Costs not disallowed  3                 $54,590,000   $1,454,000 
  Total Section 2  139  $652,608,000  $28,680,000 
       
     
*Audit receivables (expected recoveries). 
 
     
Section 3 
Reports for which no management decisions had  90  $433,579,000  $19,300,000 
been made by the end of the reporting period (Sec. 
1 minus Sec. 2) 
     
Section 4  
Reports for which no management decisions were  46  $165,962,000  $18,145,000 
made within 6 months of issuance4 
 
Audit Reports with Funds Recommended To Be Put to Better Use  
The phrase recommendations that funds be put to better use means that funds could be used more 
efficiently if management took action to implement an OIG recommendation through reductions in 
outlays, deobligation of funds, and/or avoidance of unnecessary expenditures.  Table 2 reports HHS 
program officials decisions to take action on these audit recommendations.   HHS Office of Inspector General 
Semiannual Report to Congress | Spring 2016  Page 41 
 
 
Table 2  Audit Reports with Funds to Be Put to Better Use 
 
Reports  Dollar Value 
   
Section 1 
Reports for which no management decisions had been made by the  9  $15,094,517,000 
beginning of the reporting period1 
Reports issued during the reporting period  4  $46,000,000 
  Total Section 1  13  $15,140,517,000 
   
Section 2 
Reports for which management decisions were made during the     
reporting period 
Value of recommendations agreed to      
by management 
  Based on proposed management action  7  $114,849,000 
 
  Based on proposed legislative action  0 
Value of recommendations not agreed to by management     
1  $5,533,000 
  Total Section 2  8  $120,382,000 
   
Section 3 
Reports for which no management decisions had been made by the  5  $15,020,135,000 
end of the reporting period2 (Sec. 1 minus Sec. 2)  HHS Office of Inspector General 
Semiannual Report to Congress | Spring 2016  Page 42 
 
 
End Notes 
Table 1 End Notes 
1 The opening balance was adjusted upward by $213.5 million because of a reevaluation of previously 
issued recommendations.  
2 Revisions to previously reported management decisions: 
  A-02-09-01023 Review of Medicaid Claims Submitted by Continuing Day Treatment Providers in New 
York State.  The Department of Appeals Board (DAB) ruling further reduced the disallowed cost to 
$53,446,805.  CMS adjusted grant awards accordingly by $30,920,124. 
  A-07-10-02775 Palmetto Government Benefits Administrator Did Not Always Refer Medicare Cost 
Reports and Reconcile Outlier Payments in Jurisdictions 11.  Subsequent review by CMS determined 
that the 3-year deadline for reopening the cost report had passed and there were no indications of 
fraud.  Costs totaling $1,641,927 were allowable.   
  A-04-13-00093 Medicare Compliance Review of Methodist Healthcare for the Period January 1, 2011, 
Through June 30, 2012.  Subsequent review by CMS and OIG determined that the overpayment 
amount of $5,893,302 should have been $4,948,753.  As a result, $944,549 was determined to be 
allowable cost.     
  A-04-07-00033 Review of CIGNA Government Services Durable Medical Equipment Regional Carrier 
Medicare Termination Cost Vouchers for the Period October 1, 2006, Through October 31, 2007.  CMS 
subsequent review of supporting document provided by CIGNA reduced disallowed cost by 
$922,108.    
  Not detailed are net reductions to previously disallowed management decisions totaling $3.1 million. 
3 Included are management decisions to disallow $69.6 million in questioned costs that were identified 
by non-Federal auditors in audits of State and local governments, colleges and universities, and nonprofit 
organizations receiving Federal awards conducted in accordance with OMB Circular A-133.  OIG is 
currently responsible for ensuring that work performed by these non-Federal auditors complies with 
Federal audit standards; accordingly, OIG tracks, resolves, and reports on recommendations in these 
audits. 
4 Because of administrative delays, some of which were beyond management control, resolution of the 
following 46 audits was not completed within 6 months of issuance of the reports; however, 
management has informed us that the agency is working to resolve the outstanding recommendations 
before the end of the next semiannual reporting period:  
CIN: A-01-02-00006  REVIEW OF RATE SETTING METHODOLOGY FOR MEDICAID SCHOOL BASED 
HEALTH SERVICESCT, MAY 2003, $32,780,146 
CIN: A-01-14-02503  Review of MD State Agency Processes for Design & Implementation of the 
State's Health Insurance Exchange, MAR 2015, $28,400,000 
CIN: A-07-13-01125  Medicare Part C Unlawfully Present Enrollees, APR 2014, $26,150,043  HHS Office of Inspector General 
Semiannual Report to Congress | Spring 2016  Page 43 
 
 
CIN: A-01-12-02507  Review of Connecticut's Title IV-E Adoption Assistance Maintenance Payments, 
NOV 2013, $17,499,083 
CIN: A-06-13-00038  Childcare Development Fund: Targeted Funds Review in Texas, AUG 2014, 
$14,967,129 
CIN: A-03-12-00004  Review of Horizon's 2009 and 2010 Bona Fide Service Fees, MAR 2013, 
$4,344,417 
CIN: A-02-12-02012  New York Improperly Claimed Some Childcare and Development Targeted Funds, 
JUL 2015, $3,827,836 
CIN: A-05-13-00014  Ohio Exceeded the 5-Percent Limit for Claiming Childcare Development Fund 
Administrative Expenditures, NOV 2013, $3,164,630 
CIN: A-03-13-00024  Review of New Orleans Regional Physician Hospital Organization, Inc.'s 2009, 
2010, and 2011 Bona Fide Service Fees, APR 2014, $2,880,698 
CIN: A-03-13-00025  Review of UAB Health System's 2009, 2010, and 2011 Bona Fide Service Fees, 
JAN 2014, $2,812,109 
CIN: A-03-13-00026  Review of USAble Mutual's (Arkansas Blue Cross Blue Shield) 2009, 2010, and 
2011 Bona Fida Service Fees, JAN 2014, $2,763,821 
CIN: A-03-11-00002  Review of New England Joint Enterprise 2009 DIR Reports, APR 2012, $2,710,732 
CIN: A-03-12-00006  Review of TAHMO's 2009 and 2010 Bona Fide Service Fees, MAR 2013, 
$2,355,532 
CIN: A-03-13-00020  Review of Capital District Physicians' Health Plan, Inc.'s 2009, 2010, and 2011 
Bona Fide Service Fees, JAN 2014, $2,070,605 
CIN: A-03-12-00007  Review of Arcadian's 2009 and 2010 Bona Fide Service Fees, FEB 2013, 
$2,048,967 
CIN: A-03-12-00005  Review of Windsor's 2009 and 2010 Bona Fide Service Fees, JAN 2013, 
$1,948,737 
CIN: A-03-13-00018  Review of Amerigroup Corporation's 2009, 2010, and 2011 Bona Fide Service 
Fees, JAN 2014, $1,943,251 
CIN: A-03-13-00019  Review of BlueCross BlueShield of South Carolina's 2009, 2010, and 2011 Bona 
Fide Service Fees, DEC 2013, $1,799,096 
CIN: A-07-11-06013  Indirect Costs Claimed as Direct CostsUniversity of Colorado Denver, JUN 
2013, $1,419,524 
CIN: A-03-12-00008  Review of XL Health DIR, JAN 2013, $1,410,342  HHS Office of Inspector General 
Semiannual Report to Congress | Spring 2016  Page 44 
 
 
CIN: A-03-13-00021  Review of Fallon Community Health Plan's 2009, 2010, and 2011 Bona Fide 
Service Fees, JAN 2014, $1,079,578 
CIN: A-05-12-00089   The Council on Rural Service Programs, Inc., Claimed Unallowable Head Start 
Costs, NOV 2013, $1,074,352 
CIN: A-03-13-00022  Review of MD Care, Inc.'s 2009, 2010, and 2011 Bona Fide Service Fees, JAN 
2014, $1,040,501 
CIN: A-03-13-00023  Review of National Rural Electric Cooperative Association's 2009, 2010, and 
2011 Bona Fide Service Fees, JAN 2014, $957,921 
CIN: A-02-11-02020  Review of Action for a Better Community, Inc. CSBG ARRA Costs Claimed By New 
York State, SEP 2013, $795,608 
CIN: A-09-11-01007  Review of CSBG Recovery Act Costs Claimed by HI for HCAP, FEB 2013, $513,649 
CIN: A-04-13-01024  Allowability of Selected Costs Charged to Federal Grants and Contracts UNC, JUN 
2014, $352,843 
CIN: A-01-11-02510  Review of CT CSBG Recovery Act Costs Claimed, APR 2013, $314,605 
CIN: A-01-10-02505  Results of Limited Scope Review of CTE, Inc., MAY 2011, $293,870 
CIN: A-02-11-02015  Review of INSEC, Inc. CSBG ARRA Costs Claimed by the Commonwealth of 
Puerto Rico, APR 2013, $285,412 
CIN: A-02-11-02017  New Jersey Claimed Unallowable Community Services Block Grant Costs 
Incurred by Check-Mate Inc., Under the Recovery Act, AUG 2014, $246,359 
CIN: A-09-09-00045  Risk Adjustment Data Validation of Payments Made to PacifiCare of California for 
Calendar Year 2007 (Contract H0543), NOV 2012, $224,388 
CIN: A-06-12-00057  Childcare Development Fund: Targeted Funds Review in Louisiana, SEP 2013, 
$221,578 
CIN: A-05-12-00012  Review of IL CSBG Recovery Act Costs ClaimedRockford, JUL 2013, $205,296 
CIN: A-06-09-00012  RISK ADJUSTMENT DATA VALIDATIONPACIFICARE H4590, MAY 2012, $183,247 
CIN: A-04-11-01004  Northeast Florida Community Action Agency, Inc.s CSBG funds awarded under 
the American Recovery and Reinvestment Act of 2009, SEP 2012, $165,795 
CIN: A-04-11-01008  Florida's Administration of CSBG Recovery Act Program and Costs Claimed by 
Central Florida Community Action Agency, Inc., APR 2013, $160,404 
CIN: A-07-11-02766  Review of WY CSBG Recovery Act Costs ClaimedCarbon County, AUG 2013, 
$143,588 
CIN: A-09-11-01013  Review of Oregon's Housing and Community Services Department, APR 2013, 
$115,911  HHS Office of Inspector General 
Semiannual Report to Congress | Spring 2016  Page 45 
 
 
CIN: A-06-11-00058  Review of CSBG ARRA Costs Claimed by Crowley's Ridge Development Council, 
AUG 2012, $115,420 
CIN: A-07-12-02779  Review of Natrona County CSBG Recovery Act Costs Claimed, JUN 2013, 
$104,971 
CIN: A-02-11-02000  Direct Cost ReviewSUNY Albany, OCT 2011, $27,384 
CIN: A-09-11-01014  Review of CSBG Recovery Act Costs Claimed by HI for the Hawaii County 
Economic Opportunity Council, JUL 2012, $22,602 
CIN: A-05-11-00053  The Columbus Urban League Claimed Some Unallowable Costs to Head Start, 
SEP 2012, $13,102 
CIN: A-07-13-03194  Review of CCDF Targeted Fund in Colorado, DEC 2014, $4,543 
CIN: A-03-12-00250  Audit of Lancaster County Community Action Program, NOV 2013, $2,813 
Total CINs:   46 
Total Amount:   $165,962,000 
Table 2 End Notes 
1The opening balance was adjusted upward by $49.2 million because of reevaluation of previously issued 
recommendations.  
2 Because of administrative delays, some of which were beyond management control, 3 of the 5 audits 
open at the end of the period were not resolved within 6 months of issuance of the reports.  OIG is 
working with management to reach resolution on these recommendations before the end of the next 
semiannual reporting period: 
CIN: A-05-12-00020  Comparison of Surgical Services Provided in the ASC Setting to Other Outpatient 
Settings, APRil 2014, $15,000,000,000 
CIN: A-07-13-02795  Review of Palmetto Medicare Outlier Processing Timeliness for J1, JULy 2015, 
$15,792,301 
CIN: A-05-06-00023  Undistributable Child Support Collections - MN, SEP 2006, $28,240 
Total CINs:   3 
TOTAL AMOUNT:  $15,015,821,000    HHS Office of Inspector General 
Semiannual Report to Congress | Spring 2016  Page 46 
 
 
Appendix B:  Peer Review Results 
The Inspector General Act of 1978, as amended, requires OIGs to report the results of peer reviews of 
their operations conducted by other OIGs, the date of the last peer review, outstanding 
recommendations from peer reviews, and peer reviews conducted by the OIG of other OIGs in the 
semiannual period.  Peer reviews are conducted by member organizations of the Council of the 
Inspectors General on Integrity and Efficiency (CIGIE).  The required information follows. 
Office of Audit Services  
During this semiannual reporting period, no peer reviews involving the Office of Audit Services (OAS) 
were completed.  Listed below is information concerning OASs peer review activities during prior 
reporting periods. 
OAS  Date  Reviewing Office  Office Reviewed 
May 2015  Department of  HHS OIG, OAS 
Transportation 
The system of quality control for the audit organization of HHS OIG in effect for the year ending 
September 30, 2014, has been suitably designed and complied with to provide HHS OIG with 
reasonable assurance of performing and reporting in conformity with applicable professional 
standards in all material respects.  Federal audit organizations can receive a rating of pass, pass with 
deficiencies, or fail.  HHS OIG received a peer review rating of pass. 
 
OAS  Date  Reviewing Office  Office Reviewed 
December 2015  HHS OIG, OAS  U.S. Department of Agriculture 
(USDA) 
The system of quality control for the audit organization of USDA OIG in effect for the year ending 
March 31, 2015, has been suitably designed and complied with to provide USDA OIG with 
reasonable assurance of performing and reporting in conformity with applicable professional 
standards in all material respects.  Federal audit organizations can receive a rating of pass, pass with 
deficiencies, or fail.  USDA OIG received a peer review rating of pass.  HHS Office of Inspector General 
Semiannual Report to Congress | Spring 2016  Page 47 
 
 
Office of Investigations 
During this semiannual reporting period, no peer reviews involving Office of Investigations (OI) were 
completed.  Listed below is information concerning OIs peer review activities during prior reporting 
periods. 
OI  Date  Reviewing Office  Office Reviewed 
August 2015  DOL-OIG  HHS-OIG, OI 
The system of internal safeguards and management procedures for the investigative function of 
HHS-OIG in effect for the year ending September 30, 2015, were in full compliance with the quality 
standards established by CIGIE and the Attorney General's guidelines. 
 
OI  Date  Reviewing Office  Office Reviewed 
June 2014  HHS-OIG, OI  TIGTA 
The system of internal safeguards and management procedures for the investigative function of 
TIGTA, in effect through June 2014, were in full compliance with the quality standards established by 
CIGIE and the Attorney General's guidelines. 
Appendix C:  Summary of Sanction Authories 
The Inspector General Act of 1978, as amended, specifies requirements for semiannual reports to be 
made to the Secretary for transmittal to Congress.  A selection of other authorities appears below. 
Program Exclusions 
The Social Security Act,  1128 (42 U.S.C.  1320a-7), provides several grounds for excluding individuals 
and entities from participation in Medicare, Medicaid, and other Federal health care programs.  
Exclusions are required for individuals and entities convicted of the following types of criminal offenses:  
(1) Medicare or Medicaid fraud; (2) patient abuse or neglect; (3) felonies for other health care fraud; and 
(4) felonies for illegal manufacture, distribution, prescription, or dispensing of controlled substances.   
OIG is authorized to exclude individuals and entities on several other grounds, including misdemeanors 
for other health care fraud (other than Medicare or Medicaid) or for illegal manufacture, distribution, 
prescription, or dispensing of controlled substances; suspension or revocation of a license to provide 
health care for reasons bearing on professional competence, professional performance, or financial  HHS Office of Inspector General 
Semiannual Report to Congress | Spring 2016  Page 48 
 
 
integrity; provision of unnecessary or substandard services; submission of false or fraudulent claims to a 
Federal health care program; or engaging in unlawful kickback arrangements. 
The ACA added another basis for imposing a permissive exclusion, that is, knowingly making, or causing 
to be made, any false statements or omissions in any application, bid, or contract to participate as a 
provider in a Federal health care program, including managed care programs under Medicare and 
Medicaid, as well as Medicares prescription drug program. 
Providers subject to exclusion are granted due process rights.  These include a hearing before an 
administrative law judge and appeals to the HHS Departmental Appeals Board and Federal district and 
appellate courts regarding the basis for and the length of the exclusion. 
Civil Monetary Penalties Law 
The CMPL of the Social Security Act, 1128A (42 U.S.C.  1320a-7a), imposes penalties, assessments, and 
exclusion from participation in Federal health care programs for engaging in certain activities.  For 
example, a person who submits, or causes to be submitted, to a Federal health care program a claim for 
items and services that the person knows, or should know, is false or fraudulent is subject to a penalty of 
up to $10,000 for each item or service falsely or fraudulently claimed, an assessment of up to three 
times the amount falsely or fraudulently claimed, and exclusion. 
For the purposes of the CMPL, should know is defined to mean that the person acted in reckless 
disregard or deliberate ignorance of the truth or falsity of the claim.  The law and its implementing 
regulations also authorize actions for a variety of other violations, including submission of claims for 
items or services furnished by an excluded person; requests for payment in violation of an assignment 
agreement; violations of rules regarding the possession, use, and transfer of biological agents and toxins; 
and payment or receipt of remuneration in violation of the anti-kickback statute (42 U.S.C. 
 1320a-7b(b)). 
The ACA added more grounds for imposing CMPs.  These include, among other types of conduct, 
knowingly making, or causing to be made, any false statements or omissions in any application, bid, or 
contract to participate as a provider in a Federal health care program (including Medicare and Medicaid 
managed care programs and Medicare Part D); the ACA authorizes a penalty of up to $50,000 for each 
false statement, as well as activities relating to fraudulent marketing by managed care organizations, 
their employees, or their agents.  
Patient Dumping 
The Social Security Act,  1867 (42 U.S.C.  1395dd), provides that when an individual goes to the 
emergency room of a Medicare-participating hospital, the hospital must provide an appropriate medical 
screening examination to determine whether that individual has an emergency medical condition.  If an 
individual has such a condition, the hospital must provide either treatment to stabilize the condition or 
an appropriate transfer to another medical facility. 
If a transfer is ordered, the transferring hospital must provide stabilizing treatment to minimize the risks 
of transfer and must ensure that the receiving hospital agrees to the transfer and has available space and 
qualified personnel to treat the individual.  In addition, the transferring hospital must effect the transfer 
through qualified personnel and transportation equipment.  Further, a participating hospital with  HHS Office of Inspector General 
Semiannual Report to Congress | Spring 2016  Page 49 
 
 
specialized capabilities or facilities may not refuse to accept an appropriate transfer of an individual who 
needs services if the hospital has the capacity to treat the individual. 
OIG is authorized to collect CMPs of up to $25,000 against small hospitals (fewer than 100 beds) and up 
to $50,000 against larger hospitals (100 beds or more) for each instance in which the hospital negligently 
violated any of the section 1867 requirements.  In addition, OIG may collect a penalty of up to $50,000 
from a responsible physician for each negligent violation of any of the section 1867 requirements and, in 
some circumstances, may exclude a responsible physician. 
Anti-Kickback Statute and Civil False Claims Act Enforcement Authorities 
The Anti-Kickback Statute  The anti-kickback statute authorizes penalties against anyone who knowingly 
and willfully solicits, receives, offers, or pays remuneration, in cash or in kind, to induce or in return for 
(1) referring an individual to a person or an entity for the furnishing, or arranging for the furnishing, of 
any item or service payable under the Federal health care programs or (2) purchasing, leasing, or 
ordering, or arranging for or recommending the purchasing, leasing, or ordering, of any good, facility, 
service, or item payable under the Federal health care programs.  Social Security Act,  1128B(b) (42 
U.S.C.  1320a-7b(b)). 
Individuals and entities that engage in unlawful referral or kickback schemes may be subject to criminal 
penalties under the general criminal anti-kickback statute; a CMP under OIGs authority pursuant to the 
Social Security Act,  1127(a)(7) (42 U.S.C.  1320a-7a); and/or program exclusion under OIGs permissive 
exclusion authority under the Social Security Act,  1128(b)(7) (42 U.S.C.  1320a-7(b)(7)). 
The False Claims Act  Under the False Claims Act, as amended by the False Claims Amendments Act of 
1986, (FCA) (31 U.S.C.  37293733), a person or an entity is liable for up to treble damages and a 
penalty between $5,500 and $11,000 for each false claim it knowingly submits, or causes to be 
submitted, to a Federal program.  Similarly, a person or an entity is liable under the FCA if it knowingly 
makes or uses, or causes to be made or used, a false record or statement to have a false claim paid. 
The FCA defines knowing to include not only the traditional definition but also instances in which the 
person acted in deliberate ignorance or reckless disregard of the truth or falsity of the information.  
Under the FCA, no specific intent to defraud is required.  Further, the FCA contains a qui tam, or 
whistleblower, provision that allows a private individual to file a lawsuit on behalf of the United States 
and entitles that whistleblower to a percentage of any fraud recoveries.  The FCA was again amended in 
2009 in response to recent Federal court decisions that narrowed the laws applicability.  Among other 
things, these amendments clarify the reach of the FCA to false claims submitted to contractors or 
grantees of the Federal Government. 
    HHS Office of Inspector General 
Semiannual Report to Congress | Spring 2016  Page 50 
 
 
Appendix D:  Reporting Requirements in the Inspector 
General Act of 1978  
The reporting requirements of the Inspector General Act of 1978, as amended, are listed in the following 
table along with the location of the required information. 
Section  Requirement  Location 
   
Section 4 
(a)(2)  Review of legislation and regulations  "Other HHS-Related Issues"  section   
   
Section 5 
(a)(1)  Significant problems, abuses, and  Throughout this report 
deficiencies 
(a)(2)  Recommendations with respect to  Throughout this report 
significant problems, abuses, and 
deficiencies 
(a)(3)  Prior significant recommendations on which  OIG Compendium of 
corrective action has not been completed  Unimplemented Recommendations 
(a)(4)  Matters referred to prosecutive authorities  "Legal and Investigative Activities" 
section 
(a)(5)  Summary of instances in which information  None 
requested by OIG was refused 
(a)(6)  List of audit reports  Submitted to the Secretary under 
separate cover 
(a)(7)  Summary of significant reports  Throughout this report 
(a)(8)  Statistical Table 1  Reports With  Appendix A 
Questioned Costs  HHS Office of Inspector General 
Semiannual Report to Congress | Spring 2016  Page 51 
 
 
Section  Requirement  Location 
(a)(9)  Statistical Table 2  Funds Recommended To  Appendix A 
Be Put to Better Use 
(a)(10)  Summary of previous audit reports without  Appendix A 
management decisions 
(a)(11)  Description and explanation of revised  Appendix A 
management decisions 
(a)(12)  Management decisions with which the  None 
Inspector General disagrees 
(a)(13)  Information required by the FISMA  Reported annually in the spring 
Semiannual Report to Congress, 
"Other HHS-Related Issues" section 
(a)(14)-(16)  Results of peer reviews of HHS-OIG  Appendix B 
conducted by other OIGs or the date of the 
last peer review, outstanding 
recommendations from peer reviews, and 
peer reviews conducted by HHS-OIG of 
other OIGs 
Other reporting requirements 
Section  Requirement  Location 
845  Significant contract audits required to be  "Other HHS-Related Issues" section 
reported pursuant to the National Defense 
Authorization Act for FY 2008 (P.L. No. 110-
181),  845. 
205  Pursuant to HIPAA (P.L. No. 104-191),  205,  Reported annually in the fall 
the Inspector General is required to solicit  Semiannual Report.   
proposals annually via a Federal Register  Appendix F 
notice for developing new and modifying 
 
existing safe harbors to the anti-kickback  HHS Office of Inspector General 
Semiannual Report to Congress | Spring 2016  Page 52 
 
 
Section  Requirement  Location 
statute of the Social Security Act,  1128(b) 
and for developing special fraud alerts.  The 
Inspector General is also required to report 
annually to Congress on the status of the 
proposals received related to new or 
modified safe harbors. 
1553  Pursuant to the American Recovery and  "Other HHS-Related Issues" section 
Reinvestment Act of 2009,  1553, OIG 
reports to Congress the retaliation 
complaint investigations it decided not to 
conduct or continue during the period.