office of
inspector general
U.S. Department of Health and Human Services
Semiannual Report
to Congress
October 1, 2014  March 31, 2015 HHS Office of Inspector General 
Semiannual Report to Congress | Spring 2015   
 
 
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.   
 
S The Office of Audit Services (OAS) provides auditing services for HHS, either by conducting audits with 
its own audit resources or by overseeing audit work done by others.  Audits examine the performance 
A
of HHS programs and/or its grantees and contractors in carrying out their responsibilities and are 
intended to provide independent assessments of HHS programs and operations.  These assessments 
O
help reduce waste, abuse, and mismanagement and promote economy and efficiency throughout HHS. 
 
I The Office of Evaluation and Inspections (OEI) conducts national evaluations to provide HHS, Congress, 
E 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 
O
HHS programs.  OEI reports also present practical recommendations for improving program operations. 
  The Office of Investigations (OI) conducts criminal, civil, and administrative investigations of fraud and 
I misconduct related to HHS programs, operations, and beneficiaries.  With investigators working in 
O almost every State and the District of Columbia, OI actively coordinates with DOJ and other Federal, 
State, and local law enforcement authorities.  The investigative efforts of OI often lead to criminal 
convictions, administrative sanctions, or civil monetary penalties (CMPs). 
 
G The Office of Counsel to the Inspector General (OCIG) provides general legal services to OIG, rendering 
advice and opinions on HHS programs and operations and providing all legal support for OIGs internal 
I operations.  OCIG represents OIG in all civil and administrative fraud and abuse cases involving HHS 
C programs, including False Claims Act, program exclusion, and CMP cases.  In connection with these 
cases, OCIG also negotiates and monitors corporate integrity agreements.  OCIG renders advisory 
O opinions, issues compliance program guidance, publishes fraud alerts, and provides other guidance to 
the health care industry concerning the anti-kickback statute and other OIG enforcement authorities. 
Executive Management (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; 
M
setting vision and direction, in collaboration with the components, for OIGs priorities and strategic 
planning; ensuring effective management of budget, finance, information technology, human 
E resources, and other operations; and serving as a liaison with HHS, Congress, and other 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 2015   
 
 
 
A Message From the  
Inspector General 
This Semiannual Report to Congress, submitted pursuant to the Inspector 
 
General Act of 1978, as amended, summarizes the activities of the Office of 
Daniel R. Levinson 
Inspector General (OIG), Department of Health and Human Services (HHS or  Inspector General 
the Department), for the 6-month period that ended March 31, 2015.   
OIG strives to protect the health, safety, and welfare of HHS beneficiaries and those who rely on HHS 
programs.  Robust oversight of quality-of-care issues requires a wide range of oversight tools that go 
beyond reviewing the accuracy of billing and payments.  It also includes examinations of whether 
beneficiaries have access to care, beneficiaries receive care of a sufficient quality, and their lives are 
generally enriched by that care. 
Several reports released during this reporting cycle served to improve the quality of health care and 
human services provided to beneficiaries of HHS programs.  Of particular note are reports examining 
issues related to quality in Medicaid, a program for which taxpayers spend almost half-a-trillion dollars 
each year.  One such report evaluated Medicaid beneficiaries access to physician services by reviewing 
State standards and testing beneficiaries ability to obtain appointments with primary care and specialty 
physicians.  We also examined issues surrounding low utilization of preventive screening services 
intended to help children avoid or minimize childhood illness and, in separate work, identified concerns 
surrounding the practice of prescribing antipsychotic drugs to children enrolled in Medicaid.  These and 
other reports revealed vulnerabilities in programs and practices and recommended changes to improve 
the quality of care in Medicaid. 
OIG is committed to improving the circumstances and conditions that give rise to substandard 
quality.  We provide education and outreach to help providers better understand and meet their legal 
obligations.  When poor quality care results in violations of fraud and abuse laws, we pursue 
enforcement actions, including actions to address those who harm beneficiaries or defraud the 
Government.  For example, in the largest settlement of its kind, a nationwide skilled nursing facility (SNF) 
company recently agreed to pay millions of dollars to resolve allegations that its facilities provided 
materially substandard or worthless care that resulted in serious patient harm ranging from fractures, to 
dehydration and malnutrition, to severe pressure ulcers resulting in the loss of a limb. 
Our continued partnership with other Federal, State, and local law enforcement entities as part of HEAT 
Strike Force work continues to yield results and serves to reduce beneficiaries exposure to fraudulent or 
otherwise abusive care.  In a Strike Force case that is currently scheduled for sentencing, a Detroit-area 
hematologist-oncologist pleaded guilty to prescribing and administering aggressive chemotherapy and 
related treatments to patients who did not need these therapies, in order to increase his billing to 
Medicare and other insurers.  These and other law enforcement efforts play a critical role in 
safeguarding the health and safety of program beneficiaries as well as taxpayer dollars. 
OIG continues to monitor the economy, efficiency, and effectiveness of Affordable Care Act programs 
across HHS.  Two reports released in the last 6 months examined the processes used to build Health 
Insurance Exchanges or Marketplaces.  In the first, OIG found that the Centers for Medicare & Medicaid  HHS Office of Inspector General 
Semiannual Report to Congress | Spring 2015   
 
 
Services (CMS) did not develop an overarching acquisition strategy for the Federal Marketplace or 
perform all the acquisition oversight activities required by Federal and HHS regulations.  CMS did not 
plan to assign a lead systems integrator to coordinate all contractors efforts and missed opportunities to 
leverage contract planning and oversight tools for a project of this size and importance.  In the second, 
OIG found that the Maryland State Agency did not allocate costs to Medicaid and the grants provided by 
CMS to establish State-run Marketplaces in accordance with Federal requirements.  Upcoming work 
examines whether CMSs internal controls effectively ensured the accuracy of financial assistance 
payments made to qualified health plan issuers. 
Since its 1976 establishment, OIG has worked diligently with its partners to protect HHSs 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 also like to express my appreciation to 
Congress and to the Department for their sustained commitment to supporting the important work of 
our office. 
 
Daniel R. Levinson 
Inspector General  
 
 
 
 
 
 
 
 
 
 
  HHS Office of Inspector General 
Semiannual Report to Congress | Spring 2015  Page i 
 
 
Highlights 
The Department of Health and Human Services (HHS or the Department) Office of Inspector General 
(OIG) 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) 2015 (October-March) and summarizes key accomplishments during the period.      
Accomplishments 
 
During the first half of FY 2015, OIG reported expected recoveries of over $1.8 billion consisting of nearly 
$544.7 million in audit receivables and about $1.26 billion in investigative receivables, which include 
about $142 million in non-HHS investigative receivables resulting from our work in areas such as the 
States shares of Medicaid restitution.   
OIG reported 486 criminal actions against individuals or entities that engaged in crimes against HHS 
programs and 326 civil actions, which include false claims and unjust-enrichment lawsuits filed in Federal 
district court, civil monetary penalties settlements, and administrative recoveries related to provider 
self-disclosure matters.  We also reported exclusions of 1,735 individuals and entities from participation 
in Federal health care programs. 
Strike Force and other fraud accomplishments  
 
The Health Care Fraud Prevention and Enforcement Action Team (HEAT) was started in 2009 by HHS and 
the Department of Justice to strengthen programs and invest in new resources and technologies to 
prevent and combat health care fraud, waste, and abuse.  HEAT has continued to identify and hold 
accountable those who seek to defraud Medicare and Medicaid. 
Medicare Fraud Strike Force teams coordinate law enforcement operations conducted jointly by Federal, 
State, and local law enforcement entities.  The teams, now a key component of HEAT, have a record of 
successfully analyzing data to quickly identify and prosecute fraud.  The Strike Force began in 
March 2007 and is operating in nine major cities.  During the first half of FY 2015, Strike Force efforts 
resulted in the filing of charges against 69 individuals or entities, 124 criminal actions, and $163 million 
in investigative receivables.  The effectiveness of the Strike Force model is enhanced by interagency 
collaboration.  For example, we refer credible allegations of fraud to the Centers for Medicare & 
Medicaid Services (CMS) so that it can suspend payments to the suspected perpetrators, thereby 
immediately preventing losses from claims submitted by Strike Force targets.   
Strike Force case example  Beneficiary recruitment and unnecessary services  Louisiana  
Roslyn Dogan was sentenced to 7-and-a-half years in prison and ordered to pay $43.5 million in joint and 
several restitution after being convicted of conspiracy to commit health care fraud and health care fraud.  
Dogan co-owned and managed Serenity Center, LLC (Serenity), and served as a manager and marketer 
for Psychcare of Louisiana, LLC d/b/a Shifa Community Mental Health Center (Shifa).  The investigation  HHS Office of Inspector General 
Semiannual Report to Congress | Spring 2015  Page ii 
 
 
revealed that Dogan and co-conspirators recruited Medicare beneficiaries to attend programs at Serenity 
and Shifa, even though the beneficiaries did not qualify for services, the services were not medically 
necessary, or the services were not provided.  James Hunter and others were paid kickbacks to recruit 
Medicare beneficiaries to receive partial hospitalization program services at Shifa Community Mental 
Health Center (CMHC) of Texas, LLC, which were not medically necessary and not provided.  Hunter was 
sentenced to 5 years in prison and ordered to pay $3.2 million in joint and several restitution.   
Fraudulent Part D claims - Florida 
Carlos Perez-Gomez and Jesus Fundora were sentenced to a combined 17 years and 1 month in jail and 
ordered to pay $6.2 million in joint and several restitution after pleading guilty to conspiracy to commit 
health care fraud.  Perez-Gomez and Fundora operated Kiara Discount Pharmacy, Corp., a Miami based 
retail pharmacy.  The investigation revealed that co-conspirators recruited and paid Medicare 
beneficiaries to obtain prescriptions for a variety of drugs, including expensive antipsychotic and skin 
treatment pharmaceutical drugs, that the co-conspirators subsequently furnished to Perez-Gomez and 
Fundora.  Perez-Gomez and Fundora then used the fraudulent prescriptions to bill the Medicare Part D 
program, falsely representing that the drugs were medically necessary, were prescribed by a doctor, and 
were provided by Kiara Pharmacy to the beneficiaries.  
Inappropriate patient referrals for dialysis treatment  Colorado  
In the largest kickback-only settlement to date, DaVita HealthCare Partners, Inc., agreed to pay $350 
million to resolve allegations that the company paid remuneration to nephrologists (physicians who 
specialize in kidney care) in return for referrals of beneficiaries in need of dialysis treatment.  DaVita 
allegedly provided nephrologists and nephrology practices with exclusive opportunities to buy minority 
interests in DaVita-owned dialysis clinics at unreasonably favorable rates.  In certain paired transactions, 
the nephrologists or nephrology practices could sell a majority interest in clinics they owned to DaVita at 
an unreasonably favorable rate.  These joint venture opportunities were allegedly given to nephrologists 
to induce them to refer patients to DaVitas dialysis centers in order to maintain and increase DaVitas 
market share of dialysis patients. 
Inefficient payments, policies, and practices 
 
Medicare and Medicaid policies or practices sometimes result in inefficiencies when 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.   
Hospices financial incentives to provide care in assisted living facilities        
Medicare payments for hospice care provided in assisted living facilities (ALFs) more than doubled in 5 
years, totaling $2.1 billion in 2012.  Hospices provided care much longer and received much higher 
Medicare payments for beneficiaries in ALFs than for beneficiaries in other settings.  Beneficiaries in ALFs 
often had diagnoses that usually require less complex care.  Hospices typically provided fewer than 5 
hours of visits and were paid about $1,100 per week for each beneficiary receiving routine home care in 
AFLs.  This report raises concerns about hospices targeting beneficiaries in ALFs because they may offer 
the hospices the greatest financial gain.  The findings in this and previous OIG reports show that  HHS Office of Inspector General 
Semiannual Report to Congress | Spring 2015  Page iii 
 
 
payment reform and more accountability are needed to reduce incentives for hospices to focus solely on 
certain types of diagnoses and settings.  OEI-02-14-00070. 
Critical access hospitals - Swing bed services payment rates 
Swing-bed usage at critical access hospitals (CAHs) significantly increased from calendar years (CYs) 2005 
through 2010.  Medicare spending for swing-bed services in CAHs steadily increased to, on average, 
almost four times the costs of similar services at alternative facilities.  Medicare could have saved $4.1 
billion over a 6-year period at CAHs if swing-bed services were reimbursed using the skilled nursing 
facility prospective payment system rate.  CAHs ensure that beneficiaries in rural areas have access to a 
range of hospital services.  CAHs provide swing-bed services, which are the equivalent of services 
performed at a skilled nursing facility (SNF).  Medicare reimburses CAHs at 101 percent of their 
reasonable costs for providing services to beneficiaries rather than at rates set by Medicares prospective 
payment system or Medicares fee schedules.  A-05-12-00046.   
Payments made to providers with delinquent debts 
CMS made Medicare and Medicaid payments associated with 23 of 82 individual physicians with 
delinquent debts after CMS had referred their Medicare debts to the U.S. Department of the Treasury 
(Treasury) for collection.  The 23 individual physicians, who collectively owed CMS a total of $8.8 million, 
were paid a total of $10.7 million in direct payments and provided services for an entity that received 
Federal reimbursement.  In addition, 13 of the 23 individual physicians whose debts were referred to 
Treasury had ownership interest in and/or managing control of 15 Medicare Part B entities that received 
Medicare reimbursement from CMS after CMS referred the individual physicians debts to Treasury.  
Although these individual physicians are not precluded from indirectly receiving Medicare Part B 
payments through an entity, CMS finalized a rule in December 2014 that denies an entitys enrollment 
due to Medicare debt owed by an owner.  CMS is required to seek recovery of all identified 
overpayments and can recoup or offset overpayments against a providers future Medicare and/or 
Federal share of Medicaid payments irrespective of whether the delinquent debts were transferred to 
Treasury for collection.  A-02-12-01008. 
Reconciliation of hospital outlier payments 
Medicare contractors Pinnacle Business Solutions, Noridian Healthcare Solutions, and National 
Government Services (NGS) did not always refer Medicare cost reports whose outlier payments qualified 
for reconciliation to CMS.  In addition, the three contractors did not always reconcile the outlier 
payments associated with cost reports whose outlier payments qualified for reconciliation.  The financial 
impact to Medicare of the unreconciled outlier payments and cost reports was approximately $14.4 
million (Pinnacle), $31.8 million (Noridian), and $19 million (NGS).  Medicare supplements basic 
prospective payments for inpatient hospital services by making outlier payments for unusually high-cost 
cases.  Medicare contractors refer hospitals cost reports to CMS for reconciliation of outlier payments.  
A-07-11-02773, A-07-10-02774, A-05-14-00046. 
Developmental Disabilities Waiver Program  New York  
New York claimed Federal Medicaid reimbursement for some Office for People With Developmental 
Disabilities (OPWDD) waiver program services that did not comply with Federal and State requirements. 
The State agency improperly claimed an estimated $76.8 million in Federal Medicaid reimbursement for 
waiver program services during CYs 2006 through 2008.  The OPWDD waiver program is intended to  HHS Office of Inspector General 
Semiannual Report to Congress | Spring 2015  Page iv 
 
 
enable adults and children with developmental disabilities to live in the community as an alternative to 
intermediate care facilities for individuals with intellectual disabilities.  This review is part of a series of 
reviews of New York States OPWDD Medicaid waiver program.  A-02-10-01044.  
Nonemergency Medical Transportation - Texas  
During FY 2011, Texas claimed at least $30.4 million for unallowable Medicaid payments for 
nonemergency medical transportation (NEMT) services.  Federal regulations require each State to ensure 
that Medicaid beneficiaries have necessary transportation to and from medical providers.  Prior OIG 
reviews have found that States claims for NEMT services were not always in accordance with Federal 
and State requirements.  A-06-12-00053. 
Quality of care and beneficiary protection 
Gaps in program safeguards intended to ensure medical necessity, patient safety, access to services, and 
quality of care present significant challenges to the Medicare and Medicaid programs.  OIG is committed 
to continuing its quality-of-care and beneficiary protection oversight across all HHS programs and 
services.   
Substandard and/or worthless skilled nursing services - Wisconsin 
In the largest failure-of-care settlement with a nationwide SNF, Extendicare Health Services, Inc., and its 
subsidiary, Progressive Step Corporation (ProStep), agreed to pay $38 million to resolve allegations that 
Extendicare billed Medicare and Medicaid for materially substandard and/or worthless skilled nursing 
services and billed Medicare for medically unreasonable and unnecessary rehabilitation therapy 
services.  Extendicare allegedly provided inadequate care to residents at some of its SNFs and, as a 
result, patients suffered fractures, head injuries, malnutrition, dehydration, pressure ulcers, infections, 
and amputation of limbs.  
Provider availability in Medicaid managed care  
Slightly more than half of providers reviewed could not offer appointments to enrollees.  Notably, 35 
percent could not be found at the location listed by the plan, and another 8 percent were at the location 
but were not participating in the plan.  An additional 8 percent were not accepting new patients.  Among 
the providers who offered appointments, the median wait time was 2 weeks.  However, over a quarter 
had wait times of more than 1 month.  Finally, primary care providers were less likely to offer an 
appointment than specialists; however, specialists tended to have longer wait times.  The findings 
demonstrate significant vulnerabilities in provider availability, which is a key indicator for access to care, 
and raises serious questions about the abilities of plans, States, and CMS to ensure that access-to-care 
standards are met.  OEI-02-13-00670. 
Medicaid childrens utilization of preventive screening services  
CMS had taken actions toward encouraging participation in Medicaids Early and Periodic Screening, 
Diagnostic, and Treatment (EPSDT) screenings and toward encouraging the delivery of all components of 
medical screenings, but it had not fully addressed OIGs recommendations made in 2010.  Further, it was 
found that childrens participation in EPSDT medical screenings remained lower than established goals.  
Although the national participation ratio improved from 56 percent in 2006 to 63 percent in 2013, both 
ratios are below the Secretarys goal of 80-percent participation.  Given that CMS has not yet fully  HHS Office of Inspector General 
Semiannual Report to Congress | Spring 2015  Page v 
 
 
addressed all OIG recommendations, coupled with evidence that children continue to receive fewer 
medical screenings than required, CMS must continue to focus on EPSDT screenings.  OEI-05-13-00690. 
Second-generation antipsychotic drug use among children 
In the five States reviewed, medical reviewers identified quality-of-care concerns in the medical records 
associated with 67 percent of claims for second-generation antipsychotic (SGA) drugs prescribed to 
children.  SGAs are widely used to treat children enrolled in Medicaid who have mental health conditions 
and can have serious side effects.  Quality-of-care concerns identified through medical record reviews 
corresponded to the following issues:  dosage, duration, indications for use, monitoring, polypharmacy 
(too many drugs), patient age, and side effects.  The high percentage of claims for which our reviewers 
identified quality-of-care concerns indicates that more needs to be done to ensure the quality of care 
provided to children receiving SGAs paid for by Medicaid.  OEI-07-12-00320. 
Affordable Care Act implementation 
The Patient Protection and Affordable Care Act of 2010, as amended by the Health Care and Education 
Reconciliation Act of 2010, made changes to HHS programs and enacted a range of new programs that 
affect the Department.  Our work related to the Affordable Care Act encompasses the health insurance 
Marketplaces, Medicaid expansion, use of State establishment grants, and financial assistance payments.  
Marketplaces  Inadequacies in contract planning and procurement  
CMS relied extensively on contractors to plan and build the Federal Marketplace.  However, CMS did not 
develop an overarching acquisition strategy for the Federal Marketplace contracts as required by Federal 
and HHS regulations, did not plan to assign a lead systems integrator to coordinate all contractors 
efforts, and missed opportunities to leverage contract planning and oversight tools for a project of this 
size and importance.  The complexity of the Federal Marketplace underscored the need for CMS to select 
the most qualified contractors.  However, CMS did not perform thorough reviews of contractor past 
performance when awarding two key contracts.  OEI-03-14-00230. 
Marketplaces  Misallocation of costs to establishment grants 
The Maryland Department of Health and Mental Hygiene (State agency) did not allocate costs to its 
establishment grants and Medicaid in accordance with Federal requirements, the terms and conditions 
of the establishment grants, and its Cost Allocation Plan (CAP).  The State agency allocated a total of 
$76.6 million to its establishment grants on the basis of a cost allocation methodology that did not 
prospectively use updated or better data when available and included a material defect.  As a result, the 
State agency misallocated $28.4 million in costs to the establishment grants instead of the Medicaid 
program.  The State agency misallocated these costs because it did not have adequate internal controls 
to ensure the proper allocation of costs.  A-01-14-02503.  
Premium tax credits  Accounting structure review 
The report issued jointly with the Treasury Inspector General for Tax Administration (TIGTA) found that 
the Internal Revenue Service (IRS) and CMS, in coordination with the Department of the Treasury and 
HHS, took significant steps in planning the shared roles and responsibilities for advanced premium tax 
credit (APTC) payments.  The IRS and CMS, in an effort to ensure that a sound and lawful accounting  HHS Office of Inspector General 
Semiannual Report to Congress | Spring 2015  Page vi 
 
 
structure was selected, identified issues requiring resolution and discussed a variety of accounting 
approaches.  They sought legal opinions from agency counsel and obtained input from the Office of 
Management and Budget (OMB).  By mutual agreement and with OMB concurrence, the IRS and CMS 
adopted an allocation account structure that they considered a logical and efficient 
approach.  Continuing work by OIG and TIGTA will examine APTC operations.  OEI-06-14-00590. 
Oversight of HHS grants 
 
HHS is the largest grantmaking organization in the Federal Government, and its funding of health and 
human services programs touches the lives of almost all Americans.  The size and scope of Departmental 
awards make the operating effectiveness of these grants crucial to the success of programs designed to 
improve the health and well-being of the public.  Yet OIG has noted weaknesses in the oversight of 
grantees year after year.  
Debarment of Soundview Healthcare Network  
Following a lengthy investigation by the Federal Bureau of Investigation (FBI) and the United States 
Attorneys Office, Pedro Espada, Jr., was found guilty of stealing Federal funds from Soundview 
Healthcare Network (Soundview).  Pedro Espada, Jr., was sentenced to 5 years in prison.  His son, Pedro 
G. Espada, was sentenced to 6 months in jail and 6 months home confinement.  After the conviction of 
the Espadas, OIG began suspension and debarment proceedings against the Espadas and Soundview to 
ensure that they could not obtain future Federal funds.  Effective February 5, 2015, HHS debarred the 
Espadas and Soundview, along with two other affiliated organizations (Soundview Management 
Enterprises and Community Expansion Development Corporation) for a period of 3 years.  During this 
time, they are not eligible to receive Federal grant funds or participate in contracts with the Federal 
Government.     
Child Care and Development Fund  Provider compliance with health and safety requirements 
The family childcare home providers reviewed in two States did not always comply with applicable State 
licensing requirements to ensure the health and safety of children (19 out of 20 providers reviewed in 
Minnesota and 20 out of 20 providers reviewed in Arizona).  In addition, the childcare center providers in 
Minnesota did not always comply with applicable State licensing requirements to ensure the health and 
safety of children (three out of three providers reviewed).  We found several types of errors, but not all 
errors appeared in each State.  Health and safety standards must cover three areas:  prevention and 
control of infectious disease, building and physical premises safety, and health and safety training.  A-05-
14-00021, A-05-14-00022, A-09-13-01004. 
 
 
 
  HHS Office of Inspector General 
Semiannual Report to Congress | Spring 2015  Page vii 
 
 
OIG participation in congressional hearings 
 
 
03/24/2015  Ann Maxwell, Assistant Inspector General, Office of 
Evaluation and Inspections, testified before the 
House Committee on Energy and Commerce, 
Subcommittee on Health:  Examining the 340B Drug 
Pricing Program.  Testimony.   
Ann Maxwell, Assistant Inpector 
General, Office of Evaluation and 
Inspections 
     
03/24/2015  Gary Cantrell, Deputy Inspector General for 
Investigations, testified before the House Committee 
on Ways and Means, Subcommittee on Oversight: 
Fraud in Medicare.  Testimony. 
 
Gary Cantrell, Deputy Inspector 
General for Investigations 
     
     
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  HHS Office of Inspector General 
Semiannual Report to Congress | Spring 2015  Page viii 
 
 
 
 
 
 
 
 
http://oig.hhs.gov 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  HHS Office of Inspector General 
Semiannual Report to Congress | Spring 2015  Page ix 
 
 
Contents 
Selected acronyms ............................................................................... xiii 
 
Centers for Medicare & Medicaid Services ............................................. 1
 
CMS oversight of Medicare contractor performance ................................... 1 
Contractor postretirement benefit assets and excess plan costs .............................................. 1 
Medicare payments, policies, and quality ............................................... 3
 
Medicare improper claims and payments .................................................... 3 
Deceased beneficiaries  HIV drugs .......................................................................................... 3 
Ophthalmology services ............................................................................................................ 3 
Hospitals  Referral of cost reports and reconciliation of outlier payments ............................. 3 
Power mobility devices  Face-to-face examination documentation requirements ................. 4 
Medicare payments, policies, and practices ................................................. 5 
Critical Access Hospitals  Payment policies ............................................................................. 5 
Hospices .................................................................................................................................... 6 
Provider debt referrals .............................................................................................................. 6 
Part B drugs  Price substitution ............................................................................................... 7 
Medicare quality of care and beneficiary access .......................................... 7 
National Mail Order Program  Diabetes test strips ................................................................. 7 
Compounded drugs ................................................................................................................... 8 
Drug compendia  Anticancer drug therapies ........................................................................... 8 
Quality Improvement Organizations ......................................................................................... 8 
Medicaid payments, policies, and quality ............................................... 9
 
Improper State claims for Federal reimbursement ....................................... 9 
Questionable billing  Dental services - Indiana ....................................................................... 9 
Nonemergency medical transportation program - Texas .......................................................... 9 
Targeted Case Management services - Missouri ..................................................................... 10 
Developmental Disabilities Waiver Program  New York ........................................................ 10 
Personal care services  New York .......................................................................................... 10 
Disproportionate Share Hospital payments  New Jersey ...................................................... 11  HHS Office of Inspector General 
Semiannual Report to Congress | Spring 2015  Page x 
 
 
Medicaid payments, policies, and practices ............................................... 11 
Supplemental Medicaid rebates .............................................................................................. 11 
Durable medical equipment  payment policies ..................................................................... 12 
Medicaid quality of care and beneficiary access ........................................ 12 
Medicaid Managed Care  Access to care ............................................................................... 12 
Childrens preventative medical screening services ................................................................ 13 
Antipsychotic drugs  Use among Medicaid-enrolled children ............................................... 13 
Legal and investigative activities related to Medicare and Medicaid .... 15
 
Health care fraud prevention and enforcement ......................................... 16 
HEAT provider compliance training ......................................................................................... 16 
Medicare Fraud Strike Force activities .................................................................................... 16 
Strike Force examples .............................................................................................................. 16 
Other criminal and civil enforcement activities .......................................... 18 
Special Assistant U.S. Attorney Program ................................................................................. 18 
Most wanted fugitives listed on OIGs Web site ...................................................................... 19 
OIG Hotline Operations ........................................................................................................... 19 
Recently completed actions and settlements ............................................. 20 
Prescription drug diversion ..................................................................................................... 20 
Patient harm ............................................................................................................................ 20 
Quality of care ......................................................................................................................... 21 
Home health care .................................................................................................................... 22 
Electronic health records ......................................................................................................... 22 
Pharmaceutical companies ..................................................................................................... 23 
Clinics ....................................................................................................................................... 23 
Personal care services ............................................................................................................. 23 
Hospice care ............................................................................................................................ 24 
Laboratories ............................................................................................................................. 25 
Durable medical equipment .................................................................................................... 25 
Community mental health centers .......................................................................................... 26 
Pharmacies .............................................................................................................................. 26 
Transportation fraud ................................................................................................................ 27 
Hospitals .................................................................................................................................. 27 
Employee misconduct ............................................................................................................. 27  HHS Office of Inspector General 
Semiannual Report to Congress | Spring 2015  Page xi 
 
 
State Medicaid Fraud Control Units ........................................................... 28 
OIG oversight of State MFCUs ................................................................................................. 28 
MFCU funding and accomplishments in FY 2014 .................................................................... 28 
OIG onsite reviews of MFCUs .................................................................................................. 28 
Joint investigations with MFCUs .............................................................................................. 29 
Advisory opinions and other industry guidance ......................................... 29 
Sanction authorities and other administrative actions ............................... 29 
Program exclusions .................................................................................................................. 29 
Suspensions and debarments ................................................................................................. 31 
Corporate integrity agreements .............................................................................................. 31 
Civil Monetary Penalties Law .................................................................................................. 32 
Patient Dumping ...................................................................................................................... 32 
Provider self-disclosure protocol ................................................................ 33 
Public health agencies and enforcement activities ............................... 35
 
Centers for Disease Control and Prevention ............................................... 35 
Presidents Emergency Plan for AIDS Relief ............................................................................ 35 
Public-Health-Related Legal Actions and Investigations ............................. 36 
Health Education Assistance Loan Program ............................................................................ 36 
HEAL Exclusions ....................................................................................................................... 36 
Human services agencies and enforcement activities ........................... 39
 
Administration for Children and Families ................................................... 39 
Child Care and Development Fund .......................................................................................... 39 
Foster Care ............................................................................................................................... 40 
Child support enforcement activities ......................................................... 40 
OIG investigations .................................................................................................................... 40 
Engaging the public in capturing deadbeat parents ................................................................ 41 
Other HHS-related reviews ................................................................... 43
 
Grants and Contracts ................................................................................. 43 
Payroll Certification System Pilot ............................................................................................. 43 
Grant fraud .............................................................................................................................. 43 
Small Business Innovative Research Program ......................................................................... 44  HHS Office of Inspector General 
Semiannual Report to Congress | Spring 2015  Page xii 
 
 
Recovery Act retaliation complaint investigations .................................................................. 44 
Peer review results .................................................................................................................. 45 
Contract Audits ........................................................................................................................ 45 
OIG reviews of non-Federal audits ............................................................. 45 
Other reporting requirements and reviews ................................................ 46 
Government Charge Card Abuse Prevention Act .................................................................... 46 
Legislative and regulatory reviews .......................................................................................... 46 
Affordable Care Act implementation .......................................................... 47 
Health Reform Oversight Plan ................................................................................................. 47 
Marketplaces  Contract planning and procurement ............................................................. 47 
Marketplaces  Establishment grants...................................................................................... 48 
Financial Assistance Payments ................................................................................................ 48 
Appendixes ........................................................................................... 49
 
Appendix A: ............................................................................................................................. 50 
Appendix B: ............................................................................................................................. 57 
Appendix C: ............................................................................................................................. 59 
Appendix D: ............................................................................................................................. 62 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  HHS Office of Inspector General 
Semiannual Report to Congress | Spring 2015  Page xiii 
 
 
Selected acronyms 
ACA  Patient Protection and Affordable Care Act of 2010, P.L. No. 111-148 (as 
amended by the Health Care Education and Reconciliation Act of 2010) 
ACF  Administration for Children and Families 
ALF  assisted living facility 
AMP  average manufacturer price 
APTC  advanced premium tax credit 
CAH  critical access hospital 
CAP  cost allocation plan 
CDC  Centers for Disease Control and Prevention 
CIA  corporate integrity agreement 
CIGIE  Council of the Inspectors General on Integrity and Efficiency 
CMHC  community mental health center 
CMP  civil monetary penalty 
CMPL  Civil Monetary Penalties Law 
CMS  Centers for Medicare & Medicaid Services 
CY  calendar year 
DME  durable medical equipment 
DOJ  Department of Justice 
EHR  electronic health record 
EMTALA  Emergency Medical Treatment and Labor Act,  9121 of the Consolidated 
Omnibus Reconciliation Act of 1985, P.L. No. 99-272 
FBI  Federal Bureau of Investigation 
FCA  False Claims Act (31 U.S.C.  37293733) 
FDA  Food and Drug Administration 
FISMA  Federal Financial Management Improvement Act of 1996 
FY  fiscal year 
HEAT    Health Care Fraud Prevention and Enforcement Action Team 
HEAL  Health Education Assistance Loan 
HIPAA  Health Insurance Portability and Accountability Act of 1996, P.L. No. 104-191 
HHS  Department of Health and Human Services 
HRSA  Health Resources and Services Administration 
IRS  Internal Revenue Service 
Marketplaces  health insurance exchanges 
MA  Medicare  Advantage 
MAC  Medicare Administrative Contractor 
MFCU  Medicaid Fraud Control Unit 
NEMT  nonemergency medical transportation 
NIH  National Institutes of Health 
OIG  Office of Inspector General 
OMB  Office of Management and Budget 
PEPFAR  Presidents Emergency Plan for AIDS Relief 
PMD  power mobility device 
QIO  quality improvement organization 
SBIR  Small Business Innovative Research (Program)  HHS Office of Inspector General 
Semiannual Report to Congress | Spring 2015  Page xiv 
 
 
SBIR/STTR  Small Business Innovation Research /Small Business Technology Transfer 
(Program) 
SGA  second-generation antipsychotic 
SNF  skilled nursing facility 
TIGTA  Treasury Inspector General for Tax Administration 
VAT  value-added tax 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  HHS Office of Inspector General 
Semiannual Report to Congress | Spring 2015  Page 1 
 
 
Centers for Medicare & Medicaid Services  
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 a half-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. 
Contractor postretirement benefit assets and excess plan costs 
  Highmark Medicare Services, Inc., Overstated Its Allocable Medicare Postretirement Benefit Plan 
Costs for Calendar Years 2008 Through 2011. A-07-14-00439. 2014 November.  
Highmark Medicare Services, Inc., a CMS contractor, overstated its allocable postretirement benefit 
(PRB) plan costs by $11.2 million for calendar years (CYs) 2008 through 2011.  Although Highmark did not 
directly address our recommendations, it suggested that it did not concur and OIG continues to 
recommend that Highmark: 
  decrease the allocable PRB costs used to calculate the indirect cost rates by $11.2 million for CYs 
2008 through 2011 and  
  work with CMS to determine the allowable PRB cost related to the MAC contract.  
 
  Blue Cross Blue Shield of South Carolina Overstated Its Allocable Medicare Excess Plan Costs for 
Calendar Years 2006 Through 2011. A-07-14-00445. 2014 December.  
Blue Cross Blue Shield of South Carolina, which through its subsidiaries administered Medicare functions 
for CMS, overstated its allocable Medicare Excess Plan costs by approximately $17.6 million for CYs 2006 
through 2011.  Although Blue Cross Blue Shield of South Carolina did not concur, OIG continues to 
recommend that Blue Cross Blue Shield of South Carolina:  
  decrease the allocable Excess Plan costs by $17.6 million for CYs 2006 through 2011.  
 
 
 
 
 
 
 
 
 
  HHS Office of Inspector General 
Semiannual Report to Congress | Spring 2015  Page 2 
 
 
 
 
 
 
 
 
 
 
 
http://oig.hhs.gov 
 
 
 
 
 
 
 
 
 
  HHS Office of Inspector General 
Semiannual Report to Congress | Spring 2015  Page 3 
 
 
Medicare payments, policies, and quality 
Medicare improper claims and payments 
Deceased beneficiaries  HIV drugs 
  Medicare Paid for HIV Drugs for Deceased Beneficiaries. OEI-02-11-00172. 2014 October. 
Medicare paid for HIV drugs for over 150 deceased beneficiaries in 2012.  CMSs current practices 
allowed most of these payments to occur.  Specifically, CMS has edits (i.e., systems processes) in place 
that reject prescription drug event records for drugs with dates of service more than 32 days after death.  
This practice allows payment for drugs for deceased beneficiaries.  These drugs are clearly not medically 
indicated, which is a requirement for Part D coverage.  A change in CMSs practice would affect all Part D 
drugs, not just HIV drugs.  Considering the enormous number of Part D drugs, a change in practice could 
result in significant cost savings for the program and for taxpayers.  CMS concurred with the following 
recommendation: 
  change its practice of paying for drugs that have a date of service within 32 days after the 
beneficiarys death. 
Ophthalmology services 
  Medicare Paid $22 Million in 2012 for Potentially Inappropriate Ophthalmology Claims. OEI-04-12-
00281. 2014 December. 
Medicare paid $22 million for ophthalmology claims in 2012 that were potentially inappropriate, 
according to national and local coverage requirements.  The finding demonstrates vulnerabilities in 
Medicares oversight and enforcement of its national and local coverage requirements.  CMS concurred 
with the following recommendations:  
  implement additional claims processing edits or improve exiting edits to ensure claims are paid 
appropriately and 
  determine the appropriateness of ophthalmology claims identified in this report and take 
appropriate action. 
Hospitals  Referral of cost reports and reconciliation of outlier payments 
  Pinnacle Business Solutions Did Not Always Refer Medicare Cost Reports and Reconcile Outlier 
Payments. A-07-11-02773. 2014 October. 
  Noridian Healthcare Solutions, LLC, Did Not Always Refer Medicare Cost Reports and Reconcile 
Outlier Payments. A-07-10-02774. 2014 December.  HHS Office of Inspector General 
Semiannual Report to Congress | Spring 2015  Page 4 
 
 
  National Government Services, Inc., Did Not Always Refer Medicare Cost Reports and Reconcile 
Outlier Payments in Jurisdiction 8. A-05-14-00046. 2015 March. 
Medicare contractors Pinnacle Business Solutions, Noridian Healthcare Solutions, and National 
Government Services (NGS) did not always refer Medicare cost reports whose outlier payments qualified 
for reconciliation to CMS.  In addition, the three contractors did not always reconcile the outlier 
payments associated with cost reports whose outlier payments qualified for reconciliation.  The financial 
impact to Medicare of the unreconciled outlier payments and cost reports was approximately $14.4 
million (Pinnacle), $31.8 million (Noridian), and $19 million (NGS).  Medicare supplements basic 
prospective payments for inpatient hospital services by making outlier payments for unusually high-cost 
cases.  Medicare contractors refer hospitals cost reports to CMS for reconciliation of outlier payments.  
Novitas (which assumed Pinnacles responsibilities), Noridian, and Wisconsin Physicians Service 
Insurance Corporation (which assumed NGSs responsibilities) concurred with the following 
recommendations: 
  review the cost reports that qualified for referral and, if applicable, determine whether the cost 
reports may be reopened, reconcile the associated outlier payments, and refund the amounts due to 
Medicare and due to providers;  
  reconcile the outlier payments associated with the cost reports that were referred and, if applicable, 
determine whether these cost reports may be reopened, work with CMS to reconcile the associated 
outlier payments, finalize these cost reports, and ensure the return of funds to Medicare and to the 
providers; 
  work with CMS to resolve the $185,000 (Pinnacle) and $236,099 (NGS) in outlier payments that we 
could not recalculate; 
  ensure that control procedures are in place so that all cost reports with qualifying outlier payments 
are referred and reconciled; and  
  review all cost reports submitted since the end of our audit period and ensure that those whose 
outlier payments qualified for reconciliation are referred and reconciled in accordance with Federal 
guidelines. 
Power mobility devices  Face-to-face examination documentation requirements 
  Medicare Paid Suppliers for Power Mobility Device Claims That Did Not Meet Federal 
Requirements for Physicians Face-to-Face Examinations of Beneficiaries. A-09-12-02068. 2015 
January. 
Medicare paid an estimated $35.2 million in 2010 for suppliers power mobility device (PMD) claims that 
did not meet Federal requirements because physicians had not conducted the required face-to-face 
examinations of beneficiaries or the physicians medical records did not meet the minimum 
documentation requirements for face-to-face examinations.  In 2005, CMS introduced the optional 
Healthcare Common Procedure Coding System code G0372 for a physician to establish and document 
the need for a PMD.  We refer to a physician claim with the G0372 code as a G-code claim.  For PMD 
claims with corresponding G-code claims, Medicare paid the PMD claims in accordance with Federal 
requirements for face-to-face examinations of beneficiaries.  For PMD claims without corresponding G-
code claims, Medicare did not always pay the PMD claims in accordance with Federal requirements for  HHS Office of Inspector General 
Semiannual Report to Congress | Spring 2015  Page 5 
 
 
face-to-face examinations of beneficiaries.  Of the 100 sample claims, 53 claims met the requirements, 
but 47 did not.  On the basis of our sample results, we estimated that, of the $87.4 million of high-risk 
claims reviewed, Medicare paid approximately $35.2 million in 2010 for PMD claims that did not meet 
Federal requirements.  CMS partially concurred with the following recommendations: 
  adjust the 47 sample claims representing overpayments of $115,000 to the extent allowed under the 
law and 
  after implementing the second and third recommendations (listed below), require DME Medicare 
contractors to match suppliers' PMD claims to physicians' G code claims, which would help these 
contractors to identify and review suppliers with a large number of high-risk PMD claims and could 
have saved an estimated $35.2 million for the 1-year period we reviewed. 
Although CMS did not concur, OIG continues to recommend that CMS:   
  require physicians to use the G0372 code when prescribing PMDs and 
  require Part B Medicare contractors to educate physicians on the use of the G0372 code and the 
documentation requirements for face-to-face examinations. 
Medicare payments, policies, and practices 
 Critical Access Hospitals  Payment policies 
  Medicare Could Have Saved Billions at Critical Access Hospitals If Swing-Bed Services Were 
Reimbursed Using the Skilled Nursing Facility Prospective Payment System Rates. A-05-12-00046. 
2015 March. 
Swing-bed usage at critical access hospitals (CAHs) significantly increased from CYs 2005 through 
2010.  Medicare spending for swing-bed services at CAHs steadily increased to, on average, almost 
four times the cost of similar services at alternative facilities.  Medicare could have saved $4.1 billion 
over a 6-year period at CAHs if swing-bed services were reimbursed using the skilled nursing facility 
prospective payment system rate (SNF PPS).  CAHs ensure that beneficiaries in rural areas have access 
to a range of hospital services.  CAHs provide swing-bed services, which are the equivalent of 
services performed at a SNF.  Medicare reimburses CAHs at 101 percent of their reasonable costs for 
providing services to beneficiaries rather than at rates set by Medicares PPS or Medicares fee 
schedules.  Although CMS did not concur, OIG continues to recommend that CMS:   
  seek legislation to adjust CAH swing-bed reimbursement rates to the lower SNF PPS rates paid for 
similar services at alternative facilities.   
 
  Medicare Beneficiaries Paid Nearly Half of the Costs for Outpatient Services at Critical Access 
Hospitals. OEI-05-12-00085. 2014 October. 
Beneficiaries typically pay more in coinsurance for outpatient services received at CAHs than for 
outpatient services received at other acute care hospitals.  For example, for 10 frequently provided 
outpatient services at CAHs, beneficiaries paid between two and six times the amount in coinsurance 
that they would have for the same services at acute-care hospitals.  Without a change in how  HHS Office of Inspector General 
Semiannual Report to Congress | Spring 2015  Page 6 
 
 
coinsurance for CAH outpatient services is calculated, beneficiaries will continue to pay more for these 
services.  CMS neither concurred nor nonconcurred with the following recommendation: 
  seek legislative authority to modify how coinsurance is calculated for outpatient services received at 
CAHs. 
Hospices 
  Medicare Hospices Have Financial Incentives To Provide Care in Assisted Living Facilities. OEI-02-
14-00070. 2015 January. 
Medicare payments for hospice care provided in assisted living facilities (ALFs) more than doubled in 5 
years, totaling $2.1 billion in 2012.  Hospices provided care much longer and received much higher 
Medicare payments for beneficiaries in ALFs than for beneficiaries in other settings.  Beneficiaries in ALFs 
often had diagnoses that usually require less complex care.  Hospices typically provided fewer than 5 
hours of visits and were paid about $1,100 per week for each beneficiary receiving routine home care in 
ALFs.  This report raises concerns about hospices targeting beneficiaries in ALFs because they may offer 
the hospices the greatest financial gain.  CMS concurred with the following recommendations: 
  reform payments to reduce the incentive for hospices to target beneficiaries with certain diagnoses 
and those likely to have long stays,  
  target certain hospices for review,  
  develop and adopt claims-based measures of quality,  
  make hospice data publicly available for beneficiaries, and  
  provide additional information to hospices to educate them about how they compare to their peers. 
Provider debt referrals 
  CMS Made Payments Associated With Providers After Referring Individual Providers Debts to the 
Department of the Treasury for Collection. A-02-12-01008. 2015 February. 
CMS made Medicare and Medicaid payments associated with 23 of 82 individual physicians with 
delinquent debts after CMS had referred their Medicare debts to the U.S. Department of the Treasury 
(Treasury) for collection. The 23 individual physicians, who collectively owed CMS a total of $8.8 million, 
were paid a total of $10.7 million in direct payments and provided services for an entity that received 
Federal reimbursement.  In addition, 13 of the 23 individual physicians whose debts were referred to 
Treasury had ownership interest in and/or managing control of 15 Medicare Part B entities that received 
Medicare reimbursement from CMS after CMS referred the individual physicians debts to Treasury.  
Although these individual physicians are not precluded from indirectly receiving Medicare Part B 
payments through an entity, CMS finalized a rule in December 2014 that denies an entitys enrollment 
due to Medicare debt owed by an owner.  CMS is required to seek recovery of all identified 
overpayments and can recoup or offset overpayments against a providers future Medicare and/or 
Federal share of Medicaid payments irrespective of whether the delinquent debts were transferred to 
Treasury for collection.  CMS concurred with the following recommendations:  HHS Office of Inspector General 
Semiannual Report to Congress | Spring 2015  Page 7 
 
 
  ensure that it does not pay individual physicians with delinquent debts after referring their Medicare 
debts to Treasury for collection, which could have resulted in savings to the Federal Government of 
$317,000;  
  consider authorizing Treasury to use its administrative wage garnishment authority to collect 
delinquent debts, totaling $8.8 million, associated with 21 individual physicians;  
  consider the results of our review when developing and evaluating policies that prevent payments to 
entities claiming reimbursement for services provided by individual physicians who have delinquent 
debts, which could have resulted in savings to the Federal Government of $10.4 million; and  
  consider promulgating Federal regulations to prevent entities for which individual physicians with 
delinquent debts that have any ownership interest and/or managing control from enrolling in 
Medicare.  
Part B drugs  Price substitution 
  Comparing Average Sales Prices and Average Manufacturing Prices for Medicare Part B Drugs:  An 
Overview of 2013. OEI-03-14-00520. 2015 February. 
On the basis of mandated pricing comparisons performed by OIG for the year 2013, CMS reduced 
reimbursement amounts for 15 Medicare Part B drugs, saving Medicare and its beneficiaries an 
estimated $13 million over 1 year.  According to our estimates, CMS could have saved an additional $6 
million by expanding its price substitution criteria to include Part B drugs with complete average 
manufacturer price (AMP) data in a single quarter or certain drugs with partial AMP data.  Although CMS 
did not state whether it concurred and stated that more experience with the current price reduction 
criteria is needed before they can be expanded, OIG continues to recommend that CMS: 
  consider pursuing rulemaking to expand the criteria for price reductions.   
Medicare quality of care and beneficiary access 
National Mail Order Program  Diabetes test strips 
  Medicare Market Shares of Mail Order Diabetes Test Strips 36 Months After the Start of the 
National Mail Order Program. OEI-04-13-00682. 2014 November. 
Suppliers submitted claims for at least 41 types of mail order diabetes test strips for the 3-month period 
of October to December 2013.  Two types of diabetes test strips accounted for 44 percent of the 
Medicare mail order market share.  Three types of diabetes test strips accounted for 58 percent of the 
Medicare mail order market share, and 10 types accounted for 91 percent.  CMS may consider this 
information to evaluate the effect of the National Mail Order Program on the types of diabetes test strips 
available to beneficiaries.  CMS may also find this information useful in assessing whether bidders have 
met the Medicare Improvements for Patients and Providers Act requirement for suppliers to 
demonstrate that their bids cover at least 50 percent, by volume, of all types of mail order diabetes test 
strips.  This report did not contain recommendations.  HHS Office of Inspector General 
Semiannual Report to Congress | Spring 2015  Page 8 
 
 
Compounded drugs 
  Medicares Oversight of Compounded Pharmaceuticals Used in Hospitals. OEI-01-13-00400. 2015 
January. 
Medicare oversight entities (i.e., State survey agencies or CMS-approved hospital accreditors) address 
most recommended practices related to sterile compounded drugs at least some of the time, but 
oversight entities may lack the human capital required to thoroughly review hospitals preparation and 
use of these drugs.  These findings raise concerns whether hospital surveyors are properly equipped to 
assess this highly technical aspect of hospital operations.  CMS concurred with the following 
recommendations: 
  ensure that hospital surveyors receive training on standards from nationally recognized organizations 
related to safe compounding practices and 
  amend the interpretive guidelines to address hospitals contracts with standalone compounding 
pharmacies. 
Drug compendia  Anticancer drug therapies 
  Drug Compendia Publishers Maintain Transparent Processes for Evaluating Anticancer Drug 
Therapies and Identifying Potential Conflicts. OEI-07-13-00220. 2014 October. 
Each of the publishers of the four authorized drug compendia complied with Federal laws for 
maintaining a transparent process for evaluating anticancer drug therapies and identifying potential 
conflicts of interest.  Also, the number and nature of disclosures related to potential conflicts of interest 
varied across publishers.  Insufficient evaluation criteria and conflicts of interest among compendia staff 
could lead to anticancer drugs being inappropriately recommended for inclusion in a compendium.  This 
report did not contain recommendations. 
Quality Improvement Organizations 
  Quality Improvement Organizations Provide Support to More Than Half of Hospitals but Overlap 
With Other Programs. OEI-01-12-00650. 2015 January. 
In 2013, over half of hospitals participated with quality improvement organizations (QIOs) on quality 
improvement projects, but 8 out of 10 participating hospitals also worked with other federally funded 
entities on the same topics as QIOs.  Because CMS is funding these quality improvement efforts at about 
$1 billion to work on the same topics, it is crucial to evaluate the relative effectiveness of these efforts 
and ensure that quality improvement efforts are well-coordinated and nonduplicative.  CMS concurred 
with the following recommendations: 
  take additional steps to coordinate, and reduce overlap between, the QIO program and CMSs other 
quality improvement efforts and 
  determine the relative contribution of its quality improvement efforts. 
 
  HHS Office of Inspector General 
Semiannual Report to Congress | Spring 2015  Page 9 
 
 
Medicaid payments, policies, and quality 
Improper State claims for Federal reimbursement 
Questionable billing  Dental services  Indiana  
  Questionable Billing for Medicaid Pediatric Dental Services in Indiana. OEI-02-14-00250. 2014 
November. 
Ninety-four general dentists and one oral surgeon in Indiana were identified as having questionable 
billing.  These providers were extreme outliers when compared to their peers, and Medicaid paid these 
providers $30.5 million for pediatric dental services in 2012.  These findings raise concerns that certain 
providers may be billing for services that are not medically necessary or were never provided.  They also 
raise concerns about the quality of care provided to children with Medicaid.  Prior OIG reports have also 
found vulnerabilities in the oversight of Medicaid dental providers.  The Indiana Family & Social Services 
Administration concurred with the following recommendations:  
  enhance its monitoring of dental providers to identify patterns of questionable billing,  
  closely monitor billing by providers in dental chains,  
  ensure that dental providers appropriately bill for behavior management and educate providers on 
the use of behavior management, and 
  take appropriate action on the dental providers identified as having questionable billing.  
Nonemergency medical transportation program  Texas  
  Texas Did Not Always Comply With Federal and State Requirements for Claims Submitted for the 
Nonemergency Medical Transportation Program. A-06-12-00053. 2014 October. 
During FY 2011, Texas claimed at least $30.4 million for unallowable Medicaid payments for 
nonemergency medical transportation services (NEMT).  Federal regulations require each State to ensure 
that Medicaid beneficiaries have necessary transportation to and from medical providers.  Prior OIG 
reviews have found that States claims for NEMT services were not always in accordance with Federal 
and State requirements.  Texas generally concurred with the findings and described actions that it has 
taken or will take to address the following recommendations:  
  refund $30.4 million to the Federal Government and 
  strengthen its policies and procedures to ensure that providers comply with Federal and State 
requirements.    HHS Office of Inspector General 
Semiannual Report to Congress | Spring 2015  Page 10 
 
 
Targeted Case Management services  Missouri     
  Missouri Claimed Unallowable Medicaid Payments for Targeted Case Management Services 
Provided to Individuals With Developmental Disabilities. A-07-13-03193. 2014 October. 
Missouri claimed $11.5 million of unallowable Medicaid payments for Targeted Case Management (TCM) 
services provided to individuals with developmental disabilities during State FYs 2011 through 2013.  
Missouri did not specifically address the following recommendations:  
  refund $11.5 million to the Federal Government,  
  adjust future payment rates for TCM services and work with CMS to determine the unallowable 
Medicaid payments, and  
  follow the State plan requirements for the calculation of rebased payment rates for TCM services. 
Developmental Disabilities Waiver Program  New York 
  New York Claimed Some Unallowable Costs for Services by New York State Providers Under the 
States Developmental Disabilities Waiver Program. A-02-10-01044. 2015 January.   
New York claimed Federal Medicaid reimbursement for some Office for People With Developmental 
Disabilities (OPWDD) waiver program services that did not comply with Federal and State requirements. 
The State agency improperly claimed an estimated $76.8 million in Federal Medicaid reimbursement for 
waiver program services during CYs 2006 through 2008.  The OPWDD waiver program is intended to 
enable adults and children with developmental disabilities to live in the community as an alternative to 
intermediate care facilities for individuals with intellectual disabilities.  This review is part of a series of 
reviews of New York States OPWDD Medicaid waiver program.  New York generally concurred with the 
following recommendations: 
  refund $79,000 to the Federal Government, 
  work with CMS to determine the additional amount of overpayments for claims in the sampling 
frame, and  
  work with OPWDD to strengthen the agencies' policies and procedures.  
Personal care services  New York 
  New York State Improperly Claimed Medicaid Reimbursement for Continuous 24-Hour Personal 
Care Claims. A-02-12-01004. 2015 March.   
  New York State Improperly Claimed Medicaid Reimbursement for Continuous 24-Hour Personal 
Care Claims in Ulster County. A-02-14-01003. 2015 February. 
New York claimed at least $12 million in Federal Medicaid reimbursement over 5 years for continuous 
24-hour personal care services claims that were unallowable for beneficiaries residing outside New York 
City and Ulster County.  New York claimed $6.3 million over 4 years for unallowable continuous 24-hour  HHS Office of Inspector General 
Semiannual Report to Congress | Spring 2015  Page 11 
 
 
personal care services provided to beneficiaries in Ulster County.  New York generally concurred with the 
following recommendations: 
  issue guidance to the local districts related to the requirements for continuous 24-hour personal care 
services and  
  improve its monitoring of local districts and personal care providers to ensure their compliance with 
Federal and State requirements related to continuous 24-hour personal care services.  
Although New York did not indicate concurrence or nonconcurrence with the financial disallowance 
recommendations, OIG continues to recommend that New York: 
  refund $18.3 million ($12 million and $6.3 million, respectively) to the Federal Government. 
Disproportionate Share Hospital payments  New Jersey 
  New Jersey Claimed Excessive Medicaid Disproportionate Share Hospital Payments for Five 
County-Operated Psychiatric Facilities. A-02-13-01035. 2014 November.   
New Jersey claimed Federal Medicaid reimbursement for Disproportionate Share Hospital (DSH) 
payments totaling almost $12 million for five county-operated psychiatric facilities that exceeded the 
facilities hospital-specific DSH limits.  The State agency claimed DSH payments totaling $23.7 million 
($11.9 million Federal share) that exceeded five county-operated psychiatric facilities' hospital-specific 
limits. The remaining DSH payments totaling $247.4 million ($123.7 million Federal share) were equal to 
or less than the hospital-specific limits. The overpayments occurred because the State agency had not 
established procedures for reconciling and adjusting the facilities' expenditures to ensure that DSH 
payments did not exceed hospital-specific limits.  New Jersey explained how it was addressing the 
following recommendation: 
  establish procedures for reconciling and adjusting the county-operated psychiatric facilities' 
expenditures to ensure that the facilities' DSH payments do not exceed hospital-specific limits. 
Although New Jersey did not concur, OIG continues to recommend that New Jersey:  
  refund $11.9 million to the Federal Government. 
Medicaid payments, policies, and practices 
Supplemental Medicaid rebates 
  Medicaid States Collection of Offset and Supplemental Medicaid Rebates. OEI-03-12-00520. 2014 
December. 
Forty-eight States reported $2 billion in offset rebates for 2011 and 2012, and 44 States reported 
collecting $1.7 billion in supplemental Medicaid rebates.  The Affordable Care Act (ACA) increased 
Federal Medicaid rebates  by an amount referred to as the "offset rebate"  in a way that may affect 
States' ability to negotiate for supplemental Medicaid rebates from drug manufacturers.  The ACA 
changes to the Federal Medicaid rebate program increased total rebates to the Federal Government, but  HHS Office of Inspector General 
Semiannual Report to Congress | Spring 2015  Page 12 
 
 
the method that most States used to calculate supplemental rebates caused supplemental rebates to 
decrease with the introduction of offset rebates.  Specifically, for 41 States, the supplemental rebates are 
inverse to the Federal rebate amount:  if the Federal rebate increases, the supplemental rebate 
decreases by an equal amount.  CMS concurred with the following recommendations: 
  ensure that all States appropriately report offset rebate amounts,  
  consider further whether to encourage all States to establish supplemental rebate programs, and 
  encourage States to explore alternate methods for calculating supplemental rebates. 
Durable medical equipment  Payment policies 
  The New York Medicaid Program Could Significantly Lower Payment Rates for Selected Durable 
Medical Equipment and Supplies. A-02-13-01042. 2015 February. 
The New York Medicaid program could have saved an estimated $8.9 million on selected durable medical 
equipment (DME) items for 2011 and 2012 by obtaining pricing similar to pricing under Medicares 
Competitive Bidding Program.  Although New York disagreed, OIG continues to recommend that New 
York: 
  establish a competitive bidding program that functions similarly to Medicare's Competitive Bidding 
Program for the reimbursement of 54 selected DME items, which could have resulted in cost savings 
of approximately $8.9 million for the 2-year audit period.  
Medicaid quality of care and beneficiary access 
Medicaid Managed Care  Access to care 
  Access to Care: Provider Availability in Medicaid Managed Care. OEI-02-13-00670. 2014 
December. 
Slightly more than half of providers reviewed could not offer appointments to enrollees.  Notably, 
35 percent could not be found at the location listed by the plan, and another 8 percent were at the 
location but were not participating in the plan.  An additional 8 percent were not accepting new 
patients.  Among the providers who offered appointments, the median wait time was 2 weeks.  
However, over a quarter had wait times of more than 1 month.  Finally, primary care providers were less 
likely to offer an appointment than specialists; however, specialists tended to have longer wait times.  
CMS concurred with the following recommendations to work with States: 
  to assess the number of providers offering appointments and improve the accuracy of plan 
information, 
  ensure that plans networks are adequate and meet the needs of their Medicaid managed care 
enrollees, and  
  ensure that plans are complying with existing State standards and assess whether additional 
standards are needed.  HHS Office of Inspector General 
Semiannual Report to Congress | Spring 2015  Page 13 
 
 
Childrens preventative medical screening services  
  CMS Needs To Do More To Improve Medicaid Childrens Utilization of Preventive Screening 
Services. OEI-05-13-00690. 2014 November. 
CMS has taken actions toward encouraging participation in Medicaids Early and Periodic Screening, 
Diagnostic, and Treatment (EPSDT) screenings and toward encouraging the delivery of all components of 
medical screenings, but it had not fully addressed OIGs recommendation made in 2010.  Further, 
childrens participation in EPSDT medical screenings remained lower than established goals.  Although 
the national participation ratio improved from 56 percent in 2006 to 63 percent in 2013, both ratios are 
below the Secretarys goal of 80-percent participation.  Given that CMS has not yet fully addressed all 
OIG recommendations, coupled with evidence that children continue to receive fewer medical 
screenings than required, CMS must continue to focus on EPSDT screenings.  OIG did not issue new 
recommendations, but considers all four of the recommendations from its previous report open: 
  require States to report vision and hearing screenings, 
  collaborate with States and providers to develop effective strategies to encourage beneficiary 
participation in EPSDT screenings, 
  collaborate with States and providers to disseminate education and incentives for providers to 
encourage complete medical screenings, and  
  identify and disseminate promising State practices for increasing childrens participation in EPSDT 
screenings and increasing providers delivery of complete medical screenings. 
Antipsychotic drugs  Use among Medicaid-enrolled children 
  Second-Generation Antipsychotic Drug Use Among Medicaid-Enrolled Children: Quality-of-Care 
Concerns. OEI-07-12-00320. 2015 March. 
In the five States reviewed, medical reviewers identified quality-of-care concerns in the medical records 
associated with 67 percent of claims for second-generation antipsychotic (SGA) drugs prescribed to 
children. SGAs are widely used to treat children enrolled in Medicaid who have mental health conditions 
and can have serious side effects.  Quality-of-care concerns identified through medical record reviews 
corresponded to the following issues:  dosage, duration, indications for use, monitoring, polypharmacy 
(too many drugs), patient age, and side effects.  The high percentage of claims for which our reviewers 
identified quality-of-care concerns indicates that more needs to be done to ensure the quality of care 
provided to children receiving SGAs paid for by Medicaid.  CMS concurred with the following 
recommendations: 
  perform utilization reviews of antipsychotic drugs prescribed to children, 
  conduct periodic reviews of medical records associated with claims for antipsychotic drugs 
prescribed to children, and 
  work with States to consider other methods of enhanced oversight of antipsychotic drugs prescribed 
to children. 
 
  HHS Office of Inspector General 
Semiannual Report to Congress | Spring 2015  Page 14 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
http://oig.hhs.gov 
 
 
 
 
 
 
 
 
 
 
 
  HHS Office of Inspector General 
Semiannual Report to Congress | Spring 2015  Page 15 
 
 
Legal and investigative activities 
related to Medicare and Medicaid 
For October 1, 2014, to March 31, 2015, we reported 422 criminal and 320 civil actions against 
individuals or entities that engaged in health-care-related offenses.  We also reported over $1.1 billion in 
investigative receivables due to the U.S. Department of Health and Human Services (HHS or the 
Department) and over $133 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.  
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 services more 
extensive than those actually provided; 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 the Indian Health Service, the Administration for Children and Families 
(ACF), the Health Resources and Services Administration (HRSA), and the Administration for Community 
Living.  OIG also investigates potential misuse of grants and contracts funds awarded by the National 
Institutes of Health (NIH), the Centers for Disease Control and Prevention (CDC), the Substance Abuse 
and Mental Health Services Administration, 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  HHS Office of Inspector General 
Semiannual Report to Congress | Spring 2015  Page 16 
 
 
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 
Appendix C of this Semiannual Report to Congress (Semiannual Report) and on our Web site at:  
http://oig.hhs.gov/fraud/enforcement/cmp/. 
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. 
Health care fraud prevention and enforcement 
On May 20, 2009, former HHS Secretary Kathleen Sebelius and 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 the 
Department of Justice (DOJ) and HHS who are strengthening programs, as well as investing in new 
resources and technologies, to prevent and combat fraud, waste, and abuse. 
HEAT provider compliance training  
OIG provides free training on our Web site 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/newsroom/video/2011/heat_modules.asp.  
Medicare Fraud Strike Force activities  
Medicare 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 
teams are partnerships between OIG and HHS, DOJ, U.S. Attorneys Offices, the Federal Bureau of  
Investigation (FBI), and State and local law enforcement with 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, 2014, to March 31, 2015, Strike Force efforts resulted in the filing of charges against 69 
individuals or entities, 124 criminal actions, and over $163 million in investigative receivables. 
Strike Force examples 
Miami Strike Force  Eleven defendants were charged with conspiracy to commit health care fraud and 
wire fraud, health care fraud, conspiracy to defraud the United States and make false statements related 
to health care matters, and making false statements related to health care matters.  According to the 
indictment, the defendants allegedly were part of a scheme to recruit individuals residing in Nicaragua  HHS Office of Inspector General 
Semiannual Report to Congress | Spring 2015  Page 17 
 
 
and the Dominican Republic to enroll in Medicare Advantage plans and Florida Medicaid, even though 
they were not entitled to Medicare or Medicaid coverage.  To perpetrate this fraud, the defendants 
allegedly submitted enrollment applications to Medicare Advantage plans and Medicaid, using 
nonresidential addresses, addresses belonging to the relatives and friends of these foreign residents, and 
addresses associated with the defendants, to falsely represent that the foreign residents lived in 
Florida.  As a result of the fraudulent enrollment applications, the defendants received approximately 
$25 million from Medicare and Medicaid on behalf of the purported beneficiaries, who were not eligible 
to enroll and did not reside in the service plan area.  Nine defendants are currently in custody and are 
awaiting trial, while two defendants remain at large.  
Southern Louisiana Strike Force  Roslyn Dogan was sentenced to 712 years in prison and ordered to pay 
$43.5 million in joint and several restitution after being convicted by a jury on charges of conspiracy to 
commit health care fraud and health care fraud.  James Hunter was sentenced to 5 years in prison and 
ordered to pay $3.2 million in joint and several restitution after being convicted by a jury of conspiracy to 
commit health care fraud and conspiracy to pay and receive health care kickbacks.  Dogan co-owned and 
managed Serenity Center, LLC (Serenity), and served as a manager and marketer for Psychcare of 
Louisiana, LLC, d/b/a Shifa Community Mental Health Center (Shifa).  The investigation revealed that 
Dogan and co-conspirators recruited Medicare beneficiaries to attend programs at Serenity and Shifa, 
even though the beneficiaries did not qualify for services, the services were not medically necessary, or 
the services were not provided.  Hunter and others were paid cash kickbacks to recruit Medicare 
beneficiaries to receive partial hospitalization program services at Shifa Community Mental Health 
Center (CMHC) of Texas, LLC. However, these services were not medically necessary and were not 
provided.  Co-conspirators also falsified notes for patients, making it appear as if they either evaluated 
patients for admission or provided educational psychotherapy and/or recreational psychotherapy to 
patients when, in fact, the patients were already receiving inpatient treatment at various hospitals.  The 
three CMHCs billed Medicare more than $258 million for these fraudulent services.  In addition to Dogan 
and Hunter, 15 defendants have been convicted in connection with this scheme.  
Miami Strike Force  Julio Armando Brunet was sentenced to 10 years and 1 month in prison and 
ordered to pay $18.6 million in restitution after pleading guilty to conspiracy to commit health care fraud 
and payment of kickbacks in connection with a Federal health care program.  Brunet was the director of 
Nightingale Home Health Care of Miami, and he controlled Visual Care and Supplies, Inc., two Miami-
based businesses that purportedly provided home health services to Medicare beneficiaries.  The 
investigation found that Brunet paid co-conspirators thousands of dollars in kickbacks in exchange for 
referring Medicare beneficiaries to be placed at Visual Care and Nightingale.  Brunet also paid kickbacks 
to the owner of a medical clinic in exchange for home health services prescriptions.  Brunet and his co-
conspirators then billed Medicare millions of dollars for home health services that were not medically 
necessary.  
Dallas Strike Force  Nicolas Padron was sentenced to 7 years and 3 months of incarceration and ordered 
to forfeit his house, cars, boat, and funds from several bank accounts after pleading guilty to conspiracy 
to unlawfully distribute controlled substances.  Padron operated Padron Wellness Clinic, a family practice 
and weight loss management clinic based in Dallas, Texas.  The investigation revealed that Padron 
Wellness Clinic operated as a pill mill, where dealers recruited and drove patients in groups to the 
clinic to obtain prescriptions for hydrocodone and Xanax.  Padron prescribed these medically 
unnecessary drugs with little or no medical examination and generally charged a cash fee of $250 for a 
new patient and $185 for an established patient.  The dealers then drove the patients to a local 
pharmacy to fill the prescriptions.  Once the prescriptions were filled, the patients gave the drugs to the  HHS Office of Inspector General 
Semiannual Report to Congress | Spring 2015  Page 18 
 
 
dealers, who sold them on the street for a profit.  Office manager Jose Martinez and dealers Joesephis 
Austin, Patricia Bryant, and Dennis Wade were also sentenced during this reporting period to more than 
18 years in prison, combined.  In a separate, unrelated health care fraud case, Padron was sentenced for 
his role as the medical director of A Medical House Calls, a physician house-call company that falsely 
billed Medicare for care plan oversight that was not provided.   
Miami Strike Force  Yanira Sotolongo was sentenced to 4 years in prison and ordered to pay $6.4 million 
in restitution after pleading guilty to conspiracy to pay health care kickbacks and payment of kickbacks in 
connection with a Federal health care program.  Sotolongo was a registered agent for both RR 
Healthcare and Associates, LLC, and Interim Healthcare of South Florida, Inc., two businesses that 
purportedly provided skilled nursing services, physical therapy, occupational therapy, and home health 
aide services to Medicare beneficiaries.  According to the investigation, Sotolongo paid thousands of 
dollars in cash and checks to co-conspirator patient recruiters in return for referring Medicare 
beneficiaries to her businesses, as well as another home health agency, Viva Healthcare, Inc.  Sotolongo 
and her co-conspirators then used the beneficiary information as a basis to submit false claims to 
Medicare for home health services purportedly provided to the recruited beneficiaries. 
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.  OIG attorneys are 
detailed full time to DOJs Criminal Division, Fraud Section, for temporary assignments, including 
assignments to the Medicare 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.  
Related case examples follow. 
California  Gabriel Ejizu pleaded guilty to conspiracy to commit health care fraud and is awaiting 
sentencing.  He faces up to 10 years in jail, up to a $250,000 fine, and payment of restitution.  The 
investigation revealed that Ejizu created South Bay Medical Supply, a DME company that purportedly 
provided power wheelchairs and other equipment to Medicare beneficiaries.  Ejizu and his co-
conspirators recruited Medicare beneficiaries to receive power mobility devices, hospital beds, or 
reclining chairs in exchange for their Medicare numbers.  The beneficiaries often did not see a physician, 
but rather Ejizu and his co-conspirators fabricated documents and obtained false prescriptions in order 
to bill Medicare for DME, even though the DME was not always provided to the beneficiaries and was 
not medically necessary.  South Bay also billed for power wheelchairs when, in actuality, they provided 
beneficiaries with reclining chairs, a type of DME for which Medicare does not reimburse.  This case was 
prosecuted by a Special Assistant U.S. Attorney in the District of North Dakota under a collaborative 
program by OIG and DOJ that brings cases from multiple jurisdictions to a dedicated health care fraud 
prosecutor, who is located in the same district as one of the MACs.    HHS Office of Inspector General 
Semiannual Report to Congress | Spring 2015  Page 19 
 
 
Most wanted fugitives listed on OIGs Web site  
The OIG Most Wanted Fugitives Web site 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 Web site is continuously updated 
and features a profile and statistics 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 Most Wanted Fugitives list can be accessed at https://oig.hhs.gov/fraud/fugitives. 
During this reporting period, the fugitive below was captured.   
In November 2014, OIG Most Wanted Fugitive Luis Marin was captured in Florida by Miami-Dade Police. 
Marin was indicted in August 2014 on charges of conspiracy to commit health care fraud and wire fraud, 
health care fraud, conspiracy to commit money laundering, and money laundering.  Marin was president 
of DD Quality Services Corp. in Sunny Isles, Florida, a company that purportedly provided physical 
therapy to Medicare beneficiaries.  According to court records, Marin was allegedly involved in a scheme 
in which patient recruiters were paid kickbacks in exchange for referring Medicare beneficiaries to two 
purported home health companies in Florida:  Sacred Health, Inc., and Marcialed Healthcare Corp.  
Marin and his co-conspirators allegedly falsified records to document the purported receipt of home 
health services from home health companies that, in reality, were not provided and were not medically 
necessary.  The false documents were then used to bill Medicare more than $16 million.  
Because of the success of OIGs Most Wanted Fugitives Web site, OIG launched its Most Wanted 
Deadbeat Parents Web site 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 Reviews" section of this 
Semiannual Report.  
OIG Hotline Operations 
The mission of OIG Hotline Operations is to assist OIG in protecting the integrity of all HHS programs and 
agencies.  Strategically placed within the Office of Investigations (OI), OIG Hotline Operations serves as 
the public face of OIG through analysis and processing of complaints and information received through 
various available hotlines and numbers, including, but not limited to:  OIGs Fraud, Waste and Abuse 
Hotline; OIGs Fugitive Hotline; and the CDCs Select Agent and Import Permit Hotlines.  Constantly 
working to improve outcomes and results, OIG Hotline Operations uses state-of-the-art approaches and 
current technology to best address all matters received. 
 
OIG Hotline Activity  
Contacts Received: FY 2015 
Total Calls Received:              67,014 
(Total Operator Assisted Calls: 12,339) 
Total Non-Call Matters Received:           6,904  HHS Office of Inspector General 
Semiannual Report to Congress | Spring 2015  Page 20 
 
 
Total Contacts1:                                 74,018 
Total Complaints Evaluated:                    13,495 
Recently completed actions and settlements 
Prescription drug diversion  
Maryland  Duvine Price was sentenced to 8 years and 4 months of incarceration after pleading guilty to 
conspiracy to distribute and possession with intent to distribute oxycodone.  The investigation revealed 
that Price obtained fraudulent prescriptions for oxycodone from a secretary who was stealing 
prescriptions from the doctors office where she worked.  The prescriptions were filled out in the names 
of Medicare beneficiaries and other defendants, including Price.  Price then either filled the prescriptions 
himself and billed Medicare or had them filled by other individuals and sold the oxycodone pills for 
around $10 per pill on the street.  At least 487,000 milligrams of oxycodone were distributed during this 
scheme.  In addition to receiving a sentence, Price was ordered to forfeit two cars and currency.  Eight 
other defendants previously pleaded guilty to charges in connection with this scheme and were 
sentenced to a combined 2912 years in jail.  
Florida  Carlos Perez-Gomez and Jesus Fundora were sentenced to a combined 17 years and 1 month in 
jail and ordered to pay $6.2 million in joint and several restitution after pleading guilty to conspiracy to 
commit health care fraud.  Perez-Gomez and Fundora operated Kiara Discount Pharmacy Corp., a Miami-
based retail pharmacy.  The investigation revealed that co-conspirators recruited and paid Medicare 
beneficiaries to obtain prescriptions, including prescriptions for expensive antipsychotic and skin 
treatment pharmaceutical drugs, that the co-conspirators subsequently furnished to Perez-Gomez and 
Fundora.  Perez-Gomez and Fundora then used the fraudulent prescriptions to bill the Medicare Part D 
program, falsely representing that the drugs were medically necessary, were prescribed by a doctor, and 
were provided by Kiara Pharmacy to the beneficiaries.  As a result of this scheme, Perez-Gomez and 
Fundora received approximately $6.2 million in Medicare payments to which they were not entitled.  
Kentucky  Smbat Muradyan was sentenced to 2 years and 3 months in jail and ordered to pay $75,837 
in restitution after pleading guilty to health care fraud.  The investigation revealed that Muradyan was 
involved in a scheme to submit false claims for prescription drugs purportedly provided to Medicare 
beneficiaries.  The prescriptions were for expensive, noncontrolled medications for asthma, stroke, and 
other ailments.  Muradyan and his co-conspirators forged the underlying prescriptions using the names 
and unique electronic identification numbers of California physicians who had not authorized the 
prescriptions.  The patients whose names were used to fill the prescriptions also were unaware of these 
transactions.   
Patient harm 
Wisconsin  In the largest failure-of-care settlement with a nationwide SNF, Extendicare Health Services, 
Inc., and its subsidiary, Progressive Step Corporation (ProStep), agreed to pay $38 million to resolve 
                                                           
1 A contact is the total number of instances when a person contacts OIG Hotline Operations, regardless of the 
nature of the contact, and receives service through automated or manual means.  HHS Office of Inspector General 
Semiannual Report to Congress | Spring 2015  Page 21 
 
 
allegations that Extendicare billed Medicare and Medicaid for materially substandard and/or worthless 
skilled nursing services and billed Medicare for medically unreasonable and unnecessary rehabilitation 
therapy services.  Extendicare operates 146 SNFs in 11 States and, through ProStep, provides physical, 
occupational, and speech therapy to Medicare and Medicaid beneficiaries.  Extendicare allegedly 
provided inadequate care to residents at 33 of its SNFs, including having an insufficient number and skill 
level of nursing staff to properly care for residents, failing to provide adequate catheter care to some 
residents, failing to follow appropriate pressure ulcer and falls protocols, failing to appropriately provide 
for some residents activities of daily living, and failing to appropriately administer medications to some 
residents.  As a result of the inadequate care, the United States alleged that patients suffered fractures, 
head injuries, malnutrition, dehydration, pressure ulcers, infections, and amputation of limbs.  In 
addition to being required to pay the settlement amount, Extendicare agreed to enter into a 5-year 
quality-of-care corporate integrity agreement (CIA) with OIG that includes, among other things, 
enhanced provisions to ensure the quality, quantity, and composition of nursing staff necessary to meet 
resident needs at all Extendicare facilities. 
New York  Cardiologist Rohan Wijetilaka was sentenced to 3 years in prison and ordered to pay $2 
million in restitution and forfeiture after pleading guilty to a charge of health care fraud.  Wijetilaka 
maintained a cardiology practice in Westchester County, New York.  According to the investigation, 
Wijetilaka lured new patients and maintained existing patients by offering them narcotics prescriptions 
in exchange for those patients undergoing unnecessary diagnostic tests and other medical procedures.  
Wijetilaka then billed Medicare, Medicaid, and private insurance carriers millions of dollars for these 
fraudulent claims.  Investigators believe that Wijetilaka performed cardiac procedures that served no 
legitimate medical purpose, billed for office visits that did not occur, and falsified patients' symptoms to 
justify costly and unnecessary diagnostic tests.   
Quality of care 
Pennsylvania  Tianna Edwards was sentenced to 5 years and 3 months in jail and ordered to pay $1.4 
million in restitution after pleading guilty to charges of wire fraud.  Edwards controlled and operated two 
daycare facilities in Pennsylvania called Tiannas Terrific Tots, despite the fact that she had a criminal 
record that should have precluded her from obtaining a license to operate a daycare facility in 
Pennsylvania.  Some of the children who were enrolled in Tiannas Terrific Tots were eligible for Medicaid 
benefits.  Pennsylvanias Department of Public Welfare (DPW), which administers the Medicaid program, 
provides childcare subsidy payments for operators of privately owned and operated child daycare 
centers to provide child daycare services on behalf of eligible parents.  To circumvent the DPWs criminal 
history clearance requirements for a license, Edwards submitted applications, renewal applications, and 
other falsified records containing the forged signatures of another individual.  As a result of this scheme, 
Edwards billed and received more than $1.4 million in fraudulent payments from DPW.  Records showed 
that Edwards spent hundreds of hours at a casino, where she gambled more than $1.5 million.  In April 
2012, DPW closed one of Edwardss facilities because of conditions constituting gross incompetence, 
negligence and misconduct in operating a facility and likely to constitute immediate and serious 
danger to the life and health of children in care.  In June 2012, a child enrolled in one of Edwardss 
facilities drowned in a crowded and dirty backyard pool at the home of Edwardss mother.  Edwards was 
not onsite at the time of the drowning.  Shortly thereafter, DPW closed the second facility.  In addition to 
being sentenced on wire fraud charges, Edwards pleaded guilty to involuntary manslaughter charges 
related to the childs death and is scheduled to be sentenced in the spring of 2015.   HHS Office of Inspector General 
Semiannual Report to Congress | Spring 2015  Page 22 
 
 
Detroit  Oncologist Farid Fata pleaded guilty to charges of health care fraud, conspiracy to pay or 
receive kickbacks, and money laundering. He faces a statutory maximum of 175 years in prison. Dr. Fata 
owned and operated the cancer treatment clinic Michigan Hematology Oncology, P.C., which had several 
locations in Michigan. Fata admitted that he prescribed and administered aggressive chemotherapy, 
cancer treatments, intravenous iron, and other infusion therapies to patients who did not need these 
therapies, in order to increase his billings to Medicare and other insurance companies. He then 
submitted fraudulent claims to Medicare and other insurers for these unnecessary treatments. In total, 
approximately $225 million in claims was submitted by Fata, of which he received more than $91 million 
in reimbursement. In addition, Fata also admitted to soliciting kickbacks from Guardian Angel Hospice 
and Guardian Angel Home Health Care in exchange for his referral of patients to those facilities.  
Home health care 
Florida  Elsa Ruiz was sentenced to 6 years and 8 months of incarceration and ordered to pay $45 
million in restitution after pleading guilty to conspiracy to commit health care fraud.  Ruiz was an 
administrator at LTC Professional Consultants, Inc. (LTC), and an owner and operator of Professional 
Home Care Solutions, Inc. (PHCS).  Both businesses purportedly provided home health care and physical 
therapy services to Medicare beneficiaries.  The investigation revealed that Ruiz and her co-conspirators 
paid kickbacks to patient recruiters for the referral of patients and for the provision of prescriptions, 
plans of care, and certifications for therapy and home health services.  These services either were not 
medically necessary or were not actually provided.  LTC and PHCS submitted approximately $74 million 
in fraudulent claims for home health services to Medicare and were paid approximately $45 million on 
those claims.  Myriam Acevedo, an administrator at LTC who was involved in the scheme, was previously 
sentenced to 5 years in prison and ordered to pay $27 million in restitution. 
Electronic health records 
Texas  Joe White pleaded guilty to making a false statement and is awaiting sentencing.  He could face 
up to 5 years in prison, up to a $250,000 fine, and payment of restitution.  White was the Chief Financial 
Officer at Shelby Regional Medical Center, where he was responsible for overseeing the implementation 
of electronic health records (EHRs) for the hospital and attesting that the hospitals EHR platform met 
meaningful use requirements in order to qualify for incentive payments under Medicares EHR Incentive 
Program.  The investigation revealed that, during FY 2012, Shelby Regional did not meaningfully use the 
EHR platform.  Instead, with Whites knowledge, the hospital staff only minimally used the EHR platform 
and continued using paper records and charts as well as older, uncertified technology.  In an effort to 
meet the required thresholds for meaningful use and obtain EHR incentive payments from CMS, White 
directed others to manually input data from paper records and other sources into Shelby Regionals EHR 
system, oftentimes many months after the patients were discharged from the hospital.  White also 
created a user ID for a hospital representative, without the representatives knowledge or approval, and 
used that ID to falsely attest to CMS that the information provided about its EHR usage was true, 
accurate, and complete.  White falsely certified to CMS that Shelby Regional met the meaningful use 
requirements, even though he was fully aware that Shelby Regional used the EHR system sparingly and 
did not meet the criteria for incentives.  As a result of Whites conduct, Shelby Regional received a 
$785,655 EHR incentive payment from CMS in FY 2012.  Dr. Tariq Mahmood, who owned and controlled 
six Texas hospitals, including Shelby Regional, was sentenced to 11 years and 3 months in prison after 
being convicted on charges of conspiracy to commit health care fraud, health care fraud, and aggravated 
identity theft. The investigation revealed that Dr. Mahmood and his co-conspirators instructed hospital  HHS Office of Inspector General 
Semiannual Report to Congress | Spring 2015  Page 23 
 
 
personnel to improperly assign principal diagnostic codes that were not accurate representations of the 
actual diagnoses and conditions of the patients, none of which he ever saw.  He and his co-conspirators 
then caused false claims to be submitted to Medicare and Medicaid by representing that certain 
principal diagnoses were accurate and were more severe than they actually were. 
Pharmaceutical companies 
Massachusetts  Pharmaceutical company Daiichi Sankyo, Inc., agreed to pay $39 million to resolve 
allegations that it violated the FCA.  Daiichi allegedly caused the submission of false claims for its 
prescription drugs, including Azor, Benicar, Tribenzor, and Welchol, by paying kickbacks to physicians in 
order to induce them to prescribe the drugs.  The Government alleged that the kickbacks took the form 
of honoraria payments, lavish meals, and other remuneration to physicians who participated, or 
supposedly participated, in Physician Opinion & Discussion programs and other speaker 
programs.  Daiichi allegedly made payments to physicians even when the physician participants took 
turns speaking on duplicative topics over Daiichi-paid dinners or when they spoke only to members of 
their own staffs in their own offices.  As part of the settlement, Daiichi agreed to enter into a 5-year CIA 
with OIG that includes undertaking substantial internal compliance reforms, in particular concerning the 
companys arrangements with physicians. 
Clinics 
Colorado  In the largest kickback-only settlement to date, DaVita HealthCare Partners, Inc., agreed to 
pay $350 million to resolve allegations that the company paid remuneration to nephrologists (physicians 
who specialize in kidney care) in return for referrals of beneficiaries in need of dialysis treatment.  DaVita 
operates or provides administrative services to more than 2,000 outpatient dialysis centers in 44 States 
and the District of Columbia, serving approximately 163,000 patients.  DaVita allegedly provided 
nephrologists and nephrology practices with exclusive opportunities to buy minority interests in DaVita-
owned dialysis clinics at unreasonably favorable rates.  In certain paired transactions, the nephrologists 
or nephrology practices could sell to DaVita a majority interest in clinics they owned, again at an 
unreasonably favorable rate.  These joint venture opportunities were allegedly given to nephrologists to 
induce them to refer patients to DaVitas dialysis centers, in order to maintain and increase DaVitas 
market share of dialysis patients.  In addition to agreeing to pay the settlement amount, DaVita entered 
into a 5-year CIA with OIG, which includes hiring an independent monitor chosen by OIG to oversee 
DaVita's unwinding of the joint ventures that formed the basis for the covered conduct and prospectively 
review future arrangements between DaVita and nephrologists and other health care providers. 
Personal care services 
Alaska  Good Faith Services, LLC, pleaded guilty to a charge of medical assistance fraud and, as part of 
its plea agreement, will pay $1.2 million in restitution and a $300,000 fine.  Good Faith purportedly 
provided personal care services, including transportation to and from medical appointments, to 
Medicaid beneficiaries.  Since July 2013, the State of Alaska has filed criminal charges against 53 
defendants associated with Good Faith, including 10 employees who billed Medicaid nearly $400,000 for 
services they claimed to be providing to beneficiaries while they were actually working in the office.  The 
investigation further revealed that Good Faith billed Medicaid more than $1 million for services provided 
by personal care attendants who, at the time, had not received valid background checks, in violation of 
State regulations.  As part of its plea agreement, Good Faith agreed to be permanently dissolved and will  HHS Office of Inspector General 
Semiannual Report to Congress | Spring 2015  Page 24 
 
 
no longer provide services to Medicaid recipients.  To date, 35 defendants have pleaded guilty to charges 
related to this scheme and have been sentenced to a combined 10 years and 9 months of incarceration 
and 87 years and 8 months of home detention.  The defendants were ordered to pay a combined 
$435,442 in restitution and fines.  This was a joint investigation with the Alaska Medicaid Fraud Control 
Unit (MFCU or Unit), the Alaska Department of Health and Human Services, the FBI, and U.S. 
Immigration and Customs Enforcement.  
Vermont  Magen Hill was sentenced to 18 to 36 months in jail, all suspended, and placed on 112 years of 
probation after being convicted on charges of false pretenses.  She was also ordered to pay $4,485 in 
restitution and a $423 fine.  Hill was hired to care for a beneficiary under the Developmental Disability 
Services program, which is part of the Vermont Medicaid program.  However, the investigation revealed 
that Hill did not provide any hands-on personal care, did not work the total hours stated on her 
timesheets, and was not present at the beneficiarys residence during the times stated on her 
timesheets.  Despite the fact that she did not provide adequate care for the beneficiary and did not work 
the hours stated, Hill falsified more than a dozen timesheets as a personal care services worker and used 
them to obtain reimbursement from the Vermont Medicaid program.  Hill admitted to investigators that 
she often split her Medicaid reimbursement checks with the beneficiarys wife. 
Illinois  Marlene Liss was sentenced to 5 years of probation, 6 months to be served in home 
confinement, and ordered to pay $32,790 in restitution and a $100 assessment after pleading guilty to 
health care fraud. According to the investigation, Liss served as a personal assistant to a beneficiary who 
was also one of her relatives.  In that capacity, Liss purportedly assisted in such tasks as shopping, 
personal care, incidental health care, and monitoring to ensure the health and safety of the beneficiary.  
Liss submitted timesheets to the Illinois Department of Human Services falsely certifying that she had 
worked 5 hours per day, 7 days per week as a personal assistant.  However, during this time, she was 
already employed full-time at the Illinois Office of the Secretary of State.  
Hospice care 
Mississippi  Regina Swims-King was sentenced to 5 years and 10 months of incarceration and ordered 
to pay $7.9 million in restitution after pleading guilty to conspiracy to commit health care fraud.  Swims-
King owned and operated Angelic Hospice and Palliative Care Services (Angelic), located in Greenwood, 
Mississippi.  The investigation revealed that, from around March 2010 to February 2013, Swims-King and 
her co-conspirators used Angelic to submit millions of dollars in fraudulent claims to Medicare, for which 
they were reimbursed more than $12.5 million.  These false billings included claims for patients who 
were not eligible for hospice benefits because they were not terminally ill and claims based on medical 
records containing forged signatures of the beneficiaries, the hospice medical director, and/or the 
beneficiaries attending physician.  The investigation also revealed that Swims-King, through Angelic, 
submitted claims to Medicare based on patient referrals from physicians who, in actuality, had never 
referred patients to Angelic.  Many of the patient names were obtained from a medical records clerk, 
who has been separately charged for accepting over $240,000 in kickbacks from Swims-King.  Swims-
King used the funds obtained from Medicare to purchase more than $1.4 million in vehicles and 
property.   HHS Office of Inspector General 
Semiannual Report to Congress | Spring 2015  Page 25 
 
 
Laboratories 
Georgia  Rahsaan Jackson Garth was sentenced to 3 years and 10 months of incarceration and ordered 
to pay $246,536 in restitution after pleading guilty to health care fraud.  Garth owned and operated 
Polaris Allergy Labs, Inc., a laboratory that purportedly administered allergy skin tests (also known as 
scratch tests) and blood tests when ordered by a patients doctor.  The investigation revealed that, 
from approximately September 2012 through February 2014, Garth falsely billed Medicare, Medicaid, 
TRICARE, and private insurers for blood sample allergy testing that Polaris had not actually performed.  
Garth directed his laboratory technician not to test some of the blood samples for allergens, in an effort 
to save money by not using the allergen reagents necessary for testing.  Instead, Garth instructed the 
laboratory technician to create blank test result report templates, which Garth filled in with false allergy 
test result numbers and then discarded the patients blood without ever testing it.  Garth then sent the 
false results to the allergy patients physicians and billed Federal and private health care programs for 
the testing that had never occurred.  In addition to submitting false negatives to the patients physicians 
and in an effort to further conceal the fraud, Garth also created results indicating that patients had a 
positive allergic reaction to a substance, even though the blood samples had never been tested.  
Durable medical equipment 
New Jersey  OtisMed Corp. was ordered to pay $34.4 million in fines and $5.1 million in forfeiture after 
pleading guilty to distributing, with the intent to defraud and mislead, adulterated medical devices into 
interstate commerce in violation of the Food, Drug, and Cosmetic Act.  Between 2006 and 2009, Charlie 
Chi was the Chief Executive Officer of OtisMed, a biotechnology company that manufactured, marketed, 
and sold a total knee replacement device known as the OtisKnee.  OtisMed submitted a premarket 
notification to the Food and Drug Administration (FDA) seeking clearance to market the OtisKnee in 
October 2008.  Prior to that time, the company had not sought FDAs clearance or approval and had 
been falsely representing to physicians and other potential purchasers that the OtisKnee was exempt 
from such premarket requirements.  In September 2009, FDA sent OtisMed a notice that its submission 
was denied, stating that the company failed to demonstrate that the OtisKnee was as safe and effective 
as other legally marketed devices.  Despite his awareness of the letter and advice from legal counsel that 
it would be unlawful to continue distributing the OtisKnee, Chi ordered employees at OtisMed to 
distribute more than 200 OtisKnee devices to surgeons throughout the United States.  Chi and others at 
OtisMed then took steps to conceal the shipments from FDA, and neither Chi nor any other OtisMed 
employee informed the surgeons that commercial distribution of the OtisKnee device was prohibited.  
Chi pleaded guilty to introducing adulterated medical devices in interstate commerce.  He is scheduled to 
be sentenced in the spring of 2015 and could face up to 3 years in prison.  Apart from making the 
criminal plea, OtisMed agreed to pay a $41.2 million settlement to resolve its civil FCA liability arising 
from the marketing and distribution of the OtisKnee and to be excluded from participation in Medicare, 
Medicaid, and all other Federal health care programs for 20 years.    
California  Maritza Velazquez was sentenced to 1 year and 3 months in prison and ordered to pay $3.4 
million in restitution after pleading guilty to conspiracy to commit health care fraud.  Velazquez was an 
office manager at Lutemi Medical Supply, Inc., a DME company in Carson, California.  While working at 
Lutemi, Velazquez also operated Bettys Billing Service, a medical billing business.  The investigation 
revealed that Velazquez and her co-conspirators paid cash and checks to marketers to recruit Medicare 
beneficiaries who purportedly needed power wheelchairs and other DME.  However, these products 
were medically unnecessary.  Velazquez and her co-conspirators also paid kickbacks to physicians and  HHS Office of Inspector General 
Semiannual Report to Congress | Spring 2015  Page 26 
 
 
medical clinics in exchange for writing false prescriptions and documents for the power wheelchairs and 
other DME.  The fraudulent information was then used to bill millions to Medicare for DME that was 
medically unnecessary.  
Community mental health centers 
Florida  Rodolfo Santaya was sentenced to 1212 years in prison and ordered to pay $18.2 million in joint 
and several restitution after being convicted by a jury on charges of conspiracy to commit health care 
fraud and wire fraud, conspiracy to pay and receive bribes and kickbacks in connection with a Federal 
health care benefit program, and receipt of bribes and kickbacks in connection with a Federal health care 
benefit program.  American Therapeutic Corporation (ATC) operated several purported partial 
hospitalization programs (PHPs) throughout Florida.  Evidence at trial demonstrated that Santaya, who 
was a certified nursing assistant, received thousands of dollars a month in cash kickbacks in exchange for 
referring Medicare patients to ATC.  The evidence also demonstrated that the beneficiaries Santaya sent 
to ATC did not need, qualify for, or receive PHP treatment.  Nevertheless, ATC submitted false claims to 
Medicare for PHP services purportedly provided to each of these patients.  To justify ATCs fraudulent 
billings, physicians and other medical professionals fabricated and signed fraudulent medical 
documentation and patient files. To date, 30 defendants, including the owners of ATC, have previously 
pleaded guilty or been convicted at trial on charges related to the ATC scheme, which resulted in more 
than $200 million in fraudulent Medicare billings.  
Texas  Physicians Mansour Sanjar and Cyrus Sajadi were sentenced to a combined 22 years and 4 
months in prison and ordered to pay a combined $8 million in restitution after being convicted by a jury 
on charges of conspiracy to commit health care fraud and conspiracy to pay and receive kickbacks, as 
well as related counts of health care fraud and paying illegal kickbacks.  Sanjar and Sajadi owned 
Spectrum Care P.A., a community mental health clinic that purportedly provided PHP services to 
Medicare beneficiaries.  Evidence at trial showed that Sanjar and Sajadi paid kickbacks to group care 
home operators and patient recruiters in exchange for bringing ineligible Medicare beneficiaries to 
Spectrum.  Sanjar and Sajadi then signed admission documents and progress notes certifying that the 
beneficiaries qualified for PHP services when, in fact, they did not qualify for or need these services 
and/or the actual services were not performed.  Specifically, Sanjar and Sajadi billed for PHP services 
when the beneficiaries were actually watching movies, coloring, or playing games.  Spectrum billed 
Medicare approximately $97 million for these fraudulent services.  One of the group home owners, 
Chandra Nunn, was sentenced to 412 years in prison and ordered to pay $1.8 million in restitution.  
Pharmacies 
California  Rite Aid Corporation agreed to pay $2.9 million to resolve allegations that it violated the FCA 
and the anti-kickback statute.  Rite Aid is a drug store chain with over 4,500 stores in 31 States and the 
District of Columbia.  The Government alleged that, between May 2008 and October 2010, Rite Aid 
offered and provided improper inducements to beneficiaries of Government programs in order to 
encourage them to transfer their prescriptions to Rite Aid pharmacies.  These inducements took the 
form of gift cards, gift checks, and similar promotions.     HHS Office of Inspector General 
Semiannual Report to Congress | Spring 2015  Page 27 
 
 
Transportation fraud 
Pennsylvania  Feda Kuran was sentenced to 5 years and 4 months of incarceration and was ordered to 
pay more than $2 million in restitution after pleading guilty to health care fraud and anti-kickback 
statute charges.  Kuran co-owned Brotherly Love Ambulance, Inc., which operated four different 
ambulances and a minivan.  The investigation revealed that, from July 2010 to October 2011, Kuran and 
her co-conspirators transported by ambulance patients who could walk; transported patients in 
personally owned vehicles, but billed as if the patients were transported by ambulance; used patient 
information to bill as if the patients had been transported by ambulance when, in fact, the patients had 
actually transported themselves; and paid patients to be transported by Brotherly Love.  The majority of 
Brotherly Loves clients were dialysis patients who attended dialysis treatments 3 times per week, 
thereby enabling Brotherly Love to bill extensively for these patients.  Kuran and employees at Brotherly 
Love submitted and caused the submission of more than $2 million in false claims to Medicare for 
medically unnecessary ambulance services, services that were not provided, or services that were not 
permitted because they were induced by illegal remuneration.  
Hospitals 
California  Dignity Health, formerly known as Catholic Healthcare West, agreed to pay $36.7 million to 
resolve allegations under the FCA.  Dignity Health is a nonprofit health system representing the largest 
hospital provider in California and the fifth largest health system in the country.  The settlement 
agreement resolves allegations that Dignity Health knowingly submitted, or caused to be submitted, 
false claims for reimbursement of:  (1) inpatient admissions following certain interventional 
cardiovascular procedures billed to Medicare and TRICARE that should have been performed on an 
outpatient basis, (2) inpatient admissions related to certain medical diagnoses and procedures billed to 
Medicare and TRICARE that should have been billed as outpatient or observation services, and (3) 
inpatient admissions for kyphoplasty procedures billed to Medicare that should have been billed as 
outpatient services.  Dignity Health also entered into a 5-year CIA with OIG that requires the provider to, 
among other things, retain an independent review organization to review paid claims annually, as 
determined by OIG in its sole discretion, and review inpatient admissions for medical necessity and 
appropriateness.  
Alabama  Infirmary Health System, Inc. (IHS), and Diagnostic Physicians Group, P.C. (DPG), agreed to pay 
$24.5 million to resolve allegations that they violated the FCA by paying or receiving financial 
inducements in connection with claims to the Medicare program.  The Government alleged that two IHS-
affiliated clinics entered into agreements with DPG to pay the group a percentage of Medicare payments 
for tests and procedures referred by DPG physicians, in violation of the Physician Self-Referral Law and 
the Anti-Kickback Statute.  In addition to entering into the settlement agreement, IHS entered into a 5-
year CIA with OIG that requires retaining a legal independent review organization to review its 
arrangements with physicians and other referral sources. 
Employee misconduct 
Nebraska  Timothy DeFoggi was sentenced to 25 years in prison, followed by lifetime supervision, and 
ordered to register as a sex offender for the remainder of his life after being convicted on charges of 
child exploitation enterprise and access with intent to view child pornography.  DeFoggi was the acting 
director of cyber security at HHS.  The investigation revealed that DeFoggi was a registered member of a  HHS Office of Inspector General 
Semiannual Report to Congress | Spring 2015  Page 28 
 
 
Tor, an anonymous network-based child pornography Website.  Through the site, DeFoggi accessed child 
pornography; solicited child pornography from other members; and exchanged private messages with 
other members, including messages expressing an interest in the violent rape and murder of 
children.  The site has been taken down by the FBI.  Four other members of the site, along with the sites 
administrator, Aaron McGrath, have been sentenced to a combined 83 years in prison.  The cases were 
investigated as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of 
child sexual exploitation and abuse. 
State Medicaid Fraud Control Units  
OIG oversight of State MFCUs  
MFCUs 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 2014  
In FY 2014, combined Federal and State expenditures for the operation of 50 MFCUs (including 1 in 
Washington, DC), totaled about $235 million.  The MFCUs employed 1,958 individuals.  Collectively, in FY 
2014, MFCUs reported 16,464 investigations, of which 13,192 were related to Medicaid fraud and 3,272 
were related to patient abuse and neglect, including misappropriation of patients private funds.  The 
cases resulted in criminal charges against or indictments of 1,659 individuals, including 1,185 for fraud 
and 474 for patient abuse and neglect, including patient funds cases.  In total, 1,318 criminal actions 
were reported in FY 2014, of which 956 were related to Medicaid fraud and 362 were related to patient 
abuse and neglect, including patient funds cases.  Civil judgments and settlements for FY 2014 totaled 
874, and monetary recoveries in civil cases totaled over $1.7 billion.  (Medicaid Fraud Control Units FY 
2014 Annual Report.  OEI-06-15-00010.  Appendix C.  2015 APR.)  See also Medicaid Fraud Control Units 
2014 Statistics Interactive Map and Chart on our Web site. 
OIG onsite reviews of MFCUs   
OIG has developed 12 performance standards for use in assessing the operations of MFCUs.  A copy of 
the MFCU performance standards, most recently revised in June 2012, may be found on the OIG Web 
site.  Periodicallyapproximately every 5 yearsOIG conducts an indepth onsite review of each Units 
operations as related to the 12 performance standards and to assess compliance with laws, regulations, 
and OIG policy guidance.  OIG issued reports of onsite reviews of the following MFCUs during the 
reporting period.  The full reports are available on our Web site.   
  New Mexico State Medicaid Fraud Control Unit:  2014 Onsite Review.  OEI-09-14-00240.  2015 
February. 
  Iowa State Medicaid Fraud Control Unit:  2014 Onsite Review. OEI-06-14-00190.  2014 November.  HHS Office of Inspector General 
Semiannual Report to Congress | Spring 2015  Page 29 
 
 
Joint investigations with MFCUs 
Tennessee  CareAll Management LLC and its affiliated entities (collectively, CareAll) agreed to pay $25 
million to resolve allegations that it violated the FCA by submitting claims to Medicare and Medicaid for 
upcoded and noncovered home health services.  Between April 2006 and December 2012, CareAll 
allegedly upcoded the conditions of some of its home health care patients and billed Medicare and 
Medicaid for home health services in which the patients were not homebound and the services were not 
medically necessary.  Between August 2012 and August 2013, CareAll also allegedly billed for home 
health and physical therapy services that were not covered by Medicare, were not supported by the 
proper documentation, were not medically necessary, or were provided to patients who were not 
homebound.  As part of the settlement, CareAll entered into a 5-year CIA with OIG.  This investigation 
was conducted jointly with the Tennessee 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, 2014, to March 31, 2015, OIG received 21 requests for advisory 
opinions and issued 7 opinions.  
Sanction authorities and other administrative actions  
Various Federal laws provide authorities 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 1,814 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 Web site at http://oig.hhs.gov/fraud/enforcement/cmp/index.asp.  
Program exclusions  
During this semiannual reporting period, OIG excluded 1,735 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  HHS Office of Inspector General 
Semiannual Report to Congress | Spring 2015  Page 30 
 
 
exclusions.  For a list of excluded individuals and entities, see:  https://exclusions.oig.hhs.gov/.  Case 
examples follow. 
New York  Physician Peter Lesniewski was excluded for a minimum period of 50 years on the basis of his 
conviction of conspiracy to commit mail fraud, wire fraud, and health care fraud; conspiracy to defraud 
the United States Railroad Retirement Board (RRB); health care fraud; and mail fraud.  From 
approximately 1998 through 2008, Lesniewski assisted employees from the Long Island Railroad (LIRR) in 
applying for disability benefits from the RRB, even though he knew they were not disabled.  The LIRR 
employees generally paid Lesniewski $800 to $1200, often in cash, to prepare medical assessments 
and/or illness narratives for submission to the RRB.  Lesniewski prescribed and billed patients insurers 
for unnecessary medical tests, including x-rays, scans, and nerve conduction tests, and he ordered 
physical therapy and medical treatments in an effort to pad their medical files to make it appear as if 
they were disabled.  Lesniewskis fabricated and fraudulent assessments enabled 242 LIRR employees to 
supplement their pensions with a collective $70 million in RRB disability benefit payments to which they 
were not entitled.  Lesniewski was sentenced to 8 years in prison and ordered to pay $70.6 million in 
restitution.  The New York State Board for Professional Medical Conduct revoked his medical license, and 
the New York State Office of the Medicaid Inspector General excluded him from participation in the 
Medicaid program.  
Pennsylvania  Vadim Fleshler was excluded for a minimum of 40 years on the basis of his conviction of 
conspiracy to commit health care fraud and false statements in health care matters.  Fleshler worked for 
Superior EMS Ambulance Company, which was owned by his wife.  From about September 2010 to 
August 2013, Fleshler participated in a scheme in which he transported, either by ambulance or his own 
personal vehicle, Medicare beneficiaries who had no medical necessity for ambulance transportation. 
The investigation determined that the beneficiaries, some of whom were taken 3 days a week to their 
dialysis appointments, could walk or be safely transported by other means.  Fleshler falsified trip 
sheets to reflect that the beneficiaries needed to be transported by stretcher and needed continuous 
medical monitoring during transport when, in fact, patients often walked to the ambulance and no 
medical monitoring was provided during the trip.  Fleshler, who was illegally in possession of a firearm at 
the time of his arrest, was sentenced to 1312 years in prison and ordered to pay $1.9 million in 
restitution. 
Texas  Pharmacist Lisa Hollier was excluded for a minimum period of 10 years on the basis of her 
conviction for conspiracy to unlawfully distribute controlled substances.  Hollier owned and operated 
Urban Independent Pharmacy (UIP).  The investigation revealed that Hollier participated in a scheme 
whereby dealers recruited patients to obtain unlawful prescriptions for controlled substances and 
drove the patients to UIP, where Hollier filled their prescriptions.  Hollier typically had large amounts of 
hydrocodone and other controlled substances in prefilled bottles ready each day to handle the large 
groups of dealers and their patients.  After Hollier filled the prescriptions, the patients provided the pills 
to the dealers, who then sold them on the street for a profit.  Hollier was sentenced to 5 years in prison.  
Iowa  Pediatrician Dennis Jones was excluded for a minimum of 30 years on the basis of his conviction 
of possession of child pornography.  The investigation revealed that Jones used a hidden camera to take 
pictures and videos of his minor patients without the advice or knowledge of the patients, their parents, 
or guardians.   The images and videos were taken during what were purported to be necessary medical 
exams.  Investigators searched Joness computers and found files that included child pornography along 
with videos and images of the minor patients.  Jones was sentenced to 10 years and 1 month in prison.  
The Iowa Board of Medicine also accepted the surrender of his license to practice as a medical doctor.  HHS Office of Inspector General 
Semiannual Report to Congress | Spring 2015  Page 31 
 
 
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, that have misused 
grant funds, or that 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.   
Below are two debarment examples:  
Republic of the Marshall Islands  Four defendants who participated in a scheme to embezzle money 
from Federal grants awarded to different ministries with the Republic of the Marshall Islands were 
debarred from participation in Government programs for 3 years.  The debarment was based on criminal 
convictions on charges of cheating, forgery, conspiracy, and misconduct in public office, among 
others.  The investigation revealed that the defendants had prepared and submitted false purchase 
requisitions, vendors invoices, purchase orders, and other documents that suggested a vendor had 
supplied certain goods to the Government when, in fact, the vendor had not supplied the goods.  The 
proceeds from the fraud were shared among the defendants. 
New York  Following a lengthy investigation by the FBI and the United States Attorneys Office, Pedro 
Espada, Jr., was found guilty of stealing Federal funds from Soundview Healthcare Network (Soundview).  
Pedro Espada, Jr., was sentenced to 5 years in prison.  His son, Pedro G. Espada was sentenced to 6 
months in jail and 6 months home confinement.  After the conviction of the Espadas, OIG began 
suspension and debarment proceedings against the Espadas and Soundview to ensure that they could 
not obtain future Federal funds.  Effective February 5, 2015, HHS debarred the Espadas and Soundview, 
along with two other affiliated organizations (Soundview Management Enterprises and Community 
Expansion Development Corporation) for a period of 3 years.  During this time, they are not eligible to 
receive Federal grant funds or participate in contracts with the Federal Government.     
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.   HHS Office of Inspector General 
Semiannual Report to Congress | Spring 2015  Page 32 
 
 
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 $34.9 million in CMPs and 
assessments.  The following are case examples. 
Texas  Three Houston-area physicians collectively agreed to pay $200,266 for allegedly violating the 
CMPL provisions applicable to kickbacks.  OIG alleged that family practitioner Jimmy Dung Doan, 
orthopedic surgeon Dan Kelly Eidman, and orthopedic surgeon Robert L. Burke received illegal 
remuneration from physician Jack Baker and Bakers practice, Fairmont Diagnostic Center and Open MRI, 
Inc.  This improper remuneration took the form of Bakers paying the salary of one of Doans employees 
to serve as a referral coordinator and hiring Eidman and Burke as medical directors.  OIG alleged that 
these arrangements took into account the volume or value of referrals made to Baker by each of the 
three physicians.  To date, 11 physicians have agreed to pay a collective total of $1,415,137 to resolve 
their CMPL liability for allegedly receiving kickbacks from Baker.  Another physician, Scott Houson Hung, 
agreed to be excluded from participation in Federal health care programs for 3 years.   
New York  Jennan Comprehensive Medical, P.C. (Jennan), and its owner, physician Henry Chen, entered 
into a $694,887 settlement agreement with OIG.  The settlement resolved allegations that, from May 
2008 to December 2013, Jennan and Chen knowingly submitted, or caused to be submitted, fraudulent 
claims to Medicare for physical therapy services.  Specifically, OIG alleged that these claims were 
fraudulent for one or more of the following reasons:  (1) physical therapy services were not provided or 
supervised by the rendering provider, (2) group services were billed as one-on-one provider-patient 
physical therapy services, (3) services were performed by unqualified individuals, and (4) claims for time-
based physical therapy services did not accurately reflect the actual time spent performing the services. 
California  Hyundai Drugs and its owner Sang Kim agreed to pay $1,342,295 to resolve allegations under 
the CMPL.  From January 1, 2009, through April 12, 2014, Hyundai allegedly submitted claims to 
Medicare Part D for prescription drugs that it knew, or should have known, were not provided as claimed 
and were false or fraudulent.  The case was investigated as part of Operation Pharm Fury, a joint effort 
between OIGs Office of Investigations, Office of Evaluation and Inspections, and Office of Counsel to the 
Inspector General.  Operation Pharm Fury has exposed pharmacies across the country that have shown a 
pattern of questionably high billing practices when submitting claims to Medicare for prescription drugs.  
Patient Dumping  
Some of the CMPL cases that OIG resolved between October 1, 2014, and March 31, 2015, 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.  Examples follow. 
Alabama  Atmore Community Hospital agreed to pay a maximum penalty of $25,000 to resolve its 
EMTALA liability.  OIG alleged that Atmore failed to provide stabilizing treatment to a patient who had 
been shot in the upper arm and taken to Atmore by ambulance to meet an air ambulance that would 
transport the patient to a trauma center.  As the ambulance approached Atmore, the paramedic received 
a call that foggy weather prevented the air ambulance from landing and that the patient should be taken 
by ground transportation to a hospital 1 hour away.  The patient insisted that he first go to Atmores  HHS Office of Inspector General 
Semiannual Report to Congress | Spring 2015  Page 33 
 
 
emergency department to get relief for his pain, which he rated 10 out of 10.  As the patient was being 
unloaded from the ambulance, Atmores emergency department physician and a nurse came out.  
However, despite multiple requests from the paramedic and the patient, the physician and nurse refused 
to let the patient enter to obtain pain medication because the hospital did not have a trauma surgeon.  
The physician and nurse returned to the emergency department with locked doors closing behind them. 
Tennessee  Tristar Summit Medical Center (Summit) agreed to pay $40,000 to resolve its liability under 
EMTALA.  OIG alleged that Summit violated EMTALA by transferring a patient on the basis of the patients 
insurance status, when the patient was not stabilized for transfer.  Specifically, OIG contended that the 
patient came to Summits emergency department after attempting suicide by consuming a bottle of 
antifreeze, and emergency room personnel determined that the patient would need to be admitted to 
an Intensive Care Unit (ICU).  Although Summit had capacity in its own ICU, Summit transferred the 
patient to another hospital, allegedly because the patient was outside of her TennCare HMO insurance 
network. 
Florida  Palms West Hospital (Palms) agreed to pay a maximum penalty of $50,000 to resolve its liability 
under EMTALA.  OIG alleged that Palms refused an appropriate transfer of a toddler brought by her 
mother to another hospitals emergency department after ingesting an unknown quantity of 
Drano.  Poison control recommended that the patient be seen by a pediatric gastroenterologist, which 
the first hospital did not have.  When contacted to confirm that pediatric gastroenterology services were 
available, the emergency department physician at Palms initially accepted transfer of the patient.  The 
physician subsequently rescinded the acceptance, however, erroneously believing that she had made a 
mistake about on-call coverage.  As a result, the patient was transferred to a third hospital, despite the 
fact that Palms had a pediatric gastroenterologist available.   
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 Web site at https://oig.hhs.gov/compliance/self-disclosure-info/index.asp.  
During this reporting period, self-disclosure cases resulted in over $19.5 million in HHS receivables.  The 
following are examples of provider self-disclosure settlements. 
Arizona  Abode Healthcare, Inc., self-disclosed to OIG that two of its subsidiaries, Premier Hospice and 
Palliative Care, LLC, and Premier Hospice & Palliative Care  Indiana, LLC (the Premier Entities),  had  HHS Office of Inspector General 
Semiannual Report to Congress | Spring 2015  Page 34 
 
 
submitted claims to Medicare for hospice services when the underlying documentation did not support 
hospice eligibility.  Abode disclosed that, from October 1, 2009, through April 30, 2013, the Premier 
Entities billed for hospice services that failed to comply with Medicares brief physician narrative and 
face-to-face attestation obligations for purposes of certifying terminal illness.  Abode and the Premier 
Entities prior owners, Jeff L. Smith and SP Management, Inc., agreed to pay $2,674,895 to resolve their 
liability under the CMPL. 
California  Physicians Immunodiagnostic Laboratory, Inc. (PIL), self-disclosed that, from May 20, 2008, 
through November 9, 2012, it improperly billed Medicare, Medicaid, and TRICARE for services provided 
by excluded individual Mayra Perry.  PIL employed Perry as a client account representative who was 
responsible for consulting with physicians sending samples to PIL for testing, helping to manage the 
laboratory, and performing other administrative services.  PIL agreed to pay $1,386,816 plus interest to 
resolve its CMPL liability for employment of an excluded individual. 
Maryland  St. Agnes Healthcare, Inc., d/b/a St. Agnes Hospital (St. Agnes), self-disclosed that its entry 
into and operation under a lease agreement with MidAtlantic Cardiovascular Associates, PA (MACA), 
potentially violated the Anti-Kickback Statute and the Stark Law.  Between December 1, 2001, and 
September 30, 2009, St. Agnes and MACA had an arrangement in which MACA purchased from St. Agnes 
on an as-needed or per use basis equipment, supplies, staff, and space needed to provide certain 
nuclear diagnostic cardiology testing services to MACAs patients.  MACA paid $339 per use, which was 
determined to be up to $129 below fair market value.  St. Agnes agreed to pay $1,414,248 for allegedly 
violating the CMPL provisions applicable to kickbacks and physician self-referrals. 
California  Arrowhead Cardiology Medical Group, Inc., a practice owned in part by physicians Steven 
Fitzmorris and Sunil Nowrangi, self-disclosed that it had submitted improper claims to Medicare for 
telemetry services.  Arrowhead contracted with a local hospital to provide telemetry services, and on a 
daily basis, its physicians read and evaluated the telemetry strips sent from the hospital and billed under 
a code that should be used only once per patient per day unless there is a documented change in the 
patients condition to warrant an additional service.  From December 6, 2006, through July 9, 2013, 
Arrowhead billed Medicare using that particular code in excess of once per patient per day without any 
documented change in the patients condition.  Arrowhead, Fitzmorris, and Nowrangi agreed to pay 
$485,217 plus interest for allegedly violating the CMPL. 
 
 
 
 
 
 
 
  HHS Office of Inspector General 
Semiannual Report to Congress | Spring 2015  Page 35 
 
 
Public health agencies and enforcement 
activities 
Centers for Disease Control and Prevention 
Presidents Emergency Plan for AIDS Relief 
  The Centers for Disease Control and Prevention Generally Achieved Its Main Goals Related to 
Certain HIV/AIDS Prevention, Treatment, and Care Activities Under the Partnership Framework in 
Ethiopia. A-04-13-04011. 2014 October. 
  The Ethiopian Public Health Association Generally Managed the President's Emergency Plan for 
AIDS Relief Funds but Did Not Always Meet Program Goals in Accordance With Award 
Requirements. A-04-13-04016. 2014 October. 
  The Ethiopian Public Health Institute Did Not Always Manage the President's Emergency Plan for 
AIDS Relief Funds or Meet Program Goals in Accordance With Award Requirements. A-04-13-
04017. 2015 January. 
OIG, among others, provides oversight of programs, including the Presidents Emergency Plan for AIDS 
Relief (PEPFAR), to assist foreign countries in combating HIV/AIDS, tuberculosis, and malaria.  OIG 
conducted a series of audits of CDC offices and organizations receiving PEPFAR funds from CDC.  In 
Ethiopia, CDC generally achieved its main goals related to certain HIV/AIDS prevention, treatment, and 
care activities under the Partnership Framework and collaborated with the United States Agency for 
International Development (USAID) to reduce PEPFAR redundancies.  The Ethiopian Public Health 
Association (EPHA) generally managed PEPFAR funds but did not always meet program goals in 
accordance with award requirements.  The Ethiopian Public Health Institute (the Institute) generally did 
not always manage PEPFAR funds or meet program goals in accordance with award requirements.  CDC 
concurred with the following recommendations: 
  implement a system to recognize incremental progress toward laboratory accreditation, 
  work with Office of the Global AIDS Coordinator (OGAC) to improve target setting for performance 
measures,  
  work with the grantees to overcome obstacles to meeting the conditions of participations  
performance measures, and  
  work with OGAC to allow for updates and corrections to the Foreign Assistance Coordination and 
Tracking System. 
EPHA officials concurred with the following recommendations:  
  work with CDC to resolve whether the value-added tax (VAT) was an allowable expenditure under 
the cooperative agreement and to seek reimbursement from the Ethiopian Government for the 
$68,000 of VAT paid and   HHS Office of Inspector General 
Semiannual Report to Congress | Spring 2015  Page 36 
 
 
  develop and implement policies and procedures for recording expenditures, maintaining adequate 
supporting documentation, preparing and submitting an annual progress report, and submitting its 
annual financial audit report in a timely manner. 
 Institute officials concurred with the following recommendations: 
  refund to CDC $4,300 of unallowable expenditures,  
  work with CDC to resolve whether VAT was an allowable expenditure under the cooperative 
agreement to seek reimbursement from the Ethiopian Government for the $163,000 of VAT paid,  
  require regional facilities to submit quarterly expenditure reports and reconcile the outstanding cash 
advances, and  
  develop and implement adequate policies and procedures.   
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, the Health Resources and Services Administration (HRSA) guaranteed commercial loans to 
students seeking education in health-related fields.2  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, 12 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.  
                                                           
2 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 2015  Page 37 
 
 
After being excluded for nonpayment of their HEAL debts, 2,570 individuals chose to enter into 
settlement agreements or completely repay their debts.  That figure includes 16 individuals who entered 
into such settlement agreements or completely repaid their debts during this semiannual reporting 
period.  More than $201 million is being repaid through settlement agreements or through complete 
repayment.  Of that amount, $1.4 million is attributable to this semiannual reporting period. 
Practitioners in five States entered into settlement agreements to repay the amounts indicated: 
  Michigan  Osteopath - $191,520 
  Maryland  Optometrist - $47,086 
  Texas  Optometrist - $39,278 
  Texas  Chiropractor - $26,560 
  Mississippi  Medical Doctor - $11,160 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  HHS Office of Inspector General 
Semiannual Report to Congress | Spring 2015  Page 38 
 
 
 
 
 
 
 
 
 
http://oig.hhs.gov 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  HHS Office of Inspector General 
Semiannual Report to Congress | Spring 2015  Page 39 
 
 
Human services agencies and 
enforcement activities 
Administration for Children and Families 
Child Care and Development Fund 
  Some Minnesota Childcare Home Providers Did Not Always Comply With State Health and Safety 
Licensing Requirements. A-05-14-00021. 2015 March. 
  Some Arizona Family Childcare Home Providers Did Not Always Comply With State Health and 
Safety Certification Requirements. A-09-13-01004. 2015 February. 
  Some Minnesota Childcare Centers Did Not Always Comply With State Health and Safety Licensing 
Requirements. A-05-14-00022. 2015 March. 
The family childcare home providers reviewed in two States did not always comply with applicable State 
licensing requirements to ensure the health and safety of children (19 out of 20 providers reviewed in 
Minnesota and 20 out of 20 providers reviewed in Arizona).  In addition, the childcare center providers in 
Minnesota did not always comply with applicable State licensing requirements to ensure the health and 
safety of children (3 out of 3 providers reviewed).  We found several types of errors, but not all errors 
appeared in each State.  Health and safety standards must cover three areas:  prevention and control of 
infectious disease, building and physical premises safety, and health and safety training.  In the family 
childcare home provider reports, Minnesota and Arizona concurred with the following recommendation: 
  ensure through more frequent onsite monitoring that providers comply with health and safety 
regulations. 
Arizona concurred with the following recommendation:  
  strengthen its existing policies and procedures to effectively identify when fingerprint clearance 
cards have been suspended or revoked. 
Minnesota and Arizona partially concurred with the following recommendation: 
  develop a mandatory training program to improve provider compliance with health and safety 
regulations. 
Minnesota partially concurred with the following recommendation: 
  ensure adequate oversight by reducing licensing inspectors caseloads. 
Arizona partially concurred with the following recommendation:  
  perform criminal records and child abuse registry checks in compliance with requirements.  
In the childcare report, Minnesota concurred with the following recommendations:   HHS Office of Inspector General 
Semiannual Report to Congress | Spring 2015  Page 40 
 
 
  to ensure, through more frequent onsite monitoring, that providers comply with health and safety 
regulations and  
  ensure that providers employees who provide direct services to children have completed 
background studies.   
Minnesota partially concurred with the following recommendation: 
  ensure adequate oversight by reducing licensing inspectors caseloads.   
Foster Care 
  Not All Children in Foster Care Who Were Enrolled in Medicaid Received Required Health 
Screenings. OEI-07-13-00460. 2015 March. 
We found that nearly a third of children in foster care who were enrolled in Medicaid in four States did 
not receive at least one health screening as required by their respective States plans for health services 
oversight and coordination and that 28 percent of children in foster care received required screenings 
late.  These findings raise concerns because missing or late screenings may prevent childrens mental 
health needs, physical health needs, and developmental needs from being identified and treated.  ACF 
stated that it would consider the following recommendation:  
  expand its Child & Family Services Reviews to determine whether children in foster care receive 
required health screenings according to the timeframes specified in States plans.   
ACF concurred with the following recommendation: 
  identify and disseminate State strategies to ensure that all children in foster care receive required 
health screenings.  
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.  OIG investigations of child support enforcement cases 
nationwide resulted in 32 criminal actions and court-ordered restitution and settlements of $1.32 million 
during this semiannual reporting period.  The following are examples of child support enforcement 
cases: 
North Carolina  Child Support Enforcement Most Wanted Fugitive Edward Morrill was sentenced to 
serve up to 180 days in a halfway house and  ordered to pay $46,200 in restitution after pleading guilty 
to failure to pay legal child support obligations.  In 1989, Morrill was ordered by the court to pay child 
support, provide medical insurance, and help pay medical bills for his two children.  However, the 
investigation revealed that, as of August 2004, he was nearly $60,000 in arrears.  Morrill was arrested in 
March 2014, during his attempt to enter the United States at the Mexico and El Paso, Texas, border.  HHS Office of Inspector General 
Semiannual Report to Congress | Spring 2015  Page 41 
 
 
Morrill, a fugitive from the law for nearly 10 years, remained in jail until sentencing and his placement in 
a halfway house. 
Maine  Jay Dandreo was sentenced to a 112 years in jail and ordered to pay $71,988 in restitution after 
being convicted following a trial on charges of willfully failing to pay child support and possession with 
the intent to manufacture or distribute marijuana.  In May 2004, the Maine Department of Health & 
Human Services ordered Dandreo to pay for the support of his four minor children.  Between May 2004 
and November 2013, Dandreo knowingly and intentionally failed to make any child support payments, 
resulting in an unpaid obligation of approximately $70,000.  In August 2012, Maine Drug Enforcement 
Agency investigators searched a property located in Limerick, Maine, that was owned by Dandreos 
father, and they seized 183 marijuana plants growing at several locations on the property, as well as drug 
distribution paraphernalia and several firearms. 
Pennsylvania  William Albright was sentenced to 1 year and 1 day in prison and ordered to pay $50,915 
in restitution after pleading guilty to failure to pay child support obligations. In 2000, Albright was 
ordered by the Pennsylvania Court of Common Pleas to pay $378 a month toward his court-ordered child 
support.  However, investigators determined that he had not made a child support payment since 2009. 
Engaging the public in capturing deadbeat parents 
Because of the success of OIGs Most Wanted Fugitives Web site, OIG launched its Most Wanted 
Deadbeat Parents Web site. 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 and has a reporting button to 
turn in deadbeat parents.  OIGs Most Wanted Deadbeat Parents Web site is at:  
https://oig.hhs.gov/fraud/child-support-enforcement/index.asp.  
  
    HHS Office of Inspector General 
Semiannual Report to Congress | Spring 2015  Page 42 
 
 
 
 
 
 
 
 
 
http://oig.hhs.gov 
 
 
 
 
 
 
 
 
  HHS Office of Inspector General 
Semiannual Report to Congress | Spring 2015  Page 43 
 
 
Other HHS-related reviews 
Grants and Contracts 
Payroll Certification System Pilot 
  The University of California at Irvine's Pilot Payroll Certification System Could Not Be Assessed. A-
04-13-01027. 2014 December. 
We could not determine whether the University of CaliforniaIrvines (the Universitys) pilot payroll 
certification system provided data that supported labor charges that it made to its Federal awards 
because it could not reconcile its accounting records to its Federal financial reports (FFRs).  As a result, 
we cannot determine whether the University certified, reported, or claimed labor costs and associated 
fringe benefits that accurately reflected the actual effort its personnel had devoted to Federal awards.  
Although the University did not concur, OIG continues to recommend that the University:   
  reconcile the $491.3 million it had reported on its FFRs to its accounting records and  
  modify its financial management system to ensure that amounts it reports on its FFRs can be 
supported by amounts recorded in its accounting records. 
Grant fraud 
HHS is the largest grantmaking organization and one of the largest contracting agencies in the Federal 
Government.  In FY 2014, HHS awarded over $381 billion in grants and over $21 billion in contracts 
across all program areas.  OIGs direct annual discretionary appropriation funding is used to conduct 
program integrity and enforcement activities with regard to the over 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.   
Misuse of Grant Funds Examples:  
Maryland  Jason Dietz was sentenced to 112 years in prison and ordered to pay $683,705 in restitution 
after pleading guilty to theft from programs receiving Federal funds.  Dietz worked for Matthews Media 
Group (MMG), which was contracted by the National Institute for Drug Abuse (NIDA) to recruit, screen, 
and compensate participants for clinical research studies involving drug addiction and treatment.  Dietz 
was also responsible for keeping a spreadsheet of participants compensation with supporting 
documentation.  The investigation revealed that Dietz embezzled funds from MMG in several ways, 
including paying study participants and obtaining a signed receipt from them, then logging a higher 
amount on his spreadsheet and pocketing the difference.  Dietz also created fictitious receipt numbers 
and amounts, which he placed on his spreadsheet, and then kept all the cash from these fictitious 
payments.  In addition, Dietz documented on his spreadsheet higher amounts than were actually paid to  HHS Office of Inspector General 
Semiannual Report to Congress | Spring 2015  Page 44 
 
 
employees at one of the NIDA clinics and pocketed the difference.  The investigation determined that 
Dietz embezzled, stole, and converted to his own use funds in excess of $570,000.   
Illinois  Charles Bennett entered into a $475,000 settlement agreement to resolve allegations under the 
FCA.  Bennett was a former employee and researcher at Northwestern University's (Northwesterns) 
Robert H. Lurie Comprehensive Cancer Center, a grantee of NIH.  The Government alleged that Bennett 
submitted, or caused the submission of, false claims to NIH for unallowable grant expenditures incurred 
in connection with research projects for which he served as the principal investigator.  Specifically, 
between January 2003 and August 2010, Bennett allegedly misspent grant funds on professional and 
consulting services, including those performed by unqualified family members.  Bennett also allegedly 
misspent NIH grant funds on airfare and other transportation, conference registration fees, meals, hotel 
stays, and other items that were for his personal benefit or were for the personal benefit of friends and 
family.  The grants at issue involved research on adverse drug events, multiple myeloma drugs, a rare 
blood disorder, and quality of care for cancer patients. 
New York  The Trustees of Columbia University in the City of New York and ICAP, f/k/a International 
Center for AIDS Care and Treatment Programs (collectively, Columbia), agreed to pay $9 million to 
resolve allegations under the FCA.  The United States contended that Columbia submitted false claims in 
connection with Federal grants obtained to fund ICAPs AIDS- and HIV-related work.  As the grant 
administrator on behalf of ICAP, Columbia received millions of dollars in Federal grants and, pursuant to 
the rules applicable to such grants, was required to verify that ICAPs nearly 200 employees located in 
New York City had actually performed the work charged to a particular grant.  The United States alleged 
that Columbia was aware that employee work was not being verified and that Columbia continued to 
falsely charge Federal grants for work that was not devoted to the projects being funded by CDC, HRSA, 
NIH, and other HHS granting agencies.  
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 to it related to fraud, waste, or abuse in the Small Business 
Innovative Research/Small Business Technology Transfer (SBIR/STTR) program; 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 November 2014 report delivered to the three Congressional 
oversight committees, we reported that OIG spent approximately $236,860 in salaries on oversight 
related to the SBIR/STTR program.  HHS referred 13 new SBIR/STTR cases to OIG in FY 2014. 
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 three investigations.  HHS Office of Inspector General 
Semiannual Report to Congress | Spring 2015  Page 45 
 
 
Peer review results 
During this semiannual reporting period, OI did not conduct a peer review of another OIG.  A peer 
review of OI by another OIG was not conducted during this reporting period.  
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 Report(s) 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 1,986 reports covering $834.2 
billion in audited costs.  Federal dollars covered by these audits totaled $143.7 billion, of which about 
$70.7 billion 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 followup.  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, 2014, through March 31, 2015 
Number of Non-Federal Audits:   
  Not requiring changes or having minor changes  1,185 
  Requiring major changes  93 
  Having significant technical inadequacies  8  HHS Office of Inspector General 
Semiannual Report to Congress | Spring 2015  Page 46 
 
 
Total  1,986 
 
The 1,986 reports included 1,979 recommendations for improving management operations.  In addition, 
these audit reports provided information for 29 OIG special memorandums that identified concerns for 
increased monitoring by management. 
Other reporting requirements and reviews 
Government Charge Card Abuse Prevention Act 
   Letter to Office of Management and Budget Director To Meet Requirements of Government 
Charge Card Abuse Prevention Act of 2012 Regarding Agency Progress Implementing 
Recommendations on Charge-Card-Related Findings. A-04-14-06175. 2015 January. 
This letter report describes the progress that HHS has made in implementing previous purchase and 
travel card audit recommendations and the status of OIGs annual risk assessment.  The letter was issued 
to meet the requirements of the Government Charge Card Abuse Prevention Act of 2012 (P.L. No. 112-
194) (Charge Card Act) to report to the OMB Director on agency progress in the implementation of 
recommendations on charge-card-related findings.  In addition, while not required for this report, we 
also explain how we intend to conduct required annual risk assessments of agency purchase cards.  
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, which is published at the start of each fiscal year, 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  HHS Office of Inspector General 
Semiannual Report to Congress | Spring 2015  Page 47 
 
 
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. 
Affordable Care Act implementation 
OIG continues to review programs implemented pursuant to the Patient Protection and Affordable Care 
Act of 2010, as amended by the Health Care and Education Reconciliation Act of 2010 (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.    
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.   
Following are examples of recent ACA reviews. 
Marketplaces  Contract planning and procurement  
  Federal Marketplace:  Inadequacies in Contract Planning and Procurement. OEI-03-14-00230. 
2015 JAN. 
CMS relied extensively on contractors to plan and build the Federal Marketplace.  However, CMS did not 
develop an overarching acquisition strategy for the Federal Marketplace contracts as required by Federal 
and HHS regulations, did not plan to assign a lead systems integrator to coordinate all contractors 
efforts, and missed opportunities to leverage contract planning and oversight tools for a project of this 
size and importance.  The complexity of the Federal Marketplace underscored the need for CMS to select 
the most qualified contractors.  However, CMS did not perform thorough reviews of contractor past 
performance when awarding two key contracts.  HHS and CMS concurred with the following 
recommendations:  
  ensure that acquisition strategies are completed as required by regulation, 
  assess whether to assign a lead systems integrator for complex IT projects,  
  ensure contract actions are properly documented,  
  ensure that all contracts subject to oversight review requirements undergo those reviews,  HHS Office of Inspector General 
Semiannual Report to Congress | Spring 2015  Page 48 
 
 
  limit or eliminate regulatory exceptions to acquisition planning requirements, and 
  revise acquisition guidance to include specific standards for conducting past performance reviews. 
Marketplaces  Establishment grants  
  Maryland Misallocated Millions to Establishment Grants for a Health Insurance Marketplace, A-
01-14-02503. 2015 March.   
Maryland did not allocate costs to its establishment grants and Medicaid in accordance with Federal 
requirements, the terms and conditions of the establishment grants, and its Cost Allocation Plan 
(CAP).  As a result, the State agency misallocated $28.4 million in costs to the establishment grants 
instead of Medicaid because its cost allocation methodology did not prospectively use updated or better 
data when available and included a material defect.  Maryland concurred with the following 
recommendations and described actions that it has taken or will take to address the recommendations: 
  develop a written policy that explains how to calculate cost allocations and that emphasizes the 
necessity to use updated and actual data and  
  oversee operations to ensure the identification and correction of enrollment projection errors, the 
use of better or updated enrollment data, and the application of these data to allocate costs. 
Although Maryland did not concur, we continue to recommend that Maryland: 
  refund $15.9 million to CMS that was misallocated to the cooperative agreements because it did not 
prospectively use updated actual enrollment data,  
  refund $12.5 million to CMS that was misallocated to the establishment grants using a methodology 
that included a material defect, and  
  immediately amend the CAP and the Advance Planning Document for July 1 through December 31, 
2014, so that allocated costs correspond to the relative benefits received. 
Financial Assistance Payments   
  Review of the Accounting Structure Used for the Administration of Premium Tax Credits. OEI-06-
14-00590. 2015 March. 
The report issued jointly with the Treasury Inspector General for Tax Administration (TIGTA) found that 
the Internal Revenue Service (IRS) and CMS, in coordination with the Department of the Treasury and 
HHS, took significant steps in planning the shared roles and responsibilities for advanced premium tax 
credit (APTC) payments.  The IRS and CMS, in an effort to ensure that a sound and lawful accounting 
structure was selected, identified issues requiring resolution and discussed a variety of accounting 
approaches.  They sought legal opinions from agency counsel and obtained input from OMB.  By mutual 
agreement and with OMB concurrence, the IRS and CMS adopted an allocation account structure, that 
they considered a logical and efficient approach.  Continuing work by OIG and TIGTA will examine these 
operations.  There were no recommendations in this report. 
  HHS Office of Inspector General 
Semiannual Report to Congress | Spring 2015  Page 49 
 
 
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 
 
  
    HHS Office of Inspector General 
Semiannual Report to Congress | Spring 2015  Page 50 
 
 
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  225  $917,154,000  $25,138,000 
been made by the beginning of the reporting 
period1 
Reports issued during the reporting period  62  $182,514,000  $96,000   
  Total Section 1  287  $1,099,668,000  $25,234,000 
 
Section 2       
Reports for which management decisions were       
made during the reporting period2, 3  
  Disallowed costs  172  $544,702,000*     $108,000 
  Costs not disallowed               3    $84,876,000   $1,381,000 
  Total Section 2  175  $629,578,000  $1,489,000 
       
*Audit receivables (expected recoveries).       
  HHS Office of Inspector General 
Semiannual Report to Congress | Spring 2015  Page 51 
 
 
  Dollar Value  Dollar Value 
Reports  Questioned  Unsupported 
       
Section 3 
Reports for which no management decisions had  112  $470,090,000  $23,745,000 
been made by the end of the reporting period (Sec. 
1 minus Sec. 2) 
 
Section 4        
Reports for which no management decisions were  67  $338,339,000  $23,649,000 
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.  
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  14  $15,861,878,000 
beginning of the reporting period1 
Reports issued during the reporting period  10  $161,194,000 
  Total Section 1  24  $16,023,072,000 
     
Section 2     
Reports for which management decisions were made during the     
reporting period2 
Value of recommendations agreed to      
by management 
  Based on proposed management action  7  $127,739,000 
  Based on proposed legislative action    0 
     
Value of recommendations not agreed to by management 
1  $168,000 
  Total Section 2  8  $127,907,000  HHS Office of Inspector General 
Semiannual Report to Congress | Spring 2015  Page 52 
 
 
  Reports  Dollar Value 
     
Section 3     
Reports for which no management decisions had been made by the  16  $15,895,165,000 
end of the reporting period3 (Sec. 1 minus Sec. 2) 
 
End Notes 
Table 1 End Notes 
1 The opening balance was adjusted upward by $79.6 million because of a reevaluation of previously 
issued recommendations.  
2 Revisions to previously reported management decisions: 
  A-04-11-08008 Alabama Improperly Claimed Federal Funds for Children's Health Insurance Program 
Enrollees Who Had Medicaid or Other Health Insurance Coverage.  Disallowed cost was reduced by 
$1,430,756. 
  A-05-10-13555 State of Indiana.  The State provided documentation to support the amount claimed 
on the CMS-64 report.  The $2,443,635 questioned costs were determined to be allowable. 
  A-06-11-00050   The Emergency Medical Services Authority of Oklahoma City Billed and Was Paid for 
Advanced Life Support Transports That Were Not Medically Necessary.  A decision in response to an 
appeal by Novitas determined that questioned costs totaling $365,889 were allowable.   
 
  A-09-07-88410 State of California.  Subsequent review by CMS determined that refundable costs 
totaling $3,331,446 should be $2,907,056.  As a result, the disallowed costs were adjusted by 
$404,390.      
  Not detailed are net reductions to previously disallowed management decisions totaling $383,019. 
3 Included are management decisions to disallow $77.1 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 
responsible currently 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 67 audits was not completed within 6 months of issuance of the reports; however, agency 
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-07-12-01116  MEDICARE IMPROPERLY PAID PROVIDERS MILLIONS OF DOLLARS FOR UNLAWFULLY 
PRESENT BENEFICIARES WHO RECEIVED SERVICES DURING 2009 THROUGH 2011, JAN 
2013, $91,620,548  HHS Office of Inspector General 
Semiannual Report to Congress | Spring 2015  Page 53 
 
 
CIN: A-07-12-01113  MEDICARE IMPROPERLY PAID PROVIDERS MILLIONS OF DOLLARS FOR INCARCERATED 
BENEFICIARIES WHO RECEIVED SERVICES DURING 2009- THROUGH 2011, JAN 2013, 
$33,587,634 
CIN: A-01-02-00006  REVIEW OF RATE SETTING METHODOLOGY FOR MEDICAID SCHOOL BASED HEALTH 
SERVICES - CT, MAY 2003, $32,780,146 
CIN: A-07-12-06038  REVIEW OF MEDICARE PART D PAYMENTS FOR UNLAWFULLY PRESENT BENEFICIARIES, 
OCT 2013, $28,990,718 
CIN: A-07-13-01125  MEDICARE PART C UNLAWFULLY PRESENT ENROLLEES, APR 2014, $26,150,043 
CIN: A-07-13-01127  MEDICARE A & B PAYMENTS FOR BENEFICIARIES WITH TERMINATED ENTITLEMENT, APR 
2014, $18,374,440 
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  CHILD CARE DEVELOPMENT FUND: TARGETED FUNDS REVIEW IN TEXAS, AUG 2014, 
$14,967,129 
CIN: A-04-12-00085  ACCURACY OF MEDICAID COLLECTIONS REPORTED BY THE GEORGIA DEPARTMENT OF 
COMMUNITY HEALTH, APR 2014, $10,915,180 
CIN: A-04-12-01016  AUDIT OF COSTS NORMALLY TREATED AS ADMINISTRATIVE AND CLERICAL COSTS BUT 
CHARGED DIRECTLY TO HHS AWARDS AT THE UNIVERSITY OF SOUTH FLORIDA, APR 
2014, $6,467,290 
CIN: A-03-12-00004  REVIEW OF HORIZON'S 2009 AND 2010 BONA FIDE SERVICE FEES, MAR 2013, 
$4,344,417 
CIN: A-01-11-02500  REVIEW OF MASSACHUSETTS' TITLE IV-E ADOPTION ASSISTANCE COSTS FOR FEDERAL 
FISCAL YEARS 2006 THRU 2008, AUG 2011, $4,242,540 
CIN: A-05-13-00014  OHIO EXCEEDED THE 5-PERCENT LIMIT FOR CLAIMING CHILD CARE DEVELOPMENT 
FUND ADMINISTRATIVE EXPENDITURES, NOV 2013, $3,164,630 
CIN: A-07-12-03175  REVIEW OF CCDF TARGETED FUNDS IN NEBRASKA, APR 2013, $2,965,913 
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 FIDE 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  HHS Office of Inspector General 
Semiannual Report to Congress | Spring 2015  Page 54 
 
 
CIN: A-05-12-00021  REVIEW OF CDC'S OVERSIGHT OF PEPFAR FUNDS PROVIDED TO AURUM IN SOUTH 
AFRICA FOR 2009-10, AUG 2013, $1,690,605 
CIN: A-07-11-06013  INDIRECT COSTS CLAIMED AS DIRECT COSTS - UNIVERSITY OF COLORADO DENVER, JUN 
2013, $1,419,524 
CIN: A-03-12-00008  REVIEW OF XL HEALTH DIR, JAN 2013, $1,410,342 
CIN: A-01-12-02500  REVIEW OF CONNECTICUT'S TITLE IV-E ADMINISTRATIVE/TRAINING COSTS AND 
MAINTENANCE PAYMENTS, DEC 2012, $1,316,684 
CIN: A-01-12-01501  REVIEW OF SAMHSA COSTS CLAIMED AT LATIN AMERICAN HEALTH INSTITUTE, BOSTON, 
MA, APR 2013, $1,261,328 
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-02-12-02003  ECONOMIC OPPORTUNITY COMMISSION OF NASSAU CO., INC. CLAIMED SOME 
UNALLOWABLE HEAD START COSTS, SEP 2013, $879,876 
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-02-11-02005  LIMITED HEAD START REVIEW OF INCLUDED EDUCATIONAL SERVICES, JUL 2012, 
$588,830 
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-07-12-06035  REVIEW OF MEDICARE PART D PAYMENTS FOR INCARCERATED BENEFCIARIES, JAN 2014, 
$325,903 
CIN: A-01-11-02510  NORWALK ECONOMIC OPPORTUNITY NOW, INC., DID NOT ALWAYS CHARGE 
ALLOWABLE COST TO COMMUNITY SERVICES BLOCK GRANT  RECOVERY ACT 
PROGRAMS, APRIL 2013 $314,605 
CIN: A-04-13-04015  REVIEW OF THE ETHIOPIA MINISTRY OF HEALTH FY 11 COOPERATIVE AGREEMENT 
5U2GPS002087-02, SEP 2014, $294,654 
CIN: A-01-10-02505  RESULTS OF LIMITED SCOPE REVIEW OF CTE, INC., MAY 2011, $293,870 
CIN: A-04-13-04004  REVIEW OF ZAMBIA'S MINISTRY OF HEALTH COOPERATIVE AGREEMENT 
5U2GPS001792-2, JUN 2014, $290,575 
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-05-12-00023  REVIEW OF CDC'S OVERSIGHT OF PEPFAR FUNDS PROVIDED TO SOUTHERN AFRICAN 
CATHOLIC BISHOPS' CONFERENCE FOR JUNE 1, 2009 TO MAY 31, 2010, JUL 2013, 
$235,130  HHS Office of Inspector General 
Semiannual Report to Congress | Spring 2015  Page 55 
 
 
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  CHILD CARE DEVELOPMENT FUND: TARGETED FUNDS REVIEW IN LOUISIANA, SEP 2013, 
$221,578 
CIN: A-05-12-00012  REVIEW OF IL CSBG RECOVERY ACT COSTS CLAIMED - ROCKFORD, JUL 2013, $205,296 
CIN: A-05-12-00024  NATIONAL HEALTH LABORATORY SERVICE DID NOT ALWAYS MANAGE PRESIDENTS 
EMERGENCY PLAN FOR AIDS RELIEF FUNDS OR MEET PROGRAM GOALS IN 
ACCORDANCE WITH AWARD REQUIREMENTS, AUG 2013, $185,768 
CIN: A-06-09-00012  RISK ADJUSTMENT DATA VALIDATION - PACIFICARE 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-04-11-03538  HEAD START HIGH RISK GRANTEE - MOBILE COMMUNITY ACTION AGENCY, INC., DEC 
2011, $147,587 
CIN: A-07-11-02766  REVIEW OF WY CSBG RECOVERY ACT COSTS CLAIMED - CARBON COUNTY, AUG 2013, 
$143,588 
CIN: A-09-11-01013  REVIEW OF OREGON'S HOUSING AND COMMUNITY SERVICES DEPARTMENT, APR 2013, 
$115,911 
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-05-12-00022  THE SOUTH AFRICAN NATIONAL DEPARTMENT OF HEALTH DID NOT ALWAYS MANAGE 
PRESIDENTS EMERGENCY PLAN FOR AIDS RELIEF FUNDS OR MEET PROGRAM GOALS IN 
ACCORDANCE WITH AWARD REQUIREMENTS, AUG 2013, $77,790 
CIN: A-04-13-04010  REVIEW OF UNIVERSITY OF ZAMBIA FY 2010 COOPERATIVE AGREEMENT 
5U2GPS000749, APR 2014, $76,638 
CIN: A-06-11-00057  THE VIETNAM ADMINISTRATION PEPFAR REVIEWS, JUNE 2013, $47,708 
CIN: A-02-11-02000  DIRECT COST REVIEW - SUNY 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, JULY 2012, $22,602 
CIN: A-04-13-04005  REVIEW OF UNIVERSITY TEACHING HOSPITAL-ZAMBIA COOPERATIVE AGREEMENT 
5U2GPS001932-2, MAR 2014, $13,554 
CIN: A-05-11-00053  THE COLUMBUS URBAN LEAGUE CLAIMED SOME UNALLOWABLE COSTS TO HEAD 
START, SEP 2012, $13,102 
CIN: A-09-13-02024  MEDICARE COMPLIANCE REVIEW AT SUTTER MEDICAL CENTER, SACRAMENTO, APR 
2014, $11,668 
CIN: A-03-12-00250  AUDIT OF LANCASTER COUNTY COMMUNITY ACTION PROGRAM, NOV 2013, $2,813 
 
Total CINs :    67 
Total Amount:    $338,339,000 
  HHS Office of Inspector General 
Semiannual Report to Congress | Spring 2015  Page 56 
 
 
Table 2 End Notes 
1The opening balance was adjusted upward by $12.2 million because of reevaluation of previously issued 
recommendations.  
2 Revisions to previously reported management decisions: 
  A-07-11-03169 Nursing Facilities in Missouri Did Not Reconcile Invoice Records With Credit 
Balances and Report the Associated Medicaid Overpayments to the State Agency.  Subsequent 
review by Health Management Systems, LLC (HMS), identified additional cost savings totaling 
$1,926,165.      
3 Because of administrative delays, some of which were beyond management control, 6 of the 16 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, APR 2014, $15,000,000,000 
CIN: A-01-12-00507  ACUTE-CARE INPATIENT HOSPITAL TRANSFERS TO INPATIENT HOSPICE CARE, MAY 2013, 
$602,519,187 
CIN: A-07-11-05017  NATIONWIDE REVIEW OF PART D INVESTMENT INCOME, APR 2013, $111,244,413 
CIN: A-07-13-06041  REVIEW OF MEDICARE PART D PAYMENTS FOR BENEFICIARIES INCARCERATED IN 
MENTAL HEALTH INSTITUTIONS, JUL 2014, $12,641,770 
CIN: A-04-12-06154  REVIEW OF HOSPITAL OUTPATIENT PAYMENTS FOR ESTABLISHED PATIENTS, MAR 2014, 
$7,536,964 
CIN: A-05-06-00023  UNDISTRIBUTABLE CHILD SUPPORT COLLECTIONS - MN, SEP 2006, $28,240 
 
Total CINs:    6 
Total Amount:    $15,733,976,000 
 
    HHS Office of Inspector General 
Semiannual Report to Congress | Spring 2015  Page 57 
 
 
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 peer review results 
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 
June 2012  Department of  HHS OIG, OAS 
Homeland Security 
 
The system of quality control for the audit organization of HHS OIG in effect for the year ending September 
30, 2011, 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 
May 2012  HHS OIG, OAS  U.S. Environmental  
Protection Agency (EPA) 
 
The system of quality control for the audit organization of EPA OIG in effect for the year ending September 
30, 2011, has been suitably designed and complied with to provide EPA 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.  EPA OIG received a 
peer review rating of pass. 
 
(Peer Review Results continued on next page)    HHS Office of Inspector General 
Semiannual Report to Congress | Spring 2015  Page 58 
 
 
Office of Investigations peer review results  
During this semiannual reporting period, no peer reviews involving OI were completed.  Listed below is 
information concerning OIs peer review activities during prior reporting periods. 
 
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. 
 
 
OI  Date  Reviewing Office  Office Reviewed 
August 2012  USPS-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, 2012, were in full compliance with the quality standards established 
by CIGIE and the Attorney General's guidelines. 
 
OI  Date  Reviewing Office  Office Reviewed 
July 2011  HHS-OIG, OI  DoD-OIG 
 
The system of internal safeguards and management procedures for the investigative function of DoD-OIG in 
effect through July 2011 were in full compliance with the quality standards established by CIGIE and the 
Attorney General's guidelines. 
 
OI  Date  Reviewing Office  Office Reviewed 
January 2011  HHS-OIG, OI  Department of Housing and 
  Urban Development (HUD) OIG 
 
The system of internal safeguards and management procedures for the investigative function of HUD-OIG in 
effect through February 2011 was in full compliance with the quality standards established by CIGIE and the 
Attorney Generals guidelines. 
 
 
    HHS Office of Inspector General 
Semiannual Report to Congress | Spring 2015  Page 59 
 
 
Appendix C:  
Summary of Sanction authorities 
  
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 
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)).  HHS Office of Inspector General 
Semiannual Report to Congress | Spring 2015  Page 60 
 
 
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 
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.  HHS Office of Inspector General 
Semiannual Report to Congress | Spring 2015  Page 61 
 
 
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 2015  Page 62 
 
 
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 
(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  HHS Office of Inspector General 
Semiannual Report to Congress | Spring 2015  Page 63 
 
 
Section  Requirement  Location 
(a)(14)-(16)  Results of peer reviews of HHS-OIG  Appendix C 
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 
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.