U.S. to target health-care fraud in bid to reclaim huge losses

WASHINGTON – Senior Obama administration officials on Wednesday launched a high-level task force to use technology to help detect and prevent health-care fraud that robs the nation’s coffers of billions of dollars each year.

Attorney General Eric Holder and Health and Human Services Secretary Kathleen Sebelius also directed federal investigators and prosecutors to expand special strike forces to Detroit and Houston, where “erratic” billing data suggest high levels of fraud, waste and abuse in Medicare and Medicaid programs.

Together, the actions signal the Obama administration’s biggest push since taking office to halt fraudulent claims in programs that expend hundreds of billions of dollars a year for health care for the poor, elderly and disabled.

“When individuals and corporations cross the line, we will hold them accountable,” Holder said at a news conference in Washington.

Sebelius added: “What we’re talking about today is theft, plain and simple.”

The announcement comes a week after the trustees who monitor Medicare’s finances predicted that the trust fund that pays hospital bills for elderly patients will be depleted by 2017, a year earlier than previously expected. Medicare’s eroding financial stability increases the pressure on authorities to cut down on fraud.

The new Health Care Fraud Prevention and Enforcement Action Team will be composed of senior-level officials at the Justice Department and HHS. The group will use electronic claims data, as well as the threat of federal prosecution, to look for unusual billing problems.

The largest sums by far recovered by the federal government in recent years have come through Justice Department intervention in whistleblower lawsuits, many filed under the False Claims Act against pharmaceutical companies. Such settlements are on track to reach record highs for fiscal year 2009, according to lawyers who follow the cases.

In January, Eli Lilly agreed to pay $1.4 billion in criminal fines and civil damages to resolve allegations that it defrauded Medicaid and Medicare through improper marketing of its anti-psychotic drug Zyprexa to treat dementia and other diseases afflicting the elderly, for which it was not approved by the FDA. Cases involving two related drugs marketed by other manufacturers are still pending, lawyers said. False-claims cases often proceed for years under seal while prosecutors and civil division lawyers investigate.

Last month, Quest Diagnostics agreed to plead guilty and pay more than $300 million in connection with faulty test kits sold to labs across the country, one of the largest such recoveries in a medical device case.

Other major pharmaceutical companies have reserved hundreds of millions of dollars for possible settlements that could come later this year, according to analysts who have followed the issues. And Monday, Justice Department leaders announced that the federal government and 16 states would intervene in a major whistleblower case alleging that Wyeth overcharged the government for stomach acid drugs purchased through the Medicaid program.

Department lawyers have been sorting through a backlog of the complex cases. Under the president’s 2010 budget request, the Justice Department would receive $10 million to police fraud in the bailout and stimulus programs.

“The Department of Justice has done great work,” said Patrick Burns, a spokesman for Taxpayers Against Fraud, a lawyers group that represents whistleblowers. “I just wish the Civil Division had more people to help reel in the fraudsters already on the line, as scores of billions of dollars are waiting to be recovered from the health-care industry alone.”