The General Accounting Office estimates that fraud in healthcare ranges from $60 billion to $600 billion per year – or anywhere between 3 percent and 10 percent of the $2 trillion healthcare budget.
“Unscrupulous healthcare providers are causing others to undergo more audits (such as the Medicare Recovery Audit Contractor audits) and this costs money,” said Ken Nolan, healthcare fraud attorney at Nolan & Auerbach, a healthcare qui tam law firm.
Nolan said healthcare fraud makes the playing field uneven for those who are abiding by the rules.
“They take money and resources in the system away from those who really need it,” he said.
In September, Pfizer, Inc. and its subsidiary Pharmacia & Upjohn Company Inc. agreed to pay $2.3 billion to settle criminal and civil liability charges of marketing fraud.
The case is officially the largest healthcare fraud settlement in the history of the Department of Justice, according to officials.
“This historic settlement will return nearly $1 billion to Medicare, Medicaid and other government insurance programs, securing their future for the Americans who depend on these programs,” said Health and Human Services Secretary Kathleen Sebelius.
Pharmacia & Upjohn has pleaded guilty to a felony violation of the Food, Drug and Cosmetic Act for misbranding Bextra with the intent to defraud or mislead. Bextra is an anti-inflammatory drug that Pfizer pulled from the market in 2005.
Healthcare fraud affects not only providers, but patients as well, say law enforcement officials, through off-label marketing of drugs and illegal kickbacks to doctors for writing unnecessary prescriptions.
When not approved by the FDA, drugs can be harmful or ineffective.
“Illegal conduct and fraud by pharmaceutical companies puts the public health at risk, corrupts medical decisions by healthcare providers and costs the government billions of dollars,” said Tony West, Assistant Attorney General for the Civil Division.
The civil settlement resolves allegations that Pfizer paid kickbacks to healthcare providers to induce them to prescribe these and other drugs. The federal share of the civil settlement is $668,514,830 and the state Medicaid share of the civil settlement is $331,485,170.
Six whistleblowers will receive payments totaling more than $102 million from the federal share of the civil recovery.
“The False Claims Act is the government’s primary weapon and since 1986, when the act was revitalized, $14.3 billion in healthcare fraud has been recovered,” said Nolan. “As of September 2008, $10.1 billion of that was from whistleblower lawsuits.”