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Following the Money in Health Care Fraud: Reflections on a Modern-Day Yellow Brick Road

Published online by Cambridge University Press:  06 January 2021

Joan H. Krause*
University of North Carolina-Chapel Hill School of Law


Who cheats? Well, just about anyone if the stakes are right.

Stealing a million dollars or more is remarkably easy, and carries with it little chance of getting caught. You don’t even need to know much about health care.

Copyright © American Society of Law, Medicine and Ethics and Boston University 2010

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1 Steven D. Levitt & Stephen J. Dubner, Freakonomics: A Rogue Economist Explores the Hidden Side of Everything 24 (2005).

2 Malcolm K. Sparrow, License to Steal: How Fraud Bleeds America's Health Care System 1 (updated ed. 2000).

3 For example, in the infamous case of United States v. Krizek, a psychiatrist was sued under the Civil False Claims Act (FCA) for nearly $81 million in statutory penalties and treble damages for submitting $245,000 worth of fraudulent Medicare and Medicaid claims. United States v. Krizek, 859 F. Supp. 5 (D.D.C. 1994). The underlying billing problems that led to the suit were traceable, in part, to the Krizeks’ experiences growing up first in Nazi and then Communist Czechoslovakia, their subsequent “resistance to governmental interference with Dr. Krizek's practice[,]” and a “disdain for the bureaucratic side of medicine [that] appears to have spilled over into a disregard of Medicare recordkeeping norms.” Thomas L. Greaney & Joan H. Krause, United States v. Krizek: Rough Justice Under the Civil False Claims Act, in Health Law and Bioethics: Cases in Context 187, 199-200 (Sandra H. Johnson et al. eds., 2009); see also United States v. Nazon, 940 F.2d 255, 257 (7th Cir. 1991) (physician “claimed that he simply billed Medicaid what he thought he deserved for his services”); Paul, Jesilow et al., Fraud by Physicians Against Medicaid, 266 JAMA 3318, 3320-21 (1991)Google Scholar (describing ways in which physicians who have been convicted of Medicaid fraud blame others, including the government, for their crimes).

4 Pamela H. Bucy, Crimes by Health Care Providers, 1996 U. ILL. L. REV. 589, 589 (internal quotation and citation omitted).

5 Christopher, J. Truffer et al., Health Spending Projections Through 2019: The Recession's Impact Continues, 29 Health Affairs 522, 525 (2010)Google Scholar.

6 Fed. Bureau of Investigation, Financial Crimes Report to the Public, Fiscal Year 2007 (2007),; Sparrow, supra note 2, at viii (“How much gets stolen? … For the time being, nobody knows for sure.”). The most recent estimates quoted by government officials are that “more than $60 billion in public and private health care spending is lost each year to health care fraud.” Eric H. Holder, Jr., U.S. Att’y Gen., Remarks at the National Health Care Fraud Summit (Jan. 28, 2010),

7 CMS, Improper Medicare Fee-For-Service Payments Report – November 2007 Report (2007), (follow “Findings”).

8 Id. The remaining 0.2% is attributed to “Other Errors.” Id.

9 Sparrow, supra note 2, at 121.

10 CMS, Improper Medicare Fee-For-Service Payments Report – November 2009, at 1, 8-9 (2009),

11 Id. at 10.

12 Id. at 14. Interestingly, the new estimates reflect a larger proportionate increase in claims deemed medically unnecessary and a smaller increase in incorrect coding problems.

13 Id. at 1. A similar problem may exist in trying to compare the original error estimates from 1996-2002, when earlier versions of these audits were performed by the Department of Health and Human Services (HHS) Office of Inspector General (OIG). See id. at 4.

14 Id. at 5.

15 Id. at 1-2. Similar criticism has long plagued estimates of health care fraud, starting with the rather startling assertion in the early 1990's that ten percent of health care expenditures were fraudulent. Professor David Hyman traces this number back to a 1992 General Accounting Office (GAO) survey requesting estimates of health care fraud losses, noting that “[a]lthough the figure … was an effective political statistic, it has no empirical foundation.” David, A. Hyman, HIPAA and Health Care Fraud: An Empirical Perspective, 22 CATO J. 151, 159 (2002)Google Scholar, (discussing GAO, GAO/HRD-92-69, Health Insurance: Vulnerable Payers Lose Billions to Fraud and Abuse (1992)). Others are less charitable: one author has accused then-HHS Inspector General Richard P. Kusserow of merely “pull[ing] this figure out of thin air.” Ronald T. Libby, The Criminalization of Medicine: America's War on Doctors 32-33 (referring to “the 10 percent myth”).

16 See Victor, R. Fuchs, Eliminating “Waste” in Health Care, 302 JAMA 2481, 2481 (2009) (explaining the difference between the relatively small category of “medical waste” that is of little medical benefit to patients, and the larger category of “economic waste” in which the value of expected benefit from an intervention is less than its expected costs); Jerry L. Mashaw & Theodore R. Marmor, Conceptualizing, Estimating, and Reforming Fraud, Waste, and Abuse in Healthcare Spending, 11 Yale J. on Reg. 455, 463-66 (1994)Google Scholar (distinguishing the concepts of fraud, abuse, and waste).

17 For example, the FCA defines the “knowing” submission of false claims to include not only actual knowledge but also deliberate ignorance or deliberate disregard of truth or falsity, with no proof of specific intent required. 31 U.S.C. § 3729(b) (2006).

18 See Joan, H. Krause, Fraud in Universal Coverage: The Usual Suspects (and then Some), 55 U. KAN. L. REV. 1151, 1153-58 (2007)Google Scholar (describing proper responses to each type of behavior).

19 SPARROW, supra note 2, at 39.

20 Id. at 2. Professor Sparrow explains: Fraud perpetrators understand the dynamics of false claims extremely well: They lie about diagnoses, falsify the record of services, and in some cases fabricate entire medical episodes for patients they have never seen. They bill their lies, correctly, aiming for the sweet spot – smack in the middle of medical orthodoxy, policy coverage, and price. Then, having found combinations that pay, they replicate them (electronically) thousands of times, spreading the activity across hundreds of patients’ accounts, and preferably across different insurers, to evade detection.

Id. at 84.

21 Mayo Chronicles Medicare Regs: It's 132,720 Pages of Red Tape, Modern Healthcare, Mar. 15, 1999, at 64.

22 A good example of this is the lengthy Krizek litigation. United States v. Krizek, 859 F. Supp. 5 (D.D.C. 1994). Among the government's theories was the argument that Dr. Krizek had “upcoded” by billing for longer (and more generously reimbursed) patient sessions than actually occurred, an issue that could not be resolved easily because his medical records lacked information about the length of the sessions. Dr. Krizek argued that without proof of the session times, the government could not prove that any of his bills were false. The courts, however, held “that it is the provider's duty to keep records supporting the level of care billed.” Greaney & Krause, supra note 3, at 194-95.

23 Robert Fabrikant et al., Health Care Fraud: Enforcement and Compliance § 1.04[2], at 1-28 (release 26, 2010).

24 See Sara R. Collins et al., The Commonwealth Fund, The For-Profit Conversion of Nonprofit Hospitals in the U.S. Health Care System: Eight Case Studies 26 (2001) (describing allegations against Doctors’ Hospital of Hyde Park), Chicago-Area Hospital Settles Pneumonia Miscoding Questions for $4.5 Million, U.S. ex rel. Health Outcomes Technologies v. Springfield Hospital, 4 Health Care Fraud Litig. Rep. (Andrews) no. 9, at 8 (June 1999).

25 Collins et al., supra note 24, at 26.

26 OIG, Protecting Public Health and Human Services Programs: A 30-Year Retrospective 21 (2006), (describing Pneumonia Upcoding Project).

27 See generally 42 U.S.C. §§ 1396a-1396e (2006) (limiting state Medicaid plans).

28 See, e.g., TAP Pharm. v. U.S. Dep't of Health & Human Servs., 163 F.3d 199 (4th Cir. 1998) (unsuccessful challenge to local policy adopted by Medicare Part B contractor in South Carolina that limited reimbursement of a particularly expensive drug to that of a lessexpensive alternative).

29 Kaiser Family Found., Medicare: A Primer 1 (2009),

30 See generally Karen Davis et al., The Commonwealth Fund, Mirror, Mirror on the Wall: An International Update on the Comparative Performance of American Health Care (Deborah Lorber ed., 2007), (ranking the U.S. health care system low on measures of efficiency, in part due to high administrative costs). This phenomenon also runs counter to the Obama Administration's push for interoperable electronic health records. See American Recovery and Reinvestment Act of 2009, Pub. L. No. 111-5, §§ 13001-13424, 123 Stat. 115, 226-279 (Health Information Technology for Economic and Clinical Health Act). While the Patient Protection and Affordable Care Act (PPACA) institutes new federal oversight of certain health care functions, such as the operation of the new Health Benefit Exchanges, it does not alter the basic structure of private health insurance. See generally PPACA, Pub. L. No. 111-148 (2010). Although a full analysis of the legislation is beyond the scope of this essay, I will highlight some of the most relevant provisions.

31 GAO, supra note 15, at 13; see also Mashaw & Marmor, supra note 16, at 488 (noting that the administrative complexity of the multi-payer system “renders fraud and abuse easier for those willing to engage in it, and its decentralization adds to the monitoring problems of federal, state and private officials”).

32 Fabrikant et al., supra note 23, at § 1.04[2], at 1-28.

33 Krause, supra note 18, at 1158-61.

34 Levitt & Dubner, supra note 1, at 24-25.

35 See, e.g., Sparrow, supra note 2, at 19 (describing organized crime's penetration into health care fraud); Lorraine McCarthy, CMS Official: More Beneficiaries Involved in Defrauding Medicare Program, 13 Health Care Fraud Rep. (BNA) 799 (Oct. 21, 2009) (describing “professional patients” who “rent out their Medicare numbers” for use in fraud schemes).

36 In the words of one consumer advocate, “It didn't take long for them to realize that the health care law was a new marketing opportunity.” Robbie Brown, States Warn of “Obamacare” Scams, N.Y. Times, Apr. 24, 2010 (quoting James Quiggle, spokesman for the Coalition Against Insurance Fraud); see also Medicare Drug Discount Card Fraud Discovered Months Before Program Begins, 13 Health Law Rep. (BNA) 295 (Feb. 26, 2004).

37 Bryan Walsh, Psst! Want a Cure for H1N1? Swine Flu Scams, Time, Jun. 26, 2009, available at,8599,1906998,00.html (noting that ads started to appear less than 48 hours after the public health emergency was declared); News Release, FDA, FDA Warns Web Sites Against Marketing Fraudulent H1N1 Flu Virus Claims (June 15, 2009), available at (reporting that agency had issued more than 50 warning letters to offending web sites in the past month).

38 Joan H. Krause, A Patient-Centered Approach to Health Care Fraud Recovery, 96 J. Crim. L. & Criminology 579, 582-83, 587-95 (2006).

39 Id. at 587-89 (describing inflated copayments for the drug Lupron).

40 Id. at 589-93. For a particularly troubling example, see David, R. Stone et al., Labfraud Anemia, 319 New Eng. J. Med. 727, 727-28 (1988)Google Scholar (relating doctors’ experiences with four patients over a three-month period who presented at the emergency room with severe iron-deficiency anemia, ultimately determined to be the result of the patients being paid to undergo almost daily blood draws as part of a scheme to generate fraudulent laboratory billings).

41 As a result, an additional premium was deducted from the husband's Social Security check and the couple received unexpected bills for services not covered by the new plan. Ackerman v. United Healthcare Servs., Inc., Civ. Action No. 3:08CV718TSL-JCS, 2009 WL 1769393, at *1 (S.D. Miss. June 23, 2009) (finding no federal question jurisdiction and remanding case to state court); see also Krause, supra note 38, at 593-95.

42 Lisa Girion, State Shuts Down Alleged Health Insurance Scheme, L.A. Times, July 8, 2009, at B2.

43 Press Release, U.S. Attorney's Office, S. Dist. of Fla., Four Miami-Area Residents Sentenced in $10 Million Medicare Fraud Scheme (June 5, 2009), available at

44 See infra notes 74-86 and accompanying text.

45 Press Release, Fed. Bureau of Investigation, Justice Department Announces Largest Health Care Fraud Settlement in its History: Pfizer to Pay $2.3 Billion for Fraudulent Marketing (Sept. 2, 2009), available at Press Release, Dep't of Justice, Warner-Lambert to Pay $430 Million to Resolve Criminal & Civil Health Care Liability Relating to Off-Label Promotion (May 13, 2004), available at

46 Martin Zimmerman, California and 14 Other States Sue Amgen Over Anemia Drug Aranesp, L.A. Times, Oct. 31, 2009, at B1.

47 Anti-Kickback Statute, 42 U.S.C. § 1320a-7b(b) (2006). As of March 23, 2010, a claim that includes items or services resulting from an Anti-Kickback violation explicitly constitutes a false or fraudulent claim for FCA purposes. See PPACA, Pub. L. No. 111-148, at § 6402(f).

48 Id. §§ 1320a-7(b), 1320a-7, 1320a-7a(a)(7) (fine or imprisonment, exclusion, and CMPs, respectively).

49 Id. § 1395nn.

50 False Claims Act, 31 U.S.C. §§ 3729-3733 (2006); see Joan H. Krause, Health Care Providers and the Public Fisc: Paradigms of Government Harm Under the Civil False Claims Act, 36 GA. L. REV. 121, 129-30, 142-44 (2001) (discussing Civil War-era origins of the FCA and calculation of damages under the FCA).

51 31 U.S.C. § 3729(a)-(b).

52 Id. § 3729(a)(1); 28 C.F.R. § 85.3(a)(9) (2009) (increasing statutory penalties by 10%).

53 31 U.S.C. § 3730(b), (d).

54 See DOJ, Fraud Statistics 1986-2008 (2008), Further growth in FCA cases is expected due to the significant amendments contained in the Fraud Enforcement and Recovery Act of 2009 (FERA), Pub. L. No 111-21, 123 Stat. 1617, and PPACA, Pub. L. No. 111-148.

55 HIPAA, Pub. L. No. 104-191, § 201(b), 110 Stat. 1936, 1993-1996 (1996). For a detailed – and perhaps mind-numbing – analysis of the disposition of these funds, see Krause, supra note 38.

56 See 31 U.S.C. § 3730(d) (discussing the range of awards for qui tam plaintiffs).

57 See 42 U.S.C. § 1395i(k)(2)(C)(iv) (2006) (authorizing the transfer of penalties and damages obtained in health care cases to the Trust Fund, with the exception of funds awarded to a relator, funds designated for restitution, or as otherwise authorized by law).

58 Press Release, DOJ, Justice Department Recovers $2.4 Billion in False Claims Cases in Fiscal Year 2009; More Than $24 Billion Since 1986 (Nov. 19, 2009), available at

59 See HHS & DOJ, Health Care Fraud and Abuse Control Program Annual Report for FY 2008, at 1 (2009),

60 See supra notes 7-13 and accompanying text.

61 Jack A. Meyer, Fighting Medicare Fraud: More Bang for the Federal Buck 4 (2006), Total costs were calculated by combining the budgets of the DOJ components directly involved in fighting health care fraud (the Civil Division and the U.S. Attorney's Office Affirmative Civil Enforcement units) with the total costs of the OIG staff who worked on civil fraud enforcement during this time period. Id. at 6.

62 HHS OIG, Fiscal Year 2008 Annual Performance Report 2 (2008), The ratio was calculated as the agency's “expected recoveries” from audit disallowances, investigative returns, and administrative enforcement divided by its annual budget authority. Id. at 5. Oddly, Assistant Attorney General Tony West recently estimated that the new HEAT enforcement initiative, see infra notes 110-112, recovered just four dollars for every dollar spent to enforce the law, which may be a more accurate assessment. See DOJ Officials Outline Enforcement, Prevention Initiatives to Tackle Fraud, 13 Health Care Fraud Rep. (BNA) 881 (Nov. 18, 2009). For a more cynical view of these estimates, see Sparrow, supra note 2, at 49 (“If anyone is wondering how to interpret administrators’ claims of having saved many billions of dollars through fraud-control efforts, this is usually what they mean. They project, over several years, the reduction achieved after suppressing a problem, having allowed it to escalate in the first place to ridiculously high levels … .”).

63 See United States ex rel. Franklin v. Parke-Davis, 146 F. Supp.2d 39, 46 (D. Mass. 2001); Fed. Bureau of Investigation, supra note 45.

64 42 U.S.C. § 1395i(k)(3) (2006) (describing appropriations to the Control Account).

65 See id. § 1395i(k)(3)(A)(i) (setting out the maximum amounts available to HHS and DOJ).

66 See Krause, supra note 38, at 596-601. Similarly, Professor Dayna Matthew argues that while “[p]ublic prosecutors do not have a direct personal interest in funds deposited into the Control Account from their prosecutorial efforts … they do have an interest in the size of the Control Account as a measure of their professional success and as a source of financing for future professional endeavors.” Dayna Bowen Matthew, Tainted Prosecution of Tainted Claims: The Law, Economics, and Ethics of Fighting Medical Fraud Under the Civil False Claims Act, 73 Ind. L.J. 525, 580 n.319 (2001).

67 See 28 U.S.C. § 524(c)(1) (2006); Eric, Blumenson & Eva, Nilsen, Policing for Profit: The Drug War's Hidden Economic Agenda, 65 U. Chi. L. Rev. 35, 60 (1998).

68 Blumenson & Nilsen, supra note 67, at 56.

69 See Joan H. Krause, “Promises to Keep”: Health Care Providers and the Civil False Claims Act, 23 Cardozo L. Rev. 1363, 1410-15 (2002).

70 See 42 U.S.C. §§ 1320a-7(b)(7), 1320a-7a(a)(7), 1320a-7b(a) (2006) (exclusion, CMPs, and criminal penalties in application for benefits, respectively); 31 U.S.C. § 3729(a)(1) (2006) (FCA civil liability); 18 U.S.C. § 287 (2006) (false claims criminal penalties). Additional penalties may be available under PPACA, Pub. L. No. 111-148. See infra notes 108-109.

71 In 2006, for example, the DOJ issued the Principles of Federal Prosecution of Business Organizations (the “McNulty Memorandum”), which superseded the 2003 “Thompson Memorandum.” See Memorandum from Paul J. McNulty, Deputy Att’y Gen., DOJ, to Heads of Dep't Components and U.S. Attorneys 2 (2006), Among the major changes was a limitation on the ability of prosecutors to demand that the corporation waive the attorney-client and work-product privileges. Id. at 8-11.

72 See Krause, supra note 69, at 1413-14 (describing how qui tam relators can interfere with prosecutorial discretion); see generally Dayna Bowen Matthew, The Moral Hazard Problem with Privatization of Public Enforcement: The Case of Pharmaceutical Fraud, 40 U. Mich. J.L. Reform 281 (2007) (discussing the costs of FCA overenforcement against pharmaceutical defendants caused by qui tam suits).

73 See Joan, H. Krause, A Conceptual Model of Health Care Fraud Enforcement, 12 J.L. & POL’Y 55, 110-37 (2003)Google Scholar (describing examples of the use of litigation to fill regulatory gaps, and the problems inherent in such an approach).

74 42 U.S.C. §§ 1395u(o)(1), 1395l(a)(1)(S) (2000); 42 C.F.R. § 405.517(b) (2002). Medicare pays 80% of the cost for Part B services, with the beneficiary paying the remaining 20% copayment. 42 U.S.C. § 1395l(a)(1)(S).

75 Fabrikant et al., supra note 23, at § 10.02[2][b][ii][B], at 10-10.

76 Id. § 10.02[2][b][ii][B], at 10-11.

77 Dep't of Health, Educ. & Welfare (HEW), Fact Sheet: Proposed Regulations Limiting Drug Costs, 39 Fed. Reg. 40,302 (Nov. 15, 1974), as reprinted in [1974 Transfer Binder] Medicare & Medicaid Guide (CCH) ¶ 27,141.

78 See Balanced Budget Act of 1997, Pub. L. No. 105-33, § 4556(a), 111 Stat. 251, 462-63 (1997) (codified as amended at 42 U.S.C. § 1395u(o)(1) (2000)).

79 John K. Iglehart, Medicare and Drug Pricing, 348 New Eng. J. Med. 1590, 1591 (2003) (describing lack of consensus for revising methodology).

80 Press Release, DOJ, TAP Pharmaceutical Products, Inc. and Seven Others Charged with Health Care Crimes; Company Agrees to Pay $875 Million to Settle Charges (Oct. 3, 2001), available at TAP also pleaded guilty to a conspiracy to violate the Prescription Drug Marketing Act 21 U.S.C. §§ 331, 353 (2006), by selling drug samples and paid a $290 million criminal fine. Press Release, DOJ, supra.

81 See id.

82 See Corporate Integrity Agreement Between the Office of Inspector General of the Department of Health and Human Services and TAP Pharmaceutical Products, Inc., at § III.D (Sept. 28, 2001) (copy on file with author).

83 Id. at § III.D.2. OIG followed this with a warning in the May 2003 Compliance Program Guidance for Pharmaceutical Manufacturers, making clear that the “Integrity of Data Used to Establish or Determine Government Reimbursement” would be a key risk area for drug manufacturers. Compliance Program Guidance for Pharmaceutical Manufacturers, 68 Fed. Reg. 23,731, 23,733 (May 5, 2003) (identifying risk areas).

84 See Elizabeth, A. Weeks, Gauging the Cost of Loopholes: Health Care Pricing and Medicare Regulation in the Post-Enron Era, 40 Wake Forest L. Rev. 1215, 1260-65 (2005)Google Scholar (describing unofficial regulatory process for closing drug pricing loophole).

85 Medicare Program: Payment Reform for Part B Drugs, 68 Fed. Reg. 50,428, 50,432-35 (proposed Aug. 20, 2003).

86 MMA, Pub. L. No. 108-173, § 303(c), 117 Stat. 2066, 2240-43 (2003) (codified as amended at 42 U.S.C. § 1395w-3A(d)(3)). The legislation also required the creation of a competitive acquisition program for certain drugs. Id. § 302(b), 117 Stat. at 2224-30.

87 N. Health Facilities v. United States, 39 F. Supp.2d 563 (D. Md. 1998).

88 Id. at 568.

89 Id. at 577.

90 See David A. Hyman, Health Care Fraud and Abuse: Market Change, Social Norms, and the Trust “Reposed in the Workmen,” 30 J. Legal Stud. 531, 540-48 (2001) (noting differences in social norms regarding fraud among physicians, program administrators, and fraud control personnel).

91 60 Minutes: The $60 Billion Fraud (CBS television broadcast Oct. 25, 2009), available at see also The President's Proposal 1 (Feb. 22, 2010) (claiming that President Obama's health care reform proposal would put the “budget and economy on a more stable path by reducing the deficit by $100 billion over the next ten years – and about $1 trillion over the second decade – by cutting government overspending and reining in waste, fraud and abuse”),

92 President's Health Care Reform Package Adds $1 Billion in Medicare Fraud Savings, 13 HEALTH CARE FRAUD REP. (BNA) 458 (June 17, 2009) (describing how new spending reductions increased original budget estimate of $2.7 billion in savings); News Release, HHS, HHS Budget Makes Smart Investments, Protects the Health and Safety of America's Families (Feb. 1, 2010), available at

93 See HIPAA, Pub. L. No. 104-191, §§ 241-49, 110 Stat. 1936, 2016-21 (codified as amended in scattered sections of 18 U.S.C.) (revising criminal law provisions relating to health care fraud).

94 See 42 U.S.C. § 1320a-7c (2006) (establishing program).

95 Id. §§ 1320a-7, -7a, -7b, -7d.

96 Balanced Budget Act of 1997, Pub. L. No. 105-33, §§ 4304(b), 4314, 4331(c), 111 Stat. 251, 383-84, 389, 396 (codified as amended at 42 U.S.C. §§ 1320a-7a, 1395nn, 1320a-7).

97 Deficit Reduction Act of 2005, Pub. L. No. 109-171, § 6031, 120 Stat. 4, 72-73 (2006) (codified as amended at 42 U.S.C. § 1396h).

98 FERA, Pub. L. No 111-21, § 4, 123 Stat. 1617, 1621-25. Although health care does not appear to have been the primary target of this latter legislation, both supporters and detractors agree that the effect will be to expand the reach of the FCA in the health care context.

99 DOJ, supra note 54.

100 Sparrow, supra note 2, at ix; see also id. at 69-71 (describing increased enforcement during Clinton administration). Indeed, a 1998 article warned that “[g]overnment scrutiny of health care providers will only intensify in the coming year – a feat many may have thought would be impossible given the heightened enforcement climate over the last few years.” Ursula Himali & Lisa Rockelli, Outlook 1998: Health Care Fraud Enforcement Shows No Signs of Slowing Down, 2 Health Care Fraud Rep. (BNA) 25 (Jan. 14, 1998).

101 See 18 U.S.C. §§ 1341, 1343, 1347 (mail fraud, wire fraud, and health care fraud, respectively) (2006). Professor David Hyman found few reported opinions under the new HIPAA crimes as of 2002, several years after the statute's enactment. See Hyman, supra note 15, at 167-68. Some of this may be attributed to the time lag between enactment and when USAOs are able to train personnel on the use of the new provisions. Nonetheless, this suggests that the pressure to enact these new fraud laws did not originate with a perception among prosecutors themselves that they lacked the authority to prosecute such activities.

102 Sparrow, supra note 2, at 213.

103 CMS, supra note 7, at 21.

104 This argument has been made in FCA cases in which legitimate services were rendered, but the physician acted in violation of the Anti-Kickback or self-referral provisions. See Krause, supra note 69, at 1390-96 (describing “tainted claims”). Of course, there is also some level of savings attributable to not having to expend resources investigating an improper claim.

105 See 42 U.S.C. § 1395i(k)(2)(C)(iv) (2006). The recent health care reform legislation did not alter the basic rules controlling the disposition of these recovered funds.

106 See SPARROW, supra note 2, at 222-24, 243-45 (noting importance of early detection and use of prepayment controls, and describing potential detection opportunities in electronic claims systems).

107 See Pub. L. No. 108-173, tit. III, 117 Stat. 2066, 2221-2300 (1993) (“Combatting Waste, Fraud, and Abuse”).

108 PPACA, Pub. L. No. 111-148 (2010), § 1313 (subjecting payments made through Health Benefit Exchanges to FCA, with enhanced penalties available); id. §§ 6001-6005 (2010) (restricting Stark rural and whole hospital exceptions, requiring disclosure of certain physician ownership and investment interests and certain payments from drug manufacturers, and requiring transparency for drug samples and pharmacy benefits managers); id. §§ 6101-6201 (improving quality and transparency for nursing homes); id. § 6402 (additional provisions enhancing program integrity, including adding administrative remedy for a beneficiary's knowing participation in a health care fraud scheme, requiring return of overpayments, enhancing penalties and exclusion authorities, revising intent requirement of the Medicare & Medicaid Anti-Kickback Statute and clarifying relation to FCA, and increasing amount appropriated to the Control Account)); id. § 6408 (enhancing penalties); id. § 6411 (expanding role of Recovery Audit Contractors); id. §§ 6501-6508 (additional Medicaid integrity provisions); id. § 10104(j) (revising FCA public disclosure provisions); id. § 10606 (revising health care fraud enforcement provisions, including revising fraud sentencing provisions and revising the intent requirement for Health Care Fraud, 18 U.S.C. § 1347); Health Care and Education Reconciliation Act of 2010, Pub. L. No. 111-152, § 1106 (revising Stark rural and whole hospital exceptions); id. § 1303 (increasing amount appropriated to the Control Account). For enforcement provisions in prior legislative proposals, see Affordable Health Care for America Act, H.R. 3962, 111th Cong. § 1601 (2009) (increasing amount that can be appropriated to the Control Account by $100 million a year beginning in 2011); id. §§ 1611-1620 (enhancing penalties and exclusion authorities); id. § 1635 (requiring providers to implement compliance programs); id. § 1641 (requiring return of overpayments); id. § 1651-54 (streamlining access to fraud information); Health Care Fraud Enforcement Act of 2009, S. 1959, 111th Cong. (2009) (enhancing criminal sentences for health care fraud and appropriating additional funds to DOJ for civil and criminal enforcement); America's Healthy Future Act of 2009, S. 1796, 111th Cong. § 4001 (2009) (revising Stark “whole hospital” exception); id. § 4101 (requiring disclosure of certain payments from drug manufacturers); id. § 5002(a) (enhancing general program integrity provisions, including penalizing failure to return overpayments); id. § 5002(d) (enhancing CMPs and exclusion authorities and revising the intent requirement for health care fraud); id. § 5002(i) (increasing amount that can be appropriated to the Control Account by $10 million a year from 2011 to 2020); id. § 5003 (streamlining health care fraud data bank); id. § 5008 (enhancing penalties for fraud); Affordable Health Choices Act, S. 1679, 111th Cong. §§ 501-502 (2009) (establishing new fraud positions at HHS and DOJ); id. § 511 (establishing Health Care Program Integrity Coordinating Council); id. § 521 (creating additional criminal false statements prohibition applicable to multiple employer welfare plans); The President's Proposal, supra note 91, at 6 (proposing new sanctions for purchasing, selling, and distributing Medicare and Medicaid beneficiary identification information or billing privileges).

109 See PPACA, Pub. L. No. 111-148, § 6401 (imposing additional provider screening and enrollment requirements, including development of compliance programs); id. § 6402 (requiring data matching via CMS Integrated Data Repository, requiring inclusion of national provider identification number on all applications and claims, permitting data matching between HHS and the Internal Revenue Service, requiring surety bonds for certain providers and suppliers, permitting suspension of payments pending fraud investigation); id. § 6303 (eliminating duplication between Healthcare Integrity and Protection Data Bank and National Practitioner Data Bank); id. § 6404 (reducing Medicare claims submissions period to twelve months); id. §§ 6406-6407 (imposing additional documentation requirements for physician referrals for certain high-risk items and services); id. § 6409 (requiring self-disclosure protocol); Pub. L. No. 111-152, § 1304 (providing for enhanced oversight for initial claims of certain new suppliers. For similar provisions contained in earlier proposals, see The President's Proposal, supra note 91, at 5-7; H.R. 3962, 111th Cong. §§ 1631-32 (enhancing provider screening, oversight, and disclosure requirements); id. § 1636 (reducing claims submissions period); id. §§ 1637-1639 (imposing additional home health and DME safeguards); id. § 1644 (requiring registration of Medicare billing agents and clearinghouses); S. 1796, 111th Cong. § 5001 (imposing provider screening and additional enrollment requirements); id. § 5002(g) (new surety bond requirements for certain providers and suppliers, including home health and DME); id. § 5002(h) (providing for suspension of payment pending investigation of fraud allegations); id. § 5004 (reducing maximum claims submission period); id. §§ 5005-5007 (additional requirement related to ordering of home health and DME).

110 See Kendra Casey Plank, DOJ, HHS Announce New Joint-Agency Initiative to Combat Health Care Fraud, 13 Health Care Fraud Rep. (BNA) 417 (June 3, 2009); HHS & DOJ, HEAT Task Force Success, (last visited Apr. 13, 2010). The HEAT web page contains a link to “Task Force Fact Sheets” covering each of the targeted cities.

111 See The President's Proposal, supra note 91, at 6.

112 Carrie Johnson, 53 Indicted in Medicare Fraud Sting, WASH. POST, June 25, 2009, available at Press Release, DOJ, Medicare Fraud Strike Force Operations Lead to Charges Against 32 Doctors and Health Care Executives for More Than $16 Million in Alleged False Billing in Houston (July 29, 2009), available at

113 See supra notes 87-89.

114 Frances, H. Miller, Doctors’ Conflicts of Interest (& Altruism) in the United States and Great Britain, 27 Ind. L. Rev. 687, 697 (1994)Google Scholar (reviewing Marc A. Rodwin, Medicine, Money & Morals: Physicians’ Conflicts of Interest (1993)).