Correction to This Article
The article said that Quest Diagnostics pleaded guilty last month in a medical device case. In fact, a now-defunct corporate subsidiary, NID, pleaded guilty to misbranding and Quest Diagnostics agreed to pay $262.million to resolve civil charges without admitting fault.
Health-Care Fraud to Be Targeted
New Task Force Will Focus on Costly Waste and Abuse

By Carrie Johnson
Washington Post Staff Writer
Thursday, May 21, 2009

Senior Obama administration officials launched a high-level task force yesterday to use technology to help detect and prevent health-care fraud, which robs the nation's coffers of billions of dollars each year.

Attorney General Eric H. Holder Jr. 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 yet 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 crack down on fraud.

The 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 2009, said 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 as a treatment for 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 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 this year, said analysts who have followed the issues. And Monday, top Justice Department officials 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."

Tony West, new leader of the Justice Department's civil division, said in an interview this week that pursuing such cases is a high priority.

"There is an incredible amount of money that can be recovered and returned to the health-care trust fund, and that has a real impact," West said. "I think you will see stepped-up enforcement in this area. You will see proactive and assertive efforts."

Health care, he said, has the "biggest single impact on the budget" and pursuing cases in that arena is "consistent with the president's agenda on health-care reform. We are following his lead."

Staff writer Amy Goldstein contributed to this report.

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