Last week, the Department of Justice released a report on settlements and judgments resulting from whistleblower lawsuits filed under the False Claims Act (FCA). For fiscal year 2019, which ended on September 30th, the total amount recovered was over $3 billion. Of that, almost 87 percent – $2.6 billion – was from federal lawsuits involving America’s privately-run, for-profit health care system.

According to the report, defendants included:

  • pharmaceutical companies
  • medical device manufacturers
  • HMOs
  • hospitals
  • pharmacies
  • hospice care facilities
  • laboratories
  • physicians and private practices

All of these have been involved in attempts to defraud federal and state health care programs, such as Medicare, Medicaid, and Tricare. Furthermore, 2019 is the tenth year in a row that health care fraud recoveries have totaled more than $2 billion.

Not only does all of this rampant fraud steal money from taxpayers, it also endangers the safety and lives of patients – and, of course, raises the cost of health care and medical services for all of us.

At the top of the list of offenders was Recklitt Benckiser Group, which fraudulently marketed the opioid addiction treatment Suboxone to physicians, and settled with the government for $1.4 billion. The company also reportedly interfered with the production of generic substitutes in order to maintain a monopoly on Suboxone pricing.

In second place was Insys Therapeutics, where company founder and CEO John Kapoor was convicted last year on federal racketeering charges. Insys was accused of paying kickbacks to physicians and nurse practitioners in order to encourage them to prescribe its powerful synthetic opioid, Subsys. Other allegations included marketing for off-label purposes and lying to insurance companies in order to get payments from Medicare and Medicaid.

Other drug companies include Avanir Pharmaceuticals, accused of paying kickbacks and engaging in off-label marketing, and seven other drug companies that allegedly covered patient co-pays for their own products through “independent foundations” used to funnel the payments.

A number of other health care providers have paid large settlements as well. Inform Diagnostics paid $63.5 million over allegations of illegally giving doctors subsidies for electronic health record (EHR) systems and providing free consulting services. Another EHR software company, Greenway Health, was also accused of paying kickbacks to users in return for recommendations to new customers and lying about its product’s capabilities.

Encompass Health Corporation, a company that operates inpatient rehabilitation facilities across the country, also had problems: a number of those facilities allegedly gave false information to Medicare in order to keep their status and get higher reimbursements as well as providing patients with “medically unnecessary” treatments.

The unfortunate reason that these accusations are still labeled “allegations” is that by paying the settlements these companies are not required to admit to any wrongdoing. Furthermore, compared to the huge profits most of them make, these settlements often amount to little more than pocket change – and to add insult to injury, are tax write-offs for these companies, since they are considered “remedial” rather than “punitive” (as in paying a fine).

Health care fraud is not unique to the profit-driven U.S. system.  Although current figures are difficult to come by, the University of Portsmouth (U.K.) Centre for Counter Fraud Studies commissioned a study in 2013 which found that out of the estimated $7.35 trillion (USD) spent on health care services around the world, nearly 6.2 percent – $455 billion – was lost to fraud. 

Here at home, one argument against instituting a Medicare for All system is that it would put health care fraud on proverbial steroids.

The FCA is one weapon in the federal government’s ongoing battle against health care fraud. However, bringing a qui tam lawsuit is challenging, and whistleblowers do not always get the support they need in pursuing such cases. In contrast, most nations that offer their citizens free or low-cost guaranteed health care impose stiff, criminal penalties for health care fraud.

The relative lack of meaningful consequences for corporate health care fraudsters is likely to remain an obstacle to universal health care in the U.S. Until this changes – and whistleblowers receive more government support and assistance when they come forward – little is going to change.

K.J. McElrath is a former history and social studies teacher who has long maintained a keen interest in legal and social issues. In addition to writing for The Ring of Fire, he is the author of two published novels: Tamanous Cooley, a darkly comic environmental twist on Dante's Inferno, and The Missionary's Wife, a story of the conflict between human nature and fundamentalist religious dogma. When not engaged in journalistic or literary pursuits, K.J. works as an entertainer and film composer.