How Healthcare Fraud Costs States Billions Each Year with John LeBlanc of Manatt

As the healthcare industry in America continues to grow and evolve, so too does its susceptibility to fraud and abuse.

As explained by John LeBlanc of Manatt, a law firm specializing in healthcare and government regulatory issues: “Healthcare fraud has been around for a long time.” However, it has “become more complex, and there are different kinds of fraud.”

One form of healthcare fraud is the False Claims Act, which prohibits any person or organization from knowingly presenting, or causing to be presented, a false claim for payment to the federal government. In addition, the act allows whistleblowers (called qui tam relators) with knowledge of healthcare fraud against the government to file a lawsuit on behalf of the U.S. The federal False Claims Act rewards whistleblowers with 15 to 25 percent of the proceeds collected in cases where fraud is established. It also provides significant financial penalties when violations are uncovered.

In many cases, when health care fraud comes to light, companies involved must pay for their misdeeds.

LeBlanc notes that many cases of healthcare fraud are uncovered because people in the industry report it. However, he cautions that “if somebody is engaged in fraud or misconduct and they don’t think anybody’s watching, maybe their guard is down.” Then companies may be more likely to engage in illegal schemes to boost profits.

According to LeBlanc, “Millions of dollars are at stake, and it wouldn’t be surprising for a company to go all out to protect itself. Companies may try to hide their misdeeds by withholding or destroying evidence.”

Many experts note that hospitals and other medical institutions face increasingly complex legal requirements and scrutiny as they become larger and more layered with bureaucratic decisions. As LeBlanc explains, “There are so many different rules and regulations now” to follow, making it difficult for the average person to stay on top of them all.

According to LeBlanc, healthcare fraud can occur in a wide range of ways. One way is via unnecessary medical tests that may not be needed but are often billed to Medicare.

Another way is when “pharmacists may substitute a generic drug with another, more expensive brand without doctors’ prescriptions,” explains LeBlanc. Another common complaint is when medical institutions charge for certain services or tests that were not done.

One of the most complex types of healthcare fraud is drug diversion, which involves the unlawful sale or trade of pharmaceuticals by nurses and other hospital staff members. According to LeBlanc, “This is a hot spot for fraud to take place.” One reason is that drug diversion often occurs in nursing homes, where drugs are frequently diverted because employees may be stealing them to support their own drug habits.

Another problem is that pharmaceutical costs are often high, and LeBlanc cites one case where a witness was able to show that an attorney working on behalf of the federal government provided false testimony to avoid paying for her legitimate medical care. And with healthcare fraud cases increasing, it has become essential for attorneys like LeBlanc to be aware of the tactics some medical industry employees may use to try and avoid detection.

“The Department of Justice’s “Health Care Fraud Prevention and Enforcement Action Team (HEAT) was launched in 2009 to disrupt and dismantle criminal health care organizations,” according to LeBlanc, who notes that it is a joint effort between the DOJ and HHS.

While healthcare fraud is undoubtedly a hot-button issue, many experts agree that most medical institutions remain committed to patient care and ethical business practices.

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