The Covid-19 pandemic brought many problems associated with the healthcare system to the forefront, including the frauds and scams that have been taking place in the domain for years. Healthcare frauds are not remotely a new problem. They have been there even prior to the Obama Administration’s Affordable Care Act. But unfortunately, most of the healthcare fraud prosecutions got lost in the background amidst more sensationalized scandals. However, as Covid-19 related news began to dominate the headlines and public consciousness, the awareness about healthcare fraud cases definitely increased. Ken Julian mentions that the United States Department of Justice has even made investigations of healthcare fraud one of their core major priorities.

Healthcare frauds of diverse types take place across the United States. A partner of the health care litigation practice at Manatt, Phelps & Phillips, Ken Julian, talks about how a Michigan woman was indicted with embezzlement of government property earlier this year, as an example of a healthcare fraud case. She was essentially alleged to have continued to submit claims for patients who did not qualify for home health services through a home health facility that was closed down. The facility in question had stopped operating in early 2020, but continued collecting more than $1M in Medicare benefit payments. This was a relatively small case, but there are several bigger ones as well, involving large corporations.

According to Ken Julian, the Depart of Justice had announced that Galena Biopharma Inc. agreed to pay a civil penalty of more than seven million dollars in order to resolve the allegations that it had violated the False Claims Act by issuing kickbacks to physicians and discerning other healthcare providers for prescribing Abstral, which is a fentanyl-based drug by Galena.  As per the investigation and subsequent indictment done by DOJ, Galena had paid various types of kickbacks to induce doctors to prescribe Abstral. They had paid doctors $5K and speakers $6K (plus expenses) for attending an ‘advisory board’ that was planned and attended by the Galena sales team members. Apart from this, they had also paid around $92K to a physician-owned pharmacy to prescribe Abstral, while the doctors and staff members of a single, high-prescribing practice were given more than 85 free meals.  In the end, the company cooperated in the prosecution of the two doctors who received kickbacks from them. These doctors eventually received prison sentences after conviction following a jury trial.

Former Deputy Attorney General Rod Rosenstein had once stated that prosecuting individuals in addition to corporations can be an effective way to deter people from committing white-collar crimes and healthcare fraud. When a corporation is prosecuted, they mostly have to pay a fine. They obviously cannot go to jail. Individuals, on the other hand, may receive jail time and/or have their medical license cancelled. On a personal level, individuals have way more to lose if they get caught in a healthcare fraud case than any corporation.