Policy & Regulation News

Sept. 4: Week That Was in Healthcare Fraud and Malpractice

By Jacqueline DiChiara

- Here is a general roundup of the past week’s developments in healthcare fraud and malpractice, as reported by the Department of Justice and the Office of Inspector General. The crimes reported below result in multiple millions of dollars in healthcare fraud and the possibility of extensive prison time.

fraud in healthcare false claims act

Kmart pays $1.4M to resolve False Claims Act allegations

Department store chain KMART Corporation (Kmart), which operates nearly 800 in-store pharmacies across the United States, Puerto Rico, and the US Virgin Islands, paid $1.4 million this week to resolve False Claims Act violation allegations for using drug manufacturer coupons and gasoline discounts to provide illegal inducements to Medicare beneficiaries, says the Department of Justice.

Over a three-year period beginning in June of 2011, Kmart “knowingly and improperly” coerced Medicare beneficiaries to handle their prescriptions through Kmart pharmacies, reeling them in with coupons nulling mandated co-pays. Such an act – influencing beneficiary choice – is prohibited by federal law, the Department of Justice maintains. Similarly, Medicare beneficiaries were offered gas discounts based on the volume of filled prescriptions.

  • Congress Urged to Repeal Affordable Care Act’s Cadillac Tax
  • Healthcare Payment Integrity is Vital to Maximizing Reimbursements
  • Consumers Don’t Pay Patient Financial Responsibility After Bad Experience
  • “The United States will continue to pursue retail pharmacies that improperly attempt to influence a beneficiary’s choice of pharmacy,” states Benjamin C. Mizer, Principal Deputy Assistant Attorney General and the Justice Department’s Civil Division Head. “The government will not permit pharmacies to use improper business tactics to solicit business that does nothing to improve the quality of healthcare received by Medicare beneficiaries and increases the costs of the Medicare program.” 

    Says the Department of Justice, “This settlement illustrates the government’s emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative.”

    Such news follows Kmart’s extensive data breech occurring nearly two years ago, as reported by HealthITSecurity.com where nearly 800 customers’ prescription information – including names, addresses, and prescription information – was compromised.

    Detroit-area physician pleads guilty in $5.7M fraud scheme

    Michigan-based physician, Laran Lerner, MD, pleaded guilty earlier this week for luring patients into his clinic with prescriptions for controlled substances deemed unnecessary, reports the Department of Justice. Lerner, set for January sentencing, pleaded guilty to one count of healthcare fraud and one count of structuring cash transactions to elude bank reporting mandates.

    Lerner openly acknowledged during his plea agreement billing Medicare for over $5.7 million for numerous unnecessary prescriptions, tests, and office visits to fabricate the providing of authentic medical services. Lerner additionally pleaded guilty to structuring cash deposits in $5,000 increments on consecutive days across various Detroit-area bank branches. Over 14 consecutive days, Lerner deposited $70,000 via daily $5,000 deposits.

    Confirms the Department of Justice, “Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged over 2,300 defendants who collectively have billed the Medicare program for over $7 billion. In addition, the HHS Centers for Medicare & Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.”