Federal officials recently charged 412 people across the country with healthcare fraud related to false billings, and many were healthcare professionals. A substantial portion of the charges relate to the fraudulent prescription of opioids.

  • More people may be charged.
  • The crackdown shows the need to follow opioid prescribing guidelines.
  • Hospitals and health systems should audit Medicare billings more closely than ever.

The huge federal crackdown on Medicare fraud opioid abuse is a loud alarm bell for risk managers in all healthcare settings, signaling that the Department of Health and Human Services (HHS) and the Department of Justice (DOJ) are not fooling around. They’re charging people by the hundreds, and for the first time a large proportion are healthcare professionals.

Hundreds also are excluded from Medicare participation, essentially a death sentence for their careers in medicine.

The largest-ever healthcare fraud enforcement action by the Medicare Fraud Strike Force involved 412 defendants across 41 federal districts, including 115 doctors, nurses, and other licensed medical professionals, all charged for their alleged participation in healthcare fraud schemes involving approximately $1.3 billion in false billings.

Of those charged, more than 120 defendants, including doctors, were charged for their roles in prescribing and distributing opioids and other dangerous narcotics.

HHS Secretary Tom Price, MD, announced the action recently. Thirty state Medicaid Fraud Control Units also participated in the arrests. In addition, HHS has initiated suspension actions against 295 providers, including doctors, nurses, and pharmacists.

“The charges announced today aggressively target schemes billing Medicare, Medicaid, and TRICARE [a health insurance program for members and veterans of the armed forces and their families] for medically unnecessary prescription drugs and compounded medications that often were never even purchased and/or distributed to beneficiaries,” HHS stated in an announcement of the charges. “The charges also involve individuals contributing to the opioid epidemic, with a particular focus on medical professionals involved in the unlawful distribution of opioids and other prescription narcotics, a particular focus for the department. According to the CDC, approximately 91 Americans die every day of an opioid-related overdose.”

Kickbacks, Fraudulent Billing

According to court documents, the defendants allegedly participated in schemes to submit claims to Medicare, Medicaid, and TRICARE for treatments that were medically unnecessary and often never provided. In many cases, patient recruiters, beneficiaries, and other co-conspirators allegedly were paid cash kickbacks in return for supplying beneficiary information to providers, so that the providers could then submit fraudulent bills to Medicare for services that were medically unnecessary or never performed.

The number of medical professionals charged is particularly significant, HHS said, “because virtually every healthcare fraud scheme requires a corrupt medical professional to be involved in order for Medicare or Medicaid to pay the fraudulent claims.” Aggressively pursuing corrupt medical professionals not only deters other medical professionals, but also ensures that their licenses can no longer be used to bilk the system, HHS added.

OIG, HHS, and the FBI all pledged to continue vigorously pursuing those who abuse federal healthcare programs.

‘Enormous’ Case Took Years

The scope of the legal action is noteworthy, says Kenneth Yeadon, JD, a former assistant U.S. attorney with the U.S. Attorney’s Office in Chicago and now a partner at Hinshaw & Culbertson in Chicago. In his time with the U.S. Attorney’s Office in Chicago, he led several significant investigations and prosecutions, including those involving healthcare and tax fraud, and money laundering.

“This is an enormous healthcare fraud case that likely took years to put together. Nearly one-half of the country’s federal prosecutors’ offices — U.S. Attorney’s offices — were involved,” he says. “In addition to its massive scale, one of the things that makes this action unique is the focus on healthcare professionals. More than 100 doctors, nurses, and healthcare professionals are being prosecuted for illegally distributing opioids and other prescription narcotics, and healthcare fraud.”

However, even with such a large scope there could be more arrests and charges, he says.

“Healthcare providers can expect this case to mushroom exponentially as people who have been charged begin to talk, leading to the likelihood that many more will be charged,” Yeadon says. “With so many healthcare agencies, law enforcement officials, and even the IRS involved, the charges against healthcare providers are likely to be wide-ranging. In addition to fraudulent billing, they may include money laundering and tax fraud.”

The government is sending a clear message with the arrests, says Jesse Witten, JD, partner with the law firm Drinker Biddle in Washington, DC. Officials didn’t have to round up everyone at once and make such a show of the operation, he says, but they acted with a purpose.

“They filed all these charges and announced all the exclusion actions on a single day to make as big a splash as they could, rather than spread them out over a period of time,” Witten says. “The idea of a mass takedown is not new because they do it every year, but it’s much bigger in terms of the number of people being pursued.”

Officials widened the scope of their investigation to include opioid distribution and more healthcare professionals than in previous years, he says. The number of exclusions also is significant, he says.

“Criminal charges are serious, of course, but the 295 individuals being excluded are over and above the 412 being criminally charged, so we’re talking about over 700 people,” he says. “That’s very resource-intensive for the OIG, so they’re sending the message that they are making Medicare fraud, and the opioid issue in particular, a top concern.”

It is not yet clear how the OIG investigated the individuals and reached decisions to charge and exclude them, Witten notes. The government may have relied on prescribing records and other data, but it is possible that the investigation involved whistleblowers and other direct information from those with knowledge of the crimes.

“I speculate that a lot of the nurses are being pursued because of drug diversion. This is an increasingly difficult issue for hospitals with employees of all types, but especially for nurses because they usually have access to the drugs,” Witten says. “Clamping down on controlled drugs, and opioids in particular, is not a new idea for healthcare organizations, but this brings attention to the fact that the government is going to be bringing enforcement actions that are far-reaching and which have very serious consequences.”

In addition to fraud and exclusion risks, Witten points out that hospitals face liability risks from threats to patient safety related to drug diversion. If patients do not receive proper medication because it was diverted by an employee or physician, the hospital can be held liable for the consequences. The same applies if a patient is harmed by an impaired healthcare provider.

“There’s still room there for action by Medicare and the Department of Justice, but the bigger issue there would be the opportunity for some sort of malpractice action,” Witten says. “If you’re a patient who’s only getting half the pain medication you’re supposed to get because somebody is diverting the other half, those patients will not be happy when they come to learn about that. I wouldn’t be surprised if plaintiffs’ attorneys in those areas are on high alert for those cases now.”

Risk managers at hospitals and health systems should work with the internal compliance or audit departments, and the pharmacy department, to review internal controls intended to protect controlled substance dispensing, he says.

“This would also be a good reason to conduct an audit of controlled substances and dispensing activities to look for any signs of suspicious patterns or activity,” Witten says. “If anyone in the organization was doubting the seriousness of this problem and just how seriously the government is taking this, you should have a good way to dispel those objections. Now is the time to protect yourself.”

Yeadon agrees that the massive takedown represents a good opportunity for action. (See the story in this issue about a new DOJ initiative to use big data analytics to identify opioid fraud, and the story, also in this issue, for advice on how to avoid liability with opioids.)

“Healthcare providers should not wait for this case to envelop them,” Yeadon says. “They should begin taking immediate action to focus on Medicare/Medicaid billings in anticipation of tighter controls over payments on claims and increased audits.”


  • Jesse Witten, JD, Partner, Drinker Biddle, Washington, DC. Phone: (202) 230-5146. Email: jesse.witten@dbr.com.
  • Kenneth Yeadon, JD, Partner, Hinshaw & Culbertson, Chicago. Phone: (312) 704-3524. Email: kyeadon@hinshawlaw.com.