However, some doctors are exonerated. A Nevada doctor submitting disallowed bills for pulmonary function tests as part of pulmonary rehabilitation was held to have acted in good faith, and a Utah neurologist actually sued the state’s Medicaid fraud control unit for libel and malicious prosecution for years of harassment and threats.
According to a Wall Street Journal report, managed care fraudsters have recently been targeted by the government for acts such as withholding or reducing payments to doctors, impermissibly cutting costs after receiving preset fees, or refusing to enroll certain patients.
The managed care industry services nearly 40 million state and federal beneficiaries out of some 90 million Americans covered under Medicare and Medicaid. Nationwide, prosecution of managed care entities has targeted misleading claims, denial of patient care, and tardiness in physician payments in Pennsylvania; multimillion-dollar duplicative premiums in New York; and the siphoning of funds meant to pay physicians in California.
The government also took action against a plan in Florida for allegedly inflating spending of mental health premiums to circumvent a state law requiring a refund whenever expenditures dipped below 80% of premiums. And a jury reached a verdict of $330 million against a company in Virginia on 18,000 counts of fraud for expenses well below those of competitors – purportedly because of denial of care, as some patients were excluded and only healthier and nonpregnant patients were enrolled ("Medicare, Medicaid Managed Care Gets Scrutiny for Fraud," Wall Street Journal, March 19, 2008, p. B1).
The government’s most lucrative source of recovery in health care fraud is the pharmaceutical industry. In 2012, for example, one large pharmaceutical company paid $1.5 billion, part of a global $3 billion settlement, to settle FCA allegations by the U.S. Department of Justice regarding the off-label marketing of several drugs, including Paxil, Wellbutrin, and Zofran, as well as physician kickbacks for Imitrex, Flovent, and other drugs. Another company paid $441 million for promoting Vioxx for an off-label use in rheumatoid arthritis and for making misleading statements regarding the drug’s cardiovascular safety.
Marketing FDA-approved drugs for off-label use, illegal under the False Claims Act, has long been a scourge of pharmaceutical and device manufacturers. But in a recent rare victory for Big Pharma, the U.S. Court of Appeals for the Second Circuit held that it was against theFirst Amendment right of free speech to prohibit manufacturers from discussing such off-label use when physicians themselves can legally prescribe their products for off-label indications (United States v. Caronia [703 F.3d 149 (2d Cir. 2012)]). Interestingly, the FDA has decided not to appeal the case to the Supreme Court.
Dr. Tan is a former professor of medicine and adjunct professor of law at the University of Hawaii. This article is meant to be educational and does not constitute medical, ethical, or legal advice. It is adapted from the author’s book, "Medical Malpractice: Understanding the Law, Managing the Risk" (2006). For additional information, readers may contact the author at siang@hawaii.edu.