C A R M E N M . O R T I Z
U N I T E D S T A T E S A T T O R N E Y D I S T R I C T O F M A S S A C H U S E T T S
Enforcement Perspective –
2014 High Priority Areas
IMPORTANCE OF HEALTH CARE FRAUD
INVESTIGATIONS & PROSECUTIONS
Expected 6.1% growth of health care spending in
2014*
Implementation of ACA
Projected to increase cumulative spending by $621 billion by 2022
Aging baby-boomer population
End of federal government sequester
Beneficiaries**
Over 50 million enrolled in Medicare
Over 62 million enrolled in Medicaid
A L L O C A T I O N O F T A X P A Y E R D O L L A R S T O F U N D H E A L T H C A R E
D R I V E S U P C O S T S F O R P A T I E N T S A N D C O N S U M E R S
T H R E A T E N S T H E S T R E N G T H A N D I N T E G R I T Y O F S Y S T E M
E N D A N G E R S P A T I E N T S A F E T Y
HEALTH CARE FRAUD
WHY A DOJ PRIORITY?
BATTLING HEALTH CARE FRAUD
DOJ Priority
Consumer Protection Branch
Civil & Criminal Frauds Division
HCF Prevention and Enforcement Action Team (HEAT)
Medicare Fraud Strike Forces
U.S. Attorney’s Office Priority
Health Care Fraud Unit
Affirmative Litigation Unit
Special Focus Teams
Nationally Prominent
Cases FY2013 Collections*
GSK: $1 billion criminal
fine, $2 billion resolution
of civil liabilities (2012)
J&J
Misbranding: $2.2 billion
(2013)
Omnicare: $98 million (2009)
Pfizer: $2.3 billion (2009)
Abbott Laboratories: $1.5
billion (2012)
$3.2 billion collected
from civil enforcement
cases
$450 million in
criminal fines
*Source: Department of Justice
THE COST OF NON-COMPLIANCE
NON-MONETARY COSTS
Damage to reputation
Effect on sales
Consequences to consumer confidence
Impact on business revenue
“Glaxo Agrees to Pay $3 Billion in
Fraud Settlement” – New York Times
District of Massachusetts: Prominent Cases
GlaxoSmithKline Pfizer
Johnson & Johnson (Omnicare)
Orthofix
At Home VNA
VALUE OF WHISTLEBLOWERS
Johnson & Johnson: $167.7 million
GSK (Cidra): $96 million
Abbott: $84 million
Pfizer: $51.5 million
Omnicare
$98 million
settlement
(2009)
CONSEQUENCES OF
KICKBACKS - OMNICARE
Johnson & Johnson
$149 million settlement (2013)
IVAX Pharmaceuticals
$14 million settlement (2009)
Nursing Homes
nationwide Mariner/Sava Health
Care
$14 million settlement (2010)
$8 million up- front payment conditioned on commitment to
purchase $50 million in drugs Market-share
rebates conditioned on
“active intervention
program”
Below cost consultant pharmacist
services
$50 million for business with assets of only
$3 million
Leonard Grunstein Murray Forman Rubin Schron
A TOP PRIORITY – HOLDING INDIVIDUALS
CRIMINALLY ACCOUNTABLE: ORTHOFIX
Thomas Guerreri, former Vice President of Sales
Paying kickbacks to prescribe Orthofix products
Mitchell Salzman, former Regional Sales Director
False declarations to a grand jury regarding Orthofix’s conduct
Derrick Field, former Territory Manager
Falsifying patient medical records to induce Medicare to pay for bone
growth stimulators
Michael McKay, former Territory Manager
Falsifying patient medical records to induce Medicare to pay for bone
growth stimulators
CIAs: COMPENSATORY MEASURES
Transparency and accountability:
Clawbacks for executives
Overhaul of compensation programs for sales representatives
Certification of compliance by executives and board members
Transparent research practices
Strong monitoring and reporting provisions
M A N U F A C T U R I N G O F A D U L T E R A T E D D R U G S ( C O M P O U N D E D D R U G S )
D U R A B L E M E D I C A L E Q U I P M E N T F R A U D H O M E H E A L T H C A R E F R A U D
( P H Y S I C A L , O C C U P A T I O N A L & S P E E C H T H E R A P Y ) M E D I C A L I D T H E F T
Priorities Looking Ahead
COMPLIANCE PROGRAMS: BEST PRACTICES
Cooperate with government
Willingness to self-report and take corrective action
Executives making informed, clear and ethical
decisions
Clear chain of command
Mandate ongoing training
Establish ethical compensation plans for sales reps
Conduct surprise site visits
E N S U R E E F F E C T I V E N E S S O F L E G I T I M A T E C O M P L I A N C E P R O G R A M S
C O O P E R A T E & C L E A N U P
E X P A N S I O N O F H E A L T H C A R E = E X P A N S I O N O F O V E R S I G H T
