The Federal Government has built an incredible money machine in
Boston! Aggressive U.S. Attorney Michael Sullivan and his equally
aggressive assistants have created a uniquely lucrative legal
practice in False Claims Act (FCA) cases. Their renowned Health
Care Fraud Unit of the Massachusetts U.S. Attorney's office has
(between May 1996 and May 2001), according to the Boston
Globe, "recovered $1.54 billion for federal taxpayers, more
than 30% of all health care fraud settlements by the nation's 94
U.S. attorney's offices."
That statement was printed before the Unit recovered another
$1.561 billion from three more recent cases: TAP Pharmaceuticals in
2001 for $875 million; Bayer in 2003 for a combined $256.5 million,
and Warner-Lambert (now Pfizer) in 2004 for $430 million. These
three cases of alleged Medicare and Medicaid false claims alone
make up nearly half of the $3.225 billion of Department of Justice
(DOJ) health care recoveries in those three fiscal years.
This would be a good thing if these big settlements were making
Medicare and Medicaid funds whole for their supposed losses and
ultimately securing benefits for beneficiaries.
But are they? Let's follow the money.
Right off the top comes the reward money for the "relators," the
whistleblowers who initiated the legal action. These rewards are
hefty: in the TAP case, a former salesman took home $77 million,
and a doctor and his clinic split another $17 million; in the
Warner-Lambert case, the whistleblower, an employee of only four
months, won $26.6 million for his trouble; the family of the
deceased whistleblower involved in the Bayer case got $34 million.
In all, more than one fourth of the $1.03 billion collected by the
DOJ nationwide on health care fraud in FY 2003 went to the
relators.
Where does rest of the money go? Thanks to provisions of the FCA
added in 1986, whistleblower's attorneys are guaranteed standard
hourly fees and expenses, plus a shot at a multi-million dollar
contingency fee. In December 2003, a Massachusetts Lawyers
Weekly article noted that the Boston law firm representing the
Warner-Lambert whistleblower had already racked up 6,000 billable
hours for three attorneys and a paralegal. The case ended up
settling for $430 million. Needless to say, the law firms
specializing in FCA cases are cleaning up financially.
After the whistleblowers and lawyers take their share, the
government and prosecutors divide up the rest. The first federal
mouth that gets fed is the joint HHS/DOJ program responsible for
funding investigations and prosecuting these cases -- the
government's own lawyers. The U.S. Government Accounting Office
(GAO), in an April 2005 report, reported deposits in the Health
Care Fraud and Abuse Control program (HCFAC) of $766 million for
fiscal year 2002, and $243 million for 2003. These allocations to
HCFAC account for another quarter of the total $1.03 billion
recovered from all health care fraud prosecutions in FY 2003.
Half of the amount recovered in the federal government's fraud
program goes to relators and lawyers. The other half of the amount
recovered appears to go as restitution to the programs that were
defrauded. Unfortunately, this is a little hard to figure out from
the HHS/DOJ reports on HCFAC. Besides being typically 4-12 months
late, they also do not clearly show how the money is actually
credited to various health care programs to "make them whole" for
the amounts they were purportedly defrauded.
The "legislative father" of the Act, Senator Charles Grassley,
has introduced legislation to require frequent reports -- which may
provide a clearer sense of the efficiency of the FCA. Since most
whistleblower and FCA lawyer bonanzas relate to Medicare and
Medicaid fraud, these programs should get paid first. Based on
current reports, the FCA effort seems wildly inefficient --
crediting only 50 cents on the dollar to the programs -- and
designed only to enrich whistleblowers and their lawyers rather
help the programs or beneficiaries.
Awards to whistleblowers, their lawyers and the government's
lawyers should be limited to $1 or $2 million. The rest of these
massive settlements should go directly to the Medicare trust fund
and other health care programs. And yes, there should be clear
reports of where the money goes after the bounty is collected.
topics:
Health Care, Medicaid, Law, NATO, Medicare
