Bloomberg Law
April 18, 2018, 5:26 PM UTC

Health care fraud enforcement and liability: Does it really pay to self-disclose?

John Maloney
Bloomberg Law

A key data point for anyone advising health care organizations involves the consequences of government fraud enforcement actions and the methods by which those actions are brought.

When facing allegations of violations related to billing for medically unnecessary services, it might pay to self-disclose. Using Bloomberg Law’s new Health Care Fraud Analytics tool, we find that the overall highest settlement amount is $150 million when the complaint originates from a whistleblower, whereas the highest settlement amount for a self-disclosure case is $42,750,000. Still, about 70% of all cases originate with whistleblowers while only 5% begin with a self-disclosure.

Top Settlements for Billing for Medically Unnecessary Services
Top Settlements for Billing for Medically Unnecessary Services

Top Settlements for Billing for Medically Unnecessary

ServicesAbout one-third (32%) of alleged violations related to billing for medically unnecessary services involve hospitals, and when singling out hospitals, the highest settlement amount is $97,257,500 for a whistleblower case compared to $32,700,000 for in circumstances where violations were self-disclosed.

That said, the lowest settlement amount for a hospital that self-disclosed that it billed for medically unnecessary services was $800,000 while the lowest settlement in a whistleblower case was $195,976. It should be considered that the $800,000 settlement was for a case in which a hospital voluntarily disclosed that its phlebotomists may have billed for medically unnecessary tests for patients treated by a physician engaged in an extensive false claims scheme. The physician misdiagnosed more than 500 patients and administered treatments—including chemotherapy—the patients didn’t need.

Health Care Fraud Analytics allows a practitioner to find similar entities or alleged violations and discover how much the settlements cost the companies. Attorneys can then place a value on the claims asserted against their clients in order to help guide a decision on whether to settle and for how much.

Looking at the data for alleged kickback violations, broken down by entity type, also shows some differences in the settlement amounts. Pharmaceutical manufacturers saw the largest settlements of kickback claims, including the largest overall settlement ($1.273 billion) and a median settlement of $39 million, more than double the next highest median amount.

Hospitals and clinical labs register the next highest median amounts at just over $14 million each, but hospitals have the wider range of settlements, with the smallest settlement amounting to only $431,526 and the largest coming in at $368 million.

Top Settlements for Physicians for Kickback Violations
Top Settlements for Physicians for Kickback Violations

Top Settlements for Physicians for Kickback Violations

The largest individual kickback claim settled by a physician is a not insignificant $15 million, but this type of entity has seen the lowest median settlement amount of all of the top kickback entities: only $330,000.

Using this data, an attorney who represents a pharmaceutical company in a kickback case would be able to advise her client about how expensive these cases have been and what the client can expect in a settlement offer from the Department of Justice and the Department of Health and Human Services.

Bloomberg Law’s Health Care Fraud Analytics uses a database curated by Bloomberg Law experts to identify and categorize fraud settlements based on what conduct was alleged. That conduct is then searchable and sortable, allowing a health care professional to spot trends in settlements over the years. The following was extracted from this technology and examines settlements with the Department of Justice and the Department of Health and Human Services since 2006.

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