The district's trophies include Medicaid and Medicare billing cases like a $104.5-million settlement with Vencor Inc., a hospital and nursing home operator, in 2001; an $85.7-million settlement with Quorum Health Group that same year; and a $5.8-million payment in 2002 from Eckerd Corp. to the federal government along with a $1.7-million criminal fine.
The district's attorneys also have successfully prosecuted scamsters like Barry D. Haught. A one-time pornography peddler, Haught took the government for some $14 million by selling hundreds of inexpensive scooters to people who weren't disabled and then billing Medicare -- the federal healthcare program for the elderly -- for more costly, full-powered wheelchairs. He's now serving seven years in federal prison.
"If I was going to commit healthcare fraud, I'd stay away from the Middle District of Florida," says Ken Nolan, a Fort Lauderdale attorney who specializes in healthcare false claims cases. "They're one of the most productive districts in the country."
The district's successes are notable in a state whose large population creates a huge pool of federal healthcare dollars that unscrupulous providers are eager to siphon.
In Florida, Attorney General Charlie Crist's office estimates that some 10% of the state's annual $12-billion Medicaid budget is gobbled up by fraud. "Fraud is a serious problem," says Ben St. John, a spokesman for the Department of Health and Human Services' Office of Inspector General. "States like Florida with a big population of elderly beneficiaries are targets."
A grand jury report released in December by Crist's office found, for example, that Medicare paid for about $100 million in intravenously administered drugs between January 2002 and June 2003 in Miami-Dade County alone for just four drugs.
Federal investigators are convinced, the report stated, that "these billings are fraudulent'' and that most of the drugs are being resold rather than administered to patients. One individual transaction cited by the grand jury involved the sale of some $300,000 in prescribed drugs.
'Mad Dog' zeal
The Middle District's focus on healthcare fraud began in the 1980s during the tenure of the late U.S. Attorney Bob Merkle, whose prosecutorial zeal branded him with the nickname "Mad Dog." A special healthcare fraud task force assembled in 1988 included investigators from the FBI, the Department of Health and Human Services' Office of Inspector General and the Florida Medicaid fraud unit and was headed up by Assistant U.S. Attorney Andrew Grosso.
By 1990, the task force had indicted and convicted individuals involved in four different healthcare fraud schemes, including a physician's clinic and mobile chiropractor, both of which had billed Medicare for unnecessary treatments. "It made a statement," says Grosso, now an attorney in private practice in Washington, D.C. "Much of the credit has to be given to the quality of the agents. The OIG put agents in Florida that were a match for FBI agents anywhere."
The focus on healthcare fraud has continued through successive U.S. attorneys, who have cooperated successfully with the Department of Justice's Commercial Litigation Branch and Florida's Medicaid Fraud Control Unit.
One key to the district's success has been its ability to capitalize aggressively on what are called "qui tam" lawsuits. A Civil War-era law called the False Claims Act was amended in 1986 in a way that allows whistleblowers who know of fraud against the government to sue on behalf of the government and collect a portion of any money recovered.
The 1986 amendment, passed to combat fraud by defense contractors, has proved to be an important weapon in fighting healthcare scams. The cases involving Eckerd, Quorum, Vencor and the prosecution of Haught all began as qui tam cases.
In the Haught case, an independent salesman named Gary Flewelling sued one of Haught's companies, Goldstar Medical Services, alleging that the firm was cheating Medicare. From that suit prosecutors and investigators were able to uncover a wider-ranging scam, which included dozens of front companies and offshore bank accounts.
The district's litigation also resulted in a Circuit Court opinion authorizing the government to freeze the same amount of a defendant's assets that the person obtained through healthcare fraud offenses. Assistant U.S. Attorneys Jay Trezevant and Terry Zitek were able to freeze the bank accounts of 44 defendants, an unusually high number.
Big problem
The complex billing codes through which healthcare providers seek reimbursement from the government make prosecuting healthcare fraud difficult. Some vendors try to boost their incomes by billing for treatment using codes for a similar treatment with a higher reimbursement rate. In other cases, providers bill for non-existent care. Some pharmaceutical companies have violated federal law by not giving states the "best" prices on brand name drugs.
One big problem prosecutors face is showing intent; demonstrating patterns of fraud can require lots of resources and manpower to sift through years' worth of data. In a case concluded early last year, the Middle District recovered $390,000 from Orlando Regional Medical Center after determining that the hospital had improperly billed Medicare for costs associated with experimental cardiac devices not reimbursed by Medicare before 1995.
Paul I. Perez, named U.S. Attorney for the Middle District by President George W. Bush in 2002, says the district will continue to pursue complicated fraud cases. "I am proud of the work our prosecutors do in the healthcare fraud area, and we shall continue to vigorously prosecute those who try to scam the government."
Cases
Orlando Regional Medical Center
Settlement Date: 2003
Amount Recovered: $390,000
Nature of Complaint: Hospitals throughout the country, including Orlando Regional Medical Center, violated a pre-1995 policy by billing Medicare for procedures involving experimental cardiac devices.
Eckerd Corp.
Settlement Date: 2002
Amount Recovered: Criminal fine of $1.7 million; $5.8 million for damages suffered by the Medicaid, TriCare and Federal Employee Health Benefits program; plus an additional $3.1 million to Florida and 17 other states.
Nature of Complaint: This qui tam action alleged that Eckerd Corp. improperly billed government healthcare programs for false prescriptions claims by routinely billing the government in full for filled prescriptions while giving customers only a portion of their orders.
Quorum Health Group Inc.
Settlement Date: 2001
Amount Recovered: $85.7 million; 24% went to James F. Alderson, who brought a qui tam lawsuit.
Nature of Complaint: This action, transferred to the Middle District of Florida in 1997, involved allegations of substantial Medicare cost report fraud. In addition to the financial settlement,
the company entered into a corporate integrity agreement.
Vencor Inc.
Settlement Date: 2001
Amount Recovered: $104.5 million
Nature of Complaint: This was also a qui tam case and involved more than five other districts. Vencor, which owns 46 hospitals and 219 nursing homes, submitted false cost reports for reimbursement in the Medicare program for fiscal years 1995-97 for its long-term care and acute-care hospitals.
Lifeline Healthcare of Southwest Florida
Settlement Date: 2001
Amount Recovered: More than $3 million
Nature of Complaint: Whistleblowers alleged in a qui tam lawsuit that Lifeline Healthcare, a home health provider, provided unreasonable and unnecessary service, including admitting patients who did not qualify for home healthcare services because they were not homebound or did not have the types of chronic conditions that would qualify for home healthcare services. They also alleged that Lifeline engaged in false documentation practices.