In today’s increasingly complex medical industry, fraud and other criminal activity can be challenging to detect. The challenge for authorities is, therefore, often daunting. Still, recent years have seen an unprecedented number of arrests and prosecutions for healthcare fraud, particularly in the area of pharmaceutical drug abuse. To understand how this trend has progressed over time, it is crucial to understand the unique challenges faced by prosecutors and other enforcement agencies like the Federal Bureau of Investigation (FBI) in such cases.

Ileana Hernandez of Manatt, a partner with the firm’s healthcare litigation practice and member of its national white collar group, notes that “The growing number of arrests and prosecutions also reflects the ever-increasing capacity of federal and state governments to identify and prosecute fraud cases, as well as an increased willingness on their part to devote time and resources to such efforts.”

A Healthcare Fraud Primer:

According to Cohen, Lytle & Bui PLLC, healthcare fraud can take many forms, including claims for services never performed, billing for services at higher rates than those usually offered or charged to patients, billing for services not medically necessary, falsified records of patient consent, kickbacks to providers in exchange for referrals and purchases made by beneficiaries who are ineligible to receive benefits.

A particular area of focus has been pharmaceutical drug abuse, the prosecution of which the FBI has recently called its “highest criminal priority.” There are several reasons why this is so, beginning with the fact that drug-related fraud is thought to represent between 10 and 12 percent of total healthcare expenditures in the US. Some experts contend approaches nearly half a trillion dollars per year.

The high value of these cases makes it all the more important to make each case count, and prosecutors do this by looking for what Hernandez describes as “defensible” cases. Thus healthcare fraud prosecutions tend to focus on cases in which the evidence of guilt is overwhelming or easily obtainable, allowing prosecution teams to avoid taking uncertain or time-consuming cases that might provide defendants with opportunities to create legitimate doubt.

Another reason for the recent surge in prosecutions, Hernandez says, is the fact that pharmaceutical cases are so difficult to defend against, due primarily to their reliance on “relatively easy-to-assemble” but powerful evidence like computer records of prescriptions and standard prescription patterns. Furthermore, due to enhanced federal rules, including the Health Insurance Portability and Accountability Act (HIPAA), more of this information is available to enforcement agencies, allowing them to identify suspicious activity more quickly.

All of these factors have contributed not only to an increased prosecutorial focus on pharmaceutical drug abuse but also a greater willingness by authorities to devote substantial time and resources to such investigations, a trend Hernandez believes will continue for the foreseeable future.

A Complex, Ever-Changing Legal Landscape:

According to Hernandez, it is important to note that healthcare fraud prosecutions often face complex and evolving legal landscapes such as HIPAA and the Affordable Care Act (ACA), both of which have made healthcare fraud prosecution more challenging by expanding the scope of protected information. These laws, in addition to rules like the Health Information Technology for Economic and Clinical Health (HITECH) Act, also allow patients to be privy to a greater amount of their own health-related data, including medical records from multiple providers, which in turn may present additional hurdles and difficulties for prosecutors and investigators involved in such cases.