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What Are the Penalties for Prescription Drug Fraud in Detroit, Michigan? 

Oberheiden, P.C.
Former Medicare Prosecutors & Defense Counsel

Prescription Drug Fraud in Michigan and the Detroit Area

In May 2009, The U.S. Attorney General and HHS Secretary created the Health Care Fraud Prevention & Enforcement Action Team (HEAT) in a new effort to increase collaboration among law enforcement agencies to combat healthcare fraud. HEAT teams consist of members of various agencies including HHS-OIG, FBI, DOJ, and MFCU. The HEAT teams were designed to target emerging or migrating schemes along with chronic fraud within the health care field. One of the HEAT team focus area is Detroit.

Each year, HHS-OIG releases a report of its anti-fraud activities and highlights successful cases from each HEAT city; as well as successes for individual provider types. By 2010, the second year of HEAT, the cases highlighted for Detroit began to center on prescription drug fraud. The 2010 fraud report highlighted four cases for Detroit (Eastern District of Michigan). Two of these cases involved providers who offered kickbacks to patients, including providing prescriptions for controlled substances, while a third case involved providers paying patients so that the provider could bill for unnecessary medications. This pattern of prescription drug cases in Michigan (and specifically Detroit) continued to be highlighted in the HHS-OIG yearly report and resulted in the conviction of the final defendants in a $67 million pharmacy fraud. Because of the actions of this Detroit pharmacy, over 250,000 units of oxycodone and 4 million units of hydrocodone were diverted in violation of the Federal Healthcare Fraud Statute.

Examples of Prescription Drug Fraud

Prescription drug fraud can take many forms, but there are typically four types that law enforcement most commonly search for. The first scheme is drug diversion, which involves an individual obtaining a prescription for certain drugs, usually controlled substances, and gives them or sells them to someone else. The second, doctor shopping, occurs when a beneficiary consults many doctors to inappropriately obtain multiple prescriptions. Third, are inducements, kickbacks, or bribes that are paid to the prescriber as an inducement to write certain prescriptions. The final scheme is inappropriate dispensing and results from a pharmacy dispensing expired or adulterated prescriptions or dispenses drugs without a prescription. While all four schemes might be related, each implicates a different player within the prescription transaction – patient, doctor, or pharmacy.

Prescription Drug Fraud Can Lead to a Life Sentence

While many providers that bill federal healthcare programs know healthcare fraud may carry severe penalties, few understand that prescribing physicians and responsible pharmacists may end up in prison for life. Cases in the past imposed life sentences to physicians where the provider was found guilty of healthcare fraud, and someone died because of the fraud scheme. The federal healthcare fraud statute at 18 U.S.C. 1347 explicitly enumerates imprisonment for life if the healthcare fraud scheme (e.g., prescription abuse) results in death.

Life in prison for fraud is a rare exception. Yet every physician prescriber that engages in prescription fraud and abuse gambles with the uncertainty of how the patient will tolerate prescribed drugs, whether the patient also consumes illicit drugs, or whether the patient is seeking drugs from multiple physicians. These and other factors exemplify the danger of overdose. The extent of causation required to be liable for an enhanced prison sentence for violations that result in death under the statute may not have yet been determined in most jurisdictions, yet it has been determined in the Sixth Circuit – which covers Michigan.

Providers should know that a patient’s date of death is a data field populated in the claims data obtained during an investigation. Law enforcement actively looks for correlations to patient dates of death and the last controlled substance prescription issued by a provider. This means that providers who may have a patient that dies because of something unrelated to the provider’s prescription practice (but the death is contemporaneous to the issuance of a controlled substance prescription) that provider may find themselves the subject of even more intense scrutiny.

Increased Enforcement Efforts

In June 2015, HHS-OIG released a report identifying continued questionable billing practices related to Medicare Part D. The reason for OIG’s report was two-fold. First, opioid abuse is becoming an epidemic and has led to over 2 million emergency department visits in a two-year span. Second, Medicare spending for commonly abused opioids has grown faster than spending for all of Part D. In 2006, when Part D started, spending was at $51 billion. Between 2006 and 2014 total Part D spending increased to $121 billion, an increase of 136%. During that same time, Part D spending on commonly abused opioids increased by 156%.

The report specifically looked at pharmacies that were outliers on five criteria typically associated with prescription drug fraud. The criteria considered were; 1. Average number of prescriptions per beneficiary, 2. Percentage of prescriptions that were for commonly abused opioids, 3. Average number of prescribers for commonly abused opioids per beneficiary, 4. Average type of drugs per beneficiary, and 5. Percentage of beneficiaries with an excessive supply of a drug.

Based on this criterion, the report identified over 1,400 pharmacies with suspicious billing. These pharmacies represent only 2% of retail pharmacies nationwide but cumulatively billed $2.3 billion to Part D. Also, these 1,400 pharmacies were most likely to be in New York, Miami, Los Angeles, and Detroit – all HEAT cities. Because there is a continued growth in Part D, especially in the prescription of opioids, opioids can be easily abused and lead to hospitalization, and several the pharmacies with suspicious billing practices are in HEAT cities, pharmacies in Detroit that adhere to all the program requirements may still find themselves being investigated just because they bill for or prescribe a drug deemed to be problematic.

Our Record

The commitment of Oberheiden, P.C. is to avoid criminal charges at any cost. Our team of former healthcare prosecutors and experienced defense attorneys have a distinguished history of protecting business owners, executives, lawyers, physicians, hospitals, laboratories, pharmacies, home healthcare entities, and many other healthcare organizations against any form of alleged healthcare fraud. Here are some recent examples of our case outcomes.

  • Representation of a Pharmacy against the Department of Defense and the Office of Inspector General.
    Result: No civil or criminal liability.
  • Representation of a Pharmacy by the Department of Health and Human Services.
    Result: No civil or criminal liability.
  • Representation of a Physician against the Office of Inspector General.
    Result: No civil or criminal liability.
  • Representation of a Physician against the Department of Justice and the U.S. Attorney’s Office.
    Result: No civil or criminal liability.
  • Representation of a Physician against the Department of Health and Human Services and the U.S. Attorney’s Office.
    Result: No civil or criminal liability.

We Can Help

Oberheiden, P.C. consists of former Medicare prosecutors, former healthcare fraud agents and auditors, and experienced healthcare fraud and compliance attorneys. Our combined experience of decades in charge of Medicare and Medicaid investigations allows our clients to better understand what government lawyers are looking for when reviewing healthcare data and how to avoid criminal charges.

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