Last week, a Phoenix couple pleaded guilty to criminal charges involving healthcare fraud. Unfortunately, this is not remarkable, with approximately 500 annual convictions for healthcare fraud in the U.S. each year over the past five years. What makes this case unique is the staggering size of the fraud. The government alleges that the defendants submitted $1.2 billion in fraudulent claims to Medicare, Medicaid, and other insurers. In recent years, the median amount of harm in a healthcare fraud conviction was about $1.2 million—roughly 1/1000th of the size of this wrongdoing.

The various fraud schemes involved billing for wound care procedures, including:

- Receiving kickbacks ($279 million worth!) from wound graft companies in exchange for consistently using those companies.

- Consistently using larger-than-necessary and, hence, more expensive wound grafts to maximize insurance reimbursements.

- Paying kickbacks to sales representatives marketing the defendants’ companies.

- Ignoring medical necessity and prescribing grafts regardless of whether wounds were already healed or responding to the grafts, to maximize insurance reimbursement.

As alleged in the charges, the entire fraud lasted only 18 months, during which $1.2 billion worth of claims were submitted to public and private insurers, with $960 million in claims to federal programs alone.

Each defendant has agreed to pay over $600 million in restitution and faces over 20 years in prison. The charges detail the defendants’ spending of their ill-gotten gains, including a Ferrari, a quarter-million-dollar Mercedes, several properties, and hundreds of thousands in precious metals.

A short documentary about the facts of the case is available on YouTube.

While this is a criminal case, the false charges to Medicare, Medicaid, and other government healthcare programs would likely have been actionable under the federal False Claims Act and state equivalents. These laws allow whistleblowers to sue contractors defrauding the government and, if successful, share in 15-30% of the recovery. Some states, such as California and Illinois, have similar laws that allow whistleblowers to sue for fraud against private insurers and also share in a portion of the recovery.

The attorneys at Whistleblower Partners have significant experience representing whistleblowers in cases alleging healthcare fraud. If you would like more information or wish to speak to an attorney at Whistleblower Partners, please contact us for a confidential consultation.