An Austin Firm Dedicated to
Health Care Law

  1. Home
  2.  → 
  3. Health Care Investigations
  4.  → Feds see North Texas as a “hotbed” for healthcare fraud

Feds see North Texas as a “hotbed” for healthcare fraud

Everything is bigger in Texas, and as far as the feds are concerned that old adage holds true for healthcare fraud in recent years. In the past, the feds could generally only pursue allegations of illegal kickbacks against providers who billed federal programs. Billing private insurance companies generally fell into state laws and these laws often labeled such violations as misdemeanors, a conviction for which led to a relatively minor risk when weighed against the financial benefit of continuing potentially questionable practices.

But the government has gotten creative in recent years. Generally its hands were tied, only able to prosecute cases in Texas if the provider billed federal programs like Medicare. The Forest Park case has shown that the feds have untied their hands when it comes to these types of cases.

What was the Forest Park case?

This case was one of the largest healthcare fraud cases in recent years. It involved a hospital that allegedly paid physician to refer patients. They then used large out-of-network fees to make over $200 million, while providing upwards of $40 million in illegal kickbacks to referring physicians.

Unable to pursue the case as a federal violation because the hospital billed private, not federal, insurance companies, the feds had to get creative. Queue the Travel Act. This law essentially states that the government can pursue a case against any facility that uses interstate or foreign commerce for illegal activity. The hospital in question used services, like labs, in other states.

The strategy worked. Even though no federal dollars were involved, the federal government was able to build a successful case against Forest Park using the Travel Act.

Why are the feds so focused on healthcare fraud cases in Texas?

The federal government has taken this area of law so seriously that it put together a healthcare fraud strike force. Shortly after its inception, the Dallas office took on a significant part in operations. Feds are incentivized to continue this focus, as healthcare fraud investigations tend to pay for themselves. As noted, by one of the founders of the Dallas’ branch, “the return on investment for the prosecutor [in healthcare fraud cases] is off the charts.”

Off the charts, indeed. With an estimated loss of $68 billion per year due to healthcare fraud it is no surprise the feds are cracking down hard on allegations of violations.

What should my hospital or practice do if the focus of a federal investigation?

Although the average number of healthcare fraud cases has decreased in recent years, the amount tied to each case has gone up to an average of almost $1.2 million. This means individuals, practices and facilities who find themselves under investigation are wise to take the matter seriously as it could mean the potential for huge financial penalties.

In the past, it was easy to focus reviews for anti-kickback concerns on federal or state programs. Now we know that private insurance is also subject to prosecution. Review procedures and make changes as needed to better ensure compliance and mitigate the risk of similar allegations of a violation.

Attorney John Rivas is responsible for this communication