Healthcare Fraud Examples

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April 2nd, 2013
Categories: Healthcare Reform

healthcare fraud examplesHealth care fraud costs the country over $80 billion a year according to the FBI. While the majority of healthcare providers are honest, some purposely abuse the healthcare system for financial gain.

Fraud is defined as making false statements or representations of material facts to obtain some benefit or payment for which no entitlement would otherwise exist.  For clarity, it involves obtaining something of value through misrepresentation or concealment of material facts.  Examples of fraud may include billing for services/supplies not furnished, or altering claims forms in order to gain higher payment.

Fraud is a serious crime that is punishable by imprisonment, significant fines, or both.  The False Claims Act, Anti-Kickback Statute, Physician Self-Referral Law (Stark Law), Social Security Act, and the US Criminal Code are laws used to combat healthcare fraud.  Violation of these laws may result in nonpayment of claims, civil monetary penalties, exclusion from government healthcare programs, as well as criminal and civil liabilities. Under the Affordable Care Act, Health and Human Services is now able to suspend payments to an accused medical provider until the resolution of the investigation is reached.

Below we highlight a few recent examples of large fraud cases. There are many more examples just like these that place an unnecessary burden on the US healthcare system.

Examples of Fraud & Abuse Cases

GlaxoSmithKline - $3 Billion Settlement

July 2012

GlaxoSmithKline Plc plead guilty to misdemeanor charges for healthcare fraud and agreed to pay $3 billion in order to settle its case.  The agreement covered allegations of the British drugmaker violating US laws of marketing and development of pharmaceuticals.

GSK targeted the antidepressant Paxil to patients under the age of 18 when it was solely approved for adults, and it promoted the drug Wellbutrin for uses it was not approved for, according to an investigation led by the US Justice Department. GSK’s third charge was for failing to give the USDA safety data about its diabetes medication. The misconduct was reported to have lasted over a decade and the settlement included $1 billion in criminal fines with the remainder $2 billion in civil fines.


7 Cities  - $430 Million Billed

October 2012

Individuals in seven cities, involving 91 individuals were charged for a combined $430 million in fabricated Medicare billing. The cities included were Miami, Dallas, Houston, Brooklyn, Baton Rouge and Chicago.  Charges for this case were more than $230 million in home healthcare fraud, more than $100 million in mental healthcare fraud and more than $49 million in ambulance transportation fraud, as well as several other fraud charges.  The parties participated in schemes to submit claims to Medicare for treatments medically unnecessary and often never provided. In many cases, recruiters were paid cash incentives to supply patient information to providers in order to submit fraudulent billing.


DaVita, Inc. - $800 Million Billed

November 2012

DaVita, Inc. is currently under investigation for over-billing Medicare and Medicaid for misuse of medication. DaVita, Inc is one of the nation’s largest dialysis companies with roughly 2,000 clinics adding up to about a $7 billion business. More than two-thirds of its revenue is earned through Medicare and Medicaid payments. Allegedly, DaVita company officials enforced strict instructions to administer only partial amounts of a patient’s dosage from one vial, and to then administer the remainder from additional new vials, in order to bill for at least three vials when only one is needed. Dr. Vainer, a former medical director at one of their clinics, and a nurse, Daniel Barbir, have filed a whistleblower lawsuit against the company for massive Medicare fraud.  The case is set for trial this year.


Massive Pharmacy Fraud Case – Nearly $20 Million Billed

March 2013

February 2013 in Detroit, pharmacist Babubhai “Bob” Patel, RPh was sentenced to 17 years in prison for masterminding massive healthcare fraud in prescription claims to Medicare, Medicaid and private insurers.  Since his sentencing, 5 additional physicians and 4 more pharmacists have been indicted. The healthcare scheme continued for 5 years and included illegally distributing millions of opioid painkillers and other controlled substances as payment to its “marketers”. Patel allegedly bribed physicians to write medically unnecessary prescriptions and steer patients to his pharmacies to fill their prescriptions. Patel was indicted with 4 physicians, 1 psychologist, 12 pharmacists and 9 others in August 2011. Related charges were conspiring to commit healthcare fraud, and conspiring to distribute controlled substances. There are 5 remaining defendants scheduled for trial this summer.

For more information about fraud and abuse, visit  If you suspect fraud or abuse, please report it to the US Department of Health and human Services at