Published: Sunday, February 13, 2011, 5:30 AM

Penalties for health care fraud have totaled more than $48 million in north Alabama in the past four years as federal authorities push harder to get the guilty individuals and companies to pay up, according to the U.S. Attorney’s Office.

But the amount being collected from investigations does not come close to chipping away at what one UAB professor estimates as $1.1 billion a year lost to health care fraud and abuse in Alabama — and about $75 billion nationwide.

Federal efforts at cutting down on health care fraud resulted in the recovery of a record $4 billion in taxpayer dollars, much of it for Medicare, in fiscal year ending Sept. 30, according to a January report from the Department of Health and Human Services.

“Health care is a growing part of the government’s budget, so anything we can do to recapture money that is wasted has been a focus for the past four or five years,” said Lloyd Peeples, assistant U.S. Attorney and health care fraud coordinator for the northern district of Alabama.

The U.S. Attorneys Office in Birmingham, which is responsible for the state’s 31 northern counties, has obtained criminal judgments of nearly $2.1 million and civil judgments or settlements of nearly $46.1 million in the past four years.

Peeples estimates the number of cases coming to his office for possible federal prosecution in the past five years has doubled. “Our efforts and successes in prosecuting health care fraud over the past few years have resulted in a substantial increase in both the number and size of the cases we are currently investigating and prosecuting,” he said.

At least four times each year, the Health Care Fraud Working Group, which Peeples heads, meets to address issues and trends related to the problem. about 40 people from federal agencies, private insurance and some of the state medical licensing boards are in the group.

While increased coordination among agencies is helping to fight the problem, there also has been an increase in the number of health care fraud whistleblowers — usually employees within a health care company who witness fraud.

“Whistleblowers provide the government with inside information which would either be difficult or time consuming for the government to otherwise obtain,” Peeples said.

Health care fraud and abuse takes on several different forms and prosecutors use criminal charges or civil lawsuits to go after the people or companies who caused it.

Here are a few Alabama examples in recent years from federal investigators and court records.

Charlotte Turley, a former KMart pharmacy technician in Etowah County who got more than $331,000 in fraudulent prescription reimbursements for personal use from Blue Cross Blue Shield, is to report to federal prison Feb. 17 to begin serving an 18-month sentence for health care fraud.

Thomas Martin, a north Alabama physician, in 2007 was sentenced to four months in prison and was ordered to pay just over $30,000 in restitution for health care fraud. He also agreed to pay a $105,000 civil settlement against him for charging insurance companies for lasered mole removals as complicated plastic surgery, according to Peeples and court documents.

Four people — one of them a former United Health Care insurance employee — from Jefferson County are responsible for paying $72,746 in restitution after pleading guilty to using identities of members of a federal health benefit plan to create false prescriptions, filling them at pharmacies, and then reselling the drugs.

A north Jefferson County pharmacist, Billy East, who ran a pharmacy and a website that filled narcotics prescriptions from doctors, and who consulted patients over the telephone and didn’t see them in person, was sentenced to two years in prison and ordered to give up houses, cars and other property valued at $900,000. the pharmacist was charged with one count of illegal distribution of a controlled substance (hydrocodone) and one count of money laundering.

Cases involving prescription drugs have been the most common health care fraud cases handled by Peeples’ office. the focus, he said, is on professionals such as doctors, nurses and pharmacists, not individuals who forge one prescription to get a drug. “We’re thinking more on a big scale,” he said.

Whistleblowers

U.S. Attorneys offices have stepped up investigations and prosecutions on health care fraud nationwide.

Many of the civil settlements were from lawsuits filed by whistleblowers under the false Claims Act.

Under that act a person can file a claim against someone or a company on behalf of the U.S. Government for a wrongful act, according to the U.S. Attorneys Office. if there’s a judgment in the case, the person who filed it can get a small portion of any money judgment.

One false Claims Act case, not filed in Alabama, involved claims against five state hospitals, including two in Birmingham — St. Vincent’s Hospital and St. Vincent’s East. the lawsuit alleges those hospitals and others around the country overcharged Medicare between 2000 and 2008, when performing kyphoplasty, a minimally invasive procedure used to treat certain spinal fractures that often are due to osteoporosis. in many cases kyphoplasty can be performed safely and at a lower cost as an out-patient procedure, according to the U.S. Department of Justice.

Two former Kyphon Inc. employees — one from Birmingham — that developed the procedure filed the lawsuit in new York. Medtronic Spine LLC, the corporate successor to Kyphon Inc., agreed to pay the United States $75 million to settle allegations that it caused the submission of false claims to Medicare.

Another false Claims Act case filed in U.S. District Court in Birmingham netted a $24.7 million settlement in 2009 with SouthernCare Hospice Inc. That company, which admitted no wrongdoing in its settlement, had been accused of fraudulently enrolling elderly people in hospice and charged Medicare for services when the patients were not dying.

Alabama Medicaid

The numbers for federal judgments and settlements do not include cases investigated or prosecuted by the state.

The Alabama Medicaid Agency also regularly investigates fraud or abuse.

“Even before the recent federal interest in fraud and abuse prevention, our agency has always taken an aggressive approach to preventing fraud and abuse and has been recognized nationally for payment and eligibility accuracy,” said Alabama Medicaid Commissioner Dr. Bob Mullins Jr. “Still, we always believe we can do more.”

Mullins, who took over last month, has made plans to strengthen the agency’s investigation efforts by providing additional training to staff on investigating and preparing cases that the Attorney General’s Office can successfully take to trial, or at a minimum, recover money due the state, according to a statement from the agency.

In fiscal year 2010, Alabama Medicaid reviewed 48 medical providers and 424 pharmacies, recovering $1.3 million and bringing cost savings of $8.1 million, according to information provided by the Medicaid agency. For that same year, the agency also suspended 132 beneficiaries for abuse and 840 recipients “locked” into one doctor and pharmacy to prevent potential abuse.

Cases of Medicaid fraud are referred to the Medicaid Fraud Control Unit within the Alabama Attorney General’s Office.

The Attorney General’s Office handled 32 civil and seven criminal cases last year and returned $5,238,079 to the Medicaid Agency.

Billing for services not provided and charging for a more expensive procedure than was actually done are the two most common forms of fraud they see, according to a statement from the Attorney General’s office.

Among the cases last year included a dentist convicted for billing for services not provided at school screenings in Butler, Lowndes and Conecuh counties, according to the Attorney General’s Office.

Referrals from Medicaid Agency have remained constant while the unit’s staffing levels decreased significantly in recent years, according to the statement.

National costs

Estimates on the cost of fraud and abuse across the nation range from about $75 billion to $234 billion a year. That’s just part of the estimated $2 trillion spent in the United States each year on health care, according to the National Health Care Anti-Fraud Association.

David J. Becker, an assistant professor in the Department of Health Care Organization and Policy in the UAB School of Public Health, said a fairly conservative estimate may be the $100 billion estimated by the Office of Management and Budget. Using that number, and with Alabama’s share of national health expenditures at around 1.5 percent, that would put the amount of annual fraud and abuse in Alabama at about $1.1 billion, he said.

“Fraud in our public health insurance programs robs from all of us,” Becker said.

Fraud or abuse leads to higher insurance premiums and can reduce benefits or coverage, according to the National Health Care Anti-Fraud Association. when a private insurance company is paying out more money, Peeples said. “your rates will go up.”

But fraud can lead to some real life and death problems as well, health care officials said.

Jason Silberberg, spokesman for the National Health Care Anti-Fraud Association, said one case from Kansas, in which a couple operating a pain management center was doling out pills, was tied to 100 drug overdoses and 68 deaths. That case got the investigation of the year award for 2010 from his group.

Clinton Colmenares, spokesman for UAB, said the kind of fraud they most commonly see are someone trying to use another person’s Medicaid, Medicare or private insurance card. That could lead to a doctor or nurse giving a patient the wrong blood type, he said.

“It’s not only fraudulent, but it’s also dangerous,” Colmenares said.

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North Alabama health care fraud penalties top $48 million, U.S. says