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US healthcare fraud convictions up 22%

The number of criminal convictions for healthcare fraud by companies and individuals rose 22 per cent in the US last year amid a crackdown by federal authorities

(Finacial Times / August 10, 2003) -- They come ahead of a long-awaited Department of Justice healthcare fraud report, expected in the next few weeks. The report details the DoJ's efforts to crack down on healthcare crime and abuse of health programmes including Medicare, for the elderly, and Medicaid, for the poor.

According to HHS, there were 517 criminal convictions in the year to last September, up from 423 previously. In the following six months to the end of March there were 320 convictions, up from 250 in the same period a year previously.

Healthcare fraud stepped into the limelight last week when Tenet Healthcare, the second largest US hospital chain, agreed to pay $54m to the government to settle claims that doctors at one of its California hospitals performed hundreds of unnecessary heart operations on otherwise healthy patients.

The hospital then billed Medicare, Medicaid and other government insurance programmes for reimbursement.

In June, HCA, another hospital chain, agreed to pay $631m to settle claims that it over-billed the government.

"There's an enormous amount of money in the system," said Frank Razzano, a former government prosecutor who now works at Dickstein, Shapiro, Morin & Oshinsky in Washington. "Most of these hospitals are profit-making entities, and they all want to increase the bottom line."

Federal prosecutors, especially in Boston, continue to probe the drug and medical products industry. In July, Abbott Laboratories pleaded guilty to a federal charge of obstructing investigations and agreed to pay $600m in fines to settle civil and federal claims that it conspired to defraud government healthcare programmes.

In June, AstraZeneca paid $355m in criminal fines and an out-of-court settlement. Schering-Plough said in May that it was likely to face criminal charges over sales and pricing practices, and document destruction. Earlier, Bayer pleaded guilty and paid $257m to resolve criminal and civil claims.

Drugs companies have complained that the medical billing system in the US is arcane and complex. But Neil Getnick, attorney of Getnick & Getnick, a law firm specialising in whistleblower cases and anti-fraud litigation, said that was not the entire problem.

"There is a very troubling pattern in the industry that is systemic and not aberrational," Mr Getnick