Texas Attorney Generalís Medicaid Fraud Recoveries Surpass $400 Million Mark
AUSTIN The Texas Attorney General’s decade-long crackdown on Medicaid fraud recently reached two historic milestones. Since 2002, the Civil Medicaid Fraud Division’s recoveries for the State of Texas passed the $400 million mark while total recoveries for the state and federal governments now exceed $1 billion. Because the Medicaid program is jointly funded by the State and the federal government, fraudulent overpayments recovered by the Attorney General’s Office are shared with the federal treasury.
The vast majority of the $1.01 billion recovered since 2002 stems from whistleblower lawsuits that were initially filed under seal by private parties. After reviewing the whistleblowers’ claims to determine their veracity, the Civil Medicaid Fraud Division (CMF) intervened in these cases on behalf of the State in an effort to recover overpayments to Medicaid providers. Under the Texas Medicaid Fraud Prevention Act, CMF is required to share a percentage of the recovery with the whistleblower who initiated the case.
Initially launched as a small section within another division at the Attorney General’s Office in 1999, CMF was expanded and established as a separate division in 2007 when the Texas Legislature, recognizing the value of CMF’s return on investment, dramatically increased its funding. In Fiscal Year 2012, the $137 million CMF recovered for the State was 23 times the cost of operating the division.
Nationally recognized for its successful efforts to recover funds wrongfully taken from the Medicaid program, CMF is responsible for pursuing fraud claims through civil enforcement actions. A separate division of the Attorney General’s Office, the Medicaid Fraud Control Unit, handles criminal investigations on the basis of referrals from state agencies like the Health and Human Services Commission’s Office of Inspector General.
CMF’s initial launch in 1999 stemmed from a legislative change two years earlier that amended the Texas Medicaid Fraud Prevention Act to authorize whistleblower lawsuits. As a result, CMF’s docket primarily consists of these types of cases. Historically, the vast majority of whistleblower claims have identified misconduct by pharmaceutical manufacturers. Defendants pursued by CMF are commonly charged with improperly reporting the price of their products to the Medicaid program, illegally promoting their products, and/or engaging in illegal kickback schemes.
As a groundbreaking leader in the field, the State of Texas was the first state in the nation to pursue a pharmaceutical manufacturer for improperly reporting the price of its drugs to the Medicaid program. Because the Medicaid program uses manufacturer-reported pricing information to determine the reimbursement rate for drugs, when manufacturers inflate the cost of their products in reports filed with the State, the result is millions of dollars in fraudulent overpayments to pharmacies. Drug pricing cases pursued by CMF since 2002 have yielded recoveries totaling more than $550 million including over $200 million for the State of Texas.
Illegal drug marketing cases comprise another significant portion of CMF’s enforcement docket. These cases typically involve pharmaceutical manufacturers that pay kickbacks to encourage the purchase of their products or marketing products for uses that are not approved by the U.S. Food and Drug Administration (FDA).
CMF’s largest recovery to date in an illegal drug marketing case resulted from a six-year investigation of and ensuring litigation against Johnson & Johnson Inc. and its subsidiary Janssen Pharmaceutica Inc. The State’s investigation centered on the defendants’ efforts to market the atypical antipsychotic drug, Risperdal. CMF investigators discovered that the defendants urged physicians to prescribe the drug for purposes not approved by the FDA. Moreover, evidence indicated that certain children in the Texas Medicaid program were targeted for Risperdal prescriptions despite the fact that they suffered from conditions for which no rigorous scientific testing necessary had been done to prove the drug safe and effective for those conditions. Janssen and Johnson & Johnson settled the State’s claims in January 2012 after eight days of trial in Travis County District Court. Under the terms of the settlement, Janssen and Johnson & Johnson paid more than $48 million to reimburse Texas taxpayers for the unlawful and deceptive conduct.
For more information about the Civil Medicaid Fraud Division’s efforts to eliminate waste, fraud and abuse in the Texas Medicaid program, access the Office of the Attorney General’s website at www.texasattorneygeneral.gov.