Massachusetts Attorney General Announces Record Year Of Medicaid Fraud Recoveries In 2007

January 07, 2008 -- BOSTON – Today, Massachusetts Attorney General Martha Coakley’s Office announced a record of $26.7 million recovered in settlements and judgments for Medicaid fraud cases in 2007. The sum represents the largest amount of Medicaid dollars recovered by the Attorney General’s Office, surpassing all years since the creation of the Attorney General’s Medicaid Fraud Division, which was previously known as the Medicaid Fraud Control Unit, in 1978. The Medicaid Fraud Division is responsible for the investigation and prosecution of fraud against the state Medicaid program. In 2007, the Division investigated more than sixty cases of alleged fraud.

“Our Office has been very successful in its aggressive pursuit of those who steal from the taxpayers of Massachusetts by defrauding the state’s Medicaid program,” Attorney General Coakley said. “We will continue to partner with state and federal agencies to defend the Commonwealth’s coffers from fraudulent practices by unscrupulous providers.”

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The single largest Medicaid fraud recovery in 2007 arose from the Attorney General’s case against Willow Street Medical Laboratory, LLC, an independent clinical laboratory in Lynn and resulted in payment by the company to the Commonwealth of $8.15 million to settle allegations of overpayment and inappropriate referrals. The settlement was the result of a continuing industry-wide investigation by the Attorney General’s Medicaid Fraud Division into urine drug tests billed by independent clinical laboratories to the state Medicaid program.

The Attorney General’s Office also partnered with other state and federal agencies in reaching a settlement with national drug company Purdue Pharma LP, and its subsidiary, The Purdue Frederick Company, Inc. Purdue agreed to pay approximately $8 million to the Massachusetts Medicaid program to settle claims that the company engaged in improper marketing of the highly addictive pain medication OxyContin. The payment was part of a national settlement that returned a total of $130 million in Medicaid funds to federal and state governments.

In another pending civil action against 13 generic drug manufacturers, the Attorney General’s Office entered into agreements in 2007 with 4 of the defendants to settle allegations that false price reporting by the companies caused the Massachusetts Medicaid program to pay inflated amounts for drugs produced by the defendants. Dey, Inc., a California-based manufacturer paid the Commonwealth $2.9 million. Barr Laboratories, Inc. and Duramed Pharmaceuticals, Inc., wholly owned subsidiaries of New Jersey-based Barr Pharmaceuticals, Inc., paid the Commonwealth $2 million. Lastly, a settlement in the amount of $725,000 was reached between the Commonwealth and Missouri-based Ethex Corporation.

Another significant recovery of the Attorney General’s Medicaid Fraud Division was the result of a settlement with Tri-City Mental Health, a not-for-profit mental health and social services provider with several facilities located in suburbs north of Boston. To settle claims of billing Medicaid for services never actually rendered, the company paid the Commonwealth $556,687.

Also of note is a recovery that resulted from a settlement with Joseph Y. Ng, D.M.D., P.C., a dental office in Chinatown. The provider agreed to pay $400,000 to the Commonwealth, settling allegations of billing for services not rendered.

Medicaid is a multi-billion dollar joint state and federal program that provides health insurance for the economically disadvantaged. The monies recovered by the Medicaid Fraud Division are returned to the Medicaid program.

Source: Massachusetts Attorney General