Trend lines show increasing Medicaid fraud convictions, settlements, and judgments

The U.S. Department of Health and Human Services, Office of Inspector General (HHS-OIG) recently released its Medicaid Fraud Control Units Fiscal Year 2016 Annual Report (“The Report”). The Report shows a distinct trend toward an increasing number of Medicaid fraud convictions, civil settlements, and judgments via the State Medicaid Fraud Control Units (MFCUs). These units, operated at the State level in 50 jurisdictions (49 states plus the District of Columbia), are tasked with the investigation and prosecution of Medicaid fraud and patient abuse and neglect under State laws.

We have noted numerous times in our alerts the increasing investigation and prosecution of federal health care program fraud cases by U.S. government authorities. The Report underlines the fact that enforcement is also increasing at the State level. There are numerous lessons contained in this data for those in the healthcare and pharmaceutical industries.

The information contained in the Report is based on statistical data submitted by the 50 MFCUs, in addition to information contained in MFCU annual recertification materials. The data encompasses fiscal years 2012 through 2016, enabling the OIG to conduct trend analysis on key case outcomes over a 5-year span.

Fiscal Year 2016 Data

In fiscal year 2016, the MFCUs reported 1,564 convictions (over one-third of which involved personal care services attendants or companies). Seventy four percent of the convictions involved fraud, with the remaining twenty six percent involving patient abuse or neglect. On the civil side, the MFCUs reported 998 civil settlements and judgments, nearly half of which involved pharmaceutical manufacturers. The total in civil and criminal recoveries amounted to nearly $2 billion.

Other interesting 2016 data:

  • After convictions related to personal care services, nursing services (LPNs, RNs, PAs and NPs) accounted for 11 percent of convictions.
  • Of the fraud convictions, almost half involved unlicensed providers.
  • One hundred eighty-six (186) convictions related to drug diversion, primarily fraudulent billing for drugs not delivered to the intended beneficiaries.
  • Almost half of the civil settlements involved pharmaceutical manufacturers and the marketing of prescription drugs.
  • Seventy (70) civil settlements involved laboratories; 67 involved medical device manufacturers; 57 involved retail and wholesale pharmacies.


As in the federal enforcement realm, the trend lines in State enforcement are heading up. The Report indicates that the number of convictions has increased over the past few years, from 1,349 in 2012 to 1,564 in 2016, a 5-year high. Most of the increase derives from fraud cases, while the last two years show a slight downward trajectory in abuse and neglect cases.

Civil settlements have shown more flux and no steady growth or decline. However, 2016 data demonstrates a large increase in the number of civil settlements, leaping from 731 in 2015 to 998 in 2016. A growing percentage of civil recoveries have come from pharmaceutical companies in the form of “global” civil monetary recoveries (global cases are those that involve both the federal government and a group of States coordinated by the National Association of Medicaid Fraud Control Units). Global recoveries went from 36% of recoveries in 2015 to 81% in 2016.

At the end of the day, the message to those in the healthcare and pharmaceutical industries is made clear—there is no safe haven at the State enforcement level when it comes to Medicaid fraud and abuse. The MFCUs are just as intent on criminal and civil enforcement as the federal government.

Effective compliance programs can help prevent investigations and prosecutions at both the State and federal levels. The FisherBroyles Pharmacy and Health Care Law team is available to assist you. We offer complete compliance reviews for pharmacies and health care entities across the U.S. and can help you develop a comprehensive compliance program. Please contact any of the following attorneys for assistance:

Brian E. Dickerson

Anthony Calamunci

Nicole Hughes Waid

Amy Butler

Katy Wane