HCFAC Report 2014: After Consecutive Record Years, Recoveries and Prosecutions Dip, but Exclusions Continue to Increase

health care fraud and abuse report

The Health Care Fraud and Abuse Control Program(“HCFAC”) prepares detailed yearly reports which are sometimes viewed to be a barometer of fraud and abuse enforcement efforts. Valid conclusions can’t be drawn based on small samples or on numbers alone. However, side by side comparisons of data or even over a short period of time may be suggestive of trends or general directions. It will be interesting to see if this is the case with the data recently released by HCFAC 2014 when compared to the previous two years. 

I.  Overall Health Care Fraud and Abuse Recoveries Dip Almost 25% From Record Years

After trumpeting record years in the previous two years, HCFAC 2014 reported recoveries that, while still significant, were down across the board by about 25%. Total amounts returned to the Federal government dropped from $4.2 billion in the Fiscal Year (FY) 2012 to $3.3 billion in FY 2014. The amounts reported that were won or negotiated in health care fraud judgments dropped to $2.3 billion in 2014 from $3.0 billion in 2012.

The amounts returned to the Medicare Trust Fund and recoveries in Federal Medicaid matters, perhaps the most important numbers, also sustained significant drops. The Trust Fund receipts dropped to $1.9 billion (from $2.4 and $2.85 billion). Also, Medicaid recoveries sustained a similar decline from $835.7 million in 2012 to $523 million in 2014. While there may be several explanations for this one year drop, it will be worth keeping an eye on the numbers to see what it means.

II.  DOJ Civil Numbers: Trending down, but only slightly

Due to the long delay between the opening and closing of cases, often four years and longer, there is not likely to be any correlation between a dip in recoveries and new cases in the same year. Nevertheless, the number of new civil health care fraud investigations reported by DOJ over the last three years is down about 10% from 2012 and about 20% from 2013 (782 in 2014 versus 885 in 2012 and 1,083 last year). Pending fraud matters were more stable (from 1,023 and 1,079 in the prior two years down to 957). These numbers, particularly the opening of new cases, are somewhat surprising considering the significant increase in new False Claims Act cases being brought by whistle blowers every year. It will be interesting to see if they reflect a trend or are merely an aberration.

III.  DOJ Criminal Numbers: A Mixed Bag

DOJ reported decreases in the number of new criminal health care fraud investigations (almost 20% from 2012 and about 10% from the previous year). There were also decreases in the total number of defendants convicted of health care fraud-related crimes (826 in 2012 as compared to 734 in 2014). On the other hand, the HCFAC report showed that the actual number of cases in which defendants were charged had increased (from 452 to 496). In addition, the report demonstrated that FBI investigative efforts resulted in significant increases in both operational disruptions of criminal fraud organizations (from 329 operational disruptions in 2012 up to 605 in 2014), and in dismantling criminal hierarchies (up to 142 in 2014 from 83 in 2012).

These numbers in general, and the FBI numbers in specific, may be partially explained by the Health Care Fraud Prevention and Enforcement Action Team (HEAT) program. The HEAT program emphasizes criminal investigations in health care matters, and they, too, are certainly worth keeping an eye on.

IV.  OIG Criminal and Civil Actions Increased Slightly; Exclusion Actions Up Considerably

The OIG reported a small increase in both criminal actions in crimes related to Medicare and Medicaid (849 to 867) and in civil actions brought either in Federal district court or administratively (458 to 529). However, as the report does not reconcile these numbers or actions with those reported by DOJ, it is impossible to reach any conclusions as to their meaning. On the other hand, the number of individuals and entities excluded from participation in Medicare, Medicaid, and other federal health care programs actions rose to 4,017 in 2014 from 3,214 and 3,131 in the prior two years.

A breakdown of the exclusion actions show that exclusions based on convictions for crimes related to Medicare and Medicaid increased approximately 25% since 2012 (to 1,310 from 912). It further demonstrates that exclusions based on convictions for crimes relating to other health care programs showed an even greater rise (432 in 2014 up from 287 in 2012). Other major grounds for exclusion included patient abuse or neglect and licensure revocations – both of which also rose significantly. These numbers appear consistent with, and reflective of, HHS-OIG’s increasing interest in exclusions and exclusion enforcement as a means of protecting the Medicare and Medicaid programs.

V.  Final Thoughts

The HCFAC 2014 report may simply reflect a slightly down year. On the other hand, it might be the first indication that the numbers of the previous record years may be harder to maintain and more rarely seen, as the industry embraces compliance in response to the intense enforcement efforts of recent years. Regardless of what it means, if anything, it does reflect that at least some change took place last year and that we should all stay tuned.


Paul Weidenfeld, Co-Founder and CEO of Exclusion Screening, LLC, is the author of this article. He is a longtime health care lawyer whose practice has focused on False Claims Act cases and health care fraud matters generally. Contact Paul should you have any  questions at: pweidenfeld@www.exclusionscreening.com or 1-800-294-0952.


The Health Care Fraud and Abuse Control Program (“HCFAC”) was created as part of the HIPAA anti-fraud legislation to coordinate Federal, State and local health care fraud and abuse enforcement.