Are More Federal Prosecutions of Medical Fraud on the Horizon?

In his address to the American Bar Association's House of Delegates on August 12, United States Attorney General Eric Holder caused quite a stir when he announced more restrictive guidelines for federal drug prosecutions. Specifically, he has directed that "certain low-level, non-violent drug offenders who have no ties to large scale organizations, gangs, or cartels will no longer be charged with offenses that impose draconian mandatory minimum sentences."

While some people have complained that Holder was "retreating" on the war on drugs, Holder also recognized the burden that state criminal cases have placed on the federal system—a system never intended to address state crimes the way it has with the advent of the war on drugs—a war that was reinvigorated in the 1980s.

Law enforcement officers at the state and local level were bringing low-level drug cases to federal prosecutors solely because of the severity of the sentencing possibilities. That, coupled with the expansion of drug task forces around the country, increased federal prosecutors' caseloads and prison populations. Currently, almost half of the 219,000 federal prisoners are incarcerated for drug violations.

So how does this impact insurance fraud?

When Holder said later in his speech, "It's imperative that we maximize our resources by focusing on protecting national security; combating violent crime; fighting against financial fraud; and safeguarding the most vulnerable members of our society," he was recognizing that financial fraud is a serious and growing crime that deserves continued federal attention.

Indeed, the Healthcare Fraud Prevention Partnership was formed last year by AG Holder and Health and Human Services Secretary Kathleen Sebelius to unite public-private entities in the fight against healthcare fraud. NICB CEO Joe Wehrle sits on the Executive Committee along with representatives from the health insurance industry, federal agencies, state regulatory bodies and anti-fraud associations.

There is no question that it has been difficult, at times, to get a prosecutor to bring a case against an insurance fraudster. Even the most air-tight insurance fraud investigative package is useless if a prosecutor declines to advance it. Many times those declinations are based on local guidelines or resource limitations. AG Holder's remarks provide all of us in the insurance fraud fighting community hope that going forward, more serious cases of medical insurance fraud—the most damaging and egregious ones—will be prosecuted at the federal level.

Only time will tell, but one thing is certain—the environment for prosecuting insurance fraud is becoming more welcoming than it has been for some time. And that's a good thing.