An orthopedic surgeon was sentenced to 30 months in federal prison Nov. 22 for his role in a healthcare fraud scheme that resulted in the submission of more than $580 million in fraudulent claims, mostly to California’s worker compensation system, according to the Department of Justice.
Daniel Capen, MD, was sentenced more than a year after pleading guilty to conspiracy to commit honest services fraud and soliciting and receiving kickbacks for healthcare referrals. He was one of 17 defendants charged in relation to the government’s investigation into kickbacks physicians received for patient referrals for spinal surgeries performed at Pacific Hospital in Long Beach, Calif.
Dr. Capen received at least $5 million in kickbacks for referring surgeries to Pacific Hospital and for referring services to organizations affiliated with the hospital. He allegedly accounted for $142 million of Pacific Hospital’s claims to insurers between 1998 and 2013, according to the Justice Department.
In addition to the prison term, Dr. Capen was ordered to forfeit $5 million to the federal government and pay a $500,000 fine.
Former Baltimore Mayor Catherine Pugh, who served on the board of University of Maryland Medical System for 18 years, was indicted on charges of wire fraud and tax evasion related to a children’s book scandal that involved the Baltimore-based health system and Oakland, Calif.-based Kaiser Permanente, a local CBS affiliate reports.
The indictment was unsealed Nov. 20, ahead of Ms. Pugh’s scheduled hearing on Nov. 21. If convicted, Ms. Pugh could face up to 100 years in prison and be required to forfeit her home and repay more than $769,000 allegedly obtained through the scheme.
The indictment alleges Ms. Pugh conspired with city employees to defraud buyers of her Healthy Holly children’s books, according to CBS, which published the indictment in full. It alleges Ms. Pugh arranged five $100,000 deals with UMMS to donate a total of 100,000 books to Baltimore public schools. The books were allegedly never delivered, and instead rerouted to alternate storage facilities around the city, distributed at campaign events and double-sold to other customers.
The indictment also alleges Ms. Pugh used Healthy Holly profits to fund straw donations to her mayoral campaign and to buy a house in Baltimore. She also faces allegations of tax evasion related to Healthy Holly sales, according to the report.
CBS notes Kaiser Permanente also disclosed buying $114,000 of the books at a time that overlaps with winning a $48 million contract from the city, according to the report.
The two city officials connected to the scheme pleaded guilty to conspiracy and tax evasion, according to the report.
Read the full story and access the full indictment here.
The Trump administration is proposing to loosen regulations that prohibit doctors from steering patients insured by federal programs to facilities where they have a financial interest and that outlaw health care companies from offering bribes and kickbacks in exchange for patient referrals.
Why it matters: The industry has long clamored for an overhaul to these laws, which companies say obstruct their goals of providing “value-based care.” But critics worry the broad and vague changes could engender more fraud and abuse than there already is.
About 25 percent of U.S. healthcare spending can be classified as waste, according to a new study published in JAMA Oct. 7.
For the study, researchers from Humana and the University of Pittsburgh School of Medicine analyzed 54 peer-reviewed studies, government reports and other medical literature to estimate the levels of waste in the U.S. healthcare system.
Researchers divided waste into six previously developed categories including: failure of care delivery; failure of care coordination; overtreatment or low-value care; pricing failure; fraud and waste; and administrative complexity.
Administrative complexity accounted for the most waste with $265.6 billion annually, followed by pricing failure or inefficiencies, which accounted for up to $240.6 billion in waste per year.
Approximately $300 billion in waste accrued from failure of care delivery, failure of care coordination and overtreatment. The study estimated that about half of this waste could be avoided.
Overall, the researchers found that the cost of waste in the U.S. healthcare system ranges from $760 billion to $935 billion annually.
Of the $760 billion to $935 billion of waste, researchers estimated that using interventions found to reduce waste could cut between $191 billion and $282.1 billion in healthcare spending.
Access the full report here.