Perhaps sensing their vulnerability in being painted as soft on fraud, Democrats on the Senate Judiciary Committee introduced a new healthcare fraud bill yesterday. The bill comes four days after the airing of a scathing 60 Minutes segment that has led to criticism that the government is not doing enough to control fraud and that healthcare reform lacks tough new controls.

The new bill, sponsored by committee chair Patrick Leahy (D-VT) and Sen. Ted Kaufman (D-DE), would expand the federal healthcare fraud act, increase penalties and increase anti-fraud spending $20 million per year. The proposed bill also would cover fraud against private carriers.

Hopefully, this bill will augment a proposed amendment Sen. Al Franken (D-MN) plans to introduce when the healthcare reform bill hits the Senate floor, and not replace it.

Here’s a summary of the new bill released by Leahy’s office yesterday:

Leahy, Judiciary Committee Members
Introduce Health Care Fraud Enforcement Bill

Health Care Fraud Enforcement Act Will Strengthen Tools To Investigate Health Care Fraud

WASHINGTON (Wednesday, October 28, 2009) – Following a Senate Judiciary Committee hearing Wednesday on “Effective Strategies for Preventing Health Care Fraud,” Senator Patrick Leahy joined with Senator Ted Kaufman (D-Del.) to introduce the Health Care Fraud Enforcement Act. The legislation is also cosponsored by Committee members Arlen Specter (D-Pa.), Herb Kohl (D-Wis.), Chuck Schumer (D-N.Y), and Amy Klobuchar (D-Minn.). Leahy chairs the Senate Judiciary Committee.

Building on the fraud prevention efforts included in the Finance and Health, Education, Labor and Pension (HELP) Committee’s comprehensive health care reform bills, the legislation would further strengthen the government’s capacity to investigate and prosecute waste, fraud and abuse in both government and private health insurance. Officials from the Department of Health and Human Services and the Department of Justice testified Wednesday that health care fraud enforcement is a top priority of the Obama administration, which has taken steps to increase efforts to investigate and prosecute fraud.

“I am heartened by the significant and impressive steps the administration has already taken to step up health care fraud prevention and enforcement,” said Leahy. “I was glad to contribute to the efforts to include anti-fraud provisions in the Finance and HELP Committees’ health care reform bills. But I believe that we must do everything we can to ensure that those responsible for rooting out health care fraud have the tools they need. I was pleased to join Senator Kaufman to develop the anti-fraud measures in the Health Care Fraud Enforcement Act, and look forward to working to strengthen fraud enforcement tools as the Senate debates health care reform legislation.”
“Fraud perpetrated against both public and private health plans costs between $72 and $220 billion annually, increasing the cost of medical care and health insurance and undermining public trust in our health care system,” said Kaufman. “We all know that rooting out waste, fraud, and abuse, in both government and private programs, is critical to making health care reform work. The Finance and HELP committees have worked long and hard to find ways to bend the cost curve down. There’s more work to be done, however, and the Health Care Fraud Enforcement Act is an important part of that effort.”

The bill makes straightforward but critical improvements to the federal sentencing guidelines, to health care fraud statutes, and to forfeiture, money laundering, and obstruction statutes, all of which would strengthen prosecutors’ ability to combat this particularly destructive form of fraud. These improvements include:

o Sentencing increases: The bill directs the Sentencing Commission to increase the guidelines range for health care fraud offenses and clarifies that the full potential scope of the fraud should be considered at sentencing.

o Redefining “health care fraud offense”: The bill includes all health care crimes within the definition of “health care fraud offense,” regardless of where they are codified. (ERISA, drug marketing, and kickback crimes are currently not included) This change will make available to law enforcement the full range of antifraud tools, including criminal forfeiture and obstruction penalties, to combat these offenses.

o Improving whistleblower claims: Kickbacks lead to unnecessary and risky medical care and pervert the doctor-patient relationship. This bill clarifies that all payments made pursuant to illegal kickbacks are false for purposes of the False Claims Act.

o Creating a common-sense mental state requirement for health care fraud offenses: Some courts have held that defendants must be aware that their conduct violates a specific provision of criminal law in order to be held accountable. This bill restores the original intent of Congress that a person is guilty of a health care offense if he knowingly does what the law forbids.

o Increasing funding: Money spent on health care fraud prevention and enforcement is returned manifold through costs savings and civil and criminal recoveries. This bill authorizes a modest, yet significant, increase in federal antifraud spending of $20,000,000 per year through 2016.