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Events, Speeches &
Floor Statements

Senator Klobuchar and Senator Kaufman Speak about Health Care Fraud Enforcement

December 8, 2009 | Watch

Mr. KAUFMAN.  Madam President, the Senator from Minnesota and I are going to engage in a colloquy.
We rise to talk about health care fraud enforcement. It is no secret fraud represents one of the fastest growing and most costly forms of crime in America today.

In no small part, our current economic crisis can be linked to financial fraud, starting with unchecked mortgage fraud generated by loan originators through securities fraud that hastened the eventual market crash and maximized its impact on Main Street and the average American investor.

In response, this body passed the Fraud Enforcement Recovery Act, which directed critical resources and tools to antifinancial fraud efforts. I was proud to work on FERA with my friend from Minnesota, a former prosecutor, who understands both the harm that financial fraud causes ordinary Americans and the importance of deterring criminal behavior before it happens.

Ms. KLOBUCHAR. Madam President, I thank Senator Kaufman. Before I begin, I wish to, first, acknowledge the amendment that has been offered by Senator Dorgan on drug reimportation, something I support and I know Senator Kaufman supports as well. We look forward to talking about that amendment in the days to come.

The bill Senator Kaufman referred to, the Fraud Enforcement and Recovery Act, was passed in response to an unprecedented financial crisis.

I was proud to work on that bill in the Senate Judiciary Committee along with Senator Kaufman.
But Americans should expect Congress to do more than simply react to crises after their most destructive impacts have already been felt. We are always coming in after the fact and putting out the fire. That is not what we want to do. We owe it to our constituents to be proactive, to seek out and to solve problems on the horizon so that financial disasters can be averted.

In the midst of the debate concerning comprehensive health care reform, we must be proactive in combating health care fraud and abuse. Each year, criminals drain between $72 billion and $220 billion from private and public health care plans through fraud, increasing the costs of medical care and health insurance and undermining public trust in our health care system. Think of all the money wasted—$72 billion to $220 billion each year—drained by criminals, that could be going to our seniors, that could be going for care.

Let me give a couple of examples, Senator Kaufman, of the kinds of fraud we need to address. On June 23 of this year, eight individuals were indicted in Miami for cashing $30,000 to $80,000 several times a week at two check-cashing facilities they owned themselves. These crooks defrauded the U.S. health care system by creating a phony clinic that churned out medical bills in five States. They were not providing health care. They were phony clinics. Federal prosecutors announced this on Tuesday.

Some of the purported clinics were empty storefronts with handwritten signs while others existed only as post office boxes, but none provided any actual medical services, according to prosecutors. By the time they were caught, in this one incident, this one group of con men, had bilked the government of $100 million. That is $100 million at a time when our taxpayers are trying to save every dime, while they are holding on to their jobs and trying to pay their bills. This one group of con men—$100 million.

Here is another example. In November of 2007, the Department of Justice indicted a woman for billing Medicare for motorized wheelchairs that beneficiaries didn’t need and for children’s psychotherapy services never provided. According to the indictment, the woman then laundered the money through a Houston check-cashing business, cashing several Medicaid checks each for more than $10,000. Those are just examples of what we are dealing with.

Mr. KAUFMAN.  I say to the Senator, those are sobering examples of the kinds of fraud we must stop. As we take steps to increase the number of Americans covered by health insurance and to improve the health care system for everyone—and we will do that—we must ensure that law enforcement has the tools it needs to deter, detect, and punish health care fraud.

The Finance and HELP Committees, as well as leadership, have worked long and hard to find ways to fight fraud and bend the cost curve down, and they have done a great job. But there is more work to be done. That is why Senator Klobuchar and I, along with Senators LEAHY, SPECTER, KOHL, SCHUMER, and HARKIN, have introduced our health care fraud enforcement, No. 2792.

Ms. KLOBUCHAR.  What I like about the amendment is it will protect our increased national investment in the health of Americans. We have decided Americans should be covered by health care; that people shouldn’t be thrown off of their health insurance by preexisting conditions. The way we protect that investment, and the way we make sure the funds are there to help people, is by doing things such as increasing the tools we need to prosecute these kinds of cases.

These criminals scheme the system to rob the American taxpayers of money that should be used to provide health care to those who need it most. We must put a stop to this, and we are doing that with this amendment. It provides straightforward but critical improvements to the Federal sentencing guidelines, to health care fraud statutes, to forfeiture, money laundering, and obstruction statutes, all of which would strengthen prosecutors’ ability to combat health care fraud.

As a former prosecutor, I can tell you that when we had these types of cases, we used every tool you could use to push someone to plead guilty, every tool you could use to make sure you got the maximum sentence so a message would be sent not just to that particular criminal but to other white collar offenders who thought this might be a quick way to make a buck. They need to hear they can be caught and they will go to jail.
I know Senator Kaufman has worked on this and is taking a lead, and perhaps he can provide the details on this amendment.

Mr. KAUFMAN. Sure. This amendment directs a significant increase in the Federal sentencing guidelines for large-scale health care fraud offenses. It is incredible that despite enormous losses in many health care fraud cases, analysis from the U.S. Sentencing Commission suggests that health care fraud offenders often receive—and I know this is hard to believe—shorter sentences than other white collar offenders in cases with similar loss amounts. For some reason, people think health care fraud is kind of okay.

Ms. KLOBUCHAR.  If people knew this, they would be shocked. In health care fraud, you are taking money from people who need it most—when they are at the hospital—and yet they would have shorter sentences than other types of fraud.

Mr. KAUFMAN. There is data to show that criminals are drawn to health care fraud, when they are sitting around deciding what kind of fraud they are going to do, because the risk-to-reward ratio is so much lower. That is ridiculous. We need to ensure these offenders are punished not only commensurate with the costs they impose on our health care system but also at a level that will offer real deterrence. People have got to understand they can’t go out and commit health care fraud.

There are so many different ways it can be presented; that if in fact they do it, they are going to get real time for the crime. As a result, our amendment directs changes to the sentencing guidelines that, as a practical matter, amount to sentence increases of between 20 and 50 percent for health care fraudsters stealing over $1 million.

Ms. KLOBUCHAR.  The other thing that is great about this amendment is it updates the definition of “health care fraud offense” in the Federal criminal code so it includes violations of the anti-kickback statute, the Food and Drug and Cosmetic Act, and certain provisions of ERISA. These changes will allow the full array of law enforcement tools to be used against all health care fraud.

The amendment also provides the Department of Justice with subpoena authority for investigations conducted pursuant to the Civil Rights for Institutionalized Persons Act—also known as CRIPA. Under current law, the Department of Justice must rely upon the cooperation of the nursing homes, mental health institutions, facilities for persons with disabilities, and residential schools for children with disabilities that are the target of these CRIPA investigations. While such targets often cooperate, they sometimes do not, and the current lack of subpoena authority puts vulnerable victims at needless risk.

Finally, in addition to the very important piece of this amendment that Senator Kaufman has pointed out—where we are actually increasing the ability to get better criminal penalties—the amendment corrects an apparent drafting error by providing that obstruction of criminal investigations involving administrative subpoenas under HIPAA—the Health Insurance Portability and Accountability Act of 1996—should be treated in the same manner as obstruction of criminal investigations involving grand jury subpoenas.

Senator Kaufman and I also plan to file an additional health care fraud amendment that would require direct depositing of all payments made to providers under Medicare and Medicaid. This amendment is incredibly important because the Medicare regulations already require direct depositing or electronic transfer, but these regulations have not been uniformly enforced and criminals are taking advantage of this system.

Again, I ask the question: Why would we want this money—$60 billion estimated for Medicare fraud alone—to be going to con men and crooks, people who are setting up fake storefronts with fake signs that say doctor’s office, instead of to the hard-working people in this country who can hardly afford their health care insurance? It is an outrage.
That is why I am so glad Senator Kaufman would take the leadership here, that we have a group of us who were prosecutors working on this in the Judiciary Committee to include this in the health care reform bill, because Americans have waited too long for these kinds of changes.

Mr. KAUFMAN. That is a great amendment that I think will be a big help in terms of cutting down this fraud, and that is what we are all about. This is a bipartisan issue, if there was ever a bipartisan issue. I don’t know of anyone who doesn’t think we have to do more in terms of health care fraud. When we have $70 billion to $220 billion a year in health care fraud, we have to do everything we can to stop it.

As we consider and debate meaningful health care reform, we must ensure that criminals who engage in health care fraud—and more importantly those who contemplate doing so—understand that they face swift prosecution and substantial punishment.

When the time comes, Senator Klobuchar and I, along with our fellow cosponsors, will urge our colleagues to support these amendments.

Madam President, I yield the floor.