[Congressional Record Volume 155, Number 158 (Wednesday, October 28, 2009)]
[Senate]
[Pages S10852-S10855]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. KAUFMAN (for himself, Mr. Leahy, Mr. Specter, Mr. Kohl, 
        Mr. Schumer, and Ms. Klobuchar):
  S. 1959. A bill to improve health care fraud enforcement; to the 
Committee on the Judiciary.
  Mr. KAUFMAN. Mr. President, it is no longer a secret that 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 
attributed to unchecked mortgage fraud. Mortgage fraud itself was 
spurred by rampant accounting fraud, which enabled crooked executives 
to fatten their larders on a bubble of fake equity. And on the back-
end, securities fraud, in the form of market manipulation and insider 
trading, hastened the eventual market crash and maximized its impact on 
Main Street and average American investors. In response, this body 
passed the Fraud Enforcement Recovery Act, FERA, which directed 
critical resources and tools to anti-financial fraud efforts.
  FERA was passed in response to an unprecedented financial crisis. 
Americans should expect Congress to do more than simply react to crises 
after their most destructive impacts have already been felt. We owe it 
to our constituents to be proactive and to seek out and solve problems 
on the horizon so that disaster 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 and $220 billion from private 
and public health care plans through fraud. We pay these costs as 
taxpayers and through higher health insurance premiums. As we take

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steps to increase the number of Americans who are covered by health 
insurance, and to improve the health care system for everyone, we must 
also ensure that law enforcement has the tools that it needs to deter, 
detect, and punish health care fraud.
  The Finance and HELP committees have worked long and hard to find 
ways to fight fraud and bend the cost curve down. They have done a 
great job. There's more work to be done, however, which is why today I, 
along with Senators Leahy, Specter, Kohl, Schumer, and Klobuchar, 
introduce the Health Care Fraud Enforcement Act of 2009.
  This bill makes straightforward but critical improvements to the 
Federal sentencing guidelines, to health care fraud statutes, and to 
forfeiture, money laundering, and obstruction statutes. The bill would 
also make available more Federal resources to activities specifically 
designed to target health care fraud. Taken together, these measures 
send a strong and unmistakable signal to those who would engage in 
health care fraud that they will be caught, and they will be punished.
  The bill makes important changes to the Federal sentencing guidelines 
to ensure that health care fraud offenses will be punished commensurate 
with the cost that these offenders inflict upon our health care system. 
Health care represents \1/6\ of our national economy, and so unchecked 
health care fraud has the potential to inflict devastating harm to our 
national prosperity.
  Despite the enormous losses in many health care fraud cases, analysis 
from the United States Sentencing Commission suggests that health care 
fraud offenders often receive shorter sentences than other white collar 
offenders in cases with similar loss amounts. And according to 
statements from cooperating health care fraud defendants, many 
criminals are drawn to health care fraud because of this low risk-to-
reward ratio. For this reason, the bill directs the Sentencing 
Commission to increase the offense score of health care fraud offenses 
by two to four levels, depending on the dollar amount involved in the 
crime.
  The bill also clarifies that courts should refuse to entertain 
arguments by defendants that they can avoid stiff punishment because 
only a portion of their fraudulent claims were likely to be paid.
  In addition, the bill updates the definition of ``health care fraud 
offense'' in the Federal criminal code to include violations of the 
anti-kickback statute, the Food, Drug and Cosmetic Act, and certain 
provisions of ERISA. These changes will allow the full panoply of law 
enforcement tools to be used against all health care fraud.
  The bill also strengthens whistleblower actions based on medical care 
kickbacks, which tempt by health care providers to churn unnecessary 
medical care at great risk to patients and great cost to the taxpayer. 
By making all payments that stem from an illegal kickback subject to 
the False Claims Act, this bill leverages the private sector to help 
detect and recover money paid pursuant to these illegal practices.
  The Department of Justice has had success both prosecuting illegal 
kickbacks and pursuing False Claims Act matters based on underlying 
violations of the Anti-Kickback Statute. Nevertheless, defendants in 
such FCA cases continue to mount legal challenges that sometimes defeat 
legitimate enforcement efforts.
  For example, a court recently held that, even though a device company 
may have paid a kickback to a doctor to use a particular medical 
device, the bill to the government for the procedure to implant the 
device was not false or fraudulent because the claim was submitted by 
the innocent hospital, and not by the guilty doctor. In other words, a 
claim that results from a kickback and that is fraudulent when 
submitted by a wrongdoer is laundered into a ``clean'' claim when an 
innocent third party finally submits the claim to the government for 
payment. This has the effect of insulating both the payor and the 
recipient of the kickback from False Claims Act liability. This 
obstacle to a successful action particularly limits the ability of the 
Department of Justice to recover from pharmaceutical and device 
manufacturers, because in such instances the claims arising from the 
illegal kickbacks typically are not submitted by the doctors who 
received the kickbacks, but by pharmacies and hospitals that had no 
knowledge of the underlying unlawful conduct.
  This bill remedies the problem by amending the anti-kickback statute 
to ensure that all claims resulting from illegal kickbacks are ``false 
or fraudulent,'' even when the claims are not submitted directly by the 
wrongdoers themselves. I want to emphasize that in such circumstances, 
neither anti-kickback nor False Claims Act liability will lie against 
the innocent third party that submitted the claim.
  The bill also addresses confusion in the case law over the 
appropriate meaning of ``willful'' conduct in health care fraud. Both 
the anti-kickback statute and the health care fraud statute include the 
term ``willfully.'' In both contexts, the Ninth Circuit Court of 
Appeals has read the term to require proof that the defendant not only 
intended to engage in unlawful conduct, but also knew of the particular 
law in question and intended to violate that particular law.
  This heightened mental state requirement may be appropriate for 
criminal violations of hyper-technical regulations, but it is 
inappropriate for these crimes, which punish simple fraud. The Finance 
Committee health care reform bill, America's Healthy Future Act, 
addresses this problem for the anti-kickback statute, but not for the 
general health care fraud offense. Accordingly, the Health Care Fraud 
Enforcement Act tracks the Finance bill and clarifies that ``willful 
conduct'' in this context does not require proof that the defendant had 
actual knowledge of the law in question or specific intent to violate 
that law. As a result, health care fraudsters will not receive special 
protection that they don't deserve.
  Next, the bill provides the Department of Justice with critical 
subpoena authority for investigations conducted pursuant to the Civil 
Rights for Institutionalized Persons Act, also known as CRIPA.
  Pursuant to that important statute, the Civil Rights Division of the 
Department of Justice investigates conditions in publicly operated 
institutions, such as nursing homes, mental health institutions, 
facilities for persons with disabilities, residential schools for 
children with disabilities, as well as jails and prisons, where there 
has been an allegation of pattern or practice of violating residents' 
Federal civil rights. Under CRIPA, only injunctive relief is available; 
the statute does not provide for the award of damages.
  CRIPA investigations commonly concern allegations of inadequate 
medical and mental health care, unsafe living conditions, and the 
failure to protect residents from harm. The majority of CRIPA 
investigations are conducted with the voluntary cooperation of state 
and local jurisdictions. When unlawful conditions are identified, CRIPA 
investigations are typically resolved through a negotiated settlement 
agreement that addresses the reforms necessary to correct policies, 
procedures and practices to address the identified deficiencies.
  Some jurisdictions, however, have refused to cooperate with the 
Division. CRIPA does not authorize the Department of Justice to issue 
subpoenas for documents, records, or even for access into the 
institution that is the target of the investigation. As a result, 
investigations have been hamstrung and the effectiveness of CRIPA to 
remedy systemic abuse of institutionalized persons has been 
unnecessarily limited.
  For example, in a CRIPA investigation of a county nursing home in New 
Jersey, the local jurisdiction would not cooperate. The Division's 
investigation revealed inadequate medical and mental health care, 
unlawful restraint, and inadequate nutrition and hydration. In one 
particularly serious incident, which occurred weeks after a meeting 
with the county officials to request their cooperation with the 
investigation, a resident was fed so quickly by staff that she 
aspirated and died. Emergency room physicians extracted a volume of 
mashed potatoes from the resident's lungs that filled a Ziploc bag. 
Another nursing home resident slowly starved to death because staff 
improperly positioned that resident's feeding tube. The Division was 
compelled to file suit, resulting in a negotiated settlement more than 
4 years after the investigation began. To be sure, these

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abuses are a civil rights issue that demand attention even in the 
absence of fraud prevention. But substandard care also represents fraud 
and waste, because taxpayers have paid for the provision of 
satisfactory medical services at facilities that fall under CRIPA 
jurisdiction.
  The absence of subpoena authority enables non-cooperating 
jurisdictions to obstruct and delay the Division in its mission to 
ensure that the Federal rights of persons in the custody of state and 
local officials are respected. The resultant litigation when 
jurisdictions exploit the absence of subpoena power is extraordinarily 
costly, yet the substantive outcome, appropriate injunctive relief, is 
the same.
  The bill addresses the problem by authorizing the Department of 
Justice to issue subpoenas for access to any institution that is the 
subject of an investigation related to a violation of CRIPA, and for 
any documents, records, materials, files, reports, memoranda, policies, 
procedures, investigations, video or audio recordings, and quality 
assurance reports of such institution.
  In a final substantive change, the bill 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.
  Finally, the Health Care Fraud Enforcement Act provides the resources 
needed for law enforcement to uncover and go after these frauds. Health 
care fraud cannot be fought effectively without more investigators and 
prosecutors. This bill authorizes the appropriation of $20,000,000 each 
year from 2011 through 2016 for investigations, prosecutions, and civil 
or other proceedings relating to fraud and abuse in connection with any 
health care benefit program. The bill authorizes the United States 
Attorneys' Offices to be appropriated an additional $10,000,000 each 
year for this purpose, the Criminal Division of the Department of 
Justice, $5,000,000 each year, and the Civil Division of the Department 
of Justice, $5,000,000 each year.
  As we move toward meaningful health care reform, we must ensure that 
criminals who engage in health care fraud, and those who contemplate 
doing so, understand that they face swift prosecution and substantial 
punishment. Congress should move quickly to pass this legislation so 
that American taxpayers can be confident that their government has the 
tools and resources necessary to protect its investment in the health 
and welfare of our Nation.
  I urge my colleagues to support the Health Care Fraud Enforcement Act 
of 2009.
  Mr. LEAHY. Mr. President, I am pleased to join Senator Kaufman, as 
well as Senators Specter, Kohl, Schumer, and Klobuchar, to introduce 
the Health Care Fraud Enforcement Act of 2009. This legislation builds 
on the impressive steps the administration has already taken to step up 
health care fraud prevention and enforcement, and on the real progress 
represented by the anti-fraud provisions of the Finance and Health, 
Education, Labor and Pension Committee bills already before Congress. I 
was glad to contribute to those efforts.
  I feel strongly, though, that more needs to be done. This bill will 
provide prosecutors with needed tools for the effective investigation, 
prosecution, and punishment of health care fraud. By making modest but 
important changes to the law, it ensures that those who drain our 
health care system of billions of dollars each year, driving up costs 
and risking patients' lives, will go to jail, and that their fraudulent 
gains will be returned to American taxpayers and health care 
beneficiaries.
  For more than 3 decades, I have fought in Congress to combat fraud 
and protect taxpayer dollars. This spring, I introduced with Senator 
Grassley and Senator Kaufman the Fraud Enforcement and Recovery Act, 
the most significant anti-fraud legislation in more than a decade. When 
that legislation was enacted, it provided law enforcement with new 
tools to detect and prosecute financial and mortgage fraud. Now, as 
health care reform moves through the Senate, I want to make sure we do 
all we can to tackle the fraud that has contributed greatly to the 
skyrocketing cost of health care.
  The scale of health care fraud in America today is staggering. 
According to conservative estimates, about three percent of the funds 
spent on health care are lost to fraud--more than $60 billion a year. 
In the Medicare program alone, the Government Accountability Office 
estimates that more than $10 billon was lost to fraud just last year. 
While Medicare and Medicaid fraud is significant, it is important to 
remember that health care fraud does not occur solely in the public 
sector. Private health insurers also see billions of dollars lost to 
fraud. That fraud is often harder for the Government to track. Private 
companies have less incentive to report it, and in some cases, are 
responsible for the fraudulent practices themselves. Reining in private 
sector fraud must be a part of any comprehensive health care reform.
  The Health Care Fraud Enforcement Act of 2009 makes a number of 
straightforward, important improvements to existing statutes to 
strengthen prosecutors' ability to combat health care fraud. The bill 
would increase the Federal sentencing guidelines for health care fraud 
offenses. Despite the enormous losses in many health care fraud cases, 
offenders often receive shorter sentences than other white collar 
criminals. This lower risk is one reason criminals are drawn to health 
care fraud. By increasing the Federal sentencing guidelines for health 
care fraud offenses, we send a clear message that those who steal from 
the Nation's health care system will face swift prosecution and 
substantial punishment.
  The bill also provides for a number of statutory changes to 
strengthen fraud enforcement. For example, it would expand the 
definition of a ``Federal health care fraud offense'' to include 
violations of the anti-kickback statute and several other key health 
care-related criminal statutes, which will allow for more vigorous 
enforcement of those offenses, including making their proceeds subject 
to criminal forfeiture. It would also amend the anti-kickback statute 
to ensure that all claims resulting from illegal kickbacks are 
considered false claims for the purpose of civil action under the False 
Claims Act, even when the claims are not submitted directly by the 
wrongdoers themselves. All too often, health care providers secure 
business by paying illegal kickbacks, which needlessly increase health 
care risks and costs. This change will help ensure that the government 
is able to recoup from wrongdoers the losses caused by false health 
care fraud claims. The bill clarifies the intent requirement of another 
key health care fraud statute in order to facilitate effective, fair, 
and vigorous enforcement.
  The bill also provides the Department of Justice with limited 
subpoena authority for civil rights investigations conducted pursuant 
to the Civil Rights for Institutionalized Persons Act. This provision 
allows the Government to more effectively investigate conditions in 
publicly operated institutions, such as nursing homes, mental health 
institutions, and residential schools for children with disabilities, 
where there have been allegations of civil rights violations.
  Lastly, the bill provides needed resources for criminal and civil 
enforcement of health care fraud laws. It authorizes the appropriation 
of $20,000,000 a year to the Department of Justice from 2011 through 
2016 for investigations, prosecutions, and civil or other proceedings 
relating to fraud and abuse in connection with any health care benefit 
program. Studies indicate a return on investment of anywhere from $6 to 
$15 in Government recovery of fraud proceeds for every $1 spent on 
health care fraud enforcement, so this is a prudent and needed 
investment.
  We all agree that reducing the cost of health care for American 
citizens is a critical goal of health care reform. We in Congress must 
do our part by ensuring that, when we pass a health care reform bill, 
it includes all the tools and resources needed to crack down on the 
scourge of health care fraud. This bill is an important part of that 
effort.

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      By Mr. AKAKA:
  S. 1963. A bill to amend title 38, United States Code, to provide 
assistance to caregivers of veterans, to improve the provision of 
health care to veterans, and for other purposes; read the first time.
  Mr. AKAKA. Mr. President, today I am introducing landmark legislation 
that will provide critical assistance to veterans and their family 
caregivers. The Caregiver and Veterans Omnibus Health Services Act of 
2009, contains provisions from S. 252, the Veterans Health Care 
Authorization Act of 2009, and S. 801, the Caregiver and Veterans 
Health Services Act of 2009. The Committee reported both S. 252 and S. 
801, and but they are being held by a single Senator. Today, I 
reintroduce these vital improvements to veterans' health care as S. 
1963.
  The bipartisan provisions contained in S. 1963 provide needed 
assistance and support to family members and others who are serving as 
caregivers for the most seriously injured veterans of the conflicts in 
Iraq and Afghanistan. This assistance includes health care, counseling, 
support and a living stipend. They also expand services for women 
veterans, those with traumatic brain injury, and veterans that live in 
rural areas. Because the Nation's veterans and their caregivers cannot 
wait any longer for this help, I am introducing S. 1963, and asking 
that it be immediately placed on the Calendar.
  S. 1963 has one simple theme: that every veteran deserves access to 
high quality health care, whether that care is provided by VA, or by a 
family caregiver. The Congress has previously recognized the 
contributions of caregivers. S. 1963 also contains many other important 
veterans' health improvements, including expanding services for women 
veterans; telemedicine technologies; transportation grants; and 
scholarship and loan repayment programs; and eliminating copayments for 
catastrophically disabled veterans. States which have an especially 
high number of veterans living in rural areas, such as Montana, Nevada, 
Wyoming, Florida, Arizona, Arkansas, Virginia, Idaho, Oklahoma, and New 
Mexico, would benefit greatly from the provisions in the bill which are 
designed to improve health care for rural veterans.
                                 ______