U.S. Sen. Ted Kaufman (D-DE) introduced a bill to strengthen the government’s capacity to investigate and prosecute waste, fraud and abuse in both government and private health insurance following a Senate Judiciary Committee hearing held on on the subject Wednesday, Oct. 28.

The Health Care Fraud Enforcement Act of 2009 builds on the fraud-prevention efforts included in the Finance and Health, Education, Labor and Pension Committee’s comprehensive health care reform bills.

“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,” Kaufman said on the Senate floor. “We all know that rooting out waste, fraud, and abuse, in both government and private programs, is critical to making health care reform work."

Committee Chairman Patrick Leahy (D-Vt.) and committee members Arlen Specter (D-Pa.), Herb Kohl (D-Wisc.), Chuck Schumer (D-N.Y.) and Amy Klobuchar (D-Minn.) co-sponsored the bill.

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:

• 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.
• 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.
• 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.
• 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.
• 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 million per year through 2016.

In the wake of the financial crisis earlier this year, Kaufman introduced similar legislation to strengthen tools and increase resources available to federal prosecutors to find, prosecute and jail those who committed financial fraud. President Obama signed the Fraud Enforcement and Recovery Act into law on May 20.