In 2013 budget, DOJ seeks more resources to combat economic and health care fraud

by Ben Vernia | February 13th, 2012

In a February 13 announcement of its proposed 2013 budget, the Department of Justice singled out two areas for significantly greater resources: economic fraud and health care fraud.

In its “fact sheet” on financial fraud, DOJ described its plans:

DOJ plays a crucial role in the federal financial recovery effort through criminal and civil litigation. The Department requests program increases totaling $55 million for a variety of economic fraud enforcement efforts, including work being done by DOJ members of the President’s Financial Fraud Enforcement Task Force. This increase will support additional FBI agents, criminal prosecutors, civil litigators, in-house investigators, forensic accountants, paralegals, and other support positions to ultimately improve the Department’s capacity to investigate and prosecute allegations of financial and mortgage fraud. This national initiative will pool state and federal resources to leverage impact.

To that end, the FY 2013 Budget requests a total program increase of $55 million (including $9.8 million for technology tools and automated litigation support) for this priority initiative. The request seeks 328 additional positions, including 40 FBI agents, 184 attorneys, 49 in-house investigators, 31 forensic accountants, 16 paralegals, and 8 support staff. Of the total $55 million program increase, $37.4 million is to increase criminal enforcement efforts and $17.6 million is to increase civil enforcement efforts.

The additional resources will support the Department’s investigation and prosecution of the broad range of crimes that fall under the definition of financial fraud, including securities and commodities fraud, investment scams, and mortgage foreclosure schemes. The additional resources will build upon the successes of the Financial Fraud Enforcement Task Force that, since its inception in FY 2010, has facilitated increased investigations and prosecutions of financial fraud relating to the financial crisis and economic recovery efforts.

As a prelude to implementing this initiative in FY 2013, the Attorney General has announced the formation of the Residential Mortgage-Backed Securities Working Group, supported by existing FY 2012 resources, which will leverage state and federal resources to strengthen current and future efforts to investigate and prosecute instances of wrongdoing in the residential mortgage-backed securities market. The working group, working under the authorities of the Financial Fraud Enforcement Task Force, will be co-chaired by senior DOJ and Securities and Exchange Commission officials, along with the New York Attorney General. It will be staffed by at least 55 DOJ attorneys, analysts, agents, and investigators from around the country.

Noting that some of the Department’s health care fraud funding comes from the Department of Health and Human Services, DOJ’s health care fraud fact sheet announced a substantial proposed increase in litigation resources for fighting fraud in the massive health care sector:

Eliminating fraud and abuse is essential to ensuring that our publicly funded health care programs remain a vital part of our Nation’s overall health care system. The Department of Justice, using reimbursable funding provided by the Department of Health and Human Services (HHS), focuses its investigative and litigation resources to eliminating fraud, returning ill-gotten gains to the Treasury and others, and strengthening our public health care programs. The DOJ FY 2013 Budget requests $71.7 million for program increases to expand DOJ’s investigative and litigation capacity to address health care fraud.

The FY 2013 Budget requests additional resources to strengthen and expand DOJ and HHS’ Medicare Fraud Strike Forces. These Strike Forces, comprised of Federal Bureau of Investigation Special Agents, litigators from both the U.S. Attorneys’ Offices and the Criminal Division, and our Federal, state and local partners, represents the front line of the Department’s efforts to address criminal fraud in our health care fraud programs.

In addition to supporting the Strike Forces, the funding increase will support the expansion of the Department’s civil litigation efforts in addressing health care fraud, specifically in areas such as pharmaceutical fraud and off-label marketing. The funding will support both the Civil Division as well as U.S. Attorney’s efforts to address this type of health care fraud.

Finally, the funding will bolster the Civil Rights Division activities supporting health care fraud, such as eliminating abuse and grossly substandard care in public health care facilities, Medicare and Medicaid funded nursing homes, and other long-term care facilities.

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