Thank you for inviting me here today. [THANK ATTORNEY GENERAL CONWAY—leadership on prescription drug task force, consumer protection; PRESIDENT, DAN MILLER; appreciate your leadership of this organization and your tireless work in Delaware as director of that state’s Medical Fraud Control Unit.] 

            I am delighted to be with you this morning. Combating health care fraud is a top priority for the Obama Administration, for Attorney General Eric Holder and for the Justice Department’s Civil Division, which I head and which is responsible for prosecuting all forms of health care fraud—from Medicaid and Medicare fraud by health care providers to off-label and misbranding cases against major pharmaceutical companies.  So I’m pleased to talk about our work in this area this morning. 

           But I’m also glad to be here because I am no stranger to the important work you do.  I first came into contact with state Medical Fraud Control Units ten years ago when working on elder abuse as Special Assistant Attorney General for the state of California. I learned then of the critical role you play in protecting the integrity of our public health programs.  And your mission—to curtail fraud against Medicaid and Medicare—that mission is as essential today as it was over thirty years ago, when this organization was founded.

          Indeed, perhaps more so.  Because, better than anyone, you know the impact that health care fraud has in this country.  The National Health Care Anti-Fraud Association estimates conservatively that $68 billion is lost each year to health care fraud.   And you know, from your own work, that this illegal conduct puts the public health at risk, corrupts medical decisions by health care providers, and costs federal and state governments billions of dollars.  

          But it’s not just the government who pays more.  When health care fraud occurs, it drives the cost of health care up for all of us—we know this.  Consumers pay higher premiums.  Companies pay more to cover their employees.   And when money is siphoned off by health care fraud, fewer children see doctors for preventable childhood diseases; more seniors are forced to choose between food or medicine at month’s end; and fewer people get the care to which they’re entitled that can dramatically improve the quality of their lives.

          That’s why your work is so important.  What you do everyday makes an extraordinary difference in ordinary lives.  Through your anti-fraud efforts, you’ve recovered over $1.3 billion in just the last fiscal year.

          And I’d like to suggest that as effective as you have been, I believe that we can, working together, be even more effective in making that kind of extraordinary difference in people’s lives.  This morning I’d like to talk about how we can take this unique moment—when the nation’s focus is on health care, on controlling costs and expanding coverage—and use it as an opportunity to commit ourselves to a renewed era of federal and state cooperation in fighting and deterring Medicaid fraud.

          Because if there’s anything I’ve learned since returning to the Department of Justice this past April, it’s that the only way we can truly be effective in protecting the integrity of our public health programs; in protecting public health; in ensuring that companies are honest in the claims they make about the drugs they sell—the only way we can be effective in any of these areas is by combining our resources, our expertise, and our information from both the state and federal levels. 

          That’s why, over the last five months, I’ve worked hard to ensure that partnerships between the federal government and state and local entities are a real priority—not just lip service.  As I’ve traveled the country, I’ve met with U.S. Attorneys’ Offices about how we can improve our efforts fighting health care fraud.  But I’ve also reached out beyond our federal family to meet with state Attorneys General, mayors and city council members, and other government partners such as state and local agency heads and staff.

          Because, as each of you knows from daily experience, strong partnership is a necessary prerequisite to successfully combating fraud – whether it is in health care or housing, government contracting or consumer goods.   And recent experience proves this is so.

          Two weeks ago, we announced the largest health care fraud settlement in history – a $2.3 billion settlement with Pfizer and its subsidiary, Pharmacia & Upjohn Company.  Now this settlement was important not just because it included a record $1.3 billion in criminal fines and forfeiture; and not just because Pfizer agreed to pay $1 billion to resolve serious civil fraud allegations, including over $300 million to struggling state Medicaid programs—more than $16 million of that money coming back right here, to the state of Kentucky.

          This case was important because of what it says about coordinated action at both the state and federal levels and how that action can benefit so many Americans who rely on Medicaid for the health care they need.  In addition to ensuring that those who defraud the government will pay, cases like Pfizer send a strong message that if companies violate the law, if companies put profits ahead of patient health, we will hold them accountable. 

           And by “we” I don’t just mean the federal government; I’m talking about Medicaid Fraud Control Units throughout the country who were critical to the success of that case.  Without the coordinating help of this organization, the Pfizer settlement would not have been possible.

And while it was the biggest, the Pfizer settlement was not the only example of great state-federal partnership.   

·                    Last year, the Department of Justice, 49 states and the District of Columbia, entered into an agreement with Merck & Co. that recovered a total $650 million arising from Merck's failure to pay appropriate Medicaid rebates. 

·                    This past January, DOJ worked together with the states to achieve what was then a record-breaking $1.4 billion settlement with Eli Lilly, resolving allegations that it marketed its drug Zyprexa for uses not approved by the FDA.  As a result of that settlement, over $361 million was returned to the Medicaid programs of the participating states. 

·                    And, today, as we meet here, the U.S. Justice Department and many of your state Medicaid Fraud Control Units are working side-by-side in a multi-state litigation against Wyeth over allegations that Wyeth violated the Medicaid Drug Rebate Program. 

These examples teach us that state-federal partnership produces real results for the American people.  And as you continue your efforts on the front lines of the anti-fraud battle, I want you to know that the U.S. Department of Justice, and especially those of us in the Civil Division, are committed to support your efforts to protect precious taxpayer dollars from misuse.

            One way we can do that is by supplementing state investigative, analytical and legal work with powerful litigation and statutory tools.  As many of you know, one of the most potent weapons we use at the Department of Justice to deter and redress health care fraud is the False Claims Act.  Called “Lincoln’s Law” because President Lincoln requested its enactment to fight Civil War contractors who were defrauding the Union, the False Claims Act prohibits the submission of false claims to the Government, as well as a variety of related deceptive acts, and imposes treble damages and penalties in the event of a violation. 

            And some of the most important provisions of the False Claims Act are its qui tam provisions:  Not only is the Attorney General authorized to sue under the Act; it also encourages private whistleblowers to file suits and entitles them to a share of the recovery—a powerful financial incentive for people to come forward and share knowledge with investigators. 

            Last year marked the 10^th time that the Government’s annual recoveries under the False Claims Act have exceeded $1 billion, and over the last six years, the Government’s annual recoveries have averaged $2 billion per year.  In fact, since 1986, the Government has recovered more than $14 billion from fraud against federal health care programs.

            And yet, as powerful as the False Claims Act has been, it was strengthened significantly this year when President Obama signed into law the Fraud Enforcement and Recovery Act of 2009, or FERA, which included several amendments to the False Claims Act.  Those amendments were designed, in part, to supercede several court decisions that restricted False Claims Act liability depending upon technicalities in how particular Government programs were funded.             

            The Anti-Kickback statute is another important tool in our litigation toolbox.  It allows us to target drug companies’ practice of paying kickbacks to health care providers, which we all know erodes the integrity of the doctor-patient relationship.  Patients must have confidence that their doctors are giving them the best medicines for the right reasons, and our use of the Anti-Kickback statute helps to bolster that confidence.

            Finally, through our Office of Consumer Litigation, the Civil Division has both civil and criminal authority to enforce the Food, Drug, and Cosmetic Act.  The Act requires, among other things, that companies specify the intended uses of a product in its new drug applications to FDA.  And, as you all know, once a drug is approved for an intended use, it may not be marketed or promoted for unapproved or "off-label" uses.  Pfizer exemplified how effective we can be when we pursue criminal fines through our off-label statutes—in Pfizer’s case the largest criminal fine ever paid in history—and these criminal tools are especially effective when used in conjunction with the False Claims Act.

           So these are some of the tools we want to bring to your efforts to fight health care fraud.  The Civil Division has a long history of working with various Medicaid Fraud Control Units, and we have often provided support and training on all of these statutes.  I want to offer that assistance and support again, especially in light of the recent amendments to the False Claims Act. 

           I’d also like to encourage you to reach out to us as early and as often as appropriate, both to the local U.S. Attorney level and to the Civil Division in Washington, so that we can maximize the benefits of sharing information.  Because we know our investigative efforts bear the most fruit when we can discern trends across jurisdictions, identify repeat offenders and combine our respective resources.

           We share a unique privilege, you and I.  It’s the privilege of public service.  So it’s incumbent upon us to earn the public’s trust, everyday, in the work we do.  We have had much success in fighting health care fraud, no doubt.  But we can do even more.   We can redouble our efforts to ensure that we’re working together—not just working harder but working smarter: sharing information, combining resources, and using all of the tools at our disposal to protect the integrity of our public health care programs.  Because the challenges that lie ahead require a new level of sustained commitment, a new level of cooperation, a new level of coordination.   And as certain as I am about the work that lies ahead, I am also certain that, together, we have the expertise, the tools and the ability to meet those challenges and to do that work, and to do it well.