Health Care System: An Overview of Fraud And Corruption

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Beginning this article this writer had to determine where to start as it seemed endless in scope. Therefore, I’ve decided to break it down into segments for the material is sometimes both overwhelming and sickening. It is also vitally necessary for every member of the public to be better informed and at the same time, take action for themselves to protect and safeguard themselves and their loved ones. The health care system in the United States is for the most part a fraud and infested with corruption, and sicker than the patients it purports to help.

During the 1990’s, there was a perceived notion that the United States was reeling in prosperity. If there was any truth to this fact, it was also true was that much of the prosperity came at a price of fraud, corruption and danger to the public well being. The investment and real estate markets where booming. But so were the corporate white collared criminals. And nowhere was this fact more evident than in the health care system. The nineties were a decade of health care and pharmaceutical criminality. This continues until this day as fraud and corruption remains rampant.

The Punishment Does Not Fit The Crime

For every company convicted of health care system fraud, there are numerous others who get away with ripping off the United States health care system and get only mild fines and civil penalties when caught for the corruption. According to the F.B.I., corporate and white collar crime in the health care system cause more damage to the public than all the annual cases of street crimes which comes to about $3.8 billion a year. Yet, Medicare fraud and corruption in the health care system annually costs consumers from $100 billion to $400 billion a year.

Yes, the fines given are heavy but much much more heavier are the profits that were reaped as a result of the corruption – hundreds of billions worth. Prison time was virtually non-existent for abusers of the health care system.

Following is just the tip of the iceberg of companies investigated, fined, but not punished. It would seem that even in the Justice Department of the United States, money has replaced punishment as suitable justice and restitution.

This writer has taken only a few of the Top 100 Corporate Criminals of the 1990’s List.(1) These were corporations that easily pleaded guilty and admitted to corporate crimes. Most received comparatively light fines and most of them involved the health care system in one way or another.(1) Mind you, this is only a few of one hundred listed who were in turn selected out of thousands and thousands of cases prosecuted by the United States Dept. of Justice. Hardly any received jail time for corruption and fraud. Others plead bargained with Federal officials in exchange for the highest ranking company executives not going to jail.

Case No.1:

Swiss pharmaceutical giant, F. Hoffmann-La Roche Ltd., pleaded guilty and agreed to a record $500 million criminal fine for perpetrating worldwide corruption fraud to raise and fix prices for vitamins sold throughout the United States and elsewhere.

This conspiracy which ran from 1990 until 1999, affected most vitamins A, B2, B5, C,E, and Beta Carotene commonly used as nutritional supplements for human and animal food. Also affected where vitamin premixes, used to enrich breakfast cereals and other processed foods.

Case No. 2:

BASF Aktiengesellschaft, a German company pleaded guilty and paid $225 million in criminal fines for initiating a conspiracy to raise, fix prices and allocate market shares for vitamins sold in the United States.  BASF pleaded guilty co-jointly with – Hoffman LaRoche.

Case No. 3:

In December of 1996, Archer Daniels Midland (ADM) pleaded guilty and paid a $100 million corruption fine for it’s role in a sales conspiracy in the worldwide Lysine and citric acid markets.

Consequently, the Fed proved that seed companies, farmers, large poultry and swine producers over paid millions more to buy the Lysine additive.

Additionally, the public in turn, over paid for citric acid additives of soft drink manufacturers, processed foods and detergent producers after manufacturers paid millions more to buy the citric acid.  Lysine, an amino acid, is used by farmers as a feed additive.

Citric acid, a flavor additive and preservative, is found in soft drinks, processed food, detergents, pharmaceutical and cosmetic products. Both citric acid and Lysine are a combined multi-billion dollar industry.

Case No. 4

In April 1999, Genentech Inc., San Francisco-based bio tech and pharmaceutical company, pleaded guilty of providing to doctors Protropin, a drug not approved by the FDA (Food and Drug Administration).  A $30 million fine and $20 million in civil penalties were paid. From 1985 to 1994, the company had marketed Protropin to doctors, hospitals, and others in a wide-spread corruption scheme.

This writer apologizes for the limited number of cases here presented within this article.   All companies listed, and others not listed, pleaded guilty and received fines. Hardly any imprisonment took place.   In essence, “Big Pharma” received the “green light and a wink” to continue on their corruption and fraud.

However, this writer asks the question, who is the most corrupted? All companies listed, and those not listed but prosecuted and convicted, had made contributions in the way of soft money to political campaigns and initiatives. And all regularly give huge money grants to the FDA for ongoing research, etc. To ask this writer in what condition is the health care system in the U.S., I would have to say it is one big health care fraud and full of corruption. And it is very sick.


Written by Beverly Anne Sanchez, Feb. 2011


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