Attorney General Jeff Sessions is poised to announce a major lawenforcement action this week targeting health care fraud, focusingon opioid treatment programs exploiting Obamacareinsurance plans, according to two people familiar with thematter.

In what is described as a nationwide sweep with hundreds ofarrests being carried out across the U.S., the Justice Departmentis cracking down on fraudulent claims made to some of the nation’sbiggest insurers, said one of the people.

People who run drug addiction treatment centers that havefiled bogus claims and those who have filed reimbursement claimsfor drugs they then sell illegally are among those to be charged,the person said.

Arrests will be carried out in cities includingMiami, Chicago, Detroit and Los Angeles, the person said.Scores of arrests are expected in southern Florida, which is hometo hundreds of residential drug addiction treatment centers, saidthe person.

Federal prosecutors, some of whom have been working on cases fora year or more, were directed to accelerate their efforts in timefor this month’s operation, the person said. The GovernmentAccountability Office did an investigation and found last year thatthe sign-up process for the Affordable Care Act exchanges was"vulnerable to fraud."

OIG report

In a related action, a report on opioid use is expected to bereleased Thursday by the Office of Inspector General for theDepartment of Health and Human Services. The OIG investigateswaste, fraud and abuse in government health programs, includingMedicare and Medicaid.

Under the continuing crackdown on opioidabuse, Mallinckrodt Plc, a maker of pain medications, on Tuesdayagreed to pay $35 million to resolve allegations that it failed tonotify the Drug Enforcement Administration about suspicious ordersfrom pharmacies and pain clinics.

The company denied it had behaved improperly.

This comes as a fight brews in Congress over how much money toallot for opioid treatment and as Republicans spar overhow to repeal or replace the Affordable Care Act.

Some Republicans want more funding to help states combat theopioid addiction epidemic, which is estimatedto have killed 60,000 Americans last year. Changes to a Senate billexpected to be released later this week may include more money inaddition to other changes, but it’s unclear if it will secure the50 votes needed to pass.

While the government has been doing health care fraud roundupsevery year, past actions have focused on people who were defraudinggovernment programs, including Medicare and Medicaid.

While those types of cases are still part of the roll-up, thisyear the emphasis will be on fraud against private insurers bytreatment programs that have taken advantage of Obamacare’s moregenerous coverage, the person said. Both of the people whodiscussed the initiative asked not to be named because they weren’tauthorized to speak publicly about it.

A Justice Department spokesman declined to comment.

Obamacare benefits

Obamacare requires that health insurers cover a set of benefits,including mental health and substance use disorder services. Thehealth law expanded insurance coverage to about 20 millionpeople.

At its root, health-care fraud has more to do with the lack ofcontrol of the state Medicaid program than anything that comes outof Washington, according to Len Nichols, director of GeorgeMason University’s Center for Health Policy Research and Ethics anda proponent of Obamacare. Medicaid’s day-to-day operations areadministered by the states and funded through a joint partnershipbetween the federal and state governments.

“They’re pretty desperate to switch the narrative away from 20million uncovered,” said Nichols, referring to the number of peopleestimated to lose insurance under the Republicans’ proposedObamacare replacement.

Sessions’s priorities

In a sign of shifting priorities under Sessions, many of theplanned arrests target people who’ve made fraudulent claims againstmajor private health insurers, including Anthem Inc., Cigna Corp.and companies that sell insurance under the Blue Cross Blue Shieldbrand, the person said. Sessions himself plans to announce thearrests in Washington as soon as Thursday.

Anthem, which sells insurance plans under the Blue Cross andBlue Shield brand in 14 states, said it’s "actively workingwith federal and state law enforcement in several states on thesetypes of cases.” An Anthem spokeswoman declined to comment on anyspecific investigation, but noted that the company has a specialunit that investigates cases involving opioid fraud, waste andabuse.

Cigna said in a statement that the crackdown is “a positive stepforward in the country’s efforts to drive greateraccountability.”

Aetna Inc. declined to comment, and UnitedHealth Group Inc. andHumana Inc. didn’t respond to requests for comment. Florida Blue,the state’s Blue Cross and Blue Shield insurer, said it works withauthorities to fight fraud in substance abuse treatment.

Florida case

In one case unsealed Monday, Eric Snyder, the owner of anaddiction treatment center and recovery home in Delray Beach,Florida, and an associate, were accused of filing $58 million ofallegedly fraudulent claims to Blue Cross Blue Shield, Cigna,UnitedHealth, Aetna and Humana from 2011 to 2015, according to acriminal complaint filed in federal court in West Palm Beach. Theinsurers reimbursed the men $18.6 million for the fraudulentclaims, according to an affidavit by an agent of the Federal Bureauof Investigation that’s attached to the complaint.

Snyder is accused of bilking insurers for years for servicesthat weren’t needed or weren’t provided to treat drug addicts herecruited as patients, according to the FBI affidavit. Snyderdelivered treatment by unqualified and unlicensed providers andpaid illegal commissions for patient recruiters and kickbacks topatients themselves, the complaint says. The claims were all filedfor coverage required under the Affordable Care Act, the affidavitstates.

Snyder’s lawyer, Bruce Zimet, said the case hasn’t beenpresented to a grand jury yet and that there are "significantfacts" that point against indicting his client.

"He has literally saved the lives of many, many people who hadgone through his facility in the past and were suffering fromaddiction issues," Zimet said. "We are hopeful that the governmentwill keep an open mind and realize that while there’s a lot ofabuse in the industry, Snyder is not one of those people who is anabuser."

Delray Beach

Southern Florida has the biggest concentration of residentialtreatment centers in the country -- hundreds are based mainly insingle-family homes in and around Delray Beach, a small town inPalm Beach County, north of Miami. A December 2016 grand juryreport commissioned by the State Attorney for Palm Beach Countyfound addiction treatment centers to be rife with operators who usedeceptive marketing, illegal patient brokering and fraudulentinsurance claims to profit from addicts.

The report found treatment centers and half-way houses, known assober homes, operate out of strip malls and house addicts recruitedfrom around the country, charging their private insurers thousandsof dollars a day for questionable treatment. Many residentialfacilities are “unsafe and overcrowded ‘flophouses’ where crimeslike rape, theft, human trafficking, prostitution and illegal druguse are commonplace,” the report found.

“Over the past decade, bad actors have been using these laws tohide exploitation of the very people these laws were meant toprotect,” the report concluded. This year, the Florida legislaturepassed a law that seeks to regulate and prohibit deceptivemarketing practices in opiate addiction treatment services.

‘Preying’ on people

The centers are "preying on some of the most vulnerable people,"said Deb Herzog, a retired Anthem investigator and formerprosecutor who examined such centers in California. "They’re notproviding treatment and they’re collecting a lot of money."

Fraudulent claims became so rampant that Cigna, thefourth-biggest U.S. health insurer, quit Florida’s Obamacare marketin the fall of 2015, ahead of the sign-up period for 2016 plans. Atthe time, the company blamed fraudulent and abusive practices bydrug-treatment centers for driving up its costs.

"You do not have to be a rocket scientist to defraud theinsurance companies, they make it so easy," said Herzog. "Theinsurance company has no idea what services if any are beingprovided, there’s no itemization. In my humble opinion, that’s theinsurance industry’s fault."

While Sessions plans to highlight the opioid treatment fraud,federal prosecutors have already brought cases in this space. InMay, Kenneth Chatman, the owner of a Florida sober home, wassentenced to more than 27 years after pleading guilty to healthcare fraud, money laundering and human trafficking. That caseexposed a scheme where Chatman used drug addicts as sex slaves while receivinginsurance money meant for treatment programs.

As of Tuesday, several cases in Miami, Los Angeles, New York andDetroit had already been made public. Many of those cases involvedalleged fraud of Medicare and Medicaid.

In Detroit, a Macomb County resident was indicted on July 6 in acase alleging more than $1.4 million in false Medicare claims forpsychotherapy services through her company, according to courtdocuments. In Brooklyn, prosecutors brought a fraud and tax case onJuly 5 against five people accused of fraudulently billing Medicarefor therapy services, reaping $43 million over six years.

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