The War on Health Care Fraud Needs a Champion

Merrill Goozner

Posted 1/09/12 on Gooz News

My regular readers know how much importance I attach to the war on waste, fraud and abuse in the Medicare and Medicaid programs (see posts here and here). Anyone who cares deeply about providing health care for all our citizens needs to make this a high priority, since taxpayers won’t long support those in need if the programs that deliver services aren’t protected from theft. That’s why Roy Poses over at the Health Care Renewal blog has done us a big favor by digging up this report from a 2007 Boston Globe profile on Mitt Romney.

Bain Capital’s 1989 purchase of Damon Corp., a Needham medical testing firm that later pleaded guilty to defrauding the federal government of $25 million and paid a record $119 million fine.

Romney sat on Damon’s board. During Romney’s tenure, Damon executives submitted bills to the government for millions of unnecessary blood tests. Romney and other board members were never implicated.

More than a decade later, when Romney was in pursuit of the Massachusetts governorship, his Democratic opponent Shannon O’Brien accused him of lax oversight at Damon and failing to report the fraud.

Romney replied that he had helped uncover the illegal activity at Damon, asking the board’s lawyers to investigate. As a result, he said, the board took ‘corrective action’ before selling the company in 1993 to Corning Inc.

But court records suggest that the Damon executives’ scheme continued throughout Bain’s ownership, and prosecutors credited Corning, not Romney, with cleaning up the situation. Bain, meanwhile, tripled its investment.

Romney personally reaped $473,000.

There’s a lot more than character at stake when comes to making false promises or false claims about cleaning up health care fraud. Building on an earlier program that began during the latter years of the Bush administration, President Obama and the Justice Department and Health and Human Services investigators built an admirable record combating malfeasance. But it’s only a start. Romney’s record — he reaped huge rewards by restoring profitability to health care providers purchased during his tenure at Bain, some of whom were caught in the government’s cross hairs — deserves careful scrutiny.

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