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UPDATE: U.S. Treasury Department agrees to release Virginia's share of Medicaid fraud settlement

Published On: Jun 05 2013 08:49:45 AM EDT   Updated On: Jun 05 2013 06:32:58 PM EDT
UPDATE: U.S. Treasury Department agrees to release Virginia's share of Medicaid fraud settlement

 The U.S. Treasury Department has agreed to release Virginia's share of a Medicaid fraud settlement.  The payment will total $115 million according to the office of Virginia Attorney General Ken Cuccinelli.

Earlier Wednesay, Cuccinelli criticized the IRS for failing to release the funds, which he estimated at 125 million dollars.

Following is the text of a news release from the Attorney General's Office:

Feds agree to release $115 million due Virginia from Medicaid fraud settlement



RICHMOND (June 5, 2013) - This afternoon, the U.S. Treasury Department alerted Attorney General Ken Cuccinelli that it would release $115 million due to Virginia for his office's role as the lead investigator in a 2012 Abbott Laboratories Medicaid fraud settlement.


The attorney general's office received a letter from Treasury's Executive Office for Asset Forfeiture (TEOAF) that a decision had been made on the disbursement.  Subsequent phone calls with TEOAF confirmed the $115 million figure.


"I am grateful to Treasury's Executive Office for Asset Forfeiture for agreeing to work with us to get this money to Virginia law enforcement," said Cuccinelli.  "We have been planning for more than a year to use this money for equipment and training to benefit law enforcement and communities throughout Virginia.


"This money is coming to Virginia because of the hard work and dedicated service of the staff of the Virginia Medicaid Fraud Control Unit.  I want to thank them for their distinguished service to the people of the commonwealth," he said.


In a news conference earlier today, Cuccinelli detailed how he wanted the money to be spent on law enforcement.  He also gave an accounting of the struggle to get the money to Virginia.


The Office of the Attorney General has no indication of when the money will be disbursed.


Additionally, some reporters have asked for clarification about what part of the Abbott settlement went to help Medicaid recipients.  That money has already been disbursed. 


The May 2012 $1.5 billion Abbott settlement was divided into (1) $800 million in civil settlements with the federal government and the states and (2) $700 million in criminal fines and forfeitures.


Under the civil settlement, Abbott paid $800 million to the federal government and the states to settle claims for defrauding Medicaid and other government health care programs.  That part of the settlement has already happened and the money went to reimburse Medicaid and other programs to help beneficiaries.


Under the criminal portion, Abbott paid the federal government a criminal fine of $500 million, it paid $1.5 million to the Virginia Medicaid Fraud Control Unit for investigative costs, and it forfeited assets of $198.5 million to go to the investigative agencies for law enforcement purposes.  Virginia's $115 million today comes from that asset forfeiture money,which is required by federal regulations to be used for law enforcement purposes.  


Attorney General Ken Cuccinelli says the IRS is blocking the release of $125 million owed to Virginia from a Medicaid fraud settlement.

Last year, Abbot Laboratories agreed to pay $1.5 billion to settle allegations that it promoted an anti-seizure drug for uses that were not approved by the federal government. Cuccinelli says Virginia is due $125 million from the 26-state case because it led the investigation, but the IRS for eight months has refused to complete a two-page form that would allow the release of the money. He says he first thought it was incompetence, but now wonders about the agency's motives.

The IRS did not immediately respond to a request for comment.

Cuccinelli says his office planned to use most of the money for local police equipment and training.