For the past eight months, the IRS has been blocking roughly $125 million owed to Virginia as part of a Medicaid fraud settlement. Virginia earned this money by leading a massive health-care fraud investigation into Abbott Laboratories, a pharmaceutical company that illegally marketed products for unapproved purposes. The investigation was led by Virginia’s nationally renowned Medicaid Fraud Control Unit (MFCU), part of the office of Virginia’s Attorney General. The case was enormously important for MFCU, which spent four years on the case, recording over 38,000 man-hours and doing 80 percent of the work. The resulting settlement cost Abbott $1.5 billion, making it the second largest Medicaid fraud case in history at the time.
That was last October. Since then, the Treasury Department has been sitting on $200 million of forfeiture money, while Virginia has not received one cent of the $125 million it is owed. Virginia attorney general Ken Cuccinelli has tried for months to get the money, working closely with the Treasury Executive Office for Asset Forfeiture (TEOAF), the office responsible for dividing up the forfeiture between the various agencies involved with the investigation.
Eventually, Cuccinelli received an explanation for the delay – the IRS was refusing to fill out two pages of paperwork.
