The Department of Health and Human Services (HHS) recently decided to cease its calls for the resignation of drug maker Forest Laboratories' chief executive, Howard Solomon.

Understandably, American business leaders weren't keen on the Obama Administration telling them whom they could and couldn't hire.

But the feds made sure to emphasize that they would continue investigating and penalizing purported healthcare fraudsters, including "individuals who directly committed fraud as well as executives who were in a position of responsibility at the time of the fraud."

That's all well and good. But the scuffle between Forest Labs and HHS provides a preview of how the Obama Administration plans to deal with organizations that don't line up in support of its healthcare agenda -- namely, by punishing them. Last year, federal officials accused Forest Labs -- and a number of other drug companies -- of fraud against Medicare and Medicaid because of alleged misconduct in the marketing of their products to doctors. Instead of fighting the allegations, Forest opted to settle the case. The settlement saved the company from expensive litigation and unwanted media attention.

 

But the government wasn't done. HHS Secretary Kathleen Sebelius unearthed obscure legal powers to exclude Solomon from ever doing business with the government again. In other words, if Forest Labs wanted to continue working with the government -- its biggest client -- then it would have to axe its CEO. Oddly enough, the feds never accused Solomon of any wrongdoing. In fact, there was no suggestion that he was involved with or even aware of the alleged misconduct. But the government seemed intent on making an example out of him. Eventually, protests from the company and major business groups forced HHS to drop its witch hunt. In a letter to Solomon, the HHS inspector general wrote, "Based on a review of information in our file, and consideration of the information your attorneys provided to us both in writing and in an in-person meeting, we have decided to close this case."

HHS's hectoring of Forest Labs only represents the latest example of Team Obama's predilection for bullying groups that don't fall into line with the administration.

Consider how federal officials are currently battling insurance companies, before the vaunted state-level health-insurance exchanges come online in 2014. Starting next month, the feds are requiring all insurance companies to submit proposed rate increases above 10 percent for review by the states. And in 10 states, the federal government itself will screen premiums.

If the state -- or the feds -- determines that the increase is "unreasonable," then the insurer will have to justify the hike. Of course, it's unclear what would make a rate increase "unreasonable," so the Obama Administration will have an awful lot of leeway to pick winners and losers.

Insurers that attract regulators' ire could find themselves excluded from the insurance exchanges. Indeed, Secretary Sebelius has threatened to do just that if she deems their premium hikes too high.

The Department of Health and Human Services should continue investigating healthcare fraud too -- and prosecute those who engage in it aggressively. But at the same time, federal officials must be called to task publicly and aggressively if they try to force private interests into obsequious servitude -- and thereby commit fraud themselves.