On February 7, 2023, the Department of Justice (“DOJ”) announced that it recovered over $2.2 billion in False Claims Act (“FCA”) related settlements and judgments in the federal fiscal year 2022. While this is less than half of the previous year’s recovery of $5.6 billion, the number of cases settled was the second highest on record. Principal Deputy Assistant Attorney General Boynton stated that “the large number of settlements and judgments this past year demonstrates that the False Claims Act remains one of the most important tools for ensuring that public funds are spent properly and advance the public interest.”
Whistleblowers continue to be one of the federal government’s greatest assets in FCA cases, as whistleblowers filed 652 qui tam suits in 2022 with recovery totaling $1.9 billion – 15-30% of which goes to the whistleblower or “Relator.” However, the DOJ also continues to initiate its own actions through DOJ-initiated investigative efforts. The government initiated 296 FCA cases on its own last year without input of a relator, which is the highest volume of DOJ initiated cases since the 1986 FCA amendments. This has been a growing trend in health care enforcement, and health care fraud remained the leading source of all FCA cases in 2022. Over 77% of the funds recovered were related to the health care industry, which shows the federal government’s commitment to enforcing the FCA.
Health Care Fraud Actions
Medicaid. The Medicaid program was a target in 2022. DOJ recovered $260 million from a pharmaceutical company for its underpayment of rebates to the Medicaid program by improperly designating one product as a new drug. It also recovered $70.7 million from a health plan for submitting false claims to the Medicaid program for services that were not “allowed medical expenses” for amounts that did not reflect fair market value, were duplicative of services that were required to be rendered and were unlawful gifts of public funds.
Unnecessary Services. DOJ also exercised enforcement action against providers who billed for services that were not medically necessary. One health system paid $34.37 million to resolve claims that it allegedly performed medically unnecessary neurosurgeries when its physicians were paid on a productivity metric that financially incentivized more frequent and complicated surgeries. A DME distributor paid $34.37 million to settle allegations that it submitted claims for hearing aids using unsupported hearing loss related diagnosis codes. One hospice organization paid $5.5 million based on allegations that it submitted claims for services for patients who were not terminally ill.
Standard of Care. DOJ filed claims against multiple nursing homes and their management corporation for providing services that the DOJ alleged were grossly below the standard of care. The complaint alleged that the nursing homes failed to meet the appropriate standard of care in multiple ways, including failing to following infection protocols and maintaining inadequate staffing levels.
Kickbacks. Claims were pursued in several qui tam actions related to kickbacks, with the DOJ filing suit against CEOs, physicians and other individuals and entities for FCA violations based upon improper referrals and remuneration. A pharmaceutical company paid $843.8 million to resolve allegations that it paid kickbacks to physicians who attended its programs in connection with its multiple sclerosis drugs between 2009 and 2014. A health system paid $18.2 million to settle claims that it repurchased shares from physicians over 63 and resold them to younger physicians who were chosen based on the volume and value of their referrals. A DME manufacturer paid $24.75 million to settle allegations that it induced DME suppliers to select its equipment by providing physician prescribing data free of charge yet was valuable in assisting the DME supplier’s marketing efforts.
COVID-10 Related Fraud. The federal government provided significant levels of emergency funding throughout the COVID-19 pandemic. It has continued its enforcement action against the improper uses of these funds. In 2022, DOJ resolved 35 FCA cases related to the Paycheck Protection Program, recovering $6.8 million against borrowers who were either ineligible or received duplicate or inflated loans. DOJ also investigated a nursing home entity that facilitated vaccinations for hundreds of individuals who were ineligible to participate in the Centers for Disease Control and Prevention’s Pharmacy Partnership for Long-Term Care Program and recovered $1.75 million when it discovered it had provided the limited supply vaccinations to its board of directors and donors.
Practical Takeaways
Heath care-related FCA enforcement continues to be a profitable pursuit for the federal government. While the large settlements generate the most attention, even relatively low dollar cases can cause significant disruption, expense and the potential for reputational harm to providers. With reliance on data analytics and metrics, DOJ will continue to investigate and pursue enforcement actions of all types and sizes against providers across the health care spectrum. In this environment, developing and implementing an effective compliance program is of the utmost importance and must include new and evolving areas of compliance risk such as telehealth, Stark waivers, physician compensation issues, medical necessity of services, proper standards of care for services, appropriate coding and any regulatory flexibilities that were afforded during the public health emergency.
Proactive compliance programs are an excellent defense and can help to identify issues before these issues potentially pose FCA risk. When significant concerns do arise, providers must respond timely and complete a thorough investigation with self-reporting as necessary. Hall Render attorneys have years of experience in providing practical advice to all types of health care providers and entities.
For help understanding your legal obligations, designing a compliance program that is right for your organization or investigating a potential issue, please contact:
- Katherine Kuchan at (414) 721-0479 or kkuchan@hallrender.com;
- Scott Taebel at (414) 721-0445 or staebel@hallrender.com;
- Kaitlin Nucci at (248) 457-7838 or knucci@hallrender.com; or
- Your primary Hall Render contact.
Hall Render blog posts and articles are intended for informational purposes only. For ethical reasons, Hall Render attorneys cannot give legal advice outside of an attorney-client relationship.
