May 31, 2022 – As the world slowly emerges from the COVID-19 pandemic in fits and starts, combating healthcare fraud remains a top priority for the U.S. Department of Justice (DOJ) and other government agencies with enforcement authority. Specific areas have gained particularly high priority as COVID-19 has greatly changed the healthcare landscape – in some ways temporarily and in other more permanent ways.
The most obvious post-pandemic law enforcement priority is the pandemic itself, which has seen various government-sponsored relief programs and funds distributed to healthcare providers. Even at the height of the pandemic, DOJ officials made it clear that the use of this relief would be closely scrutinized — and it turned out to be true.
Early investigations and prosecutions related to COVID-19 relief involved what may seem like “low hanging fruit,” but some of the most notable investigations involve allegations of misappropriation of relief funds for personal gain. , for example for the purchase of sports cars and luxury items.
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In April of this year, the DOJ announced a large-scale, coordinated enforcement action that involved filing criminal charges against scores of defendants across the country for alleged misconduct, including using relief funds for personal purchases and charging to patients of services provided that did not occur. However, this was not the first coordinated large-scale fraud-fighting effort related to COVID, and is unlikely to be the last.
In addition to criminal prosecutions, we expect the DOJ – with the help of whistleblowers (or “whistleblowers”) – to use civil remedies, such as the federal False Claims Act (FCA), to prosecute perceived violations of terms and conditions that vendors had to meet to participate in COVID-19 relief programs like the Vendor Relief Fund, Paycheck Protection Program, and COVID-19 Program for the Uninsured .
Legal theories on the matter are likely to be nuanced in many cases and hotly contested and will include allegations of non-compliance with evolving, sometimes randomly issued and unclear technical rules relating to receipt and use. relief funds.
We also expect more traditional survey topics to take on a COVID-19 flavor, such as following Medicare billing rules when performing other services while administering a COVID-19 test or vaccine. 19 or reviewing financial relationships with physicians or other referral sources who may rely on a physician self-referral law (known as the Stark Act) or a COVID-19 waiver of federal anti-referral law. -bribes.
However, hindsight can be 20/20 on these questions; memories fade and the crisis conditions under which healthcare providers operated, combined with the rapidly released and ever-changing nature of the rules, can be forgotten by skeptical prosecutors or reporters seeking to pursue claims and substantial penalties based on what could have been technical “foot faults” causing no loss to the government.
Context will be important in defending these issues. If the rules of the road were messy and changing, that should make it impossible to prove that a given provider or other recipient of COVID-19 aid acted in “reckless disregard” of those rules, as required to establish liability for FCA.
The COVID-19 enforcement review is unlikely to be limited to healthcare providers. For example, even before the pandemic, the government was increasingly focused on private equity investors in the healthcare sector.
As the pandemic unfolded, DOJ officials made it clear that scrutiny in the area of COVID-19 relief would extend to vendor private equity sponsors and others. people who have received aid funds. Although these sponsors do not provide or bill payers for healthcare services, they have been sued under the FCA for “inducing” someone else, such as a provider in which they have invested, to do it.
In the context of private equity, the “causality” theory of liability has not yet been widely debated, although there is case law that has found it to be a viable theory. This means that healthcare private equity sponsors have increasingly been implicated in FCA investigations and named as defendants in FCA lawsuits if for no other reason than they are perceived to be a deep pocket.
The allegations in these cases tend to focus on what the sponsor learned during due diligence before the investment, the role of the sponsor in the operations of the provider/holding company after the investment and whether (or to what extent) this role caused the holding company to submit false claims to government payers.
These claims can be greatly mitigated, and there are many defenses to these claims as well as steps that can be taken to proactively mitigate the risks of investing in healthcare. However, there is no doubt that private equity investors will continue to be at the center of the DOJ’s enforcement efforts and the relationships that bring many FCA cases to the DOJ’s attention.
Finally, there has been a huge increase in the use of telehealth services during the pandemic. While it’s no surprise, the numbers are notable.
For example, government-reported statistics show that in the first year of the pandemic, more than 28 million Medicare beneficiaries used telehealth services, while the previous year fewer than 350,000 beneficiaries of Medicare have used such services. Much of this change is due to the government temporarily waiving requirements to allow Medicare beneficiaries to access expanded telehealth services.
With the increased use of telehealth, there has been a corresponding increase in scrutiny of the application of telehealth. Indeed, even before COVID-19, scrutiny of the application of telehealth was on the rise and is expected to continue in the wake of the pandemic.
Last September, the DOJ charged more than 43 defendants across the country with submitting more than $1.1 billion in false and fraudulent claims related to telemedicine. The allegations at issue in this enforcement action are similar to those seen outside the telemedicine context and included such things as the unnecessary ordering of supplies of durable medical equipment (DME), painkillers and genetic testing, as well as allegations of bribes and the billing of “fictitious” consultations. with the sick. There is no doubt that we can expect to see more enforcement activity in this area.
In short, even though the health sector is just emerging from an unprecedented health crisis, we see no respite in the control of the application of health care laws, and the pandemic itself has led to new areas of application.
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