As vaccination rates rise, the COVID-19 pandemic continues to reverberate through 2021. These reverberations also impacted the healthcare fraud and abuse landscape that is the basis of The FCA Insider’s coverage. To-date, 2021 has seen more than three dozen posts on topics ranging from False Claims Act (FCA) court opinions, U.S. Department of Justice (DOJ) investigations, and changes to regulatory guidance under both the federal Anti-Kickback Statute (AKS) and the physician self-referral law (the Stark Law). Yet it is the fraud enforcement related to COVID-19 that we could never have planned to cover when we launched the site but led our coverage these past six months. Halfway through the year, here are six notable themes in FCA litigation and healthcare fraud and abuse covered on The FCA Insider.
1. The Government Is Focused on COVID-19 Fraud
The COVID-19 pandemic prompted unprecedented support from the federal government through various assistance programs like the Paycheck Protection Program (PPP), Economic Injury Disaster Loan (EIDL) program, and Unemployment Insurance (UI) program, as well as healthcare specific programs described in the next theme. As these programs assisted those impacted by the COVID-19 pandemic, there has been an “unprecedented pace and tempo” of false claims and misappropriation of funds. As a result of these misappropriations, DOJ “has led an historic enforcement initiative to detect and disrupt COVID-19 related fraud schemes,” according to U.S. Attorney General Merrick B. Garland. In March, DOJ announced that it has now charged nearly 500 defendants with crimes related to COVID-19 fraud schemes. Of this number, more than 120 defendants have been charged with misappropriating loan proceeds for impermissible purposes from PPP, and in conjunction with the EIDL program, the DOJ has seized more than $850 million in loans. In addition, DOJ established a task force focused on the COVID-19 UI program charging over 140 defendants. As made clear by Acting Assistant Attorney General Nicholas L. McQuaid, “To anyone thinking of using the global pandemic as an opportunity to scam and steal from hardworking Americans, my advice is simple – don’t.” Our coverage on this enforcement theme included a post on Mar. 31, 2021, highlighting support for our clients facing such investigations.
2. COVID-19-Related Healthcare Programs Also Face Significant Scrutiny
Although the healthcare industry is always active, the COVID-19 pandemic has drastically increased federal support, including Medicare advance payments and grants known as the Provider Relief Fund. With over $280 billion made available under these programs, government regulators and the DOJ are focused on ensuring the funds are not improperly utilized. In February 2021, the DOJ announced its first Provider Relief Fund criminal indictments, discussed in a Feb. 26 post, where DOJ worked with the Health and Human Services Office of Inspector General (OIG) to bring a case. The next month, President Biden signed into law the American Rescue Plan Act of 2021, which provided $5 million to OIG for Provider Relief Fund oversight. With this increased funding, we anticipate further government investigation into the whereabouts and recovery of misappropriated funds, which will likely grow later this year as healthcare providers will begin to submit mandatory reports related to use of such funding.
We also discussed DOJ’s plan for a coordinated civil rights response to COVID-19, particularly related to long-term care facilities.
3. By Contrast, the Government Also Granted Unprecedented Flexibility
While expressing significant concern with COVID-19-related fraud, the government also recognized that healthcare providers faced existential challenges to serve their patients. To address these challenges, OIG also provided COVID-19-related guidance granting flexibility from its fraud and abuse enforcement authorities. To give this flexibility, OIG requested healthcare providers submit questions and requests for discretion from administrative enforcement that could support the healthcare system. In answering frequently asked questions on its OIG COVID-19 portal, OIG continued its answers in 2020 that waived beneficiary inducement prohibitions particularly with respect to COVID-19 vaccines. In addition, OIG gave ambulance transportation providers and federally-qualified health centers (FQHCs) additional flexibility. The FCA Insider has covered these COVID-19 FAQs in a series of posts, including:
- Providers May Offer Incentives to Federal Beneficiaries for Receiving COVID-19 Vaccine (June 9, 2021)
- OIG Removes Mandatory Cost-Sharing Obligations for COVID-19 Ambulance Transport Waiver (May 17, 2021)
- Free FQHC COVID-19 Testing Approved by OIG(March 22, 2021)
- Per-Click Compensation for Philanthropic Entity’s COVID-19 Vaccine Site Low Risk of Fraud According to OIG(March 2, 2021)
4. Significant Settlements and Enforcement Activities Have Continued
Government investigators and regulators have continued to enforce general healthcare fraud, notwithstanding the pandemic. Enforcement has particularly been critical when it has involved drug abuse, including opioids. In a March post, we discussed DOJ’s record setting drug diversion settlement of $7,750,000 with a hospital system. The settlement came after a Drug Enforcement Agency (DEA) investigation into McLaren Health Care Corporation (MHCC) which determined that MHCC improperly handled controlled substances, in violation of the Controlled Substances Act. The DEA concluded that MHCC pharmacies dispensed Schedule II drugs without mandatory written prescriptions and despite “red flags” that those drugs were being diverted by MHCC’s pharmacist-in-charge. Diversion can lead to wider usage of opioids, which has ravaged many parts of the country.
In addition, we summarized both DOJ’s $2.2 billion in recoveries during FY 2020 involving the FCA, which included opioid cases, and also 2020 settlements under the Stark Law voluntary disclosure returning to pre-2019 settlement trends.
5. FCA retaliation cases increase in scope and count
To protect whistleblowers, the FCA prohibits discharging, demoting, suspending, threatening, harassing, and discriminating in any other manner for employees and contractors trying to stop FCA-related conduct. 31 U.S.C. § 3730(h)(1). While historically FCA retaliation claims have often been added onto FCA complaints as almost an ancillary matter, we have documented an increase in employee retaliation conduct being the focus of FCA litigation. In one recent case, after the defendant paid more than $100 million to settle FCA allegations involving improper speaker fees, the qui tam plaintiff who had received millions continued to bring a retaliation claim unsuccessfully. In another case we plan to discuss soon, a physician successfully alleged that he was suspended and then fired for raising concerns that his employer exchanged free massages for additional patient care services. U.S. ex rel. Snider v. Cntrs. for Pain Control, Inc. (N.D. Ind. May 5, 2021). Finally, a recent Sixth Circuit ruling extended such claims for even post-employment employer actions (e.g., responses to reference checks or providing negative statements in the industry) as a potential basis of FCA retaliation claims. With such thrusts, we anticipate more of these cases in the future.
6. Regulatory Changes May Impact Future FCA Cases
Finally, after both OIG and the Centers for Medicare & Medicaid Services issued final regulations in November 2020 with respect to, respectively, the AKS safe harbors and the Stark Law exceptions, we provided significant coverage of this regulatory change. Such regulatory changes may impact future FCA opinions and may give healthcare providers additional flexibility and protection from the federal healthcare fraud and abuse rules. This coverage included:
- CMS statement clarifies agency’s view that the Stark Law final rule is effective (Feb. 22)
- Fraud and Abuse Rules Part V: Easing Stark Law Compliance (Feb. 18)
- Fraud and Abuse Rules Part IV: Final Changes to Existing and New Anti-Kickback Statute Safe Harbors (Feb. 4)
- Fraud and Abuse Rules Part III: New Value-Based Arrangement Protections (Jan. 21)
- Fraud and Abuse Rules Part II: Amended EHR and New Cybersecurity Donation Safe Harbors and Exceptions (Jan. 13)
- Fraud and Abuse Rules Part I: Changes to Patient Inducement and Kickback Policies (Jan. 12)
- Stark & AKS Reform Webinar – Tues., Jan. 12, 2021
The authors thank McGuireWoods summer associate Rambert Tyree for assistance preparing this article. He is not licensed to practice law.