May 31, 2022 – As the world slowly emerges from the COVID-19 pandemic in fits and attacks, the implementation of health fraud remains a top priority for the US Department of Justice (DOJ) and other government agencies with law enforcement powers. Specific areas have gained particular priority as COVID-19 has changed much in the health landscape – in some ways temporarily and in others more permanently.
The most obvious priority for imposing measures after the pandemic concerns the pandemic itself, which has seen various government-sponsored aid and funding programs allocated to health care providers. Even at the height of the pandemic, Justice Department officials made it clear that the use of such relief would be considered carefully – and it turned out to be true.
Early investigations and prosecutions related to the alleviation of COVID-19 concerned what may appear to be “low-hanging fruit”, but some of the most notable investigations include allegations of misappropriation of personal assistance funds, such as for the purchase of sports cars and luxury items.
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In April this year, the Ministry of Justice announced a large-scale, coordinated enforcement process, which included criminal charges against a number of defendants across the country for alleged violations, including the use of relief funds for personal purchases and invoicing patients for services that did not occur. . However, this was not the first large-scale, coordinated criminal law enforcement effort related to COVID, and is unlikely to be the last.
In addition to prosecuting, we expect the Department of Justice – with the help of whistleblowers (or “relatives”) to use civil remedies, such as the Federal False Claims Act (FCA), to prosecute alleged violations of the conditions that providers were required to qualify for COVID-19 assistance programs such as the Supplier Support Fund, the Wage Protection Program, and the COVID-19 Uninsured Program.
Legal theories on such issues are likely to be nuanced in many cases and fiercely contested, and will include allegations of non-compliance with evolving and sometimes arbitrarily issued and unclear technical rules regarding the receipt and use of aid funding.
We also expect more traditional investigative topics to take on a taste of COVID-19, such as complying with Medicare’s charging rules for other services while administering a COVID-19 test or vaccine, or reviewing financial relationships with physicians or others. referral sources that can rely on a physician self-referral law (known as the Stark Act) or a federal anti-kickback exemption law from COVID-19.
However, the retrospective view can be 20/20 on these issues; the memories fade and the crisis conditions in which healthcare providers have worked, combined with rapidly issuing and ever-changing nature of the rules, can be forgotten by skeptical prosecutors or relatives seeking to bring claims and substantial penalties based on what may have been technical “footsteps” that did not cause a loss of government.
Context will be important in defending these issues. If traffic rules are confused and evolving, this should serve as an obstacle to proving that a provider or other recipient of COVID-19 relief has acted in a “reckless disregard” of those rules, as required to establish liability. of the FCA.
Control over the application of COVID-19 is unlikely to be limited to healthcare providers. For example, even before the pandemic, there was an increased government focus on private healthcare investors.
As the pandemic escalated, Justice Department officials indicated that control in the area of COVID-19 mitigation would extend to private equity sponsors of suppliers and others who had received aid funding. Although such sponsors do not provide or invoice health care payers, they have been prosecuted by the FCA for “causing” someone else, such as the provider they invested in, to do so.
In the context of private capital, the theory of the “causal link” for liability has not yet been widely challenged, although there is case law which has established that it is a viable theory. This means that private equity sponsors in the healthcare sector are increasingly involved in FCA investigations and have been identified as defendants in FCA lawsuits, if for no other reason than that they are perceived as a deep pocket.
Allegations in these cases tend to focus on what the sponsor has learned from due diligence prior to the investment, the sponsor’s role in the supplier / portfolio company’s post-investment operations, and whether (or to what extent) that role prompted the portfolio company to file. false claims against state payers.
These claims can be greatly mitigated and there are many protections to these claims, as well as steps that can be taken to proactively mitigate the risk associated with a healthcare investment. However, there is no doubt that private equity investors will continue to be at the center of the efforts of the Department of Law Enforcement and relatives, which draw the DOJ’s attention to many FCA cases.
Finally, there was a huge increase in the use of telehealth services during the pandemic. While this is no surprise, the numbers are remarkable.
For example, statistics reported by the government show that in the first year of the pandemic, more than 28 million Medicare beneficiaries used telehealth services, while in the previous year, less than 350,000 Medicare beneficiaries used such services. Much of this change is due to the government’s temporary waiver of requirements to allow Medicare beneficiaries access to advanced telehealth services.
With the increased use of telehealth, there is a corresponding increase in control over the application of telehealth. In fact, even before COVID-19, control over the implementation of telehealth services was on the rise and is ready to continue after the pandemic.
Last September, the Justice Department charged more than 43 defendants across the country with filing more than $ 1.1 billion in false and fraudulent telemedicine lawsuits. The disputed allegations in this law enforcement are similar to those observed outside the context of telemedicine and include things like unnecessary ordering of consumables for long-term medical equipment (DME), painkillers and genetic tests, as well as allegations of discounts and charges for “fake” patient consultations. . There is no doubt that we can expect to see further law enforcement work in this area.
In short, although the healthcare industry has barely emerged from an unprecedented healthcare crisis, we do not see a delay in healthcare enforcement, and the pandemic itself has led to new areas of focus on enforcement.
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