This is the first post in this year’s series examining important trends in white collar law and investigations. Join us in the weeks ahead as we provide updates on new developments and emerging trends in a number of white collar spaces. Up next: trends in anti-corruption.
A perennial focus of regulators, health care fraud enforcement remained active in 2021 and is expected to continue in the year ahead. Below we look at some of the drivers of that enforcement activity. Our key takeaways:
- Opioid enforcement actions will remain extremely active in the coming year, including with respect to doctors and pharmacists, not just health care companies and their executives.
- Pandemic-related fraud will continue to be a priority of federal and state enforcement agencies, including investigation regarding the use of pandemic relief funds, fraudulent testing schemes, and false vaccine documentation.
- As the evolving state of the COVID-19 pandemic brings new health services to more Americans, telehealth in particular will be a focus.
- Enforcement agencies will be especially attentive to any actions taken against vulnerable populations, including older adults and recipients of home health services.
Continuing with the trend we’ve seen over the last couple years, the U.S. Department of Justice (“DOJ” or “the Department”) remains committed to opioid related enforcement actions. In 2021, the DOJ continued its trend of focusing on doctors and pharmacists, not just companies and executives, involved with the distribution of opioids. This is not to say that the DOJ is exclusively focused on health care practitioners and pharmacists when it comes to controlled substances, though that is certainly a focus.
The DOJ remains committed to pursuing claims against pharmaceutical companies that they allege marketed opioids with false and misleading statements, paid kickbacks to increase prescriptions, or targeted health care practitioners with a known pattern of problematic prescribing. Although fewer high profile cases in 2021 might have signaled a relaxing of the DOJ’s enforcement actions against companies compared to 2020–which included the department filing suit against Walmart alleging nationwide violations of the Controlled Substance Act and the guilty plea from Purdue Pharma–the DOJ has recently reiterated its commitment to investigating and pursuing claims against health care companies and the department remains active in this space. This includes the Manhattan trial of the former CEO of Rochester Drug Co-Operative Inc. who is charged with conspiracy to violate federal law prohibiting narcotics distribution.
State Attorneys General also remain active in these spheres as evidenced by a recent trial against Teva Pharmaceuticals in New York. In a case brought by the New York Attorney General’s office, Teva was found liable by a New York jury on December 30, 2021, under a public nuisance theory for allegedly fueling the opioid crisis. A damages trial in that case is expected to take place this year. Other state and local actions against opioid manufacturers, distributors, and pharmacies under this theory will continue in 2022 and likely beyond.
Health care saw its fair share of high profile trials in 2021, with Elizabeth Holmes’s multi-month trial ending in a conviction of the former Theranos CEO on three counts of wire fraud and one count of conspiracy. Although the 12-member jury cleared Holmes on three counts of fraud and one conspiracy count related to defrauding patients, the verdict carries the possibility of significant jail time for the former executive and serves as a cautionary tale for health care executives. Holmes’s former boyfriend and former Theranos Chief Operating Officer Samesh Balwani is set to face his own charges before a jury in February.
COVID-19 related enforcement efforts continued to be a priority for the DOJ. With increased vaccine supply and the rise of vaccine requirements in various settings, the DOJ saw increased fraud related to the vaccine and brought numerous actions related to fraudulent COVID-19 vaccine cards.
The DOJ also remains active in investigations related to COVID-19 relief funds and COVID-19 testing schemes that misused information and samples obtained at COVID-19 testing sites to submit claims to Medicare for medically unnecessary, and often expensive, laboratory tests.
We can expect this space to remain active, as the Department has expressed its continuing commitment to combatting pandemic-era fraud. The Attorney General created the COVID-19 Fraud Enforcement Task Force in 2021, which is a special task forced formed to coordinate resources and information across the Department and other governmental agencies to better identify and prevent fraud. Followers can expect continued coordination efforts as federal and state authorities are continuing to coordinate on strategic enforcement, with organized meetings to discuss various fraud schemes related to the pandemic identified in different states.
One of the DOJ’s focuses coming out of the COVID-19 pandemic is on telehealth providers, in particular CMS regulations put in place during the COVID-19 pandemic that broadened telemedicine options for Medicare beneficiaries. A February 2021 speech by the then-acting Assistant Attorney General Brian M. Boynton predicted telehealth schemes would be a continued focus of the Civil Division of the DOJ. That prediction bore true with telemedicine fraud schemes amounting to some of the largest fraud enforcement actions in 2021. Notably, a September 17, 2021 enforcement action press release announced criminal charges against 138 defendants across 31 federal districts in the United States amounting to approximately $1.4 billion dollars in losses. Of the $1.4 billion in total losses, fraud schemes related to telemedicine amounted to $1.1 billion of those losses. In one of the largest Medicare fraud schemes ever charged by the Justice Department, a Newark, New Jersey grand jury indicted a Florida owner of multiple telemedicine companies on allegations of orchestrating a health care fraud scheme that involved $784 million of false and fraudulent claims to Medicare.
These enforcement efforts demonstrate that telehealth, as a new and evolving space for health care, is an area the government continues to scrutinize closely. Telehealth providers should be vigilant in their compliance efforts and consider investing in, and developing, a robust compliance program.
2021 also saw a focus on fraud schemes related to older adults and vulnerable populations in the health care space. Enforcement actions against hospice fraud and home health care fraud schemes were particularly active last year. Additionally, and related to the DOJ’s opioid enforcement efforts, the DOJ focused attention on fraud related to substance abuse clinics and treatment facilities.
This year we expect this trend to continue, as evidenced in a December 2021 speech by the Associate Attorney General Vanita Gupta reiterating the Departments commitment to combatting health care fraud and abuses against elder adults.