This is the third part in our 2023 series examining important trends in white collar law and investigations. Up next: congressional investigations.
Health care fraud enforcement remained a top priority at both the national and local levels in 2022 and we predict 2023 will be no different. This post details certain categories of health care fraud that regulators and government agencies have indicated will be a focus in this coming year as well as other expected trends. The key takeaways are the following:
- Opioids: Both federal and state governments were extremely active in opioid-related enforcement actions in 2022, as they have for many years now, and the Department of Justice (“DOJ”) announced its continued commitment to focus on individual medical professionals as part of this effort.
- COVID-19: Health care fraud in connection with COVID-19 relief funding remains a focus of DOJ, which announced in September that it was creating three new Strike Force teams dedicated to these types of matters.
- Telehealth: Regulators and DOJ have demonstrated that it will continue to focus on telehealth services—a space that is still new and found to be susceptible to fraud and abuse.
- Data Analytics: Data analytics remains central to the investigation and prosecution of health care fraud and will likely only grow in its importance in the coming year.
- False Claims Act (“FCA”): The FCA is an important tool for both government enforcement and private relator actions in the health care fraud realm. The Supreme Court is set to hear important questions related to the FCA, which may transform how the FCA is used in future enforcement actions.
Opioid enforcement actions were a core focus for both DOJ and state enforcement agencies this past year. Enforcement has not only focused on companies, but also on individuals. Earlier in 2022, DOJ announced the “2022 Opioid Enforcement Action.” This action included charges in eight federal districts against 14 individuals, 12 of whom were medical professionals, and related to unlawful distribution of prescription opioids. In announcing this action, DOJ emphasized the work it has done so far to combat the opioid crisis but made clear that “[its] work is far from done.”
Indeed, similar enforcement actions have continued across the country. In October 2022, a doctor in Maine was arrested on criminal charges for allegedly prescribing opioids without a medical purpose. And, at the beginning of this month, nine individuals were arrested in Texas for their roles in a “pill-mill pharmacy” scheme, selling opioids on the black market. DOJ has also demonstrated its commitment to this effort by creating a New England Prescription Opioid Strike Force this past year with a focus on investigating individual medical professionals.
Accordingly, aggressive enforcement of opioid-related fraud is likely to continue in 2023.
Although President Biden recently announced that he would end the official national emergency declaration for COVID-19 in May 2023, which will begin the decrease of distribution of federal COVID-19 relief money, enforcement actions related to COVID-19 are not necessarily set to slow down quite yet this year. 2022 saw a number of settlements in connection with COVID-19 funding and resources. DOJ has largely focused these efforts on borrowers under the Paycheck Protection Program (“PPP”), enacted to provide loans to assist small businesses in paying day-to-day business expenses during the pandemic. In just 2022, DOJ resolved 35 FCA matters tied to allegations that borrowers improperly received these loans and it recovered over $6.8 million. DOJ also obtained its first-ever FCA settlement with a lender who improperly disbursed PPP funds. Settlements have further continued into the beginning of this year; for example, three companies recently settled FCA allegations relating to improper PPP loans, totaling over $500,000.
In September, DOJ announced three new COVID-19 Fraud Strike Force Teams “to support, enhance, and continue” DOJ’s efforts to combat COVID-related fraud demonstrating that these types of actions are likely to continue through 2023.
The federal government greatly expanded the types of telehealth services that federal payors could cover at the start of the COVID-19 pandemic, and these services continue to be used at high volumes. Regulators and government enforcement agencies have accordingly scrutinized this new type of health care.
Last year, there was a nationwide DOJ “Telemedicine Enforcement Action” that alleged a healthcare fraud scheme utilizing telemedicine and involving more than $1.2 billion in losses. There were charges in 13 federal districts against 36 defendants, including a telemedicine company executive. CMS also took administrative action against 52 providers involved in similar schemes. The schemes generally involved medical professionals making referrals for allegedly medically unnecessary cardiovascular genetic testing, cancer genetic testing, and durable medical equipment. For example, one case involved a clinical laboratory charged with paying kickbacks to telemedicine companies to induce those companies’ physicians to order the clinical laboratory’s tests. Of note, in announcing this enforcement action, DOJ declared its view that “fraudulent cardiovascular genetic testing [is] a burgeoning scheme.” This multi-district enforcement action follows a similarly large enforcement action in 2021, where DOJ announced charges against 138 defendants across 31 federal districts in connection with fraud schemes, many of which related to telemedicine. DOJ will thus likely continue its focus on telemedicine schemes in 2023.
Recently, the U.S. Department of Health and Human Services, Office of Inspector General (“OIG”) promulgated its report “Insights of Telehealth Use and Program Integrity Risks Across Selected Health Care Programs During the Pandemic.” A portion of the report was dedicated to “program integrity risks associated with billing for telehealth services,” which it found included upcoding, duplicate billing for the same service, billing for services that were never actually provided, billing for services that were not medically necessary or that were inappropriate for telehealth, and ordering durable medical equipment, supplies, or laboratory tests. As one example, OIG found upcoding (i.e., billing for the highest, most expensive level of telehealth services even though those services were not provided) where one provider treated an individual consistently for 45-50 minute sessions but billed for 60 minutes of psychotherapy each time. Companies should be aware of these risks and update compliance programs accordingly.
A constant theme across various instances of health care enforcement is DOJ’s use of data analytics. For example, in battling the opioid crisis, DOJ has created numerous strike force teams. DOJ has explained that, in addition to traditional investigative techniques, these teams “use advanced data analysis techniques to identify aberrant billing levels in health care fraud ‘hot spots.’” DOJ, in fact, chose to convene its most recent strike force team in New England because, as Assistant AG Polite stated, he “asked [the] Fraud Section to identify the data, study the data, and identify where [DOJ] should [based on identified risks from that data] replicate [the] strike force model . . . [and] the New England area was the clear answer.” DOJ has also created three COVID-19 Fraud Strike Force Teams, which it announced are “designed to accelerate the process of turning data analytics into criminal investigations.”
In the telehealth sphere, the OIG noted in its above-referenced report that federal programs use data analysis to oversee telehealth medicine (e.g., “data analysis identifies concerning billing patterns in claims data”). And the report urges federal programs to go further in the monitoring and oversight of telehealth services, including targeted data analysis of the risks identified in the report and mentioned above.
In general, as AG Merrick Garland recognized in a speech last year, an “important force-multiplier is data analytics” and DOJ is only continuing to strengthen its “ability to bring data-driven corporate crime cases nationwide.” DOJ, and other agencies, are likely to continue relying more and more on data analytics to investigate and prosecute companies and individuals for health care fraud.
The FCA is consistently a powerful tool used in the fight against health care fraud. This is especially due to the ability for private individuals—relators—to bring qui tam actions under the FCA. Qui tam actions are approximately 75% of the new health care FCA matters that arose in 2022. Further, almost 95% of the value of the settlements and judgments recovered for health care FCA matters last year came from qui tam actions.
Notably, there are some thorny issues that remain as a source of contention within the FCA world that are being litigated at the Supreme Court this coming year. In one of these cases, United States, ex rel. Polansky v. Executive Health Resources, Inc., the Supreme Court will decide whether the government has authority to dismiss a FCA suit after initially declining to intervene in the action. In a second set of cases, United States ex rel. Schutte v. SuperValu Inc. and United States ex rel. Proctor v. Safeway, Inc., the Supreme Court will clarify the scienter element of the FCA. (For a more detailed discussion of the FCA and these cases, see our recent post here). Depending on how these issues resolve, FCA cases may be harder to successfully progress through the courts and the number of actions could begin to subside. Nonetheless, for now, the FCA—and qui tam matters more particularly—will continue to serve a central role in health care fraud enforcement.