Healthcare Fraud & Abuse Review 2021

In September 2021, the U.S. Department of Health and Human Services (HHS) announced that it had retained several accounting and consulting firms to conduct audits of COVID-19 relief payments made to healthcare providers. 14 Additionally, the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG) stated that it would audit COVID-19 funding uses 15 and, more specifically, whether payments made by Medicare for COVID-19 inpatient discharges billed by hospitals complied with federal requirements. 16 Furthermore, HHS-OIG has expressed program integrity concerns regarding persons and entities that took advantage of the Centers for Medicare & Medicaid Services (CMS) relaxation of rules during the pandemic, such as laboratories performing “add-on” tests to confirm or rule out diagnoses other than COVID-19. 17 We expect to see a wave of whistleblower qui tam lawsuits stemming from the receipt of pandemic-related relief, which will generate numerous additional COVID-19 funding investigations. These will be fueled not only by the typical financial incentives provided by the FCA, but also as a result of issues raised by funding recipients’ attempts to adhere to the hastily-issued and ever-evolving guidance provided by the government during the rush of COVID-19 funding amidst the global pandemic crisis. As DOJ’s Boynton stated at the Federal Bar Association’s Qui Tam Conference, the “False Claims Act will play a significant role in the coming years as the government grapples with the consequences of this pandemic.” THE FUTURE OF THE FALSE CLAIMS ACT For a law that has been on the books for well over 150 years, it has only been relatively recently that the FCA has been the government’s primary civil enforcement tool and a statute relied upon by private parties (relators) to bring suit on behalf of the government through the FCA’s qui tam provisions. The 1986 FCA amendments paved the way for the statute as

Claims Amendments Act of 2021, the proposed amendments would “clarify[y] the current law following confusion and misinterpretation of the Supreme Court decision in [ Escobar ], which has made it all too easy for fraudsters to argue that their obvious fraud was not material simply because the government continued payment.” 18 Late last year, the proposed amendments were approved by the Senate Judiciary Committee for consideration by the full Senate. It remains to be seen whether the Senate will take up the proposed amendments, but there can be no question that efforts to strengthen the FCA enjoy bipartisan support and will continue in the future.

The government continues to tout the FCA and, in particular, the FCA’s qui tam provisions, as vital tools in its civil fraud enforcement toolbox as it relates to uncovering fraud in the healthcare industry.

The Supreme Court may very well have the opportunity to evaluate other key legal questions involving the FCA in the coming year. There have been a number of instances in prior years where parties have urged the Supreme Court to take up the pleading standards applicable to FCA claims under Rule 9(b) of the Federal Rules of Civil Procedure (FRCP). Until now, the Supreme Court has declined to take up that issue, but there is a possibility that may change as a result of the petition for writ of certiorari pending following the Eleventh Circuit’s decision in Estate of Helmly v. Bethany Hospice & Palliative Care, LLC , to affirm the district court’s dismissal of FCA claims for failure to meet Rule 9(b)’s pleading requirements. 19 In October 2021, the Supreme Court requested a response to the petition for writ of certiorari and the petition was distributed for conference earlier this year. Finally, the government continues to tout the FCA and, in particular, the FCA’s qui tam provisions, as vital tools in its civil fraud enforcement toolbox as it relates to uncovering fraud in the healthcare industry. And perhaps they are. But the FCA certainly is not the most efficient way to uncover actual healthcare fraud, as FCA investigations of allegations made in qui tam lawsuits often drag on for years, with resolutions driven as much by the possibility of crippling damages and per claim penalties or massive defense costs as by an evaluation of the actual merits. As regulators continue to evaluate how to move away from the pay-and-chase model of healthcare fraud enforcement and toward more proactive approaches, whether the FCA retains its place of prominence in the enforcement toolbox certainly must be considered as well.

we know it today by increasing the damages and penalties available to the government for recovery, increasing the percentages of recovery for qui tam relators and implementing protections for whistleblowing activity, among other things. Since the 1986 FCA amendments, there have been other amendments intended to strengthen the FCA by addressing court decisions perceived to have weakened the FCA’s effectiveness. As the Supreme Court’s decision in Escobar continues to give rise to fierce legal disputes concerning the FCA’s materiality requirement, there were efforts last year to amend the FCA in an attempt to cabin Escobar ’s impact. Titled the False

We expect to see a wave of whistleblower qui tam lawsuits stemming from the receipt of pandemic- related relief, which will generate numerous additional COVID-19 funding investigations.

14 https://www.beckershospitalreview.com/finance/hhs-taps-4-firms-to-audit-provider-relief-fund-grants.html. 15 https://oig.hhs.gov/coronavirus/. 16 https://oig.hhs.gov/reports-and-publications/workplan/summary/wp-summary-0000515.asp. 17 See “Trend Analysis of Medicare Laboratory Billing for Potential Fraud and Abuse with COVID-19 Add-on Testing,” at https://oig.hhs.gov/reports-and-publications/workplan/summary/wp-summary-0000489.asp.

18 https://www.grassley.senate.gov/news/news-releases/senators-introduce-of-bipartisan-legislation-to- fight-government-waste-fraud. 19 853 F. App’x 496 (11th Cir. 2021) (affirming dismissal for failure to plead FCA claims in accordance with Rule 9(b)), petition for writ of certiorari pending No. 21-462.

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