The Department of Justice (“DOJ”) recently announced that the United States recovered over $2.2 billion from False Claims Act (“FCA”) cases in the federal fiscal year 2020. While this is a decrease from the previous year’s recoveries, and likely related to the COVID-19 pandemic, the most recent figures are still on par with DOJ recoveries over the last five years. This indicates that the Government is maintaining its strict enforcement in combatting perceived fraud, waste and abuse in the health care industry under the FCA.
Whistleblower cases remain the most lucrative recovery tool at the Government’s disposal, accounting for over 70% of funds recovered both generally and in the health care industry specifically. The whistleblowers themselves took home over $300 million in awards for their assistance in identifying alleged fraud and abuse. The DOJ said 672 new qui tam suits were filed in 2020. The Government recovered $545 million through other means, including government-initiated litigation and self-disclosures.
Health Care Fraud Actions
The data disclosed in the DOJ’s Fraud Statistics Overview makes it clear that the FCA remains the Government’s primary weapon in its fight against health care fraud. In 2020, health care fraud recoveries from drug and medical device manufacturers, managed care providers, health systems, hospitals, pharmacies, laboratories and physicians, among other provider types accounted for $1.8 of the $2.2 billion.
The largest portion of those recovered federal funds came from drug companies, including a settlement with Novartis Pharmaceutical Corporation for over $591 million—a settlement that resolved claims the company paid kickbacks to doctors to induce them to prescribe the drug maker’s products. Kickback allegations accounted for an additional $121 million in recoveries from a medical device manufacturer, a specialty hospital, a lab and three of its principals. Medically unnecessary services formed the basis for an additional $158 million.
The Government targeted opioid-related schemes specifically, collecting $145 million from Practice Fusion, Inc. related to kickbacks received from opioid manufacturer Purdue Pharma. An additional $2.8 billion settlement with Purdue Pharma itself, negotiated in October 2020, was not yet finalized and thus excluded from the official 2020 recovery figures. The same is true for a $225 million civil settlement reached with individuals in the Sackler family and a $600 million settlement reached with Indivior for its improper marketing of the opioid addiction treatment drug Suboxone.
In its release, the DOJ also noted ongoing matters involving Teva Pharmaceuticals USA, Inc. and Teva Neurosciences, Inc., in which the companies are alleged to have conspired to illegally subsidize Medicare co-pays for the drug Copaxone. These ongoing matters will likely increase the net recovery from healthcare industries, again signifying the Government’s close watch on the industry.
Although the largest recoveries often garner the most media attention, health care providers should understand that the Government will pursue enforcement actions against any provider type, regardless of size, if the Government believes the allegations warrant such an investigation. For example, FY2020 has seen numerous settlements involving hospitals, health systems and physicians for alleged Stark Law, Anti-Kickback Statute and FCA violations involving physician compensation, improper referrals and coding and billing issues to name a few. Individuals are also not immune to investigation and prosecution. The Government has continued its trend of entering into settlements with individuals when the Government believes a particular individual, often a senior leader or owner, shares responsibility for the misconduct.
Health care enforcement will continue and will remain a profitable tool for the federal government. Preventing, detecting and responding to compliance issues is key. A well-designed and effective compliance program is a worthwhile investment and will be scrutinized in the event of a government investigation. Proactive compliance programs are an excellent defense and can help identify potential issues early – before they develop into big issues and potentially implicate the FCA.
In the COVID-19 environment, the DOJ has made clear that fraud committed in connection with pandemic relief efforts will be actively targeted. With regard to the Paycheck Protection Program (“PPP”), that effort has already been fruitful. Now more than ever, compliance programs must be nimble and risk assessments must take into consideration new and evolving areas of compliance risk like telehealth, physician compensation issues and the Provider Relief Funds received under the CARES Act. When significant issues are identified, health care providers need to respond timely, complete a thorough investigation, and, often with the assistance of compliance counsel, determine the best course of action. These actions may include corrective actions like voluntary refunds to the MAC or Medicaid agency, self-disclosures to DOJ or OIG and internal education, auditing and monitoring.