This article is an extract from GTDT Healthcare Enforcement & Litigation 2023Click here for the full guide

Like the healthcare delivery, payment and regulatory systems in the United States, healthcare enforcement and litigation are complex systems. Healthcare is delivered through an uncoordinated nationwide assemblage of private healthcare providers, suppliers and institutions, and healthcare items and services are generally reimbursed through a complicated system of public and private funding sources. Healthcare delivery and payment are subject to both state and federal legal requirements, which may vary depending on the type of healthcare provider at issue, the source of payment and the jurisdiction (state or federal) where the enforcement is taking place. Despite the many sources of enforcement authority and responsible agencies, trends in enforcement priorities develop over time, particularly in the context of federal enforcement and litigation. Below, we discuss some of those trends because they highlight how enforcement agencies interpret and apply relevant laws, as well as the kinds of conduct that enforcement agencies prioritise.


Federal civil and criminal enforcement

In 2021, the US Department of Justice (DOJ), one of the primary federal agencies responsible for healthcare enforcement, continued to focus on certain areas that have resulted in enforcement actions over the past few years (eg, opioids) while some new enforcement priorities began to emerge (eg, clinical trials fraud).

Despite its broad authority to enforce criminal and civil federal laws, the DOJ tends to bring healthcare enforcement actions under a handful of civil and criminal statutes. Perhaps the most well-known civil enforcement statute is the federal False Claims Act (FCA) (31 USC section 3729 et seq) because violations can result in significant per-claim statutory penalties, in addition to treble damages awards. Although the DOJ can directly file an FCA claim against a defendant, private whistle-blowers (referred to in the statute as relators) may also file FCA claims on behalf of the United States. A case filed by a whistle-blower under the FCA is called a qui tam action, and it is filed under seal (ie, filed in secret). The seal remains in place until the United States either decides to intervene in the case and proceed with the litigation or declines to intervene. In the latter scenario, the whistle-blower may still proceed with the litigation. Regardless of the United States’ intervention decision, the whistle-blower is entitled to between 15 and 30 per cent of any recovery in the case (but the percentage depends in part on whether the United States intervenes).  

Each year, the DOJ releases data about its FCA enforcement activities. For example, in the fiscal year 2021, the DOJ reported that 598 matters were filed by whistle-blowers under the FCA. Although the FCA is not a healthcare-specific statute and applies to any claim for payment submitted to the federal government, the vast majority of FCA cases filed every year are healthcare-related. Of the US$5.6 billion recovered by the DOJ under the FCA in 2021, US$5 billion came from healthcare cases.

In addition to civil FCA enforcement, the DOJ uses criminal statutes to prosecute healthcare fraud committed by both companies and individuals. One of the criminal statutes upon which the DOJ most often relies is the Anti-Kickback Statute (42 USC section 1320a-7b(b)) (AKS). The AKS, in pertinent part, prohibits the offer, payment, solicitation or receipt of anything of value (including but not limited to money) to a person in return for that person ordering or recommending or arranging for the ordering of, items or services for which payment may be made under applicable federal healthcare programmes (eg, Medicare and Medicaid). Unless an AKS safe harbour or exception applies, the federal government interprets the AKS to mean that if even one purpose of an otherwise seemingly legitimate payment (or the provision of other remuneration) is to induce referrals of items or services payable by federal healthcare programmes, such a payment could violate the AKS.

The DOJ, with the assistance of other federal investigative and enforcement agencies such as the Federal Bureau of Investigation (FBI) and the Office of Inspector General (OIG) for the US Department of Health and Human Services (HHS), uses these statutory tools to target conduct and arrangements that are part of its enforcement priorities.


Federal enforcement priorities in 2021

Opioid enforcement

Given the ongoing opioid addiction epidemic that has plagued the United States for many years, the DOJ has long been investigating and prosecuting companies and individuals it believes have contributed to this crisis. While the DOJ’s opioid-related resolutions in 2021 did not involve many well-known companies, unlike in years prior (eg, Insys, Reckitt Benckiser, and Purdue Pharma), the DOJ remained intensely focused in 2021 on opioid-related enforcement activity, prosecuting both corporations and individuals. Opioid manufacturers, distributors, pharmacies and prescribers all continued to be targets of the DOJ. A few of the more notable opioid-related resolutions in 2021 are discussed below.

In September 2021, the DOJ announced its National Enforcement Action (NEA), which detailed new criminal healthcare fraud charges filed against 142 defendants. While one of the NEA’s priorities was opioid-related enforcement, only US$14 million in alleged losses (out of the US$1.4 billion total) related to opioid distribution fraud charges. The reasons for this decline are not obvious. Covid-19 may have played a part due to delays in investigations and grand jury empanelments. The transition from the Trump administration to the Biden administration also may have slowed enforcement efforts.

While these isolated causes may offer some explanation, conflating this recent decline with any broader priority shift away from opioid enforcement would be a mistake, given that the opioid epidemic accelerated this past year. Recent data reflect that overdose deaths increased by nearly 30 per cent in 2021. Increased enforcement is likely to follow, and the DOJ has expressly reaffirmed that opioid-related enforcement is a top priority.

Pharmacies were the main target for opioid-related DOJ enforcement efforts in 2021. For example, in February 2021, a Pennsylvania-based pharmacy, McElroy Pharmacy, and its pharmacist agreed to pay US$2.9 million to resolve Controlled Substances Act (CSA) allegations related to illegally dispensing opioids without a prescription and FCA allegations for false Medicare billings, whereby the pharmacy filled prescriptions with generics but billed Medicare for more expensive brands. McElroy Pharmacy surrendered its licence as part of the resolution. In May 2021, AlixaRx LLC, a pharmacy services provider for long-term care facilities, agreed to pay US$2.75 million to resolve CSA and FCA allegations relating to the unlawful dispensing and fraudulent billing of opioids. These allegations involved providing opioids to long-term care facilities without a written prescription on an ‘emergency’ basis and then double billing claims for reimbursement under both Medicare Part A and Medicare Part D.

The largest opioid-related resolutions in 2021 came at the state level. In February, a major consulting firm agreed to pay US$573 million to resolve numerous investigations by state attorneys general into the company’s practices related to its work for opioid companies. A few months later, in July, three pharmaceutical distributors and one manufacturer of opioids agreed to pay US$26 billion to resolve numerous state and local investigations into whether the distributors failed to stop suspicious opioid orders and whether the manufacturer misled patients and doctors about the addictiveness of opioids.


Covid-19 related enforcement

As was the case in 2020, the covid-19 public health emergency continued to provide fertile ground for fraud schemes in 2021, and much of the conduct subject to enforcement over the past year was similar to the schemes targeted in 2020. For example, the government continued in 2021 to prosecute fraudsters accused of unlawfully obtaining Paycheck Protection Program (PPP) loans and using them for personal enrichment (eg, gambling or buying a Lamborghini Urus), hawking fake and unproven covid-19 remedies (eg, Virus Shut Out Cards), and selling fake vaccine cards.

The DOJ’s Consumer Protection Branch (CPB), which enforces the Food, Drug & Cosmetic Act and other federal laws that protect Americans’ health and safety, played a key role in covid-19 related fraud enforcement in 2021. The CPB has utilised civil and criminal authorities and partnered with various federal agencies to root out pandemic-related misconduct. For example, the CPB worked with the Food and Drug Administration (FDA) to use the Food Drug and Cosmetic Act to address fake and unapproved covid-19 treatments and cures and also collaborated with the FTC based on referrals from the FTC for civil penalty matters.

In May 2021, Attorney General Merrick Garland announced the creation of the covid-19 Fraud Enforcement Task Force, which is composed of various entities within the DOJ, including US Attorneys, the Executive Office for United States Attorneys, and the DOJ’s Office of the Inspector General, as well as the FBI and other key interagency partners. Just over a week after the formation of the Task Force, the DOJ announced that the Task Force had executed a significant coordinated takedown targeting telemedicine executives, physicians, marketers, and medical business owners for covid-19 related fraud schemes causing losses in excess of US$143 million to federal health care programs.



The telefraud schemes that began to emerge in 2019 resulted in more criminal prosecutions in 2021. To be clear, there is a distinction between alleged ‘telefraud’ and ‘telehealth fraud’. The former involves utilising fraudulent telemarketing schemes to falsely bill for genetic and other diagnostic tests, durable medical equipment, and prescription drugs. The latter involves, for example, falsely submitting claims for sham or inadequate telehealth visits. For example, last May, the DOJ announced indictments of three telemarketing company owners in an alleged telefraud scheme involving the referral of medically unnecessary genetic testing to laboratories through a chain of kickbacks. Two of the individuals allegedly conducted a telemarketing campaign to convince Medicare beneficiaries to accept genetic tests that these beneficiaries did not need. According to the indictment, the telemarketing company owners paid kickbacks to telemedicine companies, that contracted with physicians in exchange for physician orders for expensive genetic tests. The physicians, however, had no prior relationship with and were not treating the beneficiaries for cancer or cancer symptoms, and they did not conduct proper telemedicine visits with these beneficiaries. All three indicted individuals then sold the orders to laboratories, one of which allegedly submitted US$46 million in claims to Medicare and received US$27 million in reimbursements. The laboratory paid the telemarketing company US$14 million in kickbacks for those test orders.

A new type of enforcement involving telehealth emerged in mid-2021 when the DOJ announced charges against individuals engaged in various health care fraud schemes – including telehealth fraud – that caused more than US$143 million in false billings. This announcement marked a significant change in telehealth enforcement because certain defendants billed for sham telehealth consults that did not occur, in contrast to the telefraud schemes involving fraudulent orders for ancillary services ordered through telehealth consults.

The topics discussed above are just a small sample of the many different types of conduct and entities that are subject to healthcare enforcement efforts in the United States, but they provide helpful insight into how federal enforcement agencies in particular interpret and apply the laws they are charged with enforcing.

We hope that this edition of Healthcare Enforcement & Litigation is a helpful introduction to the unique and complex landscape of healthcare.