Health Care Fraud Cases Are Rising: 2020 Was a Record Year

At the American Health Law Association’s Annual Meeting this week, Michael Granston, deputy assistant attorney general for the Department of Justice’s (“DOJ”) commercial litigation branch, made one thing very clear—health care fraud enforcement is a top priority for the DOJ. Granston explained that the DOJ prosecuted a record number of health care fraud cases last year. Of the over 900 new matters opened by the department, 580 were health fraud matters and most were prosecuted under the False Claims Act (“FCA”). The DOJ settled 265 FCA claims in 2020, which was a record number for the department.

The health care industry can expect the focal point of these enforcement actions to be the misuse of electronic health records, contributions to the opioid epidemic, abuse of senior citizens, manipulation of Medicare’s managed care program, and improper claims under COVID-19 relief funds.

Under the FCA, it is illegal to knowingly submit claims for payment to federal government programs that are false or fraudulent. While the list of federal government programs prominently includes Medicare and Medicaid, any government program through which federal funds are distributed requires compliance with the FCA.

The FCA provides two avenues for enforcement. First, the DOJ can prosecute fraudulent behavior directly. Second, private citizens can bring whistleblower or “qui tam” actions in which the plaintiff or “relator” stands in the government’s shoes and prosecutes the fraud on behalf of the government. Prior to bringing a lawsuit under the FCA, qui tam relators are required to give the government an opportunity to intervene and prosecute the action itself. Qui tam actions can be quite lucrative for qui tam relators as successful relators are entitled to a percentage of the final judgment or settlement.

Penalties for FCA violations can be devastating. Not only does the FCA provide for a per-claim penalty of up to $23,331, but it also allows for treble damages and attorneys’ fees. In addition to civil liability, the FCA contains a criminal component. Criminal violators of the FCA face up to five years’ imprisonment, fines and exclusion from any government program.

With this backdrop, those in the health care industry must proceed with caution. There’s never been a better time to review compliance plans, policies and risk assessments to ensure that those are up to date and being followed. Effective training and compliance programs are a great way to minimize the chances of ending up on the wrong side of an FCA claim. Engaging experts and being proactive will be critical as fraud allegations and investigations continue to rise. As the old adage goes—an ounce of prevention is worth a pound of cure, and preparing now for the expected uptick in whistleblower allegations and fraud and abuse investigations under the FCA will be time well spent.