Apr 132022

DOJ Settles FCA Case Alleging Medically Unnecessary Telehealth Visits, Claws Back PPP Money

Jaime L.M. Jones, Brenna E. Jenny and Krystalyn K. Weaver
, ,

This week DOJ announced one of the first civil settlements under the FCA involving abuse of the pandemic flexibilities that the Department of Health and Human Services used to authorize broader use of telehealth during the COVID public health emergency.  Physician Partners of America (“PPOA”) agreed to pay $24.5 million to resolve allegations that it violated the FCA by billing for medically unnecessary telehealth visits, and by submitting claims for medically unnecessary genetic, psychological, and urine drug tests and claims tainted by violations of the Stark Law.  While DOJ has previously engaged in criminal enforcement actions relating to abuse of the telehealth waiver flexibilities, as discussed further here, this case represents an expansion of telehealth enforcement scrutiny to the civil side.

According to DOJ, after non-emergency medical procedures were suspended in early 2020 due to the pandemic and revenues fell, PPOA directed its physicians to see patients via telemedicine twice monthly, regardless of need, and to bill for these evaluation and management visits with inappropriate high-level procedure codes.  DOJ further alleged that in connection with obtaining a $5.9 million loan through the Paycheck Protection Program (“PPP”), PPOA falsely represented that it was not engaged in unlawful conduct.  DOJ’s Civil Division has in the past generally pursued PPP loan fraud relating to misuse of PPP funds or fraudulent receipt of duplicative loans; DOJ’s decision to leverage alleged healthcare billing improprieties that are completely distinct from PPP eligibility terms as a means to claw back PPP funds may represent a new enforcement trend.

This settlement reinforces that abuse of telehealth regulatory flexibilities remains an enforcement priority for the federal government.

This post is as of the posting date stated above. Sidley Austin LLP assumes no duty to update this post or post about any subsequent developments having a bearing on this post.

Jaime L.M. Jones

Chicago

jaimejones@sidley.com

Brenna E. Jenny

Washington, D.C.

bjenny@sidley.com

Krystalyn K. Weaver

You might also like
Court Finds That Qui Tam Relator Cannot Enforce 340B Program Statute

A recent decision from the Central District of California held that a qui tam relator cannot bring a False Claims Act (FCA) case against pharmaceutical manufacturers to enforce the 340B Drug Pricing Program’s (“340B Program”) statutory requirements.  See United States ex rel. Adventist Health System/West v. AbbVie, No. 21-cv-04249 (C.D. Cal. Mar. 18, 2024). The 340B Program is a federal program that requires pharmaceutical manufacturers to offer discounted prices, called a “ceiling price,” on applicable drugs to certain hospitals and clinics, referred to as 340B “covered entities.”  The relator, Adventist Health System/West, a covered entity under the 340B Program, alleged that the defendant pharmaceutical manufacturers failed to comply with the 340B Program’s requirements related to the “penny pricing” policy, which requires manufacturers to offer drugs at a penny if the ceiling price calculation results in a number at or less than a penny.

FY 2023 Saw the Most FCA Settlements and Judgments Ever in a Single Year, with the Majority of Recovered Funds Paid by the Healthcare Industry

On February 22, 2024, Acting Associate Attorney General Benjamin C. Mizer and Civil Division Principal Deputy Assistant Attorney General Brian M. Boynton announced that settlements and judgments under the FCA exceeded $2.68 billion in fiscal year (“FY”) 2023.  DOJ and whistleblowers, further, were party to 543 FCA settlements and judgments, the most ever in a single year.  Detailed statistics on FCA recoveries from 1986 through FY 2023 are available here.

Qui Tam Alleges Hospital Fraud Relating to Provider Relief Fund “High Impact” Payment

Earlier this month, a federal court unsealed a qui tam complaint against several New Jersey hospitals, management services organizations, and the hospitals’ Chief Executive Officer and Chief Financial Officer for allegedly refusing to return CARES Act Provider Relief Fund (“PRF”) money for which the hospitals knew they were not eligible, and for allegedly using PRF money for impermissible purposes.  See United States ex rel. Singh v. Hudson Hospital OPCO, LLC, No 21-cv-19788 (D.N.J. Nov. 5, 2021).  This case is noteworthy because it is one of the first unsealed qui tam complaints raising allegations about ineligibility for, and misuse of, PRF payments.