Jun 202023

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

Jaime L.M. Jones, Brenna E. Jenny and Francesca R. Ozinal
, , ,

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.

The CARES Act, and subsequent congressional appropriations, allocated over $178 billion to the Department of Health and Human Services (“HHS”) to distribute to healthcare providers through the Provider Relief Fund.  Providers received payments in various distributions, each with its own eligibility criteria.  HHS allocated over $20 billion in High Impact Area Distributions to hospitals that had a high number of confirmed COVID-19 positive patient admissions, to help mitigate the financial costs of caring for these resource-intensive patients.  Providers were permitted to use these PRF payments only to cover healthcare related expenses and/or lost revenues that are attributable to coronavirus.

The relator, the former system Chief Medical Officer and Chief Hospital Executive for one of the defendant hospitals, alleged that the defendant hospitals received over $50 million in High Impact Area Distributions to which the hospitals were not entitled.  Specifically, the relator alleged that two internal audits confirmed that when the hospitals applied for a High Impact Area Distribution, they over-stated the number of patients with appropriately confirmed diagnoses of COVID-19.  Despite the relator’s repeated insistence that the hospitals self-report the overpayment and return the money to HHS, the hospitals retained the money.

The relator further alleged that the hospitals expended their PRF distributions on impermissible uses, including “renovating the hospital lobby, renovating a medical office building, creating a weight loss center, renovating its radiology center and upgrading its catheter lab and stroke lab.”  Notably, the relator’s qui tam complaint incorrectly suggested that the hospital could only use its PRF distributions to cover “the cost of diagnosing and treating COVID-19 patients.”  The relator’s misunderstanding of at least certain nuanced aspects of the PRF program may have contributed to the government’s decision to decline to intervene.

A copy of the qui tam complaint can be found here.

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

Francesca R. Ozinal

Washington, D.C.

fozinal@sidley.com

You might also like
Potential Liability of Investors in the Healthcare Industry Heightens as Hospital Investors Enter into Novel Settlement

A recent False Claims Act settlement between the Department of Justice, a New Jersey hospital, and the hospital’s investors also included a novel Federal Debt Collection Practices Act (“FDCPA”) settlement with the investors, highlighting the government’s continued efforts to pursue investors in the healthcare industry.

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

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.

HHS Hires Four Outside Firms to Audit Provider Relief Fund Recipients

Federal records recently made available by ProPublica reveal that from late February through early April 2021, Health Resources and Services Administration (“HRSA”), the component of HHS that administers the CARES Act Provider Relief Fund, engaged multiple outside contractors for work relating to auditing and oversight of the Provider Relief Fund, with task descriptions such as “PRF audit support services,” “Audit and financial review services of HRSA Provider Relief Fund programs,” and “Program integrity support for HRSA Provider Relief Fund programs.”  Amounts obligated so far for this work total more than $5.3 million.