DOJ Reaches Settlement with Nursing Home Provider Based on Alleged Abuse of COVID-19 Waiver

Last week, DOJ and the State of California reached a $7,084,000 settlement with a California-based nursing home chain and two executives for allegedly misusing a pandemic-era waiver program by routinely submitting claims to Medicare for nursing home residents that did not have a qualifying prior hospital stay.  This settlement is noteworthy because it is one of the first FCA settlements involving alleged abuse of this particular Centers for Medicare & Medicaid Services (“CMS”) COVID-19 waiver.  See United States and State of California ex rel. Bay Area Whistleblower Partners v. Renew Health Group, LLC, No. 2:20-cv-09472-CBM-AS (C.D. Cal. Oct. 14, 2020).

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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.

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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.

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DOJ Reaches Settlement with Laboratory Over Commission-Based Compensation Arrangements with Independent Contractors, Medical Necessity

Earlier this month, the U.S. Department of Justice (“DOJ”) announced a $5.9 million FCA settlement resolving allegations that Genotox Laboratories Ltd., a toxicology and pharmacogenetics testing laboratory: 1) violated the Anti-Kickback Statute (“AKS”), and thereby caused the submission of false claims, through commission-based compensation arrangements with its independent contractors, and 2) submitted claims to federal healthcare programs for unnecessary drug tests.  In parallel proceedings, the U.S. Attorney’s Office for the Western District of Texas and Genotox entered into an eighteen-month Deferred Prosecution Agreement to resolve a criminal investigation into the same conduct.  The settlement highlights DOJ’s ongoing interest in pursuing independent contractor arrangements that do not fit within a safe harbor to the AKS, where such relationships are also accompanied by conduct that traditionally attracts enforcement scrutiny, such as submission of claims for medically unnecessary services.

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FY 2022 FCA Recovery Statistics Show Increase in DOJ and Whistleblower Actions, Which Continue to Target the Healthcare and Life Sciences Industries

On February 7, 2023, Principal Deputy Assistant Attorney General, Brian M. Boynton, announced that the Civil Division recovered over $2.2 billion in settlements and judgments under the False Claims Act (“FCA”) for fiscal year 2022.  Detailed statistics on FCA recoveries from 1986 through FY 2022 are available here.

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CBO Reports on Grassley Bill That Would Modify Escobar Materiality and Impose Rational Relation Test on Granston Dismissals

On July 15, 2022, the Congressional Budget Office (CBO) issued a cost estimate concerning the False Claims Amendments Act of 2021, a bill sponsored by Senator Grassley.  The bill would alter the False Claims Act in three important ways. (more…)

Latest DOJ COVID Crackdown Features Another Defendant Accused of Abusing Telehealth Waivers

With its latest announcement this week of a criminal crackdown of 21 defendants for their alleged participation in various health care related fraud schemes, DOJ has underscored its commitment to aggressively pursue individuals and companies alleged to have exploited the COVID-19 pandemic. Among these actions are a collection involving alleged billing fraud arising from COVID testing; one set of defendants is alleged to have taken the data from patients seeking COVID tests and submitting bills to the federal healthcare programs for office visits that never occurred, while another set of actions involve obtaining patient samples and then billing for more expensive lab tests. Still others involve defendants alleged to have sold fake COVID vaccination cards. (more…)

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. (more…)

DOJ’s First “Cyber-Fraud” Settlement Targets Healthcare Provider

Yesterday DOJ announced its first settlement under the Department’s new “Cyber-Fraud Initiative.”  This initiative, announced in October 2021, aims to “utilize the False Claims Act to pursue cybersecurity related fraud by government contractors and grant recipients.”  However, as discussed further here, in addition to targeting traditional government contractors, the initiative presents broader opportunities for DOJ to use the FCA to address data protection practices by healthcare providers.

The healthcare industry is consistently the recipient of disproportionate oversight under the FCA, and thus it is perhaps no surprise that DOJ’s first settlement under the Cyber-Fraud Initiative was with a healthcare provider.  As announced here, a healthcare provider furnishing medical services on air force bases paid $930,000 to resolve allegations that it “violated the False Claims Act by falsely representing to the State Department and the Air Force that it complied with contract requirements relating to the provision of medical services.”  The settlement also resolved allegations relating to controlled substances. (more…)

DOJ Statistics on FCA Recoveries Through FY 2021 Reveal Continued Focus on Healthcare and More Direct Government Enforcement

On February 1, 2022, Acting Assistant Attorney General for the DOJ Civil Division, Brian M. Boynton, announced that the Civil Division recovered over $5.6 billion in settlements and judgments under the False Claims Act (“FCA”) for fiscal year 2021.  This is the second largest annual total in FCA history and a significant increase from the $2.2 billion recovered during fiscal year 2020.  Detailed statistics on FCA recoveries from 1986 through FY 2021 are available here. (more…)