On June 1, 2020, the Criminal Division of the U.S. Department of Justice (DOJ) publicized an updated version of its “Evaluation of Corporate Compliance Program” guidance. This is the third version of the document, with the DOJ having issued the guidance in 2017 (which we analyzed here) and revised it in April 2019 (which we analyzed here). This further revision is another reminder of the DOJ’s heightened focus and increasing sophistication regarding evaluating compliance programs during investigations. While the overall structure of the guidance generally remains consistent with the last version, the revisions provide additional insight into the DOJ’s expectations for corporate compliance programs. More specifically, the revisions highlight the importance of an adequately resourced and empowered compliance department, a constantly evolving compliance program based on the company’s current risk profile and relevant compliance issues, and the use of key compliance metrics to test the effectiveness of a compliance program.
In a May 4, 2020 letter to Attorney General William Barr, Senator Chuck Grassley “vehemently” disagreed with the Department of Justice’s (“DOJ”) view, expressed in a brief recently filed with the Supreme Court by the Solicitor General, that the DOJ’s authority to dismiss an FCA claim “is an unreviewable exercise of prosecutorial authority.” As a principal author of the 1986 FCA amendments that substantially expanded the whistleblower provisions, Senator Grassley argued that he could “confidently say” that the text of the FCA plainly states that the court—not DOJ—should decide whether the government’s motion to dismiss a qui tam claim succeeds.
On March 6, 2020, the United States District Court for the Central District of California unsealed a qui tam complaint filed in May 2018 against Mobile Medical Examination (“MedXM”) and a number of Medicare Advantage Organizations (“MAOs), including, United Healthcare, Wellpoint, Aetna, Health Net, and Molina Healthcare. The qui tam suit, which was brought by former employees of MedXM, alleged that the defendants engaged in a scheme to submit false claims for payment to the federal healthcare programs by inflating risk adjustment payments and providing kickbacks to MA enrollees. The Department of Justice declined to intervene in the suit. (more…)
On January 27, 2020, Deputy Associate Attorney General Stephen Cox provided insight into current DOJ False Claims Act enforcement priorities and topics such as dismissals under the Granston Memo and reliance on subregulatory guidance as the basis of enforcement. A copy of his remarks can be found after clicking Read More.
On December 10, 2019, HHS-OIG issued a report examining the extent to which Medicare Advantage Organizations (“MAOs”) leverage chart reviews to increase risk-adjusted payments. OIG undertook its review due to concerns that MAOs “may use chart reviews to increase risk adjusted payments inappropriately.” Based on its analysis, OIG estimated that MAOs received approximately $6.7 billion in additional payments based on codes added during chart reviews. While OIG did not conclude that these payments constituted overpayments, it raised concerns about “the completeness of payment data submitted to CMS, the validity of diagnoses on chart reviews, and the quality of care provided to beneficiaries.”
According to the statistics published by the Department of Justice (“DOJ”) in December of 2018, fraud recoveries, including under the False Claims Act, declined in 2018 for the third straight year. While the majority of the dollars recovered by the government in these actions continues to come from the providers of healthcare services, technologies that enable those services, the manufacturers of the drugs, devices, and the private insurers who pay for healthcare, recoveries from the healthcare sector have also declined. While we await the official 2019 statistics from DOJ, we know that this year has continued this Administration’s trend of decreasing enforcement recoveries. That said, recoveries from the industry continue to be counted in the billions of dollars and outstrip levels seen a decade ago. While this Administration’s enforcement priorities have shifted from those of the last, and while DOJ is taking steps to exercise discretion and preserve its enforcement resources in some matters, both DOJ and the U.S. Department of Health and Human Services (“HHS”) continue to devote substantial resources aggressively to pursuing high priority enforcement issues, particularly those that potentially impact patient safety and substantially increase costs to the federal healthcare programs.
As we reported here, the Supreme Court in Azar v. Allina Health Services, 139 S. Ct. 1804 (2019) held that the Medicare Act expressly requires HHS to engage in notice-and-comment rulemaking prior to adopting any “substantive legal standard.” One court recently relied on Allina to conclude that FCA claims premised on a CMS rule articulated in payment manuals must fail because the rule constitutes a “substantive legal standard” that did not go through notice-and-comment rulemaking. Polansky v. Executive Health Resources, Inc., No. 12-4239, 2019 WL 5790061 (E.D. Pa. Nov. 5, 2019). (more…)
In a landmark decision that could have significance for any False Claims Act case in the Medicare context, the Eastern District of Pennsylvania recently held that Medicare reimbursement criteria must be established through notice-and-comment rulemaking if they are to be the basis of a viable FCA suit. Polansky v. Executive Health Resources, Inc., No. 12-4239, 2019 WL 5790061 (E.D. Pa. Nov. 5, 2019). Because the relator was relying on a reimbursement policy that was found solely in a CMS manual, the Eastern District held that the relator’s claims failed “as a matter of law.”
At the recent Compliance Week Annual Conference, Principal Deputy Associate Attorney General Claire McCusker Murray delivered extensive remarks on DOJ’s corporate enforcement priorities. Of particular note, Murray discussed a number of policy reforms focused on promoting and incentivizing corporate compliance and cooperation.
On May 7, 2019, the Department of Justice (DOJ) announced the release of formal guidance to its False Claims Act (FCA) prosecutors that provides a path for leniency for defendants in FCA investigations. More specifically, the guidance which is formalized in Section 4-4.112 of the DOJ’s Justice Manual, explains the manner in which the DOJ will award credit to defendants who voluntarily self-disclose misconduct that could serve as the basis for FCA liability, take other steps to cooperate with FCA investigations, or implement adequate and effective remedial measures in the FCA context. And significantly, the guidance provides that a defendant can receive a reduction in the damages multiplier and civil penalties under the FCA, which is the typical form of “credit” described in the guidance.