Yesterday, Senator Grassley, the architect of the 1986 False Claims Act amendments, and Brian Boynton, the Acting Assistant Attorney General of DOJ’s Civil Division, delivered the opening remarks at the Federal Bar Association’s 2021 Qui Tam Conference, previewing Senator Grassley’s priority legislative changes to the FCA and DOJ’s enforcement priorities under the Biden administration.
Senator Grassley opened the panel by expressing his displeasure at courts, possibly including the Supreme Court in Escobar, that have “read into the law a more stringent materiality standard than the text of the” False Claims Act contains. He criticized these courts for accordingly harming the government’s ability to “hold fraudsters accountable,” and he pledged to introduce legislation that would reverse instances “where either administration officials or courts have misinterpreted [Congress’s] intentions.” In addition to correcting what he perceives to be an overly stringent materiality standard, Senator Grassley also fired a warning shot across DOJ’s bow with respect to DOJ’s practice—increasingly common since the 2017 issuance of the Granston Memo, as discussed here—of seeking to dismiss certain non-intervened qui tam cases. The appropriate standard of review for DOJ requests to dismiss cases has been the subject of much disagreement among the lower courts, as discussed here and here, and Senator Grassley seemingly implied that his anticipated legislative reforms would significantly ratchet up the standard DOJ must meet, by having to justify to a court why “it is best to dismiss” the suit. When asked whether his contemplated legislation would reduce FCA penalties to prevent an outcome disproportionately higher than the damages caused by the misconduct (and possibly unconstitutionally so, as discussed here), Senator Grassley insisted that such changes were absolutely not on the table, because the FCA needs to “come down with a sledgehammer” on those who commit fraud. Senator Grassley’s opening comments were fully consistent with remarks last summer, discussed here, in which he similarly promised to enact relator-friendly FCA reforms.
Boynton outlined six Biden administration priorities for FCA enforcement: fraud relating to the COVID-19 public health emergency, opioids, abuse and exploitation of senior citizens, fraud relating to electronic health records, telehealth schemes, and “technology outside of healthcare,” such as cybersecurity-related fraud. DOJ is widely expected to engage in a significant uptick in enforcement actions as the Department begins to explore pandemic fraud relating to everything from CARES Act Provider Relief Fund payments to abuse of regulatory billing flexibilities offered by the Centers for Medicare & Medicaid Services (“CMS”). One target area also related to the pandemic is the new focus on telehealth. Although DOJ has sometimes termed recent fraud takedowns as involving telemedicine, in reality, these schemes tend to involve fraudulent prescriptions for DME or lab tests that come out of marketing center calls. In contrast, we expect DOJ to soon laser in on true telehealth fraud, where the medical services being provided through remote technology are themselves the subject of scrutiny for compliance with CMS billing flexibilities. Finally, Boynton’s reference to cybersecurity being a priority is consistent with recent remarks by Deputy Assistant Attorney General Michael Granston that also identified cybersecurity as a priority. Granston further explained that where certain cybersecurity protections “are a material requirement of payment or participation under a government program or contract, the knowing failure to include such protections could give rise to False Claims Act liability.” Particularly with the growth in telehealth and other virtual care services, cybersecurity both within and outside of healthcare will likely see much greater attention from DOJ.
Boynton also discussed how the Civil Division has “increasingly been undertaking sophisticated analyses of Medicare data,” both “to uncover schemes that have not been identified by whistleblowers” and to “support those [schemes] that have” been identified through qui tam complaints. DOJ admits that it analyzes these data “to identify trends and outliers,” and this work is certainly consistent with the Fiscal Year 2020 FCA statistics (discussed here), which revealed a significant year-over-year increase in DOJ-initiated FCA matters. We anticipate that companies will increasingly need to engage in their own internal data analytics to begin to get out ahead of DOJ and identify potential issues through internal investigations before they become government investigations.