Apr 222022

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

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

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.

In addition to pursuing this type of garden-variety healthcare fraud, DOJ’s most recent charges reflect a continued pursuit of claims against providers perceived to have abused CMS’s waivers of certain telehealth coverage and reimbursement requirements to enable expanded access to care during the public health emergency. According to one of the indictments, the defendant medical professional took advantage of these waivers by billing for sham telehealth encounters that did not occur and agreeing to order medically unnecessary genetic testing and DME in exchange for referrals of patients. Among other things, the defendant allegedly signed orders for genetic tests and DME based solely on brief telephonic conversations with the beneficiary, or none at all. In exchange for these orders, the defendant received kickbacks in the form of sham consultation fees, beneficiary referrals, and the opportunity to bill Medicare for telehealth visits under the more flexible telehealth waivers. Another defendant is already serving time for his involvement in this same scheme.

This week’s indictment comes on the heels of DOJ’s announcement (discussed here) of one of its first civil settlements under the FCA that involved the abuse of the telehealth waivers. We expect to continue to see both criminal and civil enforcement against providers who are perceived to have abused the pandemic regulatory waivers, including related to the expansion of reimbursement for telehealth services.

A copy of the indictment is available 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
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.

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.