For the first time in recent history, the previous year’s healthcare fraud headlines were noteworthy as much for legal developments and U.S. Department of Justice (DOJ) pronouncements as they were for the healthcare fraud recovery haul by the government.
To be sure, DOJ enjoyed yet another banner year of civil and criminal healthcare fraud enforcement results. During the fiscal year ending September 30, 2015 (FY 2015), the federal government racked up nearly $3.6 billion in civil fraud recoveries, marking the eleventh straight year in which such recoveries exceeded $1 billion.
Nearly $2 billion of last year’s civil recoveries related to matters involving false claims against the federal healthcare programs in violation of the False Claims Act (FCA). During the last five years, civil recoveries involving the federal healthcare programs have exceeded $12.5 billion. A significant amount of last year’s civil recoveries involved qui tam actions raising issues of medical necessity and improper financial relationships between hospitals and doctors. In contrast to years past, only a fraction of the recoveries involved matters concerning the pharmaceutical industry.
Whistleblowers filed 632 new qui tam lawsuits under the FCA in FY 2015, which was more than a 10% drop compared to the previous year. This marked the fifth straight year, however, in which relators filed more than 600 new qui tam lawsuits and brought the tally of the total number of qui tam lawsuits filed during that time period to nearly 3,400. And, whistleblowers recovered a record breaking $598 million as their share of proceeds in qui tam judgments and settlements in FY 2015, bringing their total recoveries during the past five years to more than $2.4 billion.
In addition to civil fraud recoveries, DOJ announced a number of high profile criminal enforcement actions and results. In June 2015, the Medicare Fraud Strike Force led the largest single takedown in its history, which resulted in charges against 243 defendants, including doctors, nurses and other licensed healthcare professionals. The takedown was part of a coordinated nationwide operation across 17 federal districts and involved an estimated $700 million in false billings of government healthcare programs. The Strike Force also racked up a number of convictions of healthcare providers, ranging from physicians, administrators, home health, durable medical equipment and ancillary service providers.
Health and Human Services Office of Inspector General (HHS-OIG) reported expected recoveries of more than $3.25 billion, consisting of nearly $1.13 billion in audit receivables and about $2.2 billion in investigative receivables. HHS-OIG reported 925 criminal actions against individuals or entities that had engaged in crimes against federal healthcare programs and 682 civil actions, including lawsuits alleging false claims and unjust-enrichment, seeking civil monetary penalties and administrative recoveries related to provider self-disclosures. HHS-OIG also excluded more than 4,000 individuals and entities from participation in federal healthcare programs. Overall, HHS-OIG reported $20.6 billion in estimated savings resulting from legislative, regulatory or administrative actions.
In June 2015, HHS-OIG released a Portfolio Report, which summarized nearly 10 years’ worth of investigations and audits regarding Medicare Part D. This Report was intended to synthesize numerous past HHS-OIG reports that have identified weaknesses in Part D program integrity. The Report focused, in particular, on weaknesses in the use of data to identify vulnerabilities and highlighted the fact that Part D remains vulnerable to fraud.
Statistics summarizing recoveries told only part of the story regarding the government’s healthcare fraud efforts last year. In November 2015, DOJ released a memorandum concerning “Individual Accountability for Corporate Wrongdoing,” which is commonly referred to as the “Yates Memo,” in recognition of its author Deputy Attorney General Sally Yates. The Yates Memo formalizes a message DOJ officials have been clearly forecasting during the last several years; namely, that DOJ will seek to hold individuals responsible for corporate wrongdoing accountable for their actions. The Yates Memo includes a number of directives regarding cooperation credit and the expectation that those seeking such credit will provide a full disclosure of all facts regarding individuals involved in the alleged wrongdoing. Notably, the FCA was the only statute specifically referenced in the Yates Memo and undoubtedly healthcare providers in the midst of investigations will be grappling with the consequences of the Yates Memo in the coming years.
Last year, a number of key legal developments concerning the FCA emerged, which practitioners and healthcare providers will be tracking closely. In perhaps the most noteworthy, the U.S. Supreme Court granted certiorari to consider the legal viability and scope of the implied certification theory of falsity under the FCA. Given the split among the circuits regarding whether and to what extent a provider’s implied certification of compliance with an underlying requirement may establish an FCA violation, the Supreme Court will have the opportunity to provide some much needed clarity on this issue.