In FY 2015, the United States recovered $3.6 billion in fraud-related civil settlements and judgments. That number may increase significantly in the coming years due to stiffer penalties under the False Claims Act. On Aug. 1, the FCA’s per claim penalties are set to double from $5,500- $11,000 per claim to a whopping $11,000- $21,563.
Healthcare Fraud & Abuse
“This change was part of the Bipartisan Budget Act of 2015, which required federal agencies to update monetary penalties within their jurisdiction,” explained attorney Matt Curley, partner in the healthcare fraud group at Bass Berry Sims.
The Nashville law office recently released its “Healthcare Fraud and Abuse Review 2015,” which included exhaustive coverage of healthcare-related FCA settlements from the past year organized by healthcare industry sector and detailed coverage of FCA legal developments. The 70-page review also included an overview of regulatory enforcement efforts related to the Stark Law and the Anti-Kickback Statute.
“Each year our healthcare fraud taskforce looks at significant developments under the FCA related to healthcare fraud and abuse and compiles a single resource for clients that covers the waterfront with respect to these issues,” Curley said. “We strive to provide clients with an idea of significant developments they may be encountering.”
The Yates Memo
Curley said one of the most significant developments last year was the Yates Memo issued by the Department of Justice. The memo included a number of DOJ directives regarding the government's expectation of those companies seeking cooperation credit in connection with resolution of alleged wrongdoing. It also indicated the DOJ would be focusing on individual liability in connection with healthcare fraud and abuse matters. “It really hit its mark with respect to the board room and got the attention of healthcare companies in ways that prior announcements may not have,” said Curley.
The Yates Memo was partly in response to past criticism of cases in which companies might have resolved issues of corporate wrongdoing without any individual being held accountable for the misconduct at issue. “Often times in the past, the government may have been criticized when there has been a very large settlement without any individuals being held accountable for the wrongdoing,” Curley said. “Corporations can only act through individuals, and the government has made clear that it will focus its enforcement efforts on those individuals who may have been involved in corporate misconduct.”
In addition to civil fraud recoveries, the review also cited a number of high profile criminal enforcement actions and results. Case in point: The June 2015 Medicare Fraud Strike Force takedown, which became the largest single takedown in its history and resulted in charges against 243 defendants including doctors, nurses and other licensed healthcare professionals. According to the report, “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.”
Stopping Trouble Before it Starts
While most sophisticated provider offices have compliance programs to identify potential problems, many are now taking additional steps to proactively head off FCA liability before problems start. “The increase in penalties is part of a broader narrative,” Curley said. “If a provider finds themselves in an FCA investigation and facing increased potential penalties for false claims, it may influence decision-making when it comes to litigating or settling with the government or a whistle blower.” That’s because most FCA investigations are the result of lawsuits filed by whistleblowers.
“Historically, the bulk of recoveries in FCA lawsuits initiated by relators have come from cases in which the United States intervenes,” the Healthcare Fraud and Abuse Review stated. “This year, however, the recoveries were distributed more evenly between intervened and non-intervened qui tam cases, with non-intervened cases accounting for approximately 40 percent of recoveries in FCA cases generated by qui tam lawsuits. Such numbers undoubtedly will encourage the relators’ bar to continue to aggressively litigate declined cases.”
According to the review, “whistleblowers led 632 new qui tam lawsuits under the FCA in FY 2015, which was more than a 10 percent drop compared to the previous year. This marked the fifth straight year, however, in which relators led 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 the 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.”
Curley said the best thing a practice can do is to head off whistleblower lawsuits before they start. “It’s imperative that employers respond to compliance issues as soon as they’re raised by employees, provide ongoing compliance training to employees, and monitor industry trends to see where the government might be focusing on a particular issue,” he said.
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Healthcare Fraud & Abuse Review