On the heels of a nationwide sweep in June 2024, in which almost 200 defendants who allegedly committed over $2.7 billion in health care fraud were charged by the U.S. Department of Justice ("DOJ") Health Care Fraud Unit ("Unit"), the Principal Deputy Assistant Attorney General, Nicole Argenteri, issued a special statement to emphasize that "[c]ombating health care fraud is a critical priority for the [DOJ]." In doing so, she highlighted three strategies the Unit is taking to prosecute health care fraud nationwide: (1) use of a "data-driven approach"; (2) responding to evolving threats; (3) and a whole-of-government approach. In the recent enforcement actions, more than 25% of the 193 defendants were medical professionals. The Unit shows no signs of slowing down. The above-referenced enforcement actions and DOJ's claimed reasons for the Unit's success are outlined below.
The Unit's Recent Enforcement Actions and Reasons for its Success
The DOJ asserts that since its inception in 2007, the Unit has made significant progress in enforcing healthcare fraud and has brought charges against over 5,400 defendants for fraudulently billing Medicaid, Medicare, and private health insurers over $27 billion. The average loss corresponding to the schemes enforced by the Unit has consistently increased, highlighting the Unit's concentration on offenders causing high loss amounts. The DOJ claims there are three reasons for its notable success.
DOJ's Use of Data
The first reason, according to the DOJ, is data. Through its data analytics group, the Unit monitors billing trends, finds irregular providers, and assists the DOJ in identifying possible schemes it can investigate and stop. By using data analytics proactively, for example, the DOJ contends the Unit identified a spike in genetic testing at a laboratory in Houston, Texas. After further investigation, this lead ultimately resulted in the indictment of the laboratory's owner for allegedly being involved in a $356 million fraudulent scheme whereby Medicare was billed for unnecessary genetic tests that were ordered for kickbacks.
Responding to Evolving Fraud Schemes
The DOJ claims the second reason for the Unit's success is its ability to respond to evolving threats. Before, apparently, the Unit's data analytics team would follow the data, identify hot spots for healthcare fraud, and the Unit would launch ad-hoc strike forces accordingly. But, due to complex and ongoing criminal schemes emerging during the COVID-19 pandemic, the Unit had to respond by creating the National Response Strike Force ("Strike Force"). Specifically, according to the DOJ, the Strike Force responds to emerging complicated criminal schemes across the entire U.S. (e.g., those involving telemedicine) instead of in a particular hot spot. The DOJ reports that the Strike Force has helped the Unit meet its objectives. For instance, it helped the Unit prosecute—with the help of a partner strike force in Dallas—defendants charged, at the end of June 2024, with being involved in a $54 million genetic testing scheme and laundering their illicit gains by buying luxury vehicles.
Notably, as explained by the DOJ, the Strike Force model gives the DOJ the means to deploy prosecutors to put an end to schemes at early stages. In one of its latest prosecutions, towards the end of June 2024, the Strike Force surged resources to an investigation involving the Arizona Medicaid Agency after discovering the agency was allegedly being defrauded in relation to addiction treatment services provided to certain Native Americans. Subsequently, the DOJ charged three defendants, including an outpatient treatment center owner allegedly engaged in a $69 million healthcare fraud scheme, which also involved money laundering. Based on the indictment, the treatment center, despite claiming to provide addiction and treatment services, was either not providing such services to patients or was providing services so far below the requisite standard that they were not even considered a valid treatment option.
Working with Federal and State Agency Partners
According to the DOJ, the third reason for the Unit's success is its whole-of-government approach. Citing the recent enforcement actions (discussed above) as an example, the DOJ emphasized how this was a multilateral effort by the Unit, multiple U.S. Attorney's Offices across the nation, Medicaid Fraud Control Units, State Attorneys Generals, and other partners in law enforcement.
Notably, the DOJ has underscored "[t]here's more to come," including a pilot program announced this past spring. This program promotes voluntary reporting of schemes to the Unit (or DOJ) that it otherwise is unaware of in exchange for a potential non-prosecution agreement. The difference between this pilot program policy and the DOJ's standard voluntary self-disclosure policy is that, unlike the latter, it lays out specific criteria that, if met, guarantees the person who self-disclosed will receive a non-prosecution agreement.
Possible Risks for Companies Doing Business in the Health Care Field
The DOJ warns that it "will continue to hold accountable to the fullest extent of the law those who exploit these programs and place greed and profits above patient care." Indeed, the DOJ has stressed that its recent enforcement actions demonstrate it is focusing on all players in the healthcare industry: corporate executives, medical professionals, other service providers, and companies handling reimbursement and billing.
By way of example, at the end of June 2024, the Unit charged three owners and executives of a pharmaceuticals wholesale distributor for their alleged participation in a $90 million wire fraud conspiracy in which they sought to market and sell misbranded and adulterated HIV medication. The defendants allegedly purchased the HIV medication from the "black market" and resold it to pharmacies using false documentation. The pharmacies then distributed the drugs to consumers, some of whom nearly died after taking them. This HIV medication diversion scheme highlights the risk to companies purchasing medical items or medications, wholesale or otherwise.
Another June 2024 enforcement action implicated employees at a health care plan. The alleged scheme involved a medical biller who filed almost $1 million of fraudulent and false claims with respect to the health care plan for a national train company based on services that were never provided. The DOJ's information (the charging document) asserts that the biller "paid cash bribes and kickbacks to co-conspirator [national train company] employees in return for the employees' agreement to allow their insurance to be used for false billing."
The clear takeaway from DOJ's actions is that they are committed to using a variety of methods—whether driven by data or by investigative techniques—to prosecute healthcare frauds which may implicate participants at many levels of the industry. Given these examples, companies need to ensure they structure their compliance systems to prevent and detect a range of potential misconduct, including improper disclosure of patient information, bribery, and kickbacks. Foley Hoag will continue tracking these enforcement trends and advising clients concerning healthcare fraud investigations and related matters.
Originally published 23 July 2024
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