COVID-19 Relief Funding for Healthcare Organizations Will Be Under the Government's Microscope in 2022 and Beyond

NASHVILLE, Tenn., Feb. 10, 2022 /PRNewswire-PRWeb/ -- Pandemic-related fraud remained a top enforcement priority of the federal government during 2021 and will remain an enforcement focus in the coming year, as detailed in the Healthcare Fraud & Abuse Review 2021 published today by Bass, Berry & Sims.

In the 10th annual Review, Bass, Berry & Sims' attorneys analyze the government's new, multi-agency COVID-19 Fraud Enforcement Task Force and COVID relief enforcement actions, along with statements by top enforcement officials to guide healthcare companies on this important issue.

Download the Healthcare Fraud & Abuse Review 2021.

"We expect to see a significant number of whistleblower qui tam lawsuits against healthcare companies involving pandemic-related relief, prompting scores of investigations by the government," said Brian D. Roark, co-chair of Bass, Berry & Sims' Healthcare Fraud Task Force. "We expect the government to focus on threshold issues of eligibility, along with representations and certifications associated with the receipt and use of relief funds during the pandemic."

Bass, Berry & Sims will host a complimentary webinar that will provide an overview and discussion of key focus areas covered in the Review on Thursday, February 17, 2022, from 11:00 a.m.-1:00 p.m. ET / 10:00 a.m.-12:00 p.m. CT / 8:00-10:00 a.m. PT. Please click here to register.

Critical enforcement issues to watch

The Review covers major developments involving the False Claims Act (FCA), which remains one of the government's primary civil fraud tools. Last year marked the fifth anniversary of the Supreme Court's landmark FCA decision in Universal Health Services v. U.S. ex rel. Escobar, in which the Court addressed the FCA's materiality requirement, describing it as "rigorous" and "demanding." Recent congressional efforts to amend the FCA stem from the perception among some legislators that Escobar weakened the FCA by allowing defendants to escape liability because the government continued payment.

"The Supreme Court's opinion in Escobar continues to have a profound impact on the manner in which FCA allegations are pleaded in complaints, investigated by the government and litigated by parties to FCA lawsuits," said Matthew M. Curley, co-chair of the firm's Healthcare Fraud Task Force. "We will continue to track efforts to amend the FCA in response to Escobar, along with the possibility that the Supreme Court may consider questions involving FCA pleading standards and scienter that are winding their way through federal appellate courts."

Last October, the Department of Justice (DOJ) announced a new Civil Cyber-Fraud Initiative aimed at using the FCA to pursue claims against government contractors—including healthcare provider organizations—for their cybersecurity efforts.

"Healthcare companies are already the leading target of cyberattacks, and DOJ's new cybersecurity initiative should be watched closely given the impact of the FCA as an enforcement tool with its treble damages and per claim penalties," said Lisa S. Rivera, a member of the firm's Healthcare Fraud Task Force and former federal prosecutor. "This initiative heightens the need for healthcare companies to continuously evaluate and improve the security of their data and their networks to defend against and quickly respond to cyberattacks."

Most settlements involve healthcare again

The federal government recovered $5.6 billion from FCA cases in FY2021, which ended September 30, 2021, DOJ announced on Feb. 1. This represents the second largest announced recovery total in the history of the False Claims Act and the largest recovery since DOJ pulled in $6.2 billion in FY2014. As most often is the case, the healthcare industry accounted for the overwhelming percentage of the recoveries at $5 billion of the total recoveries in FY2021, or nearly 90 percent. Over the last ten years, the federal government has recovered more than $25 billion in civil fraud settlements and judgments involving the healthcare industry.

Alleged Stark Law and Anti-Kickback Statute violations remained a prominent fixture in settlements and recoveries involving hospitals and health systems with physician compensation arrangements receiving continued scrutiny.

"Federal regulations governing the relationships between hospitals, health systems and other provider organizations with referring physicians are complex and remain a key area of enforcement focus," said Anna M. Grizzle, a member of the firm's Healthcare Fraud Task Force who advises clients on enforcement and compliance-related issues. "The impact of the Stark Law and Anti-Kickback Statute reforms announced in late 2020 on the government's enforcement approach remains to be seen. While the reforms may provide healthcare providers with increased flexibility to support innovations in value-based care delivery, providers must remain vigilant in this complex area of the law."

Many of the largest settlements in FY2021 involved pharmaceutical and medical device companies. Opioid-related settlements comprised the most significant portion of the total recoveries from last year. Beyond those settlements, three generic pharmaceutical manufacturers agreed to pay $447.2 million to settle allegations that they paid and received kickbacks through arrangements on price, supply and allocation to customers with other pharmaceutical manufacturers. Three medical device manufacturers, in separate settlements, agreed to pay a total of nearly $88 million to resolve claims they had sold defective products, including surgical gowns, implantable defibrillators and blood coagulation monitors.

"These settlements highlight DOJ's increased focus on FCA violations that have a direct impact on patient safety," said John E. Kelly, a former federal prosecutor, managing partner of the firm's Washington, D.C. office and a member of the firm's Healthcare Fraud Task Force. "The government also has continued to scrutinize relationships between pharmaceutical and medical device companies and physicians, from speakers' programs to royalty arrangements."

Comprehensive review of settlements

Bass, Berry & Sims' Healthcare Fraud & Abuse Review 2021 will assist healthcare companies in developing a greater understanding of the civil and criminal enforcement risks they face during a time of great uncertainty for the healthcare industry. The Review offers analysis of major trends in False Claims Act case law, issues to watch as this year unfolds, and a comprehensive review of settlements involving the healthcare industry, including:

• Hospitals and Health Systems
• Long Term Care
• Pharmaceutical and Medical Device Companies
• Pharmacy Services
• Lab and Diagnostic Service Providers
• Behavioral Health

Download the Review, visit Bass, Berry & Sims' Healthcare Fraud & Abuse Resource Center, which features a database of healthcare fraud settlements since 2012, and follow the Inside the FCA blog to stay up to date on FCA matters.

About Bass, Berry & Sims PLC

With more than 300 attorneys representing numerous publicly traded companies and Fortune 500 businesses, Bass, Berry & Sims has been involved in some of the largest and most significant litigation matters, investigations and business transactions in the country. The firm is ranked as one of the nation's five largest healthcare firms by American Health Law Association and Modern Healthcare. For more information, visit http://www.bassberry.com.

Media Contact

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