High Stakes

Healthcare Fraud Enforcement: Certain as Death and Taxes

Healthcare Fraud Enforcement: Certain As Death And Taxes

No matter which way the policy winds are blowing in healthcare, stringent enforcement of fraud and abuse laws and regulations is likely to continue. To get a better sense of what’s ahead on the healthcare fraud enforcement front in 2017, we turned to Matt Curley, a member of the Healthcare Fraud Task Force at Bass, Berry & Sims. In this Q&A, Curley explains why healthcare companies – and the executives who lead them – will continue to draw the focus of regulators for the foreseeable future.

Healthcare fraud recoveries have really taken off in the past decade. What has been driving that?

The healthcare industry is a natural target for fraud enforcement activity primarily because the federal government’s spending on healthcare continues to grow exponentially.  Additionally, as regulators are always quick to point out, it’s an area where enforcement pays; for every $1 the federal government spends on enforcement, it typically takes in $6 to $8 in recoveries.

For more than three decades, the government’s healthcare fraud enforcement efforts have enjoyed wide bipartisan political support. The previous presidential administration devoted increased resources to fraud enforcement activity and legislative changes to certain statutes eased burdens on the pursuit of False Claims Act (FCA) cases and armed regulators with additional investigatory tools. Not surprisingly, whistleblower attorneys took that as an invitation to pursue more cases. Better use of data, by both the government and whistleblower attorneys, has also played a role.

Bass, Berry & Sims recently published its Healthcare Fraud & Abuse Review 2016. Click here to download the Review

What are some of the ways big data has increased scrutiny?

Data has helped the government begin to shift its efforts from “pay and chase” – that is, paying virtually all claims and then chasing down fraud afterwards – to preventing payment for questionable claims on the front end. Over the past several years, the Office of Inspector General in the U.S. Department Health and Human Services (HHS OIG) and the Centers for Medicare & Medicaid Services (CMS) have greatly enhanced their use of data analysis techniques to detect healthcare fraud. Additionally, attorneys for whistleblowers have mined newly available Medicare billing data to find new cases.

Still open, however, is how receptive courts will be to the use of statistical sampling of claims to establish and extrapolate FCA liability over a broader universe of claims. Practitioners and providers should closely watch cases dealing with this issue because such cases will greatly impact how these cases are litigated.

Whistleblower cases increased roughly 10 percent in 2016. How is the government encouraging more whistleblower action?

The financial incentives are clear: Whistleblowers recovered $520 million as their share of proceeds in qui tam judgments and settlements in FY 2016, bringing their total recoveries during the past five years to more than $2.8 billion. And, last August, the penalties a court must levy in FCA cases more than doubled, to a range of nearly $11,000 to about $21,500 per alleged false claim. Perhaps more importantly, however, the government’s increased willingness to devote the necessary resources to investigating and closely scrutinizing allegations brought by whistleblowers undoubtedly has encouraged whistleblowers to bring allegations to the attention of the government.

How does the health policy debate in Washington impact fraud enforcement?

Healthcare executives also will be watching efforts to repeal or modify the Patient Protection and Affordable Care Act (PPACA). In addition to the impacts such changes might have to most healthcare sectors, the PPACA includes several provisions that amended the FCA. These amendments generally have been considered favorable to the government and whistleblowers in pursuing FCA cases. PPACA also amended the Anti-Kickback Statute (AKS) to make clear that “a claim that includes items or services resulting from a violation of [the AKS] constitutes a false or fraudulent claim for purposes of [the FCA].” This removed any lingering uncertainty regarding whether an FCA claim could be based on an underlying AKS violation.

What impact has the Yates Memo had on holding individual executives and employees accountable?

It is fair to say that the actions of the Justice Department following the September 2015 release of the Yates Memo certainly suggest that the policies highlighted in the memo have real teeth. A key component of the Yates Memo was making clear the DOJ would include a focus on allegedly culpable individuals from the inception of civil and criminal corporate investigations. Other policy memos had emphasized coordination between the DOJ’s criminal and civil divisions, and between the DOJ and other enforcement agencies, such as HHS OIG.  And, there have been a number of high profile settlements and enforcement actions involving individuals in recent months that provide examples of how these policies are playing out in the context of healthcare fraud investigations.

What other trends are worth noting?

We are seeing an increased level of FCA activity and government investigations in managed care. Traditionally, enforcement efforts have been focused on provider organizations, and pharmaceutical and medical device manufacturers. The increasing use of private health plans to manage the care of Medicare and Medicaid beneficiaries has significantly increased the amount of government money flowing through private insurers, and that is likely driving the increase in enforcement activity.


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