What a past year for the Department of Justice (DOJ) and its False Claims Act (FCA) settlements and judgments.

In February 2022, the DOJ released a statement detailing the efforts by the agency for fiscal year 2021 (FY 2021), including the recoupment of more than $5.6 billion from civil FCA claims – making this the second largest annual total to date and the largest since fiscal year 2014.

Out of the $5.6 billion, over $5 billion related to the “health care industry, including drug and medical device manufacturers, managed care providers, hospitals, pharmacies, hospice organizations, laboratories, and physicians.”

Whistleblower – or qui tam suits – continue to make up a significant percentage of FCA filed cases. In FY 2021, whistleblowers filed 598 suits and were paid out $237 million for their work in assisting the government. Of the $5.6 billion recouped, $1.6 billion came from qui tam suits.

The DOJ’s release highlighted five key enforcement areas of focus for FY 2021:

Opioids

Enforcement actions against responsible parties for “triggering and fueling the opioid epidemic” remained a crucial part of the DOJ’s efforts toward addressing the opioid crisis.

Most notably, FCA settlements included $600 million for Indivior, a prescription opioid manufacturer, for its “promotion of Suboxone to physicians” and for “making false and misleading claims” that Suboxone was “less susceptible to diversion and abuse.”

Additionally, Purdue Pharma resolved its FCA claim for $2.8 billion as it related to Purdue’s promotion of opioids. It was alleged that Purdue “paid kickbacks to doctors, certain specialty pharmacies and an electronic health records developer to increase prescriptions of Purdue’s opioid products.”

Lastly, members of the Sackler family, shareholders, and board members of Purdue paid $225 million to resolve their civil FCA liability, due to their involvement in "a new marketing program that intensified marketing of OxyContin to extreme, high-volume prescribers, causing opioid prescriptions for uses that were unsafe, ineffective and medically unnecessary, and that often led to abuse and diversion."

Medicare Part C (Medicare Advantage Programs)

Medicare Part C is Medicare’s managed care program, and is administered by private health insurers through Medicare Advantage (MA) programs.

Medicare Part C pays a capitated amount to the insurer for each participant in the MA program, rather than using fee-for-service payments. The capitated amount is determined by “various ‘risk’ factors that affect expected health care expenditures to ensure that plans are paid more for enrollees who pose a greater risk.”

Last year, the Centers for Medicare & Medicaid Services (CMS) was projected to pay more than $343 billion for 26 million MA participants. Unfortunately, some providers and plans sought to increase their payment per participant by altering the risk adjustment process “by submitting unsupported diagnosis codes to make their patients appear sicker than they actually were.” Settlements for these types of allegations included $90 million from California-based Sutter Health and $6.3 million from Kaiser Foundation Health Plan in Washington.

Unlawful Kickbacks

Kickbacks continue to remain a concern for the DOJ and for health care, generally.

For $160 million, a mail order diabetic testing company settled allegations that it “paid kickbacks to Medicare beneficiaries by providing them ‘free’ or ‘no cost’ diabetic testing glucometers and by routinely waiving or not making reasonable efforts to collect their copayments for glucometers and diabetic testing supplies.”

The DOJ also recovered $140 million from a group of pain management clinics and urine drug testing labs for “paying unlawful kickbacks to providers to induce their referrals of urine drug tests,” and $9 million from the individual owner of the clinics and labs.

For $18.25 million, an electronic health record (EHR) vendor settled allegations that it “invited customers and prospective customers to lavish all-expense-paid sporting, entertainment, and recreational events to generate sales of its EHR product.”

Lastly, the DOJ recovered over $400 million from three generic pharmaceutical manufacturers for allegations that they paid and received kickbacks from arrangements with other pharmaceutical manufacturers around price, supply, and customer allocation for their generic drugs. Additionally, they entered into a deferred prosecution with the Antitrust Division regarding the related criminal charges surrounding the conspiracy to fix certain generic drug prices, according to the DOJ.

Unnecessary Medical Services

The DOJ resolved cases of unnecessary medical services, with cases focusing on providers billing for medically unnecessary services or services not rendered.

One rehabilitation therapy service provider settled for $11.2 million for allegations they used “aggressive corporate targets” without focusing on the patient’s needs, which led to medically unnecessary services or unskilled “grossly and materially substandard and/or worthless” services.

Additionally, durable medical equipment providers settled for a combined total of $65.75 million for providing known defective devices and for failing to disclose serious adverse health events.

Hayat Pharmacy in Milwaukee paid $2 million to settle its allegation that it unnecessarily, and without valid prescriptions, switched patients under a federal health care program from low-cost medications to unnecessary medications that would increase their profits.

Fraud Related to COVID-19

The DOJ continues to work closely with stakeholders to “identify, monitor and investigate” the misuse of pandemic relief funds.

Notably, the DOJ recouped under the FCA and Financial Institution Reform, Recovery, and Enforcement Act $70,000 from a medical practice and its provider for allegations surrounding falsely certifying a second Paycheck Protection Program (PPP) loan application when the practice had not previously received an initial PPP loan. The provider will also repay the second PPP loan.

Enforcement Continues

Through the DOJ’s rigorous actions in FY 2021, there is no doubt they will stay the course with their enforcement against FCA claims to deter fraud and abuse activity in the health care system.

In addition to the settlements and judgments, 31 corporate integrity agreements (CIA) were entered into between the government and health care entities. CIAs are made between the Office of Inspector General, the Department of Health and Human Services, and the health care entity. In these agreements, the entity – as part of the civil settlement – agrees to obligations, in exchange for not being excluded from federal health care programs.

A Compliance Program Is Essential

These CIAs, along with the annual releases from the DOJ and Advisory Opinions, are great resources to guide health care entities when determining whether their engagements are in alignment with fraud and abuse initiatives. These resources also offer insight into the government’s current practices surrounding fraud and abuse enforcement.

With this continued and robust enforcement by the DOJ against FCA claims, clients submitting claims potentially within the reach of the FCA will find the best tool to mitigate the risk of a FCA claim lies in a compliance program. A strong, enforced, and properly tailored compliance program provides the necessary oversight for entities in the health care industry to educate, audit, and combat against fraud and abuse within the industry.

If clients are not annually reviewing their compliance program, they should make it a priority. Annual reviews are essential to ensure their compliance program is meeting the client’s needs by providing tools to effectively prevent, detect, and correct compliance concerns and educating client’s staff.

Compliance programs are not meant to be reactive programs. They should be used continuously as proactive measures to prevent or reduce impact from noncompliance so issues do not reach the level of potentially involving a FCA claim.

A compliance program is only as good as its utilization, however. As we know from regulators, you could have a top-notch compliance program, but if it is not being used or used effectively, it is useless.

One final thought: compliance programs should be “doable” for the client. If the program places unnecessarily burdensome obligations or is simply unattainable for the client entity, then those obligations need to be tailored appropriately to fit the entity’s needs. This allows the client to properly comply with their program – and reap the benefits.

This article was originally published on the State Bar of Wisconsin’s Health Law Blog. Visit the State Bar sections or the Health Law Section webpages to learn more about the benefits of section membership.