The U.S. Department of Justice (DOJ) recently announced that it recouped over $2.2 billion through the enforcement of False Claims Act (FCA) settlements and judgments in fiscal year (FY) 2022.

This is less than half of the prior year’s recoupment of more than $5.6 billion from civil FCA claims.However, the DOJ noted “the government and whistleblowers were party to 351 settlements and judgments,” which made FY 2022 the second highest for the number of settlements and judgments in one year.

Since 1986, recoveries under the FCA have totaled more than $72 billion.

In the February announcement, Principal Deputy Assistant Attorney General Boynton praised the recoupment, saying that “The large number of settlements and judgments this past year demonstrates that the False Claims Act remains one of the most important tools for ensuring that public funds are spent properly and advance the public interest.”

Over $1.7 billion, out of the over $2.2 billion recovered, related to the “health care industry, including drug and medical device manufacturers, durable medical equipment, home health and managed care providers, hospitals, pharmacies, hospice organizations, and physicians.” In addition to this, the DOJ recovered additional amounts for state Medicaid programs.

Whistleblower – or qui tam suits – continue to make up a significant percentage of FCA-filed cases. In FY 2022, whistleblowers filed 652 suits with settlement and judgments exceeding $1.9 billion and payouts of over $488 million to the whistleblowers.

The DOJ’s announcement highlights the following key areas of health care enforcement for FY 2022:

Fraud and Abuse in the Medicaid Program

As noted above, the DOJ recovered significant amounts of dollars for state Medicaid programs. Mallinckrodt ARD LLC, a pharmaceutical company paid $234.7 million to resolve the FCA allegations that it underpaid Medicaid drug rebates for the drug Acthar. The DOJ says that Mallinckrodt improperly treated Acthar as “new” when it has been around for decades. Additionally, Mallinckrodt paid $26.3 million to resolve the kickback allegations they “knowingly used a foundation as a conduit to pay illegal kickbacks in the form of copay subsidies so that it could market Acthar as ‘free’ to doctors and patients while increasing its price significantly.”

Three providers and a California health plan paid a total of $70.7 million to resolve FCA claims they had submitted false claims to California’s Medicaid program “related to Medicaid Adult Expansion under the Patient Protection and Affordable Care Act (ACA).” The claims submitted “were not for ‘allowed medical expenses’ under the health plan’s contract with the state, were pre-determined amounts that did not reflect fair market value, were duplicative of services already required to be rendered, and were unlawful gifts of public funds in violation of the state constitution."

Unnecessary Medical Services and Substandard Care

The DOJ filed an FCA claim against a management company and three affiliated nursing homes for providing “grossly substandard services that failed to meet required standards of care in various ways, including by failing to follow appropriate infection control protocols and not maintaining adequate staffing levels.”

Multiple providers faced enforcement actions for submitting claims for unnecessary medical services. Providence Health and Services Washington, a health care and hospital system, paid $22.7 million to resolve allegations that it billed for medically unnecessary neurosurgeries. Additionally, the provider entered into a corporate integrity agreement, which required the provider to “implement and maintain a number of quality-of-care and patient safety obligations” and “retain outside experts to perform annual claims and clinical quality systems reviews.”

Eargo, Inc. a DME dispenser for hearing aids paid $34.37 million to resolve FCA allegations that it submitted unsupported hearing loss-related diagnosis codes for reimbursement of its devices.

To resolve FCA allegations, a hospice provider paid $5.5 million for allegedly submitting false claims to Medicare for patients not terminally ill.

MD Labs, Inc., and Radeas, LLC, both labs, agreed to pay up to $16 million and 11.6 million, respectively, to resolve allegations of medically unnecessary claims for urine drug tests.

Individual providers are not immune from action under the FCA. An individual physician paid $9.5 million to resolve his involvement in submitted false claims to federal and state health care programs for procedures and tests never performed, including injections of medications.

Unlawful Kickbacks

Kickbacks continue to remain a concern for the DOJ and for healthcare, generally. The DOJ filed complaints in qui tam cases against providers, CEOs, and other individuals for alleged FCA violations for patient referrals and medically unnecessary testing.

Biogen, Inc., a pharmaceutical company, paid $843.8 million due to allegations under a relator case that the company “offered and paid kickbacks – including in the form of speaker honoraria, speaker training fees, consulting fees, and meals – to physicians who spoke at or attended Biogen programs in connection with Biogen’s multiple sclerosis drugs.”

A DME manufacturer paid $24.75 million for allegations it provided kickbacks to DME suppliers to select their respiratory equipment through giving the suppliers free physician prescribing data to assist in their marketing efforts.

COVID-19 Related Fraud

The DOJ resolved 35 FCA cases for improper loans under the Paycheck Protection Program (PPP), recovering over $6.8 million.

Additionally, a Florida nursing home and assisted living facility, MorseLife Health System, Inc., paid “$1.75 million to resolve its potential liability under the False Claims Act for facilitating COVID-19 vaccinations for hundreds of individuals ineligible to participate in the CDC’s Pharmacy Partnership for Long-Term Care Program (LTC PPP), a program specifically designed to vaccinate long-term care facility residents and staff when doses of COVID-19 vaccine were in limited supply at the beginning of the CDC COVID-19 Vaccination Program.” Rather, the facility allegedly provided vaccination to ineligible individuals, including the facility’s board members and individuals it targeted for donations to its private foundation. Out of the 976 individuals vaccinated, over half were ineligible to participate in the LTC PPP program.

Conclusion: Compliance Programs Provide Necessary Oversight

In keeping with the years past, the DOJ’s rigorous actions in FY 2022 indicate their continued attention toward FCA claims.

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. Under the CIA, the entity, as part of the civil settlement, agrees to obligations in exchange for not being excluded from federal health care programs.

These CIAs, along with the annual releases from the DOJ and Advisory Opinions, are great resources to guide health care entities in determining if their engagements are in alignment with fraud and abuse initiatives.

In FY 2022, there were over 20 Advisory Opinions published with topics ranging from providing gift cards to Medicare Advantage enrollees to zero interest financing with DME manufacturers.Again, overall, these resources 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 strong compliance program.

A strong, enforced, and properly tailored compliance program provides the necessary oversight for entities in the health care industry to be proactive toward compliance risks that could land a FCA claim. Compliance programs should aim to educate, audit, and combat against fraud and abuse within the industry and focus on risk areas especially relevant to the given health care service of the client.

Clients should annually review their compliance program and make it a priority for the organization. Annual reviews are essential to ensure the compliance program are meeting the organization’s needs and are changing with the organization. Annual reviews should show the compliance program is providing tools to effectively prevent, detect, and correct compliance concerns, and educating organizational 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. 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. Attorneys and business leaders should work together to establish, compliance programs that clients can actually implement successfully.

Not only should compliance plans be periodically updated to reflect areas of concern based on enforcement activities like those described in this blog post, they must also be tailored to the client’s needs and capabilities. This way, clients can properly utilize compliance plans to catch potential problems early and avoid becoming part of next year’s statistics.

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.