Recent False Claims Act Cases Shed Light Upon Compliance Scrutiny

As touted by the U.S. Department of Justice (DOJ) and Members of Congress alike, including Senator Chuck Grassley (R-IA), the False Claims Act, 31 U.S.C. §§ 3729, et seq. (FCA) is the federal government’s primary tool to root out fraud and put money back into the federal fisc. The statistics are not out yet for fiscal year ending Sept. 30, 2022; however, for FY 2021, the DOJ obtained more than $5.6 billion in settlements and judgments from civil cases (excluding Medicaid). As then Acting Assistant Attorney General Boynton indicated in a Feb. 1, 2021 press release, “The False Claims Act is one of the most important tools available to the department both to deter and to hold accountable those who seek to misuse public funds.”

Deterrence is a critical aspect of the law. The most effective way to rightfully evade liability is for a person to cultivate a culture of compliance. The first step for healthcare industry participants is to implement comprehensive fraud, waste, and abuse training, hire outside auditors to conduct statistically significant coding/billing audits, and create comprehensive policies and procedures that address the Stark Law, the Anti-Kickback Statute (AKS), and the FCA. A good place to start, whether as a newcomer to compliance or as a seasoned participant, is to consider recent FCA cases/ settlements and HHS-OIG enforcement actions. These two resources provide a roadmap for areas to emphasize to potentially avoid liability or mitigate liability, per the United States Department of Justice Manual, if a government investigation ensues.

Recent Highlights

While there are cases pending in front of the United States Supreme Court, some of which have not been granted certiorari—a request that the Supreme Court review the record of a lower court for review and opinion.

Most cases are resolved without the need to access higher courts. Here are three recent actions to consider:

• January 4, 2023 – $745,000 False Claims Act settlement with medical device distributor Jet Medical, Inc. and related companies, to resolve civil and criminal allegations. While the complaint alleged that for a period of five (5) years, misbranded medical devices were introduced into interstate commerce, which have the potential to harm patients because there was no FDA approval and no acceptable investigational study conducted regarding the safety and efficacy of the device, there are other components that providers other than medical device companies and distributors should consider. First, don’t solely rely on a sales representative’s word. Conduct independent research to ascertain whether or not investigational studies were performed and the indications. Second, consider the impact on patient safety. Lastly, put these items into internal policies and procedures.

• December 29, 2022 – DOJ filed a complaint alleging that one of the United States’ largest pharmaceutical distributors violated the Controlled Substances Act (CSA) and contributed to the opioid epidemic and related deaths. The emphasis of the complaint is that like other companies, Amerisource Bergen placed profits from opioids over patient safety. According to the DOJ press release, “Pharmaceutical distributors that sell controlled substances, including AmerisourceBergen, have a longstanding legal obligation to monitor the orders that they receive from pharmacies and other customers and must inform the DEA each and every time they receive a suspicious order.” From a compliance standpoint, physicians and other providers, as well as facilities should ensure that their record keeping is accurate, that adequate training is required, and that there are policies and procedures in place for dispensing, disposal, cybersecurity, claims/prescription submissions, accounting, and reporting.

• December 15, 2022 - $3 million settlement to resolve allegations that a privately held company and its subsidiary violated the AKS, which led to the submission of false claims. In essence, the DOJ alleged that Ocenture “participated in a genetic testing fraud scheme with other marketers and clinical laboratories. As part of the alleged scheme, Ocenture solicited genetic testing samples from Medicare beneficiaries directly and through other marketers.” In turn, physicians were paid to falsely attest to medical necessity for genetic testing. In some ways, the defendants were fortunate—other laws could have also been utilized, which are specific to labs, in addition to the AKS and FCA. The best prophylactic measures include training, ensuring that AKS safe harbors are met, and appreciating that the exclusion from participating in government programs is a possibility.

Conclusion

The FCA will continue to be a driving force in recovering funds for taxpayers, as well as holding those accountable who commit (or allegedly) fraud. Appreciating the laws and safe harbors is the first step. Training, adequate policies and procedures, and reporting are other mitigation factors. Finally, compliance teams and defense counsel should consider mitigating factors available in the Justice Manual. In sum, in the words of Henry Wadsworth Longfellow, “It takes less time to do things right than to explain why you did it wrong.”

Rachel V. Rose, JD, MBA, is an Attorney at Law, in Houston, TX. Rachel advises clients on healthcare, cybersecurity, securities law, and qui tam matters. She also teaches bioethics at Baylor College of Medicine. She has been consecutively named by Houstonia Magazine as a Top Lawyer (Healthcare) and to the National Women Trial Lawyer’s Top 25. She can be reached at rvrose@rvrose.com. www.rvrose.com