Fraud involving Covid-related funds, electronic health records, opioid prescriptions and kickbacks, and cybersecurity contracts are among the top False Claims Act enforcement priorities for the US Department of Justice this year.
Acting Assistant Attorney General Brian M. Boynton highlighted DOJ’s top False Claims Act enforcement priorities in a speech at the Federal Bar Association Qui Tam Conference last month and affirmed the crucial role whistleblowers play in alerting the government to all forms of fraud.
“. . . Qui tams will continue to be an essential source of new leads, and the department will continue to rely on whistleblowers to help root out the misuse and abuse of taxpayer funds,” Boynton said.
Qui tam cases initiated by whistleblowers were responsible for securing over 70% of the $2.2 billion the government recovered in FY 2020 under the False Claims Act.
Covid-19-related fraud
The CARES Act (Coronavirus Aid, Relief and Economic Security Act) poured vast sums of federal money into pandemic relief. This includes forgivable loans through the Paycheck Protection Program and financial assistance through the Provider Relief Fund. With so much government money suddenly available, the programs have become targets of fraud.
“The circumstances of the current pandemic may be novel, but the inevitable fraud schemes it will produce will in many cases resemble misconduct that the False Claims Act has long been used to address,” Boynton said.
Fraud schemes involving pandemic funds include false representations regarding eligibility, misuse of program funds and false certifications pertaining to loan forgiveness.
Electronic health records fraud and kickbacks
Fraud enforcement against electronic health record (EHR) vendors and developers has picked up steam in the past few years, with six settlements by EHR companies since 2017.
In January of this year, Athenahealthcare Inc. agreed to pay $18.25 million to settle alleged kickback charges and False Claims Act violations. The government settled a kickback case against Practice Fusion for $145 million in 2020 and settled a case against Greenway Health for $57.25 million in 2019.
Phillips & Cohen brought the first-ever whistleblower case under the False Claims Act against a EHR vendor. The company, eClinicalWorks, paid the government $155 million in 2017 to settle the case, which alleged both kickbacks and critical flaws in its EHR software.
Fraud in telehealth services
Telehealth fraud has increased during the coronavirus pandemic as more healthcare providers are offering telehealth services.
The federal government has stopped many fraudulent telehealth schemes. Last September, the government announced a nationwide enforcement effort that netted 86 criminal defendants who allegedly had submitted false and fraudulent Medicare claims involving telemedicine that totaled $4.5 billion.
In February, a Florida business owner pleaded guilty to criminal charges and agreed to a settlement of $20.3 million to resolve criminal and civil charges involving payment for telehealth visits that didn’t occur.
The business owner and her company established dozens of medical equipment supply companies in the names of straw owners and the companies, then submitted fraudulent medical equipment claims to Medicare and the Veterans Administration that they said were based on telemedicine visits. DOJ alleged that doctors were paid kickbacks to approve the claims and that there were no telehealth visits.
In a separate telehealth scheme, some telemedicine companies allegedly duped Medicare beneficiaries into signing up for unnecessary or nonexistent genetic tests to screen for cancer, which were very expensive.
Fraud and kickbacks involving opioid prescriptions
The US had over 81,000 drug overdose deaths in a twelve-month period ending May 2020 – the highest number of fatal overdoses ever recorded in a single year. During the pandemic, the opioid crisis has continued – and likely worsened.
“Criminal and civil enforcement actions against the parties responsible for triggering and fueling the opioid epidemic are a critical part of efforts to address this crisis,” Boynton said.
Whistleblowers have played an important role in exposing fraudulent practices by pharmaceutical companies that undermine and endanger patient health.
Employees of opioid manufacturers have blown the whistle on illegal off-label marketing, kickbacks, fraudulent physician speaker programs and other schemes that have pushed inappropriate opioid prescribing.
With the help of whistleblowers, DOJ has used the False Claims Act and criminal remedies in major cases against pharma companies for their schemes to increase sales of their opioid products.
For example, a former sales representative of Insys Therapeutics, who is a Phillips & Cohen client, was one of several whistleblowers who exposed the company’s illegal efforts to encourage physicians to over-prescribe the powerful fentanyl-based spray Subsys using such tactics as sham speaker programs and cash bribes.
In 2019, Insys agreed to a $225 million settlement of civil and criminal charges, and filed for bankruptcy shortly thereafter. Former Insys CEO and founder John Kapoor and other company executives were convicted of criminal charges and sentenced to prison for their roles in the illegal schemes.
Cybersecurity fraud under the False Claims Act
When the government pays for systems or services that purport to comply with required cybersecurity standards but fail to do so, those contractors may be liable for fraud under the False Claims Act.
“With the growing threat of cyberattacks, federal agencies are relying heavily on robust cybersecurity protections to safeguard our vital governmental data and information,” Boynton said.
In 2019, DOJ settled one of the first qui tam cases involving cybersecurity issues. A Phillips & Cohen whistleblower client alleged that Cisco Systems knowingly sold video surveillance systems used by federal and state agencies that could have been easily hacked because of critical software flaws. Cisco paid $8.6 million to resolve the case.
How whistleblowers can stop fraud
Whistleblowers aware of fraud against the government can file lawsuits – called “qui tam” lawsuits – on behalf of the government to recover funds that otherwise would be lost.
After qui tam lawsuits are filed, the government investigates the allegations and may choose to join the whistleblower’s case and take primary responsibility for prosecuting the case. If the government chooses not to join the qui tam lawsuit, the whistleblower may pursue the case in the government’s name.
If a qui tam lawsuit is successful, the whistleblower can be awarded 15% to 30% of the amount recovered as a result of their case.
The False Claims Act also protects whistleblowers from employment retaliation. Those who suffer demotion, job termination and other forms of retaliation for efforts to stop violations of the False Claims Act may sue and collect compensation for the harm they suffered and attorneys’ fees.
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