Health Care Enforcement & Investigations

The government continued to dedicate enormous resources to investigating and prosecuting fraud against COVID-19 pandemic relief programs in 2023. In addition to civil False Claims Act settlements, there were a number of criminal enforcement matters, including some involving politicians, government employees, and those with connections to gangs and transnational crime networks.

Several case dispositions from this past year, both criminal and civil, reaffirm DOJ’s policy of ensuring individual accountability in resolving allegations of wrongdoing and underscore the importance of considering that issue in the resolution of any FCA case.

Health care companies using algorithms and AI applications face increased compliance risks. Previous technology-related enforcement suggests how relators and enforcement agencies might use AI to detect potential fraud and develop allegations based on how the technology is being used.

In 2023, the Supreme Court and the US Courts of Appeals published a number of significant decisions involving FCA issues with implications for health care and life science entities, including a deepening circuit split on the causation standard applicable to FCA cases based on theories under the Anti-Kickback Statute.

After growing significantly over the last decade, private equity health care deal activity nevertheless remained robust last year, with an estimated deal volume of about $29 billion in North America.

This July, we detailed the Supreme Court’s surprising revival in United States ex rel. Polansky v. Exec. Health Resources, No. 21-1052 (S. Ct. June. 16, 2023), of the question of whether the qui tam provisions of the False Claims Act (“FCA”), see 31 U.S.C. § 3730(b)(1), violate the Executive Branch’s exclusive grant of authority under Article II of the United States Constitution. In Polansky, a lengthy dissent by Justice Thomas questioned whether the False Claims Act qui tam provisions violated the Appointments Clause and Take Care Clause of Article II of the United States Constitution, arguments that had been endorsed by the Department of Justice (“DOJ”) in the 1989, though ultimately repudiated by DOJ just seven years later. A concurrence by Justice Kavanagh, joined by Justice Barrett, stated that “the Court should consider the competing arguments on the Article II issue in an appropriate case.” Shortly after Polansky was decided, a defendant in a declined qui tam case pending in the United States District Court for the Northern District of Alabama accepted Justice Kavanagh’s invitation, and moved to dismiss on Article II grounds. In a decision entered in November, the District Court rejected that challenge.

In coordination with the Centers for Medicare & Medicaid Services (CMS), the Department of Health and Human Services (HHS) and Office of the National Coordinator for Health Information Technology (ONC) proposed a much-anticipated framework to establish and manage “appropriate disincentives” for health care providers under the Information Blocking Rules. As described in more detail in the blog post, the proposed rule (Appropriate Disincentives Proposed Rule) includes proposed disincentives for (i) hospitals and critical access hospitals (CAHs) participating in the Medicare Promoting Interoperability Program; health care providers eligible for Merit-Based Incentive Payment System (MIPS) adjustments; and health care providers participating in the Medicare Shared Savings Program (MSSP).

A recent Massachusetts Federal District Court decision adds to divergent opinions deciding an important health care enforcement question: what causation standard applies to a False Claims Act (FCA) case based on a violation of the Anti-Kickback Statute (AKS)? The AKS states that a claim that includes items or services “resulting from” a violation of the AKS constitutes a “false or fraudulent claim” under the FCA. 42 U.S.C. § 1320a-7b(g). On September 27, 2023, Chief Judge Saylor of the District of Massachusetts issued a decision in United States v. Regeneron Pharmaceuticals, Inc., C.A No. 20-11217-FDS, which adopted a “but-for” standard of causation applicable to the AKS’s “resulting from” language.

On August 15, 2023, the Office of Inspector General for the Department of Health and Human Services (OIG) issued a negative Advisory Opinion regarding a turnkey physician-owned entity (Newco) operated by an existing provider of intraoperative neuromonitoring (IONM) services. In reaching its determination, the OIG stated that Newco and its arrangements with the IONM Company would present a significant risk under the federal Anti-Kickback Statute (AKS) primarily because it exhibits many indicia of a suspect contractual joint venture.

A little over a year after the Dobbs v. Jackson Women’s Health Organization decision, the Food and Drug Administration (FDA) continues to be at the forefront of addressing reproductive health concerns. An example of this activity came just a few days after the FDA approved the first nonprescription daily oral contraceptive for marketing in the U.S. when the agency sent a warning letter to Wise Women’s Choice (WISE) in connection with the marketing and sale of its “birth control cream.” Among other things, this warning letter highlights for consumers the importance of confirming that birth control methods are safe, effective, and FDA-approved for their intended uses.

Do the qui tam provisions of the False Claims Act (FCA), see 31 U.S.C. § 3730(b)(1), violate the Executive Branch’s exclusive grant of authority under Article II of the United States Constitution? This long-dormant question has been revived in a surprising context. In its recent decision in United States ex rel. Polansky v. Exec. Health Resources, No. 21-1052 (S. Ct. June. 16, 2023), the Supreme Court affirmed the government’s authority to intervene to dismiss a whistleblower action, even after initially declining to intervene in the case. Knowledgeable FCA practitioners expected this result. Less expected was Justice Thomas’s dissent, which argued that the case should have been remanded to allow the parties to brief and argue whether Article II forbids allowing private citizens to maintain FCA claims on behalf of the government. A concurrence by Justice Kavanagh (joined by Justice Barrett), while rejecting Justice Thomas’s call for a remand, nonetheless stated that “the Court should consider the competing arguments on the Article II issue in an appropriate case.” With three justices expressing interest in this question—and only four justices being required to grant certiorari—health care enforcement defense attorneys should now consider whether to raise the constitutionality of the FCA’s qui tam provisions when relators move forward to litigate cases that the government declines to pursue.

Though there has been much speculation and commentary among industry stakeholders, the Office of Inspector General (OIG) and the Office of the National Coordinator for Health Information Technology (ONC) have not yet begun enforcing statutory penalties associated with violations of the Information Blocking Rules. On July 3, 2023, OIG and Department of Health and Human Services (HHS) took a significant step toward enforcement of these penalties when they published long-awaited civil monetary penalty (CMP) final rule (CMP Final Rule) for certain Information Blocking Actors in the Federal Register.

In a resounding unanimous 9-0 decision, the Supreme Court rejected the argument that a defendant’s subjective belief is irrelevant under the False Claims Act (FCA) when evaluating whether a defendant “knowingly” submitted a false claim to the government for payment. On June 1, 2023, the Court issued its highly anticipated opinion in the consolidated cases U.S. ex rel. Schutte v. SuperValu, Inc. and U.S. ex rel. Proctor v. Safeway, Inc. (SuperValu) and addressed the question of whether a defendant is liable under the FCA if its conduct is consistent with an “objectively reasonable” interpretation of ambiguous statutory or regulatory language. Justice Thomas, writing for the Court, held that an “objectively reasonable” interpretation does not provide a complete legal defense to liability under the FCA. Rather, a defendant meets the FCA’s intent (scienter) requirement if the defendant’s subjective beliefs indicate it had knowledge that its submission of claims was “false or fraudulent,” regardless of whether the defendant’s conduct could be supported by a later “objectively reasonable” interpretation of the ambiguous legal or regulatory issue. Further, the Court articulated new standards for what might constitute “deliberate ignorance” or “reckless disregard” under the “knowledge” prong of the FCA.

In this episode, Health Care Enforcement Defense specialists Eoin Beirne, Karen Lovitch, and Brian Dunphy discuss key regulatory and policy updates issued by the DOJ and their potential impact on False Claims Act cases, from self-disclosure to privacy regulations.

Bridgette Keller speaks with Karen Lovitch, Brian Dunphy, and Eoin Beirne about the Mintz Health Care Enforcement Defense Practice’s recent edition of the EnforceMintz newsletter, Analyzing Health Care False Claims Act Cases, and key health care enforcement trends.

Mintz's Health Care Enforcement group analyzes trends in False Claims Act (FCA) investigations and lawsuits using data compiled its Qui Tam Database, the Department of Justice's (DOJ) annual report of FCA statistics, and the DOJ’s discussion of FCA enforcement trends.

Based upon the increase in both financial and staffing resources, we expect to see an increase in COVID-19 related fraud prosecutions in 2023 as DOJ tries to recover additional funds and resolve cases in order to meet its stated Priority Goals. We anticipate that these cases will be a mixture of larger or more complex cases and cases that will bring heightened media scrutiny such as the recent charges brought in the Northern District of Florida against a controversial Florida state representative stemming from his applications for $150,000 in pandemic relief.

Medicare Advantage (Medicare Part C) remained a top enforcement priority in 2022, and Medicare Advantage Organizations (MAOs) are the subject of intense scrutiny by the Department of Justice (DOJ); the Office of Inspector General for the Department of Health and Human Services (HHS OIG); and the press. MAOs undoubtedly will continue to face considerable enforcement in 2023 and beyond, particularly as Medicare Advantage continues to grow in both number of enrollees and in federal spending. As of January 31, 2023, more than 30 million people are enrolled in MAOs—nearly half of all Medicare enrollees.