Department of Justice Charges 345 Defendants in Largest Ever National Health Care Fraud Takedown

Yesterday, the Department of Justice (DOJ) announced criminal charges against 345 defendants across 51 different judicial districts in health care fraud schemes involving more than $6 billion in alleged losses to federal health care programs.

The alleged frauds are varied with $4.5 billion connected to telemedicine, more than $845 million tied to substance abuse treatment facilities, and more than $806 million related to a variety of other health care fraud and illegal opioid distribution schemes. While there are COVID-19 related schemes among the cases charged, the vast majority relate to conduct pre-dating the COVID-19 pandemic.

The largest portion of alleged fraud relates to telemedicine—the use of telecommunications technology to provide health care services remotely. The charges allege that medical practitioners ordered unnecessary durable medical equipment, genetic and other diagnostic testing, and medications for patients that they had never met, or only interacted with briefly by telephone. The medical practitioners allegedly wrote the prescriptions and orders in exchange for payment by telemedicine executives. The pharmacy, lab, or medical equipment company would then bill Medicare or Medicaid for the equipment, test, or medication, which was either medically unnecessary for the patient or not even provided. With the increasing prevalence of telehealth during, and likely after, the COVID-19 pandemic, it is safe to assume that more telemedicine cases are in the pipeline for DOJ. A diagram of this alleged telemedicine fraud is available here:

Cases involving substance abuse treatment facilities, known as “Sober Homes,” were also prevalent in this week’s takedown. Physicians, owners, operators, and patient recruiters (known as “body brokers”) were charged with alleged fraud ranging from illegal kickbacks and bribes for patient referrals to medically unnecessary testing and nonexistent therapy sessions. Finally, cases were also charged for the illegal prescription and distribution of opioids, as well as more traditional health care fraud schemes.

Takeaways
First, this week’s charges reflect an increasing use by the DOJ of the Eliminating Kickbacks in Recovery Act of 2018 (EKRA). ERKA bears similarities to the Anti-Kickback Statute (AKS), however it extends beyond federal health care fraud and covers private payor fraud by recovery homes, clinical treatment facilities, and laboratories. A number of the cases announced on Wednesday involve allegations of AKS and EKRA violations.

Second, the takedown reflects continued coordination of the criminal and civil components of DOJ, with the concurrent announcement of more than 20 civil health care fraud settlements, resolutions, or actions. Health care fraud often involves parallel investigations by criminal and civil prosecutors at DOJ, as potential exposure exists under both criminal and civil statutes.

Third, with the influx of trillions of dollars of federal funding to address the COVID-19 pandemic, it is reasonable to anticipate an increase in criminal and civil health care fraud charges in the coming months and years. Yesterday’s announcement serves as a good reminder to those receiving federal funds through COVID-19 relief that compliance efforts are of the upmost importance, especially in the complex arena of health care laws and regulations.

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Potomac Law Group’s White Collar Defense and Investigations practice represents businesses and individuals in civil and criminal enforcement actions by the DOJ and other government agencies. To learn more about the issues raised by this client bulletin, please contact Derek Adams at dadams@potomaclaw.com.

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