Enforcement Trends: After 2017 Decline, False Claims Act Healthcare Recoveries Bounce Back

Although the False Claims Act (FCA) remains a federal enforcement cash cow, the growth rate has fallen off in recent years, at least in the healthcare sector. But that short-term trend could be in reversal. Thus, after last year’s surprising decline, FCA recoveries against healthcare providers rebounded in 2018 to reach $2.513 billion, which exceeded not only the $2.184 billion total recoveries in 2017 but also the 10-year average of $2.3 billion. Of course, what never changes is the industry’s perennial position as the leading source of FCA recoveries.

2018 By the Number
Here are the key numbers from the year in 2018 FCA recoveries, as reported by the DOJ at year’s end:

• $2.8 billion: Total FCA recoveries in FY 2018;
• $2.5 billion: Total recoveries against healthcare providers in FY 2018 (not including state Medicaid);
• $37.8 billion: Total FCA recoveries between 2009-2018;
• $3.7 billion: Average annual FCA recoveries for three-year period 2016-2018;
• $22.7 billion: Total FCA recoveries from healthcare providers between 2009-2018;
• $2.3 billion: Average annual FCA recoveries from healthcare providers between 2009-2018;
• 645: Total qui tam (whistleblower) lawsuits filed in FY 2018, an average of 12.4 cases per week;
• $2.1 billion: Total recoveries in qui tam lawsuits in FY 2018;
• $301 million: Total recoveries paid to whistleblowers in FY 2018.

Top 5 FCA Healthcare Recoveries
Labs and lab services did not figure directly in any of the five largest civil recoveries in the healthcare industry during the year, which included cases against:

1. AmerisourceBergen Corporation and its subsidiaries: $625 million to resolve allegations of seeking to circumvent important safeguards intended to preserve the integrity of the nation’s drug supply and profit from the repackaging of certain drugs supplied to cancer-stricken patients;

2. HealthCare Partners Holdings LLC (HCP), dba DaVita Medical Holdings LLC: $270 million to settle charges of providing inaccurate information that caused Medicare Advantage Organizations (MAOs) to receive inflated Medicare payments;

3. Health Management Associations (HMA): $216 million to resolve allegations of: i. Billing government healthcare programs for more costly inpatient services that should have been billed as observation or out-patient services; ii. Paying illegal remuneration to physicians for patient referrals to HMA hospitals; and iii. Inflating claims for emergency department facility fees;

4. United Therapeutics Corporation: $210 million to settle allegations of using a foundation as an illegal conduit to pay the co-pay obligations of thousands of Medicare patients taking its PAH drug; and

5. William Beaumont Hospital: $84.5 million to resolve allegations of improper relationships with eight referring physicians intended to induce patient referrals.

Lab Enforcement Trends
Continuing recent trends, the DOJ targeted individuals and not just faceless entities. Of the individuals the DOJ cited as being held personally liable for alleged false claims in 2018, several involved lab testing, including:

• Three individuals who entered into a $114 million settlement for their role in the notorious kickback scheme involving blood testing labs Health Diagnostic Laboratory (HDL) and Singulex Inc. in which physicians were paid bribes disguised as “handling fees” of between $10 and $17 for each patient they referred; and
• Dr. Michael Frey, a pain management specialist and one of two principal owners of Advanced Pain Management Specialists P.A. in Fort Myers, Florida, who agreed to pay $2.8 million to resolve allegations that he violated the FCA by receiving illegal kickbacks and ordering medically unnecessary lab tests.

FCA Recoveries in Qui Tam Cases against Healthcare Providers Since 2009
(in billions of dollars)

Source: U.S. Department of Justice

Takeaway: The DOJ’s reporting of FY 2018 fraud recoveries show that large scale and individual enforcement efforts continue—and that lab testing remains a major target for enforcement agencies.