Four Fraud and Abuse Enforcement Trends That Labs Should Be Aware Of

The Department of Justice’s shift to prosecute more individuals responsible for corporate wrongdoing, as evidenced by the Yates Memo (see G2 Compliance Advisor December 2015) is not the only change in the way the government is fighting fraud and abuse by labs and other providers. The government has additional new tools and strategies in its arsenal that it has begun to use, according to inside experts.

“Enforcement is increasing. Efforts in health care fraud and abuse are picking up,” reported attorney John Kelly, with Bass Berry & Sims in Washington, DC, speaking at the American Bar Association’s Health Law Section’s Annual Washington Health Law Summit in Washington, DC in December. Here are four enforcement trends and changes that labs should know about:

1. The increase in whistleblower lawsuits–& how they’ve evolved
There’s been a “dramatic” increase in the number of qui tam lawsuits brought by whistleblowers claiming that providers have violated the False Claims Act (FCA) in the past few years. For example, the Department of Justice (DOJ) announced in December 2015 that it had recovered over $3.5 billion in fiscal year (FY) 2015 in FCA enforcement efforts, the fourth consecutive year that DOJ recovered more than $3.5 billion under the FCA, according to Gejaa Gobena, Deputy Chief, Health Care Fraud, Fraud Section, Criminal Division for the DOJ, also speaking at the conference.

The majority of that amount, $1.9 billion, was recovered from health care entities, and most were due to whistleblowers, who receive up to 30 percent of the recovery. Whistleblowers filed 638 new FCA lawsuits in FY 2015 alone, and the DOJ recovered $2.8 billion from these and earlier suits. The whistleblowers’ awards totaled $597 million. That’s quite an incentive for employees, contractors and others to file them.

But what’s changing is more than the sheer volume of FCA lawsuits being filed. It’s that more individual whistleblowers are proceeding on their own with their lawsuits even when the DOJ chooses not to join in—or intervene— and take over the costs and handling of the lawsuit, warns Edward Crooke, DOJ, Senior Counsel for Healthcare Fraud (Civil Division), also speaking at the conference. The DOJ only intervenes in 15-20 percent of FCA lawsuits filed, and in the past most whistleblowers who didn’t get DOJ assistance would not proceed with the litigation. That is no longer the case—and some of these whistleblowers have been “quite successful,” said Crooke. (For more information on how to reduce the risk that a whistleblower will turn on your lab, see G2 Compliance Advisor, May 2015).

2. The use of data mining
The government has become much more adept at using data analytics to ferret out fraud and abuse, said Gobena. The DOJ is using claims data on a macro level to identify overall trends, unusual information that may need additional scrutiny, and outliers in different regions of the country, since fraud schemes vary in different cities, he explained.

The DOJ is also using the data on a micro level to bore down into a provider’s claims and see what doesn’t make sense. “We peel back the layers of the onion to go down to the individual provider and see what sticks out,” he said. The DOJ also now has more real time access to the data and its own in-house staff to conduct the analyses, he added.

3. Coordinated government enforcement
The different enforcement agencies have stepped up their collaboration on provider investigations, filling in gaps for each other. “There are a lot of advantages [for us] in efficient collection of evidence and coordinating interviews with witnesses,” says Gobena.

While this has been the DOJ’s mission for years, it ramped up considerably in September 2014 with the announcement that all new whistleblower FCA investigations, which are civil in nature, will be shared with the DOJ’s criminal division to see if a parallel criminal investigation should also be opened. Previously this was optional.

And now, when the DOJ settles with a payor of a kickback, such as a lab or pharmaceutical company, the Department of Health and Human Services’ Office of Inspector General, which handles administrative sanctions against providers, will initiate enforcement actions against the physician recipients of the kickback, said Lisa Re, Branch Chief, HHS Administrative and Civil Remedies Branch Office, Counsel to the Inspector General, also speaking at the conference.

“It levels the playing field. Everyone has to be compliant. The doctor can’t just shop around to find someone [else] to pay [a kickback],” she said.

4. The emphasis on defendants’ cooperation
The DOJ is also looking for more cooperation from the health care organization being investigated. This cooperation, the focus of the Yates Memo, aims, among other things, to have the corporation proffer the identities of the individual(s) who caused or allowed the corporate wrongdoing. Entities that cooperate more may receive lighter penalties; the Yates Memo clarifies how much cooperation is expected.

“The degree of cooperation is important. It’s not just responding to what’s being asked [by investigators] but also volunteering factual information,” said Gobena.

Takeaway: Labs have historically been in the government’s crosshairs; and the risks are only getting greater. Labs should revisit their compliance programs and ensure that they have mechanisms in place to comply with the anti-kickback, Stark and other laws.