In 2021, health care fraud enforcement authorities directed attention to priorities of recent years while increasing their focus on emerging areas. Perhaps necessarily, enforcement efforts targeted some of the dominant challenges of the day: the COVID-19 pandemic and the worsening opioid epidemic. As we predicted in our Health Care Enforcement 2020 Year in Review & 2021 Outlook1 (2021 Outlook), the government aggressively pursued many forms of alleged fraud involving COVID-19, which included misuse of COVID-19 relief funds, the promotion and sale of unproven COVID-19 treatments, improper billing for COVID-19 testing, and the peddling of fake vaccination cards. As we also expected, several government enforcement agencies, including the Department of Justice (DOJ) through its Criminal and Civil Divisions and the Federal Trade Commission (FTC), are coordinating to bring COVID-19 related enforcement actions. Opioids also remained a top enforcement priority at the federal level, and a number of closely watched lawsuits against opioid manufacturers are being litigated in states around the country.
We also saw health care enforcement shift to address the increasing importance of technology in health care. As the use of telehealth grew exponentially during the COVID-19 pandemic (and its broad use is expected to continue), the risk of abuse increased as well. DOJ historically has prioritized enforcement against outright telefraud, but we have begun to see enforcement evolve toward investigations and False Claims Act (FCA) cases involving billing for sham telehealth consults. DOJ also geared up in 2021 to target cybersecurity by launching a cyberfraud initiative. Among other things, DOJ widely publicized its intention to use the FCA as a tool to address government contractors’ misrepresentations about compliance with cybersecurity requirements. Further, enforcement actions involving electronic health records (EHR) vendors have been ongoing for several years, and we saw additional settlements announced in 2021 that included kickback allegations related to their sales and marketing practices.
The FCA continues to be one of the government’s most potent enforcement tools. Despite the pandemic’s impact on courts and all types of organizations, FCA cases involving traditional health care providers, such as laboratories, hospices, skilled nursing facilities, and hospitals, as well as Medicare Advantage Organizations (MAOs), remained at the forefront in 2021.
A few additional enforcement trends were notable in 2021. Given the upward trend in private equity investment in health care, enforcement against health care sector investors remains an enforcement priority. DOJ has also shined a spotlight on clinical trial fraud as an area of concern for some time, and it delivered on its warnings in 2021. Finally, the government began to utilize newer laws intended to target health care fraud, such as Eliminating Kickbacks in Recovery Act (EKRA) and the COVID-19 Consumer Protection Act.
Mintz’s Health Care Enforcement Defense team2 has reviewed criminal enforcement activities, key civil cases and settlements, policy issues, statistics, and court decisions from 2021, and in this report we reflect on those developments and also predict the trends in health care enforcement in 2022 and beyond.
FCA case activity for 2021 reveals seemingly contrary trends. For the federal fiscal year (FY) that ended September 30, 2021, the DOJ annual report on FCA enforcement activity3 (FCA FY 2021 Report) touts record recoveries in FCA cases. At the same time, both DOJ-reported statistics and the health care–related qui tam litigation activity tracked in our internal Health Care Qui Tam Database (the Mintz Database) show a decline in the number of cases being brought.4/ When we look more closely at data from the Mintz Database for cases unsealed in 2021, we see some subtle changes in rates of government intervention and in the types of defendants, but consistency in who is bringing the cases. Taken together, these trends show that FCA litigation continues to have a substantial impact on the health care industry, even as the total number of new cases has declined.
DOJ Reports Record FCA Recoveries in 2021 (but with a Possible Asterisk)
According to the FCA FY 2021 Report, FCA recoveries in FY 2021 totaled $5.6 billion. Of that amount, a staggering $5 billion relates to the health care sector, particularly opioid manufacturers, as well as drug and medical device manufacturers, managed care providers, hospitals, pharmacies, hospice organizations, laboratories, and physicians. This amount compares to a previous record for recoveries in health care cases of $3.1 billion in FY 2012 and represents an almost threefold increase from the $1.8 billion in health care–related recoveries in FY 2020.
Now here is the asterisk to denote that this record might not actually be a record.5/ DOJ’s $5 billion tally for its FY 2021 health care haul appears to include DOJ’s agreement with Purdue Pharma in connection with Purdue Pharma’s global bankruptcy court opioid litigation settlement for an allowed, unsubordinated, general unsecured bankruptcy claim of $2.8 billion. As discussed below, the Purdue bankruptcy plan may not survive review, and if it does, it is unclear how much DOJ might actually recover on this claim. Without counting this $2.8 billion, DOJ’s FCA health care recoveries would be $2.2 billion, the same amount recovered in FY 2020.
Led by the anticipated recovery in the Purdue Pharma case, the reported $4 billion in recoveries in cases brought by DOJ in FY 2021 significantly outstripped recoveries of $1.6 billion in qui tam cases. (For those keeping track, payments to relators in those qui tam cases totaled $237 million). By way of comparison, DOJ reported $1.7 billion in qui tam recoveries (and $309 million in payments to relators) in FY 2020, compared to roughly $500 million in recoveries in cases brought by DOJ. The fact that the scale tipped toward government cases in FY 2021 is consistent with the increase we have observed in DOJ-initiated actions in recent years and represents a remarkable year for DOJ recoveries in these matters.
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1. Mintz, Health Care Enforcement 2020 Year in Review & 2021 Outlook, Report, February 18, 2021, https://www.mintz.com/ sites/default/files/media/documents/2021-03-03/Mintz_HCE_2020_Year_In_Review_2021_Outlook_0.pdf .
2. Mintz, Health Care Enforcements & Investigations, https://www.mintz.com/industries-practices/health-care-enforcementinvestigations.
3. U.S. Department of Justice, “Justice Department’s False Claims Act Settlements and Judgments Exceed $5.6 Billion in Fiscal Year 2021,” Press Release, February 1, 2022, https://www.justice.gov/opa/pr/justice-department-s-false-claims-actsettlements-and-judgments-exceed-56-billion-fiscal-year.