Filter By Service Area
Filter By Title
Filter By Office

Resources

Fraud And Abuse Trends In Health Care - Something Old, Something New

With the year 2022 behind us and 2023 in full swing, much of the world is moving on from the COVID-19 pandemic. For government agencies, the work of investigating and prosecuting health care fraud and abuse is back in full swing as well. Earlier this year, the U.S. Department of Justice issued a press release regarding the claims prosecuted and resolved under the False Claims Act (“FCA”), 31 U.S.C. §§ 3729 et seq., for fiscal year 2022, which ran from October 1, 2021, to September 30, 2022. The FCA report reflects a return to robust enforcement efforts and provides a glimpse of the new enforcement priorities that we can expect to see more and more of in the upcoming years.

As reported in the press release, claims under the FCA exceeded over $2.2 billion in fiscal year 2022, with over $1.7 billion of that amount related to the health care industry. Much of the recovery came from medical providers and suppliers that are the perennial targets of government enforcement efforts, i.e., drug and medical device manufacturers, durable medical equipment, home health and managed care providers, hospitals, pharmacies, hospice organizations, and physicians. As stated in the release, the 2022 fiscal year recoveries “also reflected the department’s focus on new enforcement priorities, including fraud in pandemic relief programs and alleged violations of cybersecurity requirements in government contracts and grants.”

The opioid epidemic, which has been a top DOJ enforcement priority in recent years, continues to be the driving force for a significant part of the United States’ recovery. These enforcement efforts have resulted in significant civil recoveries from pharmaceutical companies, pharmacies, labs, and physicians. However, the most significant development of concern to hospital administrators in the past year and a half is the significant number of cases and settlements arising from the Anti-Kickback Statute and the Stark Law. These cases involve the financial relationships between physicians and their employers as well as relationships between providers and outside contractors/vendors. For example, in late 2021, the DOJ and Flower Mound Hospital Partners, LLC entered into an $18.2 million settlement based on allegations that the hospital violated the Stark Law and the Anti-Kickback Statute when it repurchased shares from physician-owners aged 63 or older and then resold those shares to younger physicians. In doing so, the hospital impermissibly took into account the volume or value of certain physicians’ referrals when it (1) selected the physicians to whom the shares would be resold, and (2) determined the number of shares each physician would receive. More recently, Ascension Sacred Heart Pensacola paid $2.4 million dollars in civil monetary penalties based on its remuneration to a physician group in the form of free or below market value space, equipment, and personnel. Similarly, Center for Vascular Medicine, LLC, which is based in Maryland, Virginia, and New Jersey, agreed to pay over $107,000 in civil monetary penalties based on allegations that the Center paid remuneration to a practice management company, which was owned in part by a physician who referred patients to the Center.

I have discussed the use of “management companies” as a conduit for disguised remuneration/self referrals in a prior article for LHA, but I cannot overstate the importance of carefully scrutinizing proposed management-type arrangements for potential Anti-Kickback and Stark Law violations. Many purported “management contracts” and similar arrangements are couched in terms of “investment opportunities” and the illegal remuneration paid is characterized as “investment returns.” In evaluating these business structures, the government will take a skeptical view of any arrangement that appears to be nothing more than an indirect conduit for illegal remuneration between a provider and a referral source. The government will not accept the parties’ characterization of the arrangement nor will it consider the alleged “good faith” of the parties in entering into such relationships. Also, any administrator evaluating a proposed management (or similar) agreement must take into account that a large portion of enforcement claims are instigated by whistleblowers from inside an organization, and thus the idea that the “the government will never find out” is never a given in the health care world.

Self-scrutiny and compliance review is more important now more than ever in the post-pandemic world. As set forth in the recent FCA report, we are beginning to see more cases involving pandemic fraud. While most of the pandemic fraud cases to date involve non-healthcare entities and PPP funds, the enforcement of pandemic fraud is in its infancy. The grant money disbursed under the CARES Act is subject to ongoing reporting and auditing; each of these stages will be carefully scrutinized by the government for accuracy. It is especially important to maintain documentation setting forth the good-faith efforts to interpret and satisfy the eligibility requirements for the funds received and to repay any amount in surplus of that allowed under the regulations and guidance documents.

In addition to pandemic fraud cases, we are beginning to see actions brought as a result of the DOJ’s Civil Cyber-Fraud Initiative, which was instituted in October 2021. In early 2022, Comprehensive Health Services, LLC entered into a $930,000 FCA settlement with the government based on allegations that it failed to disclose to the government that it had not consistently stored patients’ medical records on a secure EMR system, in violation of the terms of its contract. We can expect to see more scrutiny and more settlements resulting from lax security performance arising from the Civil Cyber-Fraud Initiative.

As always, the best practice for avoiding government scrutiny and a potential enforcement action is to make sure that any arrangements and contracts are vetted and reviewed by health care counsel during the crucial stages of negotiation and implementation of such agreements. Given the large exposure attached to FCA violations, an ounce of prevention really is worth a pound of cure.

Fraud And Abuse Trends In Health Care - Something Old, Something New

With the year 2022 behind us and 2023 in full swing, much of the world is moving on from the COVID-19 pandemic. For government agencies, the work of investigating and prosecuting health care fraud and abuse is back in full swing as well. Earlier this year, the U.S. Department of Justice issued a press release regarding the claims prosecuted and resolved under the False Claims Act (“FCA”), 31 U.S.C. §§ 3729 et seq., for fiscal year 2022, which ran from October 1, 2021, to September 30, 2022. The FCA report reflects a return to robust enforcement efforts and provides a glimpse of the new enforcement priorities that we can expect to see more and more of in the upcoming years.

As reported in the press release, claims under the FCA exceeded over $2.2 billion in fiscal year 2022, with over $1.7 billion of that amount related to the health care industry. Much of the recovery came from medical providers and suppliers that are the perennial targets of government enforcement efforts, i.e., drug and medical device manufacturers, durable medical equipment, home health and managed care providers, hospitals, pharmacies, hospice organizations, and physicians. As stated in the release, the 2022 fiscal year recoveries “also reflected the department’s focus on new enforcement priorities, including fraud in pandemic relief programs and alleged violations of cybersecurity requirements in government contracts and grants.”

The opioid epidemic, which has been a top DOJ enforcement priority in recent years, continues to be the driving force for a significant part of the United States’ recovery. These enforcement efforts have resulted in significant civil recoveries from pharmaceutical companies, pharmacies, labs, and physicians. However, the most significant development of concern to hospital administrators in the past year and a half is the significant number of cases and settlements arising from the Anti-Kickback Statute and the Stark Law. These cases involve the financial relationships between physicians and their employers as well as relationships between providers and outside contractors/vendors. For example, in late 2021, the DOJ and Flower Mound Hospital Partners, LLC entered into an $18.2 million settlement based on allegations that the hospital violated the Stark Law and the Anti-Kickback Statute when it repurchased shares from physician-owners aged 63 or older and then resold those shares to younger physicians. In doing so, the hospital impermissibly took into account the volume or value of certain physicians’ referrals when it (1) selected the physicians to whom the shares would be resold, and (2) determined the number of shares each physician would receive. More recently, Ascension Sacred Heart Pensacola paid $2.4 million dollars in civil monetary penalties based on its remuneration to a physician group in the form of free or below market value space, equipment, and personnel. Similarly, Center for Vascular Medicine, LLC, which is based in Maryland, Virginia, and New Jersey, agreed to pay over $107,000 in civil monetary penalties based on allegations that the Center paid remuneration to a practice management company, which was owned in part by a physician who referred patients to the Center.

I have discussed the use of “management companies” as a conduit for disguised remuneration/self referrals in a prior article for LHA, but I cannot overstate the importance of carefully scrutinizing proposed management-type arrangements for potential Anti-Kickback and Stark Law violations. Many purported “management contracts” and similar arrangements are couched in terms of “investment opportunities” and the illegal remuneration paid is characterized as “investment returns.” In evaluating these business structures, the government will take a skeptical view of any arrangement that appears to be nothing more than an indirect conduit for illegal remuneration between a provider and a referral source. The government will not accept the parties’ characterization of the arrangement nor will it consider the alleged “good faith” of the parties in entering into such relationships. Also, any administrator evaluating a proposed management (or similar) agreement must take into account that a large portion of enforcement claims are instigated by whistleblowers from inside an organization, and thus the idea that the “the government will never find out” is never a given in the health care world.

Self-scrutiny and compliance review is more important now more than ever in the post-pandemic world. As set forth in the recent FCA report, we are beginning to see more cases involving pandemic fraud. While most of the pandemic fraud cases to date involve non-healthcare entities and PPP funds, the enforcement of pandemic fraud is in its infancy. The grant money disbursed under the CARES Act is subject to ongoing reporting and auditing; each of these stages will be carefully scrutinized by the government for accuracy. It is especially important to maintain documentation setting forth the good-faith efforts to interpret and satisfy the eligibility requirements for the funds received and to repay any amount in surplus of that allowed under the regulations and guidance documents.

In addition to pandemic fraud cases, we are beginning to see actions brought as a result of the DOJ’s Civil Cyber-Fraud Initiative, which was instituted in October 2021. In early 2022, Comprehensive Health Services, LLC entered into a $930,000 FCA settlement with the government based on allegations that it failed to disclose to the government that it had not consistently stored patients’ medical records on a secure EMR system, in violation of the terms of its contract. We can expect to see more scrutiny and more settlements resulting from lax security performance arising from the Civil Cyber-Fraud Initiative.

As always, the best practice for avoiding government scrutiny and a potential enforcement action is to make sure that any arrangements and contracts are vetted and reviewed by health care counsel during the crucial stages of negotiation and implementation of such agreements. Given the large exposure attached to FCA violations, an ounce of prevention really is worth a pound of cure.

Fraud And Abuse Trends In Health Care - Something Old, Something New

With the year 2022 behind us and 2023 in full swing, much of the world is moving on from the COVID-19 pandemic. For government agencies, the work of investigating and prosecuting health care fraud and abuse is back in full swing as well. Earlier this year, the U.S. Department of Justice issued a press release regarding the claims prosecuted and resolved under the False Claims Act (“FCA”), 31 U.S.C. §§ 3729 et seq., for fiscal year 2022, which ran from October 1, 2021, to September 30, 2022. The FCA report reflects a return to robust enforcement efforts and provides a glimpse of the new enforcement priorities that we can expect to see more and more of in the upcoming years.

As reported in the press release, claims under the FCA exceeded over $2.2 billion in fiscal year 2022, with over $1.7 billion of that amount related to the health care industry. Much of the recovery came from medical providers and suppliers that are the perennial targets of government enforcement efforts, i.e., drug and medical device manufacturers, durable medical equipment, home health and managed care providers, hospitals, pharmacies, hospice organizations, and physicians. As stated in the release, the 2022 fiscal year recoveries “also reflected the department’s focus on new enforcement priorities, including fraud in pandemic relief programs and alleged violations of cybersecurity requirements in government contracts and grants.”

The opioid epidemic, which has been a top DOJ enforcement priority in recent years, continues to be the driving force for a significant part of the United States’ recovery. These enforcement efforts have resulted in significant civil recoveries from pharmaceutical companies, pharmacies, labs, and physicians. However, the most significant development of concern to hospital administrators in the past year and a half is the significant number of cases and settlements arising from the Anti-Kickback Statute and the Stark Law. These cases involve the financial relationships between physicians and their employers as well as relationships between providers and outside contractors/vendors. For example, in late 2021, the DOJ and Flower Mound Hospital Partners, LLC entered into an $18.2 million settlement based on allegations that the hospital violated the Stark Law and the Anti-Kickback Statute when it repurchased shares from physician-owners aged 63 or older and then resold those shares to younger physicians. In doing so, the hospital impermissibly took into account the volume or value of certain physicians’ referrals when it (1) selected the physicians to whom the shares would be resold, and (2) determined the number of shares each physician would receive. More recently, Ascension Sacred Heart Pensacola paid $2.4 million dollars in civil monetary penalties based on its remuneration to a physician group in the form of free or below market value space, equipment, and personnel. Similarly, Center for Vascular Medicine, LLC, which is based in Maryland, Virginia, and New Jersey, agreed to pay over $107,000 in civil monetary penalties based on allegations that the Center paid remuneration to a practice management company, which was owned in part by a physician who referred patients to the Center.

I have discussed the use of “management companies” as a conduit for disguised remuneration/self referrals in a prior article for LHA, but I cannot overstate the importance of carefully scrutinizing proposed management-type arrangements for potential Anti-Kickback and Stark Law violations. Many purported “management contracts” and similar arrangements are couched in terms of “investment opportunities” and the illegal remuneration paid is characterized as “investment returns.” In evaluating these business structures, the government will take a skeptical view of any arrangement that appears to be nothing more than an indirect conduit for illegal remuneration between a provider and a referral source. The government will not accept the parties’ characterization of the arrangement nor will it consider the alleged “good faith” of the parties in entering into such relationships. Also, any administrator evaluating a proposed management (or similar) agreement must take into account that a large portion of enforcement claims are instigated by whistleblowers from inside an organization, and thus the idea that the “the government will never find out” is never a given in the health care world.

Self-scrutiny and compliance review is more important now more than ever in the post-pandemic world. As set forth in the recent FCA report, we are beginning to see more cases involving pandemic fraud. While most of the pandemic fraud cases to date involve non-healthcare entities and PPP funds, the enforcement of pandemic fraud is in its infancy. The grant money disbursed under the CARES Act is subject to ongoing reporting and auditing; each of these stages will be carefully scrutinized by the government for accuracy. It is especially important to maintain documentation setting forth the good-faith efforts to interpret and satisfy the eligibility requirements for the funds received and to repay any amount in surplus of that allowed under the regulations and guidance documents.

In addition to pandemic fraud cases, we are beginning to see actions brought as a result of the DOJ’s Civil Cyber-Fraud Initiative, which was instituted in October 2021. In early 2022, Comprehensive Health Services, LLC entered into a $930,000 FCA settlement with the government based on allegations that it failed to disclose to the government that it had not consistently stored patients’ medical records on a secure EMR system, in violation of the terms of its contract. We can expect to see more scrutiny and more settlements resulting from lax security performance arising from the Civil Cyber-Fraud Initiative.

As always, the best practice for avoiding government scrutiny and a potential enforcement action is to make sure that any arrangements and contracts are vetted and reviewed by health care counsel during the crucial stages of negotiation and implementation of such agreements. Given the large exposure attached to FCA violations, an ounce of prevention really is worth a pound of cure.

Fraud And Abuse Trends In Health Care - Something Old, Something New

With the year 2022 behind us and 2023 in full swing, much of the world is moving on from the COVID-19 pandemic. For government agencies, the work of investigating and prosecuting health care fraud and abuse is back in full swing as well. Earlier this year, the U.S. Department of Justice issued a press release regarding the claims prosecuted and resolved under the False Claims Act (“FCA”), 31 U.S.C. §§ 3729 et seq., for fiscal year 2022, which ran from October 1, 2021, to September 30, 2022. The FCA report reflects a return to robust enforcement efforts and provides a glimpse of the new enforcement priorities that we can expect to see more and more of in the upcoming years.

As reported in the press release, claims under the FCA exceeded over $2.2 billion in fiscal year 2022, with over $1.7 billion of that amount related to the health care industry. Much of the recovery came from medical providers and suppliers that are the perennial targets of government enforcement efforts, i.e., drug and medical device manufacturers, durable medical equipment, home health and managed care providers, hospitals, pharmacies, hospice organizations, and physicians. As stated in the release, the 2022 fiscal year recoveries “also reflected the department’s focus on new enforcement priorities, including fraud in pandemic relief programs and alleged violations of cybersecurity requirements in government contracts and grants.”

The opioid epidemic, which has been a top DOJ enforcement priority in recent years, continues to be the driving force for a significant part of the United States’ recovery. These enforcement efforts have resulted in significant civil recoveries from pharmaceutical companies, pharmacies, labs, and physicians. However, the most significant development of concern to hospital administrators in the past year and a half is the significant number of cases and settlements arising from the Anti-Kickback Statute and the Stark Law. These cases involve the financial relationships between physicians and their employers as well as relationships between providers and outside contractors/vendors. For example, in late 2021, the DOJ and Flower Mound Hospital Partners, LLC entered into an $18.2 million settlement based on allegations that the hospital violated the Stark Law and the Anti-Kickback Statute when it repurchased shares from physician-owners aged 63 or older and then resold those shares to younger physicians. In doing so, the hospital impermissibly took into account the volume or value of certain physicians’ referrals when it (1) selected the physicians to whom the shares would be resold, and (2) determined the number of shares each physician would receive. More recently, Ascension Sacred Heart Pensacola paid $2.4 million dollars in civil monetary penalties based on its remuneration to a physician group in the form of free or below market value space, equipment, and personnel. Similarly, Center for Vascular Medicine, LLC, which is based in Maryland, Virginia, and New Jersey, agreed to pay over $107,000 in civil monetary penalties based on allegations that the Center paid remuneration to a practice management company, which was owned in part by a physician who referred patients to the Center.

I have discussed the use of “management companies” as a conduit for disguised remuneration/self referrals in a prior article for LHA, but I cannot overstate the importance of carefully scrutinizing proposed management-type arrangements for potential Anti-Kickback and Stark Law violations. Many purported “management contracts” and similar arrangements are couched in terms of “investment opportunities” and the illegal remuneration paid is characterized as “investment returns.” In evaluating these business structures, the government will take a skeptical view of any arrangement that appears to be nothing more than an indirect conduit for illegal remuneration between a provider and a referral source. The government will not accept the parties’ characterization of the arrangement nor will it consider the alleged “good faith” of the parties in entering into such relationships. Also, any administrator evaluating a proposed management (or similar) agreement must take into account that a large portion of enforcement claims are instigated by whistleblowers from inside an organization, and thus the idea that the “the government will never find out” is never a given in the health care world.

Self-scrutiny and compliance review is more important now more than ever in the post-pandemic world. As set forth in the recent FCA report, we are beginning to see more cases involving pandemic fraud. While most of the pandemic fraud cases to date involve non-healthcare entities and PPP funds, the enforcement of pandemic fraud is in its infancy. The grant money disbursed under the CARES Act is subject to ongoing reporting and auditing; each of these stages will be carefully scrutinized by the government for accuracy. It is especially important to maintain documentation setting forth the good-faith efforts to interpret and satisfy the eligibility requirements for the funds received and to repay any amount in surplus of that allowed under the regulations and guidance documents.

In addition to pandemic fraud cases, we are beginning to see actions brought as a result of the DOJ’s Civil Cyber-Fraud Initiative, which was instituted in October 2021. In early 2022, Comprehensive Health Services, LLC entered into a $930,000 FCA settlement with the government based on allegations that it failed to disclose to the government that it had not consistently stored patients’ medical records on a secure EMR system, in violation of the terms of its contract. We can expect to see more scrutiny and more settlements resulting from lax security performance arising from the Civil Cyber-Fraud Initiative.

As always, the best practice for avoiding government scrutiny and a potential enforcement action is to make sure that any arrangements and contracts are vetted and reviewed by health care counsel during the crucial stages of negotiation and implementation of such agreements. Given the large exposure attached to FCA violations, an ounce of prevention really is worth a pound of cure.

Fraud And Abuse Trends In Health Care - Something Old, Something New

With the year 2022 behind us and 2023 in full swing, much of the world is moving on from the COVID-19 pandemic. For government agencies, the work of investigating and prosecuting health care fraud and abuse is back in full swing as well. Earlier this year, the U.S. Department of Justice issued a press release regarding the claims prosecuted and resolved under the False Claims Act (“FCA”), 31 U.S.C. §§ 3729 et seq., for fiscal year 2022, which ran from October 1, 2021, to September 30, 2022. The FCA report reflects a return to robust enforcement efforts and provides a glimpse of the new enforcement priorities that we can expect to see more and more of in the upcoming years.

As reported in the press release, claims under the FCA exceeded over $2.2 billion in fiscal year 2022, with over $1.7 billion of that amount related to the health care industry. Much of the recovery came from medical providers and suppliers that are the perennial targets of government enforcement efforts, i.e., drug and medical device manufacturers, durable medical equipment, home health and managed care providers, hospitals, pharmacies, hospice organizations, and physicians. As stated in the release, the 2022 fiscal year recoveries “also reflected the department’s focus on new enforcement priorities, including fraud in pandemic relief programs and alleged violations of cybersecurity requirements in government contracts and grants.”

The opioid epidemic, which has been a top DOJ enforcement priority in recent years, continues to be the driving force for a significant part of the United States’ recovery. These enforcement efforts have resulted in significant civil recoveries from pharmaceutical companies, pharmacies, labs, and physicians. However, the most significant development of concern to hospital administrators in the past year and a half is the significant number of cases and settlements arising from the Anti-Kickback Statute and the Stark Law. These cases involve the financial relationships between physicians and their employers as well as relationships between providers and outside contractors/vendors. For example, in late 2021, the DOJ and Flower Mound Hospital Partners, LLC entered into an $18.2 million settlement based on allegations that the hospital violated the Stark Law and the Anti-Kickback Statute when it repurchased shares from physician-owners aged 63 or older and then resold those shares to younger physicians. In doing so, the hospital impermissibly took into account the volume or value of certain physicians’ referrals when it (1) selected the physicians to whom the shares would be resold, and (2) determined the number of shares each physician would receive. More recently, Ascension Sacred Heart Pensacola paid $2.4 million dollars in civil monetary penalties based on its remuneration to a physician group in the form of free or below market value space, equipment, and personnel. Similarly, Center for Vascular Medicine, LLC, which is based in Maryland, Virginia, and New Jersey, agreed to pay over $107,000 in civil monetary penalties based on allegations that the Center paid remuneration to a practice management company, which was owned in part by a physician who referred patients to the Center.

I have discussed the use of “management companies” as a conduit for disguised remuneration/self referrals in a prior article for LHA, but I cannot overstate the importance of carefully scrutinizing proposed management-type arrangements for potential Anti-Kickback and Stark Law violations. Many purported “management contracts” and similar arrangements are couched in terms of “investment opportunities” and the illegal remuneration paid is characterized as “investment returns.” In evaluating these business structures, the government will take a skeptical view of any arrangement that appears to be nothing more than an indirect conduit for illegal remuneration between a provider and a referral source. The government will not accept the parties’ characterization of the arrangement nor will it consider the alleged “good faith” of the parties in entering into such relationships. Also, any administrator evaluating a proposed management (or similar) agreement must take into account that a large portion of enforcement claims are instigated by whistleblowers from inside an organization, and thus the idea that the “the government will never find out” is never a given in the health care world.

Self-scrutiny and compliance review is more important now more than ever in the post-pandemic world. As set forth in the recent FCA report, we are beginning to see more cases involving pandemic fraud. While most of the pandemic fraud cases to date involve non-healthcare entities and PPP funds, the enforcement of pandemic fraud is in its infancy. The grant money disbursed under the CARES Act is subject to ongoing reporting and auditing; each of these stages will be carefully scrutinized by the government for accuracy. It is especially important to maintain documentation setting forth the good-faith efforts to interpret and satisfy the eligibility requirements for the funds received and to repay any amount in surplus of that allowed under the regulations and guidance documents.

In addition to pandemic fraud cases, we are beginning to see actions brought as a result of the DOJ’s Civil Cyber-Fraud Initiative, which was instituted in October 2021. In early 2022, Comprehensive Health Services, LLC entered into a $930,000 FCA settlement with the government based on allegations that it failed to disclose to the government that it had not consistently stored patients’ medical records on a secure EMR system, in violation of the terms of its contract. We can expect to see more scrutiny and more settlements resulting from lax security performance arising from the Civil Cyber-Fraud Initiative.

As always, the best practice for avoiding government scrutiny and a potential enforcement action is to make sure that any arrangements and contracts are vetted and reviewed by health care counsel during the crucial stages of negotiation and implementation of such agreements. Given the large exposure attached to FCA violations, an ounce of prevention really is worth a pound of cure.

Fraud And Abuse Trends In Health Care - Something Old, Something New

With the year 2022 behind us and 2023 in full swing, much of the world is moving on from the COVID-19 pandemic. For government agencies, the work of investigating and prosecuting health care fraud and abuse is back in full swing as well. Earlier this year, the U.S. Department of Justice issued a press release regarding the claims prosecuted and resolved under the False Claims Act (“FCA”), 31 U.S.C. §§ 3729 et seq., for fiscal year 2022, which ran from October 1, 2021, to September 30, 2022. The FCA report reflects a return to robust enforcement efforts and provides a glimpse of the new enforcement priorities that we can expect to see more and more of in the upcoming years.

As reported in the press release, claims under the FCA exceeded over $2.2 billion in fiscal year 2022, with over $1.7 billion of that amount related to the health care industry. Much of the recovery came from medical providers and suppliers that are the perennial targets of government enforcement efforts, i.e., drug and medical device manufacturers, durable medical equipment, home health and managed care providers, hospitals, pharmacies, hospice organizations, and physicians. As stated in the release, the 2022 fiscal year recoveries “also reflected the department’s focus on new enforcement priorities, including fraud in pandemic relief programs and alleged violations of cybersecurity requirements in government contracts and grants.”

The opioid epidemic, which has been a top DOJ enforcement priority in recent years, continues to be the driving force for a significant part of the United States’ recovery. These enforcement efforts have resulted in significant civil recoveries from pharmaceutical companies, pharmacies, labs, and physicians. However, the most significant development of concern to hospital administrators in the past year and a half is the significant number of cases and settlements arising from the Anti-Kickback Statute and the Stark Law. These cases involve the financial relationships between physicians and their employers as well as relationships between providers and outside contractors/vendors. For example, in late 2021, the DOJ and Flower Mound Hospital Partners, LLC entered into an $18.2 million settlement based on allegations that the hospital violated the Stark Law and the Anti-Kickback Statute when it repurchased shares from physician-owners aged 63 or older and then resold those shares to younger physicians. In doing so, the hospital impermissibly took into account the volume or value of certain physicians’ referrals when it (1) selected the physicians to whom the shares would be resold, and (2) determined the number of shares each physician would receive. More recently, Ascension Sacred Heart Pensacola paid $2.4 million dollars in civil monetary penalties based on its remuneration to a physician group in the form of free or below market value space, equipment, and personnel. Similarly, Center for Vascular Medicine, LLC, which is based in Maryland, Virginia, and New Jersey, agreed to pay over $107,000 in civil monetary penalties based on allegations that the Center paid remuneration to a practice management company, which was owned in part by a physician who referred patients to the Center.

I have discussed the use of “management companies” as a conduit for disguised remuneration/self referrals in a prior article for LHA, but I cannot overstate the importance of carefully scrutinizing proposed management-type arrangements for potential Anti-Kickback and Stark Law violations. Many purported “management contracts” and similar arrangements are couched in terms of “investment opportunities” and the illegal remuneration paid is characterized as “investment returns.” In evaluating these business structures, the government will take a skeptical view of any arrangement that appears to be nothing more than an indirect conduit for illegal remuneration between a provider and a referral source. The government will not accept the parties’ characterization of the arrangement nor will it consider the alleged “good faith” of the parties in entering into such relationships. Also, any administrator evaluating a proposed management (or similar) agreement must take into account that a large portion of enforcement claims are instigated by whistleblowers from inside an organization, and thus the idea that the “the government will never find out” is never a given in the health care world.

Self-scrutiny and compliance review is more important now more than ever in the post-pandemic world. As set forth in the recent FCA report, we are beginning to see more cases involving pandemic fraud. While most of the pandemic fraud cases to date involve non-healthcare entities and PPP funds, the enforcement of pandemic fraud is in its infancy. The grant money disbursed under the CARES Act is subject to ongoing reporting and auditing; each of these stages will be carefully scrutinized by the government for accuracy. It is especially important to maintain documentation setting forth the good-faith efforts to interpret and satisfy the eligibility requirements for the funds received and to repay any amount in surplus of that allowed under the regulations and guidance documents.

In addition to pandemic fraud cases, we are beginning to see actions brought as a result of the DOJ’s Civil Cyber-Fraud Initiative, which was instituted in October 2021. In early 2022, Comprehensive Health Services, LLC entered into a $930,000 FCA settlement with the government based on allegations that it failed to disclose to the government that it had not consistently stored patients’ medical records on a secure EMR system, in violation of the terms of its contract. We can expect to see more scrutiny and more settlements resulting from lax security performance arising from the Civil Cyber-Fraud Initiative.

As always, the best practice for avoiding government scrutiny and a potential enforcement action is to make sure that any arrangements and contracts are vetted and reviewed by health care counsel during the crucial stages of negotiation and implementation of such agreements. Given the large exposure attached to FCA violations, an ounce of prevention really is worth a pound of cure.