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Healthcare companies should expect increased fraud enforcement in 2021

Press releases may be edited for formatting or style | February 09, 2021 Business Affairs
Examining issues surrounding the receipt of COVID-19 relief funds will be a significant area of focus for the government as it ratchets up scrutiny of healthcare companies in 2021, according to Bass, Berry & Sims’ ninth annual Healthcare Fraud & Abuse Review 2020.

The federal government’s financial response to the pandemic through the CARES Act and other COVID-19 relief programs has allocated billions of dollars to the healthcare industry. The Review details how such a scenario presents an enforcement perfect storm for the healthcare industry as a result of the distribution of large amounts of fast cash within a highly regulated industry, along with poor and evolving government guidance, and assured retrospective scrutiny by the regulators.

Download the Healthcare Fraud & Abuse Review 2020.

“The federal government has already moved to shut down blatantly fraudulent schemes related to the CARES Act and COVID-19 relief. We expect the government to shift its attention to the billions of dollars earmarked for hospitals and other healthcare providers, scrutinizing eligibility, use and documented support for COVID-19 funds,” said Brian D. Roark, head of the Bass, Berry & Sims Healthcare Fraud Task Force. “We expect these investigations will be much more wide-ranging than more typical fraud investigations in healthcare. Regulators examining the need and use of COVID-19 relief funding are likely to scrutinize the whole enterprise.”

Recoveries down, new cases up

The raw numbers suggest that the pandemic impacted investigations, litigation and civil fraud recoveries during federal fiscal year 2020, which ended Sept. 30, 2020. Recoveries by the U.S. Department of Justice (DOJ) in FY20 declined nearly 30 percent compared with the prior fiscal year, dropping to $2.2 billion from the $3.1 billion collected in FY19. Notably, the $2.2 billion in civil fraud recoveries is the lowest amount recovered in more than 10 years. One thing that has not changed, however, is the fact that recoveries from healthcare-related cases continued to comprise the overwhelming percentage of total recoveries, amounting to more than $1.8 billion of the total.

Announced recoveries in FY21 already have eclipsed the 2020 total and are nearing $4 billion, fueled by a number of high-profile opioid-related settlements. New qui tam lawsuits filed under the False Claims Act in FY20 increased to 672 new cases and another 250 non-qui tam civil fraud suits were filed, representing an increase of more than 100 compared with FY19, according to DOJ figures. The significant number of new cases will continue to fuel enforcement efforts for years to come.

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