On Sept. 17, 2021, the U.S. Department of Justice (DOJ) announced the results of its 2021 Healthcare Takedown. The Healthcare Takedown is the industry nickname for DOJ’s annual announcement of multiple indictments across the country involving billions of dollars of fraud in the healthcare and life sciences industries. While the announcement is a public affairs tool for DOJ meant to make a big media splash that demonstrates its commitment to combating healthcare fraud, the announced charges and arrests are the culmination of months, if not years, of investigative work across various DOJ units, federal agencies and U.S. Attorney’s Offices.
This year, DOJ announced criminal charges against 138 defendants, including 42 medical professionals, in 31 federal districts for conduct related to schemes involving approximately $1.4 billion in alleged losses to federal healthcare programs. These are gaudy numbers, to be sure, but they represent a steep drop from the 345 defendants charged for conduct that led to $6 billion in losses announced for the 2020 Healthcare Takedown.
DOJ’s 2021 press release highlighted four areas of fraud that were targeted. First, the largest amount of fraud loss charged was in connection with telemedicine schemes, which comprised over $1.1 billion in fraudulent claims submitted by more than 43 defendants in 11 judicial districts. Second, DOJ targeted several fraud schemes related to COVID-19, which resulted in over $29 million in false claims to federal healthcare programs. Third, prosecutors targeted several sober homes for illegal conduct including kickbacks paid to referring providers and billing for medically unnecessary lab tests and therapy, resulting in over $133 million in false claims. Finally, opioids continued to be an area of focus for DOJ prosecutors, who brought charges against 19 defendants who prescribed more than 12 million doses of opioids and other narcotics, while submitting over $14 million in false billings.
With the exception of the COVID-19-related fraud, DOJ’s areas of focus in this year’s Takedown are the same major targets as in its 2020 Takedown: telemedicine, sober homes and opioid distribution. Each of these priority areas is correlated to COVID-19 and the associated social confinement and substance abuse issues that have only grown during the pandemic.
Forty-two of the 138 defendants charged this year were licensed medical professionals accused of illegal conduct. In one case, a physician, physician assistant and a nurse practitioner working at a pain management practice allegedly operated a “pill mill,” in which they distributed approximately 150,000 unlawful prescriptions. See United States v. Anderson, et al., 5:21-cr-00008 (S.D. Ga. 2021). The indictment claims that, without any medical exam, the conspirators prescribed enormous quantities of prescription opioids, benzodiazepines, sleeping medications and muscle relaxers to addicts, who usually paid cash at the time of their visits. But the defendants allegedly continued to bill Medicaid, Medicare and private insurance for at least some of these prescriptions. DOJ alleged that these medically unnecessary prescriptions have cost Medicare approximately $5.7 million since 2017.
While substance abuse in general, and the opioid epidemic in particular, were plaguing the country long before the pandemic, and while media coverage of the opioid epidemic has taken a back seat to the COVID-19 pandemic, researchers have observed increases in substance abuse and drug overdoses in the United States since the COVID-19 pandemic. (See “COVID-19 and Substance Abuse,” National Institutes on Drug Abuse, May 14, 2021.) Drug overdose deaths increased by more than 30 percent in the past year (see Provisional drug overdose death counts, National Center for Health Statistics, Sept. 15, 2021), and DOJ has plainly made opioid and substance abuse, and fraud related to the same, a continued focus despite the media attention on issues more directly tied to COVID-19.
While DOJ’s priority areas for enforcement are somewhat clear, the reason for the sharp drop in the number of indicted individuals and total value of fraudulent billings associated with this year’s Takedown is murkier. The 138 healthcare fraud defendants DOJ charged as part of the 2021 Takedown are allegedly responsible for $1.4 billion in losses for the federal government, which represents a roughly 60 percent decline in the number of indictments and a 76 percent decline in the alleged losses associated with their various schemes, as compared to the 2020 Takedown.
The reason for this dramatic decrease is uncertain, but it might be due to: (1) COVID-19-related delays in grand jury empanelments and investigatory hurdles; (2) the transition to a new presidential administration, though a similar drop-off was not seen during the last presidential transition year (301 indicted defendants and $900 million in losses announced for the 2016 Takedown, versus 412 indicted defendants and $1.3 billion in losses announced for the 2017 Takedown); or (3) DOJ de-emphasizing the annual Takedown in favor of more frequent major announcements related to actions in specific areas targeted for increased enforcement.
For example, in May 2021, DOJ announced it had charged 14 defendants in COVID-19-related fraud schemes that caused fraudulent billings exceeding $143 million, including billing for tests that were not necessary or were not performed, payment of kickbacks in connection with COVID-19 tests, and misappropriation of CARES Act Provider Relief Funds intended to reimburse healthcare providers who incurred expenses or lost revenue due to COVID-19.
No matter the reason for the decline, there are two important takeaways for healthcare providers from the 2021 Takedown announcement. First, with many of the limits on courts and grand juries removed and Senate-confirmed appointees in place in many DOJ units and U.S. Attorney’s Offices, there is potential for a correction in 2022, particularly given the more than $4 trillion in federal government COVID-19 stimulus.* Second, telemedicine-related fraud, COVID-19 schemes and the opioid epidemic continue to be areas of focus for DOJ. Anecdotally, there has been a marked increase in the number of subpoenas issued in the last several months related to COVID-19 funds.
Providers should take advantage of the recently announced 60-day grace period for recipients to comply with the Provider Relief Fund reporting requirements to ensure they are in full compliance. (See Sept. 28, 2021, McGuireWoods alert, “Provider Relief Fund Reporting Guidance: HHS Grants Reporting Grace Period Until Nov. 30 for Provider Relief Fund.”)
McGuireWoods stands ready to help Provider Relief Fund and Payment Protection Program loan recipients with any questions about their auditing and reporting requirements and to assist healthcare providers with any enforcement issues or concerns.
* Coronavirus Preparedness and Response Supplemental Appropriations Act, 2020, Pub. L. No. 116-123 (appropriating $8.3 billion to COVID-19 relief); Families First Coronavirus Response Act, Pub. L. No. 116-127 (appropriating $225 billion to COVID-19 relief); CARES Act, Pub. L. No. 116-136 (appropriating $2.2 trillion to COVID-19 relief); Consolidated Appropriations Act, 2021, Pub. L. No. 116-260 (appropriating $920 billion to COVID-19 relief); American Rescue Plan, Pub. L. No. 117-2 (appropriating $1.9 trillion to COVID-19 relief). See also “All of the COVID-19 Stimulus bills, visualized,” USA Today, March 17, 2021.
McGuireWoods has published additional thought leadership analyzing how companies across industries can address crucial business and legal issues related to COVID-19.