Health Law Advisor

On January 14, 2021, the U.S. Department of Justice (DOJ) reported its False Claims Act (FCA) statistics for fiscal year (FY) 2020. More than $2.2 billion was recovered from both settlements and judgments in 2020, the lowest level since 2008 and almost $1 billion less than was recovered in 2019. The total recoveries in 2020 reflect the first of many anticipated resolutions of fraud enforcement actions in the COVID-19 world, and over 80% of all recoveries—amounting to almost $1.9 billion—came from the health care and life sciences industries.

HIGHEST NUMBER OF NEW FILINGS EVER REPORTED

Significantly, 2020 saw the largest number of new FCA matters initiated in a single year. The government initiated new FCA matters at its highest rate since 1994, with 250 new cases brought in 2020. Strikingly, the number of government-initiated cases against health care entities more than doubled from 2019 to 2020 and was at the highest level ever reported. Likewise, qui tam relators filed 672 new matters in FY 2020, an increase over FY 2019 and the fifth highest number of cases in reported history. Qui tam relators filed, on average, almost 13 new cases a week. Of the 672 qui tam cases filed, 68% were related to health care.

QUI TAM FILINGS CONTINUE TO BE THE DRIVER

Total recoveries from qui tam-initiated actions generated almost $1.7 billion. While the largest recoveries continue to come from cases where the government intervenes, cases pursued by relators post-declination generated more than $193 million in FY 2020, the fifth largest annual recovery in non-intervened cases since 1986. These cases continue to be rewarding for relators; over $309 million in relators’ share awards were paid in FY 2020, of which more than $261 million were paid in cases pursued against health care entities.

The Department of Justice (DOJ) announced on January 12, 2021, the first civil settlement to resolve allegations of fraud against the Paycheck Protection Program (PPP) of the Coronavirus Aid, Relief, and Economic Security (CARES) Act.[1] SlideBelts Inc. and its president and CEO, Brigham Taylor, have agreed to pay the United States a combined $100,000 in damages and penalties for alleged violations of the False Claims Act (FCA) and the Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA).[2]

The CARES Act was enacted in March 2020 to provide emergency financial assistance to individuals and businesses affected by the COVID-19 pandemic.[3] The CARES Act established the PPP, which provided $349 billion in forgivable loans to small businesses in order to assist in job retention and business expenses.[4] Since March 2020, Congress has authorized an additional $585 billion in PPP spending to be distributed under the Small Business Administration (SBA).

SlideBelts operates as an online retail company, and filed a petition for relief under Chapter 11 of the Bankruptcy Code in August 2019. Between April and June of 2020, while its petition was pending in the U.S. Bankruptcy Court for the Eastern District of California, SlideBelts and Taylor allegedly made false statements to federally insured financial institutions that the company was not involved in bankruptcy proceedings in order to influence the institutions to grant, and for SBA to guarantee, a PPP loan. SlideBelts received a loan for $350,000 based off of these purported false claims, which SlideBelts repaid in full to the PPP.

The government was able to recover damages and civil penalties from SlideBelts under the FCA for submitting alleged fraudulent claims for payment to the government and under the FIRREA for violations of federal criminal statutes that affect federally insured banks. This settlement is the end result of the first, but not the last, of many civil investigations and, ultimately, litigations relative to the CARES Act in the coming months and years under the FCA. In fact, during a June address to the Chamber of Commerce, Principal Deputy Attorney General Ethan Davis stated, “Going forward, the Civil Division will make it a priority to use the False Claims Act to combat fraud in the Paycheck Protection Program.”[5]

As the SBA prepares to issue a second round of PPP loans, the DOJ is likely to continue to use the FCA and the FIRREA to pursue entities receiving funds on the theory that those entities intend to exploit for their benefit these federal programs.[6]

This Diagnosing Health Care episode examines the fraud and abuse enforcement landscape in the telehealth space and considers ways telehealth providers can mitigate their enforcement risks as they move into the new year. Hear how the uptick in enforcement warrants close consideration by telehealth providers, especially those that are new to the space and have not yet built their compliance infrastructures.

The episode features Epstein Becker Green attorneys Amy Lerman, Melissa Jampol, and Bonnie Scott.

The Diagnosing Health Care podcast series examines the business ...

The U.S. Supreme Court will consider whether the federal government can approve state programs that force Medicaid participants to work, go to school, or volunteer to get benefits. Both Arkansas and the Justice Department sought review of the issue. Epstein Becker Green attorney Clifford Barnes provides potential paths for the Biden administration to best position itself in the case.

The U.S. Supreme Court will hear oral argument in a case involving the authority of the Department of Health and Human Services to approve Medicaid work requirements programs in Arkansas and New Hampshire that were struck down by the U.S. Court of Appeals for the District of Columbia Circuit.

The high court has agreed to determine whether the HHS can allow states to impose work requirements in its Medicaid program even though all lower courts ruled against HHS’s approval of states’ Section 1115 work requirement waivers, based on the Trump administration’s refusal to consider the impact of the waivers on the core purpose of Medicaid—which is to increase health insurance coverage.

Unlike the narrow question considered by the lower courts, however, the court granted certiorari on a much broader issue. The question presented concerns the entire Section 1115 process and asks whether the HHS secretary has the power to establish additional purposes for Medicaid, beyond coverage.

Should the court rule that the HHS secretary does indeed possess this unbounded power, the entire Section 1115 landscape could shift, potentially allowing states to implement waivers like Arkansas, so long as they meet such additional purpose.

The case establishes an effective deadline for the Biden administration to take action to mitigate or eliminate the work requirements, in light of the administration’s commitment to expanding, rather than rolling back, Medicaid insurance coverage.

On January 5, 2020, HR 7898, became law amending the Health Information Technology for Economic and Clinical Health Act (HITECH Act), 42 U.S.C. 17931, to require that “recognized cybersecurity practices” be considered by the Secretary of Health and Human Services (HHS) in determining any Health Insurance Portability and Accountability Act (HIPAA) fines, audit results or mitigation remedies. The new law provides a strong incentive to covered entities and business associates to adopt “recognized cybersecurity practices” and risk reduction frameworks when complying ...

Our colleagues Maxine Neuhauser and Eric I. Emanuelson, Jr. of Epstein Becker Green have recently published an Act Now Advisory that will be of interest to our readers: "Remote Workforce or Not, New Jersey Employers Must Ensure Notices and Posters Remain Up to Date."

The following is an excerpt:

The year 2020 brought significant changes nationwide to how and where employees work and expanded the legal landscape. The expectations of employer compliance with employment law, however, remained unchanged. In New Jersey, for example, 2020 brought a package of legislation aimed at ...

Our colleagues Jennifer Barna, Scarlett L. Freeman, and Nathaniel M. Glasser of Epstein Becker Green have a new post on the Workforce Bulletin blog that will be of interest to our readers: "EEOC Updates COVID-19 Guidance on Employer Administered or Mandated Vaccinations."

The following is an excerpt:

As the first wave of COVID-19 vaccinations are being administered across the United States, employers are considering whether to mandate and/or administer the COVID-19 vaccine to employees.  On December 16, 2020, the U.S. Equal Employment Opportunity Commission (“EEOC” or ...

Epstein Becker Green (“EBG”) has released Value-Based Payments: A Comprehensive State Survey.

EBG has researched, compiled, and analyzed state-specific content about the regulatory requirements involved in providers moving away from fee for service reimbursement (such as discounted fees and per diems) and towards value-based payment arrangements involving “downside” risk or insurance risk-sharing with insurers, HMOs, and other types of state-regulated health plans. Some types of risk-sharing arrangements include capitation, shared savings and losses ...

Our colleague Nathaniel M. Glasser and Jennifer Barna of Epstein Becker Green have co-authored an article in Bloomberg Law that will be of interest to our readers: "COVID-19 Vaccines and Workplace Challenges."

The following is an excerpt:

As COVID-19 vaccines become widely available, employers will face a critical set of challenges, ranging from whether they can—or will want to—mandate all or some employees get vaccinated, to what liability may attach to mandating vaccination, and even whether the Occupational Safety and Health Administration (OSHA) could require a ...

Our colleague Melissa L. Jampol of Epstein Becker Green has a new post on the Commercial Litigation Update blog that will be interest to our readers: “Opioids, Sober Homes and ‘Telefraud’: An Overview of the DOJ 2020 Healthcare Fraud Takedown.”

The following is an excerpt:

As we have previously reported, opioids have been a large focus of DOJ in the past few years in an attempt to stem the opioid epidemic through increased enforcement and this takedown is a continuation of those efforts. DOJ stated that the charges involved in the opioid-related takedown involved the ...