Healthcare providers were forced to pay a historic $2.7 billion to resolve federal False Claims Act allegations last year, an escalation that will likely allow the government to support even more investigations in years to come.
The Department of Justice last week announced its historic haul for the fiscal year ending Sept. 30. The government and whistleblowers were party to 543 settlements and judgments, which also notched an annual record for federal involvement in those types of cases.
The False Claims Act awards whistleblowers triple damages for helping bring about a case that proves healthcare entities inappropriately billed Medicare or Medicaid for unneeded or undelivered services. That mechanism has been both praised for its ability to discourage fraudulent activity by providers and criticized for its role in encouraging specious claims that cost operators hundreds of thousands of dollars in legal fees.
Among the 2023 cases highlighted by the federal government Thursday was a settlement in which the owners of Saratoga Center for Rehabilitation and Skilled Nursing Care and its owners agreed to pay $7.1 million. The New York nursing home operators were accused of providing “worthless services” to residents over four years of mismanagement marked by what the government deemed patient safety violations and fraudulent billing.
The Justice Department also outlined its successful allegations against Medicare Advantage plans, including settlements with Cigna ($172 million) and Martin’s Point Health Care ($22.5 million) and ongoing litigation against UnitedHealth Group and others.
“Medicare Advantage/Part C recoveries is the area that is most likely to expand significantly from its current levels,” Baker Donelson Attorney Thomas Barnard told McKnight’s Long-Term Care News Friday.
But that doesn’t mean skilled nursing providers should breathe a sigh of relief. There are plenty of factors that could point to more investigations in the post-acute and long-term care space this year and beyond.
“This trend of continued growth in recoveries is likely to continue as the recovery grows [because] more money is available to contribute to enforcement budgets and expanding staffing and hiring,” Barnard said. “The FCA will continue to grow in use as it serves not only as a mechanism for recovering funds, but there continues to be increased efforts to use it to enforce policy priorities as well to shape behavior — like with cybersecurity.”
That could be a critical influence if a second Biden term comes to be, given the president’s ongoing focus on aging services, in general, and private nursing home owners in particular.
Other factors that could drive overall activity and payouts up, Barnard said, are continuing attempts to make COVID relief recoveries in the next few years and the role of increasing state-level False Claims-like actions.
Barnard, a former Department of Justice prosecutor, is presenting a session at next week’s AHLA Long Term and Post-Acute Care Law and Compliance conference titled,”What to Expect when You Are Expecting: The False Claims Act Edition For Long Term Care Facilities.”
False Claims relief to come?
A major Supreme Court decision last summer was predicted to have a potentially chilling effect on at least some False Claim actions. The ruling allows the government to move for dismissal of civil cases, even if it ultimately decided not to support a whistleblower in court and even over the objection of whistleblowers who stand to gain financially from ongoing litigation.
But that decision occurred in June, too early to impact suits moving through the courts last fiscal year.
For now, providers’ concerns about the expensive nature of qui tam suits — even those not found to be fruitful by the government — will likely be deepened by the Justice Department’s 2023 annual review.
For the second year in a row, more money was recovered from whistleblower cases the government declined to get involved in than from government-initiated cases. More than $2.3 billion of the $2.7 billion total, or about 86%, came from whistleblower cases.
“These numbers demonstrate the integral part that whistleblowers play in recovering federal funds lost to fraud,” Jacklyn DeMar, president and CEO of the public interest group known as the The Anti-Fraud Coalition, in a statement praising the settlements.
Of the more than $2.68 billion in False Claims Act settlements and judgments reported, more than $1.8 billion was related to matters involving the healthcare industry, including managed care providers, hospitals, pharmacies, laboratories, long-term acute care facilities and physicians.
“As the record-breaking number of recoveries reflects, those who seek to defraud the government will pay a high price,” warned Principal Deputy Assistant Attorney General Brian Boynton, head of the Justice Department’s Civil Division.
