Already facing heightened regulatory pressure, skilled nursing operators could find themselves the subject of more criminal investigations in 2024 with the Biden administration ramping up efforts to investigate what it calls corporate “power and control” over healthcare.

The White House announced in December it would be launching a cross-government public inquiry “into corporate greed in healthcare.” It includes the addition of new, high-ranking healthcare attorneys at three federal agencies with healthcare oversight.

That followed on the heels of a November promise by the Department of Justice to add 75 more attorneys this year to nine “strike forces” tasked with rooting out healthcare fraud.

All of this gives the federal government reinvigorated investigative powers and fresh resources to take civil and criminal cases against healthcare providers — both businesses and individuals — to court. Given the administration’s dogged attention on the long-term care sector and its owners over the last two years, several attorneys warn that more nursing home operators and investors could find themselves targeted.

“I think broadly there’s going to be a push, especially around staffing ratios and staffing levels,” said Spencer Bruck, a former New York special assistant attorney general who led civil healthcare fraud and whistleblower investigations involving nursing homes and other providers. “We’ve also seen other enforcement and transactions with third parties may also come up with regard to requests by regulators to disclose information related to management team transactions with related parties.”

Following the money

Fresh reporting rules related to transparency and ownership may embolden civil and criminal prosecution, supplying a stream of fresh data that could help underpin new cases.

“They’re going to use that data. They’re not gathering it to put it in a drawer,” Bruck, now an attorney with Crowell & Moring’s healthcare practice, told McKnight’s Long-Term Care News. “Financial disclosures, third parties and management teams, that’s easily geared towards civil cases. And then on top of that you have these new [proposed federal] regulations on staffing levels. So you could pair them together, for example, if you’re violating a staffing level and then you’re following the money.”

In the case of Medicare and Medicaid fraud teams, enforcement action often has been motivated by the opportunity to return misspent funds to the federal trust fund.

But as a recent federal case involving Pennsylvania nursing home owner Comprehensive Healthcare demonstrated, prosecutors are also increasingly empowered and even encouraged to pursue criminal cases. While a jury convicted two nursing homes for their roles in staffing and patient assessment fraud, it did let five individuals, including the facilities’ CEO, walk free on related charges. Still, the split verdict likely won’t dissuade the government from bringing similar cases against nursing homes in the future.

Strike Force teams use investigative resources from multiple agencies and work with prosecutors from US Attorneys’ Offices. They are designed to use intelligence and data to spot large scale or complex fraud activity. In 2022, they filed 266 indictments and criminal complaints, obtained 395 guilty pleas and argued 42 jury trials, according to a November report issued by the HHS Office of Inspector General.

Meanwhile, according to the same report, the Department of Justice opened 809 criminal healthcare fraud investigations and convicted at least 477 defendants of healthcare fraud-related crimes.

Riskier than ever?

The growth of regional and national strike teams, along with continuing anti-corporate rhetoric from the White House, portends more trouble ahead for skilled nursing providers.

The Department of Justice healthcare fraud unit already employs more criminal healthcare prosecutors than many US Attorneys offices have attorneys, noted Anthony J. Burba of Barnes & Thornburg LLP in commentary published in the National Law Review.

“When the Fraud Section’s resources grow, often there is a corresponding growth in assistant US attorney and agent numbers in the districts where strike forces are located,” he wrote. “If nothing else, healthcare providers can take from this announcement that the federal government’s investment in healthcare fraud enforcement will continue to grow, and its focus on these issues will remain sharp. … Understaffing and underfunding of compliance programs is riskier than ever.”

For more proof that the administration continues to paint some providers as profit raiders, one has to simply skim the latest fact sheet on lowering healthcare costs. It’s in that Dec. 7 document that the White House outlines its concern that the “healthcare system is increasingly being financialized, with corporate owners like private-equity firms and others maximizing their profits at the expense of patients’ health and safety, while increasing costs for patients and taxpayers alike.”

It directs the Justice Department, the Federal Trade Commission, and the Department of Health and Human Services to issue a joint Request for Information to seek input about how private equity and other corporations’ increasing power and control of healthcare is affecting Americans. 

The results would be used to underpin future regulation and enforcement prioritization, the White House said. The three agencies will continue to work together on case referrals, training, data-sharing, and new healthcare competition policy. 

It’s as part of that effort that HHS will appoint a chief competition officer and the DOJ’s Antitrust Division and FTC will name new counsels for healthcare.