Healthcare providers were forced to pay nearly $2 billion to resolve federal False Claims Act allegations last year, a historic amount that serves as one of several fresh indicators that federal investigations of long-term care and others will likely ramp up in 2024 and beyond.

The government and whistleblowers were party to 543 settlements and judgments in 2023. That was an annual record for federal involvement in such cases, the Department of Justice reported in March.

But law enforcement officials aren’t content to put all of their compliance opportunities in one basket. On the heels of the February False claims announcement, the DOJ also published a video from a first-ever summit intended to strengthen investigations into elder abuse and fraud — including oversight of nursing homes. 

The department acknowledged in the session description that nursing homes are already regulated by federal and state agencies. But officials made it clear during their two-day event that they want local and state law enforcement agencies to join them in digging deeper into nursing
home operations.

“A nursing home can be, with the right facts and circumstance, a crime scene,” Susan Lynch, senior counsel for the Justice Department’s Elder Justice unit, told attendees. “We need you, law enforcement, to partner with us, the Department of Justice, states, EMS, ombudsmen, to really bring to justice those nursing homes and their owners who are providing grossly substandard care to residents.”

And operations aren’t the only target. Financial strategies and relationships continue to attract additional scrutiny from the Biden administration.

The elder abuse video landed simultaneously with a formal request for information on tools and strategies that could help the Justice Department, Health and Human Services and the Federal Trade Commission “accurately understand the modern market realities of the healthcare industry and forcefully enforce the law against unlawful deals.”

Dark days ahead?

Combined, these steps can be taken as ominous signs for providers, even those with strong compliance records.

The False Claims Act awards whistleblowers triple damages for helping bring 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 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 lawyer Thomas Barnard told McKnight’s Long-Term Care News.

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 says. “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 occurs, 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 says, are continuing attempts to make COVID relief recoveries in the next few years and the role of increasing state-level False Claims-like actions.

Rewarding whistleblowers

In March, the Justice Department issued yet another threat when it announced it plans to launch a reward hotline for whistleblowers.

Deputy Attorney General Lisa Monaco touted some high-profile convictions of healthcare companies and investment firms over the last two years as she explained the rationale behind the new approach. 

“This is challenging work,” she told members of the American Bar Association. “As we investigate more complex schemes, in more corners of the globe, with more evidence to gather and disclose, we’re inevitably devoting more resources to each individual case. And in part because we’re bringing serious charges, with significant penalties, against senior executives, we’re also taking more cases to trial.”

What’s a new way to prod more information that could help the department develop such cases? 

Monaco says that would be money, likening a reporting tool in the works to “Wanted” posters from the Old West era.

Although it’s still too early to know exactly how the hotline might be used to target healthcare providers, attorneys say it will pay to be aware
of developments.

“The DOJ’s been pretty clear that this is supposed to be kind of a gap-filling measure,” says Sean O’Connell, a Baker Donelson attorney who represents clients in health care fraud, tax, False Claims and Foreign Corrupt Practices cases.

He believes it could ultimately be a way to hold accountable healthcare companies with foreign ownership, including some private equity investors. In the past, foreign corruption and false claims cases haven’t had much crossover; this new use of tipsters may change that.

For now, however, Barnard says announcing the program is sort of like building the airplane while flying it. Only final details will determine how exactly callers could target healthcare providers.

While Monaco says the hotline’s rewards would not be available to individuals who could bring their cases as whistleblowers under existing law (such as False Claims), O’Connell and Barnard envision a program that could be susceptible to competitors turning on each other. 

Barndard also warned that cash incentives could encourage cybersleuthing or data thefts at a time when the DOJ says it is hyper-focused on cyber security in healthcare.

“I see a lot of red flags around this,” he says.

Consumer groups, however, love the idea that the US is willing to expand the role of whistleblowers, regardless of how often scurrilous claims might drag on, for many years in some cases, and add millions to national healthcare costs. 

Last year was the second in a row that more money was recovered from whistleblower cases that 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,” said Jacklyn DeMar, president and CEO of the public interest group known as the The Anti-Fraud Coalition, in a statement praising the 2023 settlement totals.