By Beth Anne Jackson and Allison Shelton, Brown & Fortunato, P.C.
In its annual report on False Claims Act (FCA) recoveries released February 1, 2022, the Department of Justice confirmed that health care fraud was “once again the leading source” of its FCA settlements and judgments, totaling more than $5 billion in the fiscal year 2021. This compares to $1.8 billion in FY2020.
Before reviewing the details of the report, it is worthwhile to examine the fact that health care entities accounted for approximately 90% of the FCA settlement dollars recovered by DOJ in FY2021. Health care constituted 9.12% of federal discretionary spending and 27.92% of mandatory federal spending in FY2021. So why does it account for the vast majority of FCA recoveries? One reason is that health care fraud has been high on the list of DOJ priorities for decades: Janet Reno, U.S. Attorney General from 1993-2001, called it “one of my major initiatives.” Another is that Medicare and other payers have volumes of data and sophisticated tools in place to analyze the data and to detect fraud. In addition, CMS has significant program integrity funding and uses it strategically to root out areas in which fraud is prevalent. Finally, and importantly, CMS has been granted expanded statutory authority to screen providers, exclude providers, cross-terminate between Medicare and Medicaid, suspend payments in cases of suspected fraud, and conduct an array of audits. CMS findings are shared with the DOJ, which then pursues what it assesses to constitute false claims.
In the DOJ report for FY2021, fraud related to the opioid epidemic garnered the highest dollar amounts in recoveries. Indivior and Purdue, as well as several individuals, entered into settlements regarding conduct that was alleged to have fueled opioid 
abuse. The DOJ made substantial recoveries as well from Medicare Advantage contractors who were alleged to have misrepresented beneficiaries’ health status to increase the risk-based capitation that they received from the Medicare program.
Violations of the federal Anti-Kickback Statute (AKS) resulted in sizeable recoveries as well. The largest of these was a settlement of more than $400 million paid by generic drug manufacturers based on allegations that they made unlawful payments to fix the price of some generic drugs. Additionally, the AKS was the basis for $160 million being paid by Arriva Medical LLC to resolve allegations that it routinely waived copayments. Another $140 million was received in settlement from pain management clinics and urine drug testing laboratories for allegedly paying kickbacks to providers to induce referrals. Interestingly, AKS was the basis for a more than $18 million settlement with electronic health records (EHR) technology vendor Athenahealth, Inc. The EHR vendor allegedly ran various programs to generate sales, including all-expenses-paid trips to the Master’s Tournament and the Kentucky Derby. The DOJ’s press release explained the theory of liability:
As a result of these kickbacks, it is alleged that Athena improperly generated sales for itself while causing healthcare providers to submit false claims to the federal government related to incentive payments for adoption and “meaningful use” of Athena’s EHR technology.
Last but not least, the provision of unnecessary medical services resulted in tens of millions of dollars in settlements. This included not only the provision of unnecessary DME and “worthless” skilled nursing services but also the provision of defective devices, such as defective point-of-care testing devices for monitoring coagulation and implantable heart devices with batteries that prematurely became depleted, resulting in adverse health events for patients.
Looking closer at the statistics attached to the report, one sees that qui tam settlements accounted for only $1.47 billion of the more than $5 billion recovered from health care providers in FY2021. With more than $3.59 billion in recoveries, non qui tam cases accounted for almost 60% of the settlements and judgments. Moreover, these recoveries were made on fewer cases – in the last two fiscal years, new qui tam cases have outnumbered the DOJ-initiated cases by more than 3 to 1. Looking back a decade to FY2011 and FY2012, 38 and 26 cases, respectively, were filed by the government. In contrast, the government filed 122 new cases in FY2020 and 97 in FY2021. FCA cases can take years to build and more to resolve. One can only conclude that more cases being filed against health care entities means more paid out in settlements in the coming years. FY2021 was the second largest in terms of FCA dollars recovered, but it seems like more record-breaking years for the DOJ are inevitable.
Compliance with the voluminous and byzantine regulations and sub-regulatory guidance of federal health care programs is difficult. Nonetheless, as long as DOJ’s efforts continue to expand in the health care space, it is absolutely necessary to make such compliance efforts a priority and to implement programs to prevent and detect fraud, waste, and abuse within your organization.