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Bass, Berry & Sims Releases Annual Healthcare Fraud & Abuse Report

Brian D. Roark

Last month, Bass, Berry & Sims released their annual review of federal healthcare fraud and abuse enforcement actions for 2019. The report provides insight into issues of interest and analysis of trends and policy announcements surrounding compliance with the key federal statutes governing healthcare claims and referral relationships.

The Healthcare Fraud & Abuse Review is a collective effort of the firm's Healthcare Fraud Task Force and attorneys within the Healthcare Practice Group. The effort tapped into the expertise of more than 30 attorneys to create and edit the content.

Civil fraud recoveries attributable to healthcare companies were $2.6 billion for the fiscal year that ended Sept. 30, 2019. That number was up just slightly from the $2.5 billion in FY2018 recoveries and marked the 10th consecutive year that healthcare fraud recoveries topped the $2 billion mark.

"Healthcare companies must continue to invest in compliance efforts as fraud enforcement hasn't wavered at all during significant political and healthcare industry changes over the last decade," noted Brian D. Roark, head of the Bass, Berry & Sims Healthcare Fraud Task Force. "In an election year, where health policy is a crucial issue, we don't expect anything but continued robust enforcement efforts across all healthcare sectors."

A number of significant developments ... from important judicial decisions to trends in whistleblower approaches to the False Claims Act ... were highlighted in this most recent report. One such trend was the rise of the "professional relator."

The False Claims Act (FCA) allows private citizens to bring actions on the government's behalf based on allegations of wrongdoing in filing healthcare claims. As an incentive to turn in those engaged in fraudulent activity, whistleblowers receive a percentage of any monies recovered as a result of the lawsuit. While traditional relators have had personal knowledge of alleged false claims, the lucrative incentives have given rise to professional relators who mine Medicare claims data and other public information sources to develop FCA cases against healthcare providers with whom they have no personal relationship.

Matt Curley

"The drive for transparency in healthcare is making claims data and similar information available to analytics firms looking to make FCA cases," explained Matt Curley, a member of the firm's Healthcare Fraud Task Force and editor of the Review. "Providers must understand what their publicly available data show, because the government and relators see this data as fertile ground for FCA cases."

Taking a deeper dive on the information in this latest Review, Curley and Roark - who teach the Healthcare Fraud and Abuse Course at Vanderbilt University School of Law where they are adjunct professors- jointly answered questions about this year's highlights for Nashville Medical News.

NMN: Bass, Berry and Sims has produced this annual report since 2012. What overall trends have emerged?

Curley & Roark: During that time, the civil and criminal enforcement efforts of government regulators have remained robust both locally and nationally. We also have seen huge numbers of whistleblower lawsuits filed under the False Claims Act, with more than 3,500 such lawsuits filed by whistleblowers during the last five years. Results from enforcement actions concerning hospitals and health systems, as well as physicians, continue to make up a significant percentage of the recoveries involving healthcare fraud and abuse issues.

NMN: Was there a particular segment of healthcare that was more vulnerable to FCA actions in 2019?

C&R: The government and whistleblowers continue to focus on arrangements between physicians and hospitals and whether those arrangements comply with regulatory requirements such as the Stark law and the Anti-Kickback Statute. There also is a continued focus on whether particular care or services are medically necessary. Both types of cases are important from the perspective of regulators because they implicate questions of patient harm and whether clinical judgment has been compromised.

NMN: Speaking of Stark and the Anti-Kickback Statute, what should providers know about proposed changes and how those might impact the way they practice and refer?

C&R: Proposed regulatory changes are intended to address the healthcare industry's shift to a value-based payment and delivery model and movement away from the traditional fee-for-service reimbursement model. While the specifics of the proposed changes are too voluminous to catalogue here, these changes, if implemented, could go a long way to easing some of the impediments to moving toward a value-based model, many of which stem from enforcement actions challenging the appropriateness of financial arrangements between referral sources.

NMN: What about the issue of medical necessity?

C&R: One of the most significant cases of the past year was an Eleventh Circuit decision holding that a claim cannot be deemed false under the False Claims Act based on a difference in clinical opinion between the government's and defendant's experts. Rather, FCA liability requires some objective falsehood, such as the physician did not review the patient's medical records; the physician did not believe the diagnosis; or no reasonable physician could have reached the diagnosis. The court's rationale should make it harder for the government or relators to bring FCA cases based on lack of medical necessity.

NMN: With both traditional and professional relators on the lookout for opportunities to file FCA claims, what should providers keep in mind?

C&R: Data can be a great source of evidence for regulators or whistleblowers to bolster allegations of fraud against healthcare providers. It can show trends and how a provider stacks up relative to peers. Healthcare providers should proactively undertake to analyze and understand their own data, as that analysis may identify issues that need to be more closely reviewed or evaluated.

NMN: There are many private equity firms in Nashville that are instrumental in scaling up healthcare companies. What liability do they face if an FCA action is brought against a company in which they are an investor?

C&R: There is no question that private equity firms are increasingly investing in companies across all sectors of the healthcare industry both in Nashville and throughout the country. There have been recent efforts by whistleblowers and regulators to hold private equity firms responsible under a theory that those firms caused their portfolio healthcare company to submit false claims to government payers. The more closely a private equity firm is perceived as involved in the day-to-day operations of a company, the higher the risk that whistleblowers might seek to bring that firm into the scope of their theory of liability.

NMN: What course of action should someone take if facing an allegation of fraud or abuse or if an issue comes to light through a self-audit?

C&R: Inquiries from the government (whether by subpoena, civil investigative demand, agent interviews, or through some other means) should always be taken seriously. Respond promptly, investigate any issues raised, and consider disclosing and resolving any problems found.

Providers should evaluate their compliance programs and ensure that sufficient resources are in place to ensure that these programs are effective. If and when compliance issues are identified, providers must be sure to investigate and remediate those issues and should document those remedial efforts in the event those issues become the subject of whistleblowing or enforcement focus in the future.

Providing appropriate feedback to individuals who raise compliance issues is an important part of a compliance program. Individuals often become whistleblowers and pursue remedies outside of the organization when they do not believe their concerns have been heard within the organization.

Downloading the Full Report

The 2019 Healthcare Fraud & Abuse Review is available here.


Bass, Berry & Sims

Annual Review


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Anti-Kickback Statute, Bass, Berry and Sims, Brian Roark, False Claims Act, FCA, Healthcare Fraud & Abuse Review. Matt Curley, Healthcare Fraud Task Force, Healthcare Whistleblower, Professional Relator, Stark Laws
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