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Bass, Berry & Sims Releases Healthcare Fraud and Abuse Review 2018 Examining Key Issues Affecting Fraud Enforcement


Healthcare providers remain under close scrutiny by regulators amid uncertainty at the highest levels of government, regulatory developments impacting the enforcement environment, and key cases interpreting the False Claims Act (FCA), according to the Healthcare Fraud and Abuse Review 2018 released today by Bass, Berry & Sims.

"Healthcare companies have a lot at stake in 2019 on the fraud and compliance front," said Brian D. Roark, head of the Bass, Berry & Sims Healthcare Fraud Task Force. "From court rulings considering important FCA issues to legislative developments designed to stem the opioid epidemic to implementation of enforcement guidance issued last year by the DOJ, healthcare providers should pay particular attention to healthcare fraud developments in the coming year."

Download the Healthcare Fraud and Abuse Review 2018

Federal courts are expected to continue to grapple with the Supreme Court's opinion in Universal Health Services, Inc. v. U.S. ex rel. Escobar, which already has upended more than $1 billion in jury verdicts involving FCA claims. Litigants are expected to continue to seek review of key appellate decisions involving Escobar and its treatment of the FCA's materiality requirement.

Whistleblowers continue to pursue qui tam lawsuits informed by the greater public availability of healthcare provider data. "We are increasingly seeing whistleblowers mine data to support possible theories of liability under the FCA," said Matthew M. Curley, a member of the Healthcare Fraud Task Force and editor of the Healthcare Fraud and Abuse Review 2018. "Healthcare companies should be vigilant in understanding and evaluating their own data to identify risk areas as part of their proactive compliance programs."

FCA and the Opioid Crisis

The Review also recounts recent fraud enforcement developments tied to the opioid crisis, including new prosecutorial task forces aimed at medical professionals who prescribe opioids and companies in the manufacturing and distribution chain. A provision in last fall's sweeping opioid-related legislation is expected to have a far-reaching impact for clinical laboratories - even labs that do not provide drug treatment, recovery or testing services. Known as the Eliminating Kickbacks in Recovery Act (EKRA) when it was a stand-alone bill, the law establishes all-payor criminal liability for payments tied to referrals, not just for patients covered by government health programs as with the federal Anti-Kickback Statute.

The broad language of the legislation calls into question many common laboratory arrangements, including all sales-based compensation arrangements, said Anna M. Grizzle, an experienced healthcare attorney who advises clients on compliance and enforcement-related issues. "Laboratory operators will want to monitor developments closely as federal agencies interpret this law," Grizzle added. "At the very least, labs with volume-based compensation arrangements should consider an interim policy until the impact of the new law comes into better focus."

Pharmaceutical Makers and Patient Assistance Programs under the FCA

Pharmaceutical manufacturers should also pay close attention to the activities of and relationships with any patient assistance programs and charitable foundations that help patients with access to and the cost of medicines. This past year saw numerous settlements involving multi-million dollar payments and corporate integrity agreements. "Patient assistance programs and charitable funds will continue to be an area of focus for government regulators, especially with increasing political pressure on the cost of certain pharmaceutical products and therapies," said John E. Kelly, the former Assistant Chief for Health Care Fraud at the DOJ and managing partner of Bass, Berry & Sims' Washington, D.C., office. "Evaluating these various patient-focused practices from a compliance perspective is critical to avoiding the costs of huge settlements and the business disruption of a corporate integrity agreement."

DOJ Memos Impact on Fraud Enforcement

The Review also details the impact on fraud enforcement stemming from two memos issued to DOJ attorneys handling healthcare fraud enforcement matters. The "Granston Memo" lays out evaluation criteria for government lawyers considering whether to dismiss qui tam lawsuits that the government declines to prosecute, even when whistleblowers wish to continue pursuing their claims. And, the "Brand Memo" prohibits DOJ attorneys from giving the force of regulation to agency guidance documents in certain civil enforcement actions to establish violations of applicable laws, including the FCA.

"These memos may signal significant and nuanced shifts in the government's approach to analyzing and pursuing allegations of healthcare fraud," said Lisa S. Rivera, a former federal prosecutor and member of the firm's Healthcare Fraud Task Force. "Diminishing the role of agency guidance has the potential to limit the theories of liability available to whistleblowers and the government, while the dismissal criteria point to DOJ's greater focus on preserving resources and avoiding unfavorable precedents and government discovery in non-intervened cases."

The uncertainty healthcare companies face in the evolving fraud landscape underscores the need to regularly re-evaluate compliance programs. "No matter the political power dynamics in Washington, fraud enforcement always has strong support," Roark said. "Investing in compliance programs and instilling a culture of compliance avoids settlements and, more importantly, allows management to focus on the business instead of investigations and litigation."


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