Fraud stemming from the COVID-19 pandemic continues to be a criminal enforcement priority for the US Department of Justice (DOJ). On April 20, DOJ announced a new round of criminal charges against 21 defendants that stem from over $149 million in allegedly fraudulent billing to federal healthcare programs and pandemic assistance programs. The new cases raise DOJ’s total COVID-19-related enforcement stats to 35 defendants and over $290 million in fraudulent billing across 16 federal districts.
The allegations detailed in DOJ’s recent press release involve schemes related to COVID-19 testing, telehealth, and misappropriation of Provider Relief Fund (PRF) payments. These schemes are nearly identical to DOJ’s first COVID-19 enforcement action announced last May. Unsurprisingly, DOJ’s criminal enforcement activities have focused on individuals taking advantage of the rapidly constructed infrastructure surrounding the country’s response to the pandemic. While an important enforcement priority, the conduct involved has been relatively unsophisticated. In one matter involving a manufacturer of fake COVID-19 vaccination cards, the defendant even told an undercover federal agent, “until I get caught and go to jail… I’m taking the money, ha! I don’t care.”
The real story, however, may be in what lies ahead. DOJ’s recent announcement shows that it is continuing to pursue schemes designed to be quickly and easily profitable. But given the massive size of federal programs designed to combat COVID-19 (the PRF is $178 billion, of which nearly $120 billion has been distributed to healthcare providers), DOJ’s focus may eventually turn toward more complex and sophisticated schemes. Many of these may be the result of qui tam complaints or based on Office of Inspector General of the US Department of Health and Human Services investigations and audits.
Stakeholders in the healthcare and life science industries should attempt to get ahead of this anticipated wave of enforcement and audit activity. This includes carefully evaluating your organization’s involvement with COVID-19-related programs (e.g., did your organization receive PRF funds or Paycheck Protection Program funds?), as well as compliance with the myriad terms and conditions of each of these programs. Particularly for enterprise organizations that may have received PRF funds across multiple providers, evaluating and documenting the use of those funds remains an important risk mitigation activity.
Notably, reflecting the rapid evolution of these programs, the federal government is continuing to update its policies on PRF reporting and other COVID-19 programs. For instance, the Health Resources & Services Administration recently announced that providers experiencing extenuating circumstances may be able to submit PRF reports late. As has occurred in other major emergency situations, it can be particularly challenging for providers to identify changes made by government entities to regulatory requirements and obligations, which can lead to significant risk exposure after the dust has settled.
If you have questions about conducting an internal investigation or evaluation related to COVID-19 programs, contact us for more information.