EXECUTIVE SUMMARY

The Department of Justice’s annual report shows a focus on telemedicine and COVID-19 fraud. The number of charges and defendants dropped form 2020.

  • Telemedicine was involved in $1.1 billion of fraud.
  • Sober homes and opioid prescriptions accounted for many charges.
  • About one-third of defendants were licensed medical professionals.

The Department of Justice’s (DOJ’s) 2021 Healthcare Takedown report indicates government investigators are looking for fraud in some areas related to the pandemic as well as some perennial sources of wrongdoing.

Known in the industry as the Healthcare Takedown, DOJ’s annual announcement of healthcare fraud indictments across the country has the primary purpose of showing its commitment to fighting fraud, explains Lawrence J. Cameron, JD, partner with McGuire Woods in Raleigh, NC. But the annual announcement can be analyzed for a look into where the DOJ and U.S. attorneys are focusing their efforts to find and punish healthcare fraud.

Four Types of Fraud

The 2021 report includes charges against 138 defendants, including 42 medical professionals, involving allegations of $1.4 billion of fraud involving federal healthcare programs. That is a sharp drop from the 345 defendants charged with $6 billion in fraud in the 2020 Healthcare Takedown.

The DOJ focused on four types of fraud in 2021. The largest amount of fraud loss charged involved telemedicine, possibly because of the greatly increased use of this technology during the COVID-19 pandemic. The DOJ charged 43 defendants with more than $1.1 billion related to telemedicine fraud.

Charges related specifically to COVID-19 accounted for $29 million in false claims to federal healthcare programs. Sober homes were cited for $133 million in illegal conduct, such as paying kickbacks to referring providers and billing for medically unnecessary care. Continuing from previous years, the DOJ focused on opioids, charging 19 defendants who prescribed 12 million doses of opioids and other narcotics and submitted $14 million in false claims.

Cameron notes 42 of the 138 defendants charged in 2021 were licensed medical professionals. One example involved a physician, physician assistant, and a nurse practitioner who the DOJ says operated a “pill mill,” distributing approximately 150,000 illegal prescriptions.

“Prosecutors alleged that they prescribed large quantities of prescription opioids, benzodiazepines, sleeping medications, and muscle relaxers to people who essentially were addicts, without even providing a medical exam first,” Cameron explains. “Most of their patients paid cash, but the defendants allegedly continued to bill Medicaid, Medicare, and private insurance at least sometimes for the same patients.”

The DOJ estimates such illegal prescriptions have cost Medicare approximately $5.7 million since 2017, according to the report.

COVID-19 Fraud on Radar

Some of the 2021 prosecutions were influenced by funds that flowed into the federal system because of legislation intended to address the COVID-19 pandemic.

“DOJ is focusing on anything that can even tangentially be related to COID-19 fraud. You have telemedicine and sober homes because there was an increase in addictive behavior during the pandemic, so it’s not just the direct fraud related to relief funds,” Cameron says. “The surprise was that it was a bit smaller than last year’s takedown.”

Cameron suspects the smaller number was due to the DOJ focusing on pandemic-related cases, even if that meant the number of prosecutions would be smaller, with the goal to send a message that would deter future profiteering from COVID-19.

“They’re trying to deter [fraudulent] conduct. They’re being more targeted and showing that they are going to regularly and aggressively target offenders in this area to deter bad actors,” Cameron says. “The message for risk managers is that the sooner you can catch a bad actor who may be involved with your organization, the better. The sooner you can get in front of it and self-report, the better you are going to come out of it in the end.”

The issues the DOJ focused on this year probably will carry over into 2022 enforcement, Cameron says. Telemedicine is one area that could receive even more attention.

“During the pandemic, some of the requirements around telemedicine were loosened. Now, there is some expectation that some of the pre-pandemic restrictions will be back into play,” Cameron says. “Healthcare organizations need to be mindful about how they are monitoring the regulations and how they adjust their internal policies and procedures so they are compliant if some of these pre-COVID requirements come back.”

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