Kusserow on Compliance: DOJ reports 2019 False Claims Act Recoveries of over $3B

The DOJ obtained more than $3 billion in settlements and judgments from civil cases involving fraud and false claims against the government in fiscal year 2019. Recoveries since 1986, when Congress substantially strengthened the civil False Claims Act, now total more than $62 billion. Of the more than $3 billion in settlements and judgments recovered, $2.6 billion related to the health care industry.

This was the tenth consecutive year that health care fraud settlements and judgments have exceeded $2 billion. Whistleblower, or qui tam, actions comprise a significant percentage of the False Claims Act cases that are filed. Of the $3 billion in settlements and judgments reported by the government in fiscal year 2019, over $2.1 billion arose from lawsuits filed under the qui tam provisions of the False Claims Act.

During the same period, the government paid out $265 million to the individuals who exposed fraud and false claims by filing these actions. The number of lawsuits filed under the qui tam provisions of the Act has grown significantly since 1986, with 633 qui tam suits filed this past year—an average of more than 12 new cases every week. In its news release, the DOJ noted that it had increased holding individuals accountable and cited examples of actions taken against responsible executives.

Richard P. Kusserow served as DHHS Inspector General for 11 years. He currently is CEO of Strategic Management Services, LLC (SM), a firm that has assisted more than 3,000 organizations and entities with compliance related matters. The SM sister company, CRC, provides a wide range of compliance tools including sanction-screening.

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Copyright © 2020 Strategic Management Services, LLC. Published with permission.

Kusserow on Compliance: OIG program exclusions reported for second half of 2019

Total of 2640 new exclusions added to the LEIE in 2019

Under the Social Security Act, the HHS Office of Inspector General (OIG) is able to exclude individuals and entities from participation in Medicare, Medicaid, and other Federal health care programs. Exclusions are required (mandatory exclusion) for individuals and entities convicted of the following types of criminal offenses: (1) Medicare or Medicaid fraud; (2) patient abuse or neglect; (3) felonies for other health care fraud; and (4) felonies for illegal manufacture, distribution, prescription, or dispensing of controlled substances. The OIG is also authorized (permissive exclusion) to exclude individuals and entities on several other grounds, including misdemeanors for other health care fraud (other than Medicare or Medicaid); suspension or revocation of a license to provide health care for reasons bearing on professional competence, professional performance or financial integrity; provision of unnecessary or substandard services; submission of false or fraudulent claims to a federal health care program; or engaging in unlawful kickback arrangements. The Patient Protection and Affordable Care Act (ACA) added another basis for imposing a permissive exclusion, that is, knowingly making, or causing to be made, any false statements or omissions in any application, bid, or contract to participate as a provider in a federal health care program, including managed care programs under Medicare and Medicaid, as well as Medicare’s prescription drug program.

During this semiannual reporting period, the OIG excluded 1,347 individuals and entities from Medicare, Medicaid, and other federal health care programs. Most of the exclusions resulted from convictions for crimes relating to Medicare or Medicaid, patient abuse or neglect, financial misconduct, controlled substances, or as a result of license revocation. The OIG completed the deployment of a new service for State Medicaid Fraud Control Units (MFCUs) to report convictions through a central web-based portal for exclusion. This improved reporting from those agencies. A list of excluded individuals and entities can be found at https://exclusions.oig.hhs.gov/.

 

Richard P. Kusserow served as DHHS Inspector General for 11 years. He currently is CEO of Strategic Management Services, LLC (SM), a firm that has assisted more than 3,000 organizations and entities with compliance related matters. The SM sister company, CRC, provides a wide range of compliance tools including sanction-screening.

Connect with Richard Kusserow on LinkedIn.

Subscribe to the Kusserow on Compliance Newsletter

Copyright © 2020 Strategic Management Services, LLC. Published with permission.

Kusserow on Compliance: False Claims Act settlements on the risk spectrum

OIG reported results of action taken in FY2019

The government’s primary civil tool for addressing health care fraud is the False Claims Act (FCA) and most of these cases are resolved through settlement agreements in which the government alleges fraudulent conduct and the settling parties do not admit liability. Based on the information it gathers in an FCA case, the OIG assesses the future trustworthiness of the settling parties (which can be individuals or entities) for purposes of deciding whether to exclude them from the federal health care programs or take other action. The OIG applies published criteria to assess future risk and places each party to an FCA settlement into one of five categories on a risk spectrum. OIG bases its assessment on the information OIG has reviewed in the context of the resolved FCA case and does not reflect a comprehensive review of the party.

The OIG published its FCA risk spectrum report for 2019. The amount of settlements was not part of this report but will be provided separately later. There were fifteen entities excluded based on FCA violations. Another 40 entities entered into Corporate Integrity Agreements (CIAs), which was at about the same rate as in recent past years. Also reported were two cases where the entity was placed on Heightened Security, rather than signing a CIA. In addition there were twelve self-disclosures related to FCA violations reported.

Richard P. Kusserow served as DHHS Inspector General for 11 years. He currently is CEO of Strategic Management Services, LLC (SM), a firm that has assisted more than 3,000 organizations and entities with compliance related matters. The SM sister company, CRC, provides a wide range of compliance tools including sanction-screening.

Connect with Richard Kusserow on LinkedIn.

Subscribe to the Kusserow on Compliance Newsletter

Copyright © 2019 Strategic Management Services, LLC. Published with permission.

Chiding parties, court grants doctor sanctions for manufacturer’s failure to disclose witnesses

In an animated opinion, a judge grants a request for sanctions against Boston Scientific for failure to disclose witnesses after a long history of discovery disputes.

Noting that it was “[c]learly. . . not enamored with the parties’ conduct,” a district court judge in Minnesota found that Boston Scientific Corporation (BSC), a medical device manufacturer, failed to fully disclose certain witnesses and therefore granted, in part, a doctor’s motion for sanctions in a False Claims Act (FCA) (31 U.S.C. §3729 et seq.) action. Although the court found that both parties “share the blame as to certain discovery woes,” it found that the medical device manufacturer engaged in a shell game by failing to disclose four individuals as having specific knowledge of certain relevant information (U.S. ex rel Higgins v. Boston Scientific Corp., October 16, 2019, Rau, S).

Discovery proceedings

Initially, the doctor filed a qui tamaction on behalf of the government, alleging that the manufacturer violated the FCA. The doctor claimed that the manufacturer sold defective medical devices and that it provided kickbacks. Following the outcome of several procedural motions, the doctor filed his Second Amended Complaint. The court began the road of guiding the parties through discovery. Initially, the parties appeared to work cooperatively and productively, parsing out electronically stored information (ESI) search terms and custodians. However, later, the parties reported that they were at an “impasse” regarding certain issues. The court provided a step-by-timeline of discovery, including agreements and disputes. At some point, it became apparent that discovery had broken down. During the course of discovery, the doctor filed several motions to compel. In each instance, the court found in the doctor’s favor.

Later, the doctor raised several issues, including the manufacturer’s last-minute amendment to its initial disclosure. Specifically, on the last day of discovery, the manufacturer disclosed seven new individuals it might use to support its claims or defenses, four of which had information about FDA correspondence and submissions. Those four, along with others, were not disclosed as custodians. The doctor subsequently filed this motion for sanctions.

The court found that the manufacturer left off from its initial disclosure the individual who was a “central witness” regarding the manufacturer’s communications with the FDA about the relevant medical devices, along with several other individuals. The court rejected the manufacturer’s contention that it had no affirmative obligation to amend its disclosure to add the individuals. With respect to one individual, the manufacturer claimed he was referenced in hundreds of documents, but according to the court, those represented only a small number of the total documents produced. In its ruling, the court found the manufacturer’s logic was flawed. Among other things, the court questioned how, if the manufacturer made a truthful and fulsome response to the government’s FCA investigation, it failed to recognize the import of the newly-disclosed individual’s knowledge. Instead, the court said it was convinced that the manufacturer engaged in malfeasance.

According to the court, manufacturer misled the doctor. The initial disclosures were the foundation for all discovery, and the manufacturer’s failure to disclose the newly-disclosed individuals prejudiced the doctor throughout discovery. The court suggested that the manufacturer knew what it was doing. The court claimed that the manufacturer’s failure to disclose was not an oversight, but a strategy that coincided with baseless legal arguments regarding that and other discovery issues, leading to gamesmanship the court said it wound not reward.

Turning to the sanctions to be levied, the court said that rules of procedure makes exclusion of evidence the default, self-executing sanction in the event a party fails to comply disclosure rules. However, the rule permits imposition of alternative sanctions. In this instance, exclusion of the witnesses’ testimony would be detrimental to the doctor and would reward the manufacturer. Accordingly, the court ordered the manufacturer to produce documents from the newly-disclosed witnesses and the doctor was granted leave to depose the four individuals. Additionally, the manufacturer was barred from using documents or testimony that it could not affirmatively show was produced to the doctor during discovery or in light of the ruling at hand. The manufacturer was also ordered to pay the doctor’s costs and attorneys’ fees incurred in filing the motion for sanctions and for the additional discovery.