It is becoming increasingly evident that in 2021 the U.S. healthcare industry is experiencing intensified levels of governmental scrutiny, which is likely continue for the foreseeable future. Following a period of concentrated and widespread federal spending in response to the Covid-19 pandemic, the U.S. government is keen to ensure any misappropriated funds are retrieved.  As mentioned in my previous blog, the False Claims Act (FCA) continues to be highly effective in enabling the Department of Justice (DOJ) to recover monies incorrectly or fraudulently-billed via schemes such as Medicare, Medicaid, TRICARE and the Provider Relief Fund.  In the DOJ’s own words: “The False Claims Act is the Government’s primary tool for redressing the knowing misuse of taxpayer funds”.

U.S. healthcare organisations are no strangers to the challenges posed by DOJ enforcement actions regarding regulatory medical billings. Yet, recently many have found themselves ill prepared when faced with the DOJ’s reinvigorated determination, which is proving more financially challenging and time consuming to defend in ensuing litigations.

The increase in DOJ enforcement activity is particularly stark when compared with last year’s recoveries under the FCA, which decreased considerably from the previous year. In 2020, approximately $2.2 billion was recovered – the lowest figure since the 2008 financial crisis – down 27% from the circa. $3.08 billion recovered in 2019. The rise in DOJ actions have prompted a corresponding 20% – 30% year-on-year increase in submissions for medical billings insurance.

The growing number of government-initiated investigations is a clear indication of the DOJ’s intent to be more proactive and robust in its oversight. This is in addition to increased audit funding and the expansion of government task forces, commissions and appointees whose sole focus is policing the distributions of federal funds. Harnessing data analytics will be the next step in the government’s increasingly sophisticated drive to identify potential fraud cases missed by whistleblowers.

Whistleblowers, or qui tam, play a significant role in FCA-related actions, accounting for between 15% – 30% of all cases. However, non-qui tam-initiated investigations are also increasingly fuelling a growing number of FCA lawsuits. In March the DOJ applauded the “unprecedented pace and tempo” of efforts by a long list of whistleblowers. As healthcare providers also begin to submit mandatory reports detailing the use of federal funds, a further escalation in the number of filings is highly likely.

In addition to the increased frequency and strict application of the FCA, a further challenge stems from the fact that the FCA does not discriminate between deliberate acts of fraud and common negligence or mistakes. This means healthcare businesses can fall foul of lengthy and expensive lawsuits following something as innocent as an administration error.

Given the DOJ’s expanded resources and heightened determination, which Attorney General Merrick B. Garland described as: “an historic enforcement initiative to detect and disrupt COVID-19 related fraud schemes”, demand for medical billings insurance is rising. This reflects mounting concern about the adequacy of self-insuring, with many providers now looking to insurance to safeguard their ability to meet the financial burden of defending themselves should they be subject to DOJ action.