On March 19, 2021, the U.S. Department of Health and Human Services Office of Inspector General (“OIG”) published its annual report detailing the Medicaid Fraud Control Units (“MFCUs”) case outcomes.  According to the report, MFCUs recovered $1 billion from criminal and civil cases, equating to $3.36 recovered for every $1 spent for investigations. 

MFCUs investigate and prosecute Medicaid provider fraud and patient abuse/neglect in all 50 states, the U.S. Virgin Islands, Puerto Rico, and the District of Columbia.  MFCUs’ cases usually begin as referrals from the public, state Medicaid agencies, and other federal and state agencies.  As of February 2021, the OIG has approved data mining for twenty-one MFCUs under 42 C.F.R. § 1007.20, which can also be a source for cases.  MFCUs review referrals to determine the potential for criminal or civil action, or sometimes, for both criminal and civil action, all of which may result in monetary penalties and administrative action, such as exclusion.

In an internal OIG survey, MFCUs reported significant challenges in 2020 that limited case outcomes due to the COVID-19 pandemic.  Despite the challenges, MFCUs achieved significant outcomes. 

Convictions.  MFCUs reported a decline (from 1527 to 1017) in convictions for fraud and abuse/ neglect.  Working with the OIG, MFCUs reported a conviction rate of 87.7% for FY 2020, a decline from 90.3% in FY 2019.  The 87.7% conviction rate is significant considering it is the lowest conviction rate since FY 2016.  Fraud convictions accounted for three-quarters of all FY 2020 convictions.  Within the abuse and neglect conviction category, nurse’s aides (e.g., CNAs) and nurses accounted for 42% of the convictions.  MFCUs also reported a decline in criminal recoveries of monetary penalties, from $305 million to $173 million.  

Exclusions.  MFCUs caused 928 exclusions (43%) out of the 2,148 total OIG exclusions in FY 2020, which does not include cases MFCUs worked jointly with the OIG Office of Investigations that may have resulted in exclusions.

Civil Settlements.  Unlike criminal convictions, civil settlement and judgments increased from 658 to 786.  Not surprisingly, pharmaceutical manufacturers had the highest number of civil settlements and judgments (263).  Also, pharmaceutical manufacturers had over four times the number of settlements than the next major industry – Medical Device Manufacturers (54).  Durable Medical Equipment, Prosthetics, Orthotics and Supplies (DMEPOS) was third in civil settlements (45), according to the report.  While the number of settlements and judgments increased, civil recovery amounts decreased by 48% from $1.6 billion in FY 2019 to $855 million in FY 2020.

Despite the outcome declines associated with COVID-19 pandemic, MFCUs obtained over $1 billion in civil and criminal recoveries.  The OIG, MFCUs, and other enforcement agencies will continue to take criminal, civil, and administrative action against individuals and entities that do not comply with fraud, waste, abuse laws.  For example, despite the 87.7% conviction rate in FY 2019, MFCUs (working with the OIG) have set 89% as the target conviction rate for FY 2021 and FY 2022.  Likewise, the target rate for indictments is also higher in FY 2021 (19%) and FY 2022 (18.4%), than the actual indictment rate in FY 2020 (17.2%).  The increased target indictment and conviction rates highlight the continued and ever-increasing importance that healthcare entities take proactive steps regarding compliance. 

The attorneys at Chilivis Grubman represent both companies and individuals in connection with government investigations, both criminal and civil, and in False Claims Act litigation.  If you have any questions related to such matters, please contact us today.