While much of the Department of Justice’s (DOJ) enforcement has shifted away from white collar to other areas such as immigration, drug trafficking, and violent crime, the Trump DOJ has made clear that it will continue to prioritize enforcement under the False Claims Act (FCA), using both traditional theories of liability and some that are new and more aggressive.
The FCA Working Group
The latest announcement came on July 2, when the DOJ announced that it was restarting its “False Claims Act Working Group,” which was originally created during the first Trump term in December 2020. The Working Group will include leadership from various federal agencies and components including the Health & Human Services (HHS) Office of General Counsel, the Centers for Medicare & Medicaid Services’ (CMS) Center for Program Integrity, Office of Counsel to HHS Office of Inspector General (OIG), the DOJ’s Civil Division, and U.S. Attorney’s Offices. The Working Group will be jointly led by the HHS General Counsel, Chief Counsel to HHS-OIG, and the Deputy Assistant Attorney General of the Commercial Litigation Branch of the DOJ.
In announcing the Working Group, the DOJ said that HHS has been directed to make referrals to the DOJ of potential FCA violations that “reflect Working Group priorities” including:
- Medicare Advantage
- Drug, device or biologics pricing, including arrangements for discounts, rebates, service fees, and formulary placement and price reporting
- Barriers to patient access to care, including violations of network adequacy requirements
- Kickbacks related to drugs, medical devices, durable medical equipment, and other products paid for by federal healthcare programs
- Materially defective medical devices that impact patient safety
- Manipulation of Electronic Health Records systems to drive inappropriate utilization of Medicare covered products and services
The Working Group will also prioritize cases involving what the Trump administration has frequently called “unlawful DEI.” [We previously covered a prior DOJ announcement on this topic.]
The Working group will “maximize cross-agency collaboration to expedite ongoing investigations in these priority areas and identify new leads, including by leveraging HHS resources through enhanced data mining and assessment of HHS and HHS-OIG report findings.”
The press release states that the Working Group will also discuss “considerations bearing on whether HHS should implement a payment suspension pursuant to 42 C.F.R. § 405.370 et seq. [dealing with “credible allegations of fraud”] or whether DOJ shall move to dismiss a qui tam complaint under 31 U.S.C. § 3730(c)(2)(A), consistent with Justice Manual Section 4-4.111″ [Section (c)(2)(A) allows the DOJ to dismiss a qui tam (whistleblower) lawsuit over the Relator’s objection.]
What Does This Mean for Government Contractors and Healthcare Providers?
This is the latest in a series of announcements and guidance documents that demonstrate the DOJ’s continued commitment to utilizing the FCA to combat various types of allegations of fraud affecting federal programs, including federal healthcare programs. In addition to traditional theories of liability such as kickbacks and false billing, the Trump administration has made it clear that it plans to use the FCA in ways that have not been previously attempted, such as against entities that engage in DEI initiatives.
Another component of the DOJ’s announcement that is worthy of discussion is its express reference to CMS’ ability to suspend a Medicare provider’s payments for “credible allegations of fraud.” This should be concerning for healthcare providers given the breadth of CMS’ power in this respect. The applicable regulations include a very broad definition of “credible allegation of fraud” to include:
An allegation from any source, including but not limited to the following:
(1) Fraud hotline tips verified by further evidence
(2) Claims data mining
(3) Patterns identified through provider audits, civil false claims cases, and law enforcement investigations. Allegations are considered to be credible when they have indicia of reliability
Moreover, CMS (or its contractor) can suspend a provider’s payment for up to 360 days without giving the provider any official appeal rights.
While only time will tell what comes out of the DOJ’s revitalized FCA Working Group, this much is certain: anyone who does business with the federal government — whether a Medicare or Medicaid provider, University, or defense contractor — better make sure their house is in order.
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The attorneys at Chilivis Grubman represent businesses and individuals in connection with False Claims Act investigations and litigation. If you need assistance with such a matter please contact us.