Health Care Fraud and Abuse Investigations: Latest Trends and Developments

Joe Wolfe, Attorney, Hall Render Killian Heath & Lyman PC, speaks with Crane Pomerantz, Member, Clark Hill PLC, about the current landscape of health care fraud and abuse investigations. They discuss government enforcement under the previous administration, notable recent settlements, and enforcement priorities under the current administration. Clark is the author of AHLA Health Care Fraud and Abuse Investigations Handbook, Third Edition. From AHLA's Fraud and Abuse Practice Group.

Watch the conversation here.

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Transcript

Speaker 1: 0:00

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Speaker 2: 0:04

ALA's, popular Health Law Daily email newsletter is now a daily podcast exclusively for a HLA premium members. Get all your health law news from the major media outlets on this new podcast. To subscribe and add this private podcast, feed to your podcast app, go to American health law.org/daily podcast .

Speaker 3: 0:27

Uh, welcome everyone to today's American Health Law Association podcast, where I'll be talking to Crane Pomerantz about healthcare fraud and abuse investigations. Uh, crane is an attorney with Clark Hill and is located in Las Vegas. He's a former federal prosecutor, and his practice focuses on healthcare fraud and abuse matters , uh, including criminal defense, civil litigation , uh, regulatory and transactional work. And I last talked in a podcast back in August of 2023 , um, about, you know, crane's practice and about , um, settlements as well. Um, he's the author of the ALA's, recently updated third Edition of Health , the Healthcare Fraud Abuse Investigations Handbook. And we're excited to hear about , uh, any updates he has in the fraud and abuse and Investigation world, and also about that book as well. So, a , a lot has happened since we talked back in 2023. Um, we've had criminal and civil enforcement, we've had shifts in interpretations under the False Claims Act , uh, the rollout of new compliance, guidance from the OIG and , and implementation of that guidance , uh, stark in and kickback development, self disclosures , uh, settlements, new advisory opinions. So , so lots of activity , uh, in this area. And it's, it's definitely impacted , um, healthcare organizations , uh, going forward here in 2025. And they're looking to the market for any resources they can get to just wrap their arms around , uh, kind of what's going on. Um, so today's podcast is brought to you by the American Health Law Association's Fraud and Abuse Practice Group. Uh, I currently chair the Practice Group, and our mission is to help our members stay informed about healthcare fraud and abuse and compliance issues. Uh, this likely will be my last podcast , uh, as the Chair of the Practice Group. Uh, the vice Chairs continue to do a great job within the Practice Group , um, in developing webinars and publications and other content. So , uh, you know , the , the , uh, fraud Abuse Practice Group will continue to produce some, some, some great current cutting edge content. Um, so before we get into the, the q and A here, you know, crane , why don't you introduce yourself and tell us a little bit about your practice.

Speaker 4: 2:49

Joe, first, I just wanna say thanks for having me back. I, I can't believe that it had been August, 2023 since we recorded the first time. Uh, and so I'm really appreciative to be back here. Um, I think you gave a pretty good overview of , of who I am. Uh , I'm a member in the Las Vegas office of Clark Hill. Uh, I spent 15 years as a federal prosecutor. I was the , uh, criminal healthcare fraud coordinator in the US Attorney's Office here in Las Vegas. Prior to that, I was in private practice. Obviously, since then, I've been in private practice, and I've been able to lean into my experience as a prosecutor, as I now defend , uh, providers who are going through enforcement actions.

Speaker 3: 3:40

Uh , thanks Crane. Um, and just a brief background on, on me, I'm a shareholder and practice group leader at Hull Render . Um, I have a , a very national healthcare practice focused on a healthcare financial relationships with referral sources, stark and kickback , um, value-based models as well. Uh , like I said , national practice , um, uh, am am also licensed in the state of Florida, and do a lot of work in, in that market. Obviously, it's a , uh, a busy, busy market , uh, there from a fraud abuse standpoint. Um, so just a little background before we get into Crane and , and discussing his thoughts on, on the book and on, on what he's seeing in the market. Um, a lot of numbers get thrown around when we start talking about fraud enforcement. Um, again, to all of you listening in , um, when I'm start, start, you know , a lot of numbers, again, get thrown around. If you're looking for numbers on, on enforcement, I often look to the OIGs Semi-Annual Report to Congress. Uh, the most recent version of that I think was, was released back in December of 24, 20 24. And it , it describes the OIGs work identifying issues , um, in investigation outcomes, and , um, their enforcements related to HHS programs and operations. So they, they published this report , um, in the Fall 2024 report. The one I'm referring to mentioned some pretty staggering numbers. Um, it highlighted over $7 billion in expected recoveries and receivables resulting from HHS and OIMG investigations and audits conducted during that, the last fiscal year. Um, it talked about the fact that there were , uh, the HHS and OIG were reporting over 1500 criminal and civil enforcement actions involving , uh, individuals and entities suspected of engaging in crimes, targeting HHS programs , um, and the people that they serve , um, including settlements resulted from using the OIG Civil Monetary Penalty Authority and criminal investigations. I'm not gonna go into that in detail, but that, that those are staggering numbers . And we look a bit further. The HHS and OIG also excluded over 3,200 individuals and entities from participation in federal healthcare programs. Uh, the report get goes into some detail about that, that $4 billion , um, and, and, and, and their efforts at in enforcing the program. So that's a number I , that's an area I always go back to look at when I'm thinking about enforcement. Um, also if you're looking for another resource, the A HLA publishes every year a connections article that, that discusses in sort of broad strokes , the biggest trends and issues going on , um, in, in healthcare. And the article from this past year on the fraud and abuse piece was written by Ellie Valla and her colleague Jordan Morin. And, and they pointed out some issues to watch from a fraud and abuse standpoint. Um, you know, for years as, as they mentioned in that article, combating healthcare front abuse has been a critical priority for the DOJ . And now there's a bit of a wait and see with the new election , um, on , on what remains a priority. I think Crane might talk about that here. Um, there is some uner certainty and the next administration could shift priorities or reallocate resources. That article was released in January, February. I mean, I think we've seen some of that play out already. Um, as, as we look at the market , um, you know, obviously new leadership when we look at HHS and CMS with, with Robert Kennedy being pointed, appointed as the new head of HHS , uh, Dr. Oz being appointed as the CMS , uh, leader , um, as well. Um , the, with all of that potential change, I think some of the infrastructure has remained the same. Um, healthcare fraud and abuse and enforcement is largely driven by the False Claims Act. Um, its key TAM provisions remain on the books that hasn't changed , um, as crane's are gonna talk about somewhat. There, there is a, a continued flow of cases coming from whistleblowers. Um, and there is a pipeline already established with , uh, those whistleblower actions . So relators aren't going anywhere. Um, we, I personally and others that I, I work with and, and have talked to in the market are continuing to see , uh, investigations consistently , uh, in the market. So investigations are not going away. Um, I think they continue to be a priority. And , um, based on all of that, with the infrastructure and the pipeline of cases that come down, I , I don't think we're going to see , um, you know, cases drop dramatically. I think we already have many of them in the pipeline, and they also have always have lag time. Um, it it , and there's been a lot of areas where we've seen enforcement activity , uh, covid fraud, managed care , uh, lab testing, a steady stream of lab cases , um, relating to wrongly induced or influence ordering of tests. Um, the medical necessity of those tests , uh, telehealth enforcement, including some criminal enforcement , uh, we've seen in the market , um, new OIG compliance guidance, I mentioned that earlier. Um , and also some industry segment specific compliance guidance coming out with nursing facilities. So it's something to watch this year. We're gonna see new guidance coming out , uh, likely on those industry specific areas. Lots of activity around ket a constitutionality, FCA big cases , uh, coming on the pike with, with Chevron and the o overruling of Chevron, and the Loper Bright decision , uh, large stark settlements and , and anti-kickback settlements. Uh, the continuing continuing issuance of advisory opinions. And that's giving us new guidance to work from , um, in lots happening in the self-disclosure space. So a very, very busy area, obviously coupled with changes in the administration. And so it's, it is a very interesting time, and with all of us trying to, to make sense of this and to understand where our priorities should lie , um, we know this is a really complicated area. And so Crane, with , with that background on, on what's going on from my perspective and others from the market , um, as , as you look at your book , um, can you speak to that, give us an overview of the handbook, generally , um, share what new information might be in it , um, in this most recent version , um, that maybe didn't appear in , in earlier versions.

Speaker 4: 10:31

I , I have to take a minute to thank , uh, two guys who were my mentors in Boston almost 30 years ago. Paul, Sean , Bob Griffith. They were the previous author slash editors of this book. I work with them when I was a baby attorney, as I said, nearly 30 years ago now. Uh, and aside from being really good attorneys, they're really good guys. And I appre , uh, I appreciate even 30 years later, even though we haven't worked together in, in 25 years, the mentorship that they still provide to me. So with regard to the, the book itself, it's , it's not a treatise. It's not intended to be a treatise , uh, even though there are some really interesting legal discussions in it, it's intended to be , uh, a practical guide. What should you do if you receive a subpoena? What if you represent an entity and an investigation, and you wanna obtain counsel for the individual employees of your entity, or hire an expert witness or conduct an internal investigation. Now , you asked about some of the new things that are in this edition , uh, of the book. And, and what I'd like to do is focus on two new chapters that we added. Uh, the first chapter we added was one on key TAM lawsuits, as we know, and , and I'm gonna go into some detail later on in the podcast about this. Uh , and I'm really excited to talk about , uh, enforcement trends. But as we know, the False Claims Act authorizes private parties known as Relators to bring a lawsuit in the name of the government. The private plaintiff does preliminary investigation, and it provides a complaint, which it seals , uh, and then gives to the civil division of the United States Attorney's Office for an opportunity to what we call intervene in the lawsuit. While this may be second nature to some of our listeners , uh, for those of you who are new to this, intervene as just sort of a fancy word for taking over the case, when the government intervenes, it assumes responsibility for litigating the case. What we do in this chapter , uh, of the book is look at the Keam case from the perspective of both the relator, the plaintiff in the case and the defendant, the party charged with Medicare or Medicaid fraud. From the relator side, we look at the practical considerations that go into something as basic as where to file. The goal is usually to persuade the government to intervene in your case. So assuming you can file your key TAM lawsuit in several jurisdictions, say you're making allegations against a provider that has business in multiple states , um, what are the things you look at in deciding where to file? Do you focus on things like the personal relationships of the attorneys with the United States Attorney's Office? Do you focus on issues of local importance? Or do you present your case to an office with a particularly strong reputation for taking on big or hard key TAM cases like the US Attorney's Office in Boston, or the Eastern District of Pennsylvania in Philadelphia? From the defendant side, we take more of a legal or technical approach to the False Claims Act. And what we look at are what are some of the nuances of that statute that might persuade the government not to intervene in a case or an argument counsel might make to drive down the settlement value of the case. And one example that I would use, Joe, is the False Claims Act imposes liability on a party who causes a false claim. Now, sometimes that's very clear. If we're representing a party that actually submits claims to Medicare or Medicaid, then that analysis is clear. But what if you're representing a drug or device manufacturer , uh, and , uh, and they are selling product to providers who actually submit the claims at , at what point can that drug or device manufacturer be held liable for causing the submission of a false claim? You , you won't be surprised to hear that the government typically takes a very expansive view of what constitutes causing the submission of a false claim. And the defense bar takes a considerably narrower view. So one example is a lot of the courts say the , uh, party being charged has to play a quote , substantial factor in submitting in the, causing the submission of the claim. Now, if an entity is accused of paying kickbacks, that's pretty clear that they are a substantial factor. But in sort of the garden variety billing fraud case , uh, it's not as clear courts require some level of quote , direct involvement in the billing process is providing recommended CPT codes enough, I don't know. And I think that's an issue ripe for debate. The second chapter we added, Joe, was in defending commercial insurance investigations. As we know, healthcare fraud investigations are most often conducted by law enforcement and other government agencies, but it is a reality that healthcare providers also face fraud and abuse inquiries from the commercial insurers , uh, to which they submit claims. We run through all of the different types of commercial insurance investigations from recoupment actions, which required in-depth analysis of individual claim , individual claims to credentialing actions, which is to say, when a private insurer tries to terminate a provider from their network, and we try to give the reader an overview.

Speaker 3: 16:35

So along , uh, you know, along the lines, the book gets into some of the settlements that, that we've seen in the mar in the industry. Um, I mean, we, we, we try to keep our eyes on those. They, they tell, each of them tells a story , um, they help our clients assess risk. Uh, so can you provide some examples of, of notable , uh, recent settlements that you think we should be focusing on?

Speaker 4: 16:59

Sure. Um, Joe, I thought you did a great job at the outset talking about numbers. And I, I'd like to expand upon , uh, that discussion a little bit before I get into specific settlements. I , I want to talk numbers also, and , and you explain that you usually rely on the OIG Semi-annual report , uh, which is a , a fabulous resource. I also tend to look at the Department of Justice issues, a report in January of each year talking about its recoveries and the work that it's done. That's also a , a helpful source of information. Um, so, so what, what happened in 2024 and , and what does it tell us potentially about what's gonna happen in, in 2025? In fiscal year 2024, the Department of Justice recovered $2.9 billion in False Claims Act settlements, 1.7 billion of which was healthcare related . It was the second largest year for recoveries on record behind only fiscal year 2021, which I think we can fairly attribute to covid fraud. Now, two of the biggest settlements last year were against, and I'll , I'll get into some specifics, but these two really sort of stuck out to me. There was one settlement against Rite Aid, the pharmacy chain, and one against Endo Health Solutions, which is a, a drug manufacturer, and both related to the improper distribution of opioids. And spoiler, I'm gonna talk about that a little bit when we talk about initiatives of the new administration. The , the right aid settlement was a , a $408 million settlement. And the accusation was that the pharmacy lacked a legitimate medical purpose , uh, to issue certain prescriptions. And those scripts were not issued in the usual course of professional practice. The endo settlement was for 475 million. And the allegation was that it had used a marketing scheme that targeted healthcare providers that the manufacturer knew were prescribing its drug for a non-medically accepted indication. Now, I , I think there are a couple of things that are meaningful in those settlements. First is the focus on opioids. We're gonna talk in a few minutes, I think, Joe, about the impact of the new administration on enforcement initiatives. Here's my spoiler. While I think healthcare enforcement initiatives are gonna diminish under the current administration, the one area that I think we may see an increase, or at least robust enforcement, is opioids. The administration has been pretty clear that it deems opioid abuse a major issue and intends to pursue it . The second thing that stuck out to me about these two settlements is that both cases involve dual criminal and civil resolutions, which means they were the product of parallel investigations by the civil division and the criminal division. Uh, that's well within Department of Justice's rights. It is perfectly legal. It was very popular method of investigating cases , uh, 15, 20, 30 years ago. Um, from personal experience, though , uh, the last few healthcare fraud cases I've defended have either been criminal cases or Civil False Claims Act cases, but not both. Uh, I have this vague sense, Joe, based on nothing but anecdotal evidence that the number of parallel investigations and prosecutions has diminished as of late. The third thing I wanted to point out about the Rite Aid settlement and about the Endo settlement is, which I found interesting, is that both cases involved bankruptcy agreements, which is to say in both cases, the defendants were in bankruptcy or had declared bankruptcy, and in both cases, the Department of Justice appeared in the bankruptcy proceeding and worked out a settlement with the debtor in the context of the bankruptcy proceeding. Um, I'll be honest, I haven't seen that very often. Uh, and it's something I'd like to continue to observe because it requires some bankruptcy expertise on the part of , uh, on the part of the Department of Justice. Um, so, so those are the the things that I wanted to , uh, highlight in terms of recent settlements , um, and , uh, and patterns.

Speaker 3: 21:55

Thanks for that. And I mean , uh, just pulling the thread , um, you know, you look at these new cases versus old ones, and , and this might be asking you the same question again, are , are you noticing any other patterns beyond what you just described?

Speaker 4: 22:09

N no , I think what was reported in 20, and again, I'm, I'm sort of segwaying into the, the next section, but I think what you see in 2024 is a continuation of the prior administration, the Biden administration, which tended to , uh, place a greater emphasis on healthcare fraud, white collar fraud. And so what you see, Joe, is a full panoply of enforcement actions.

Speaker 3: 22:39

So, so crane on that, I mean, let's, let's pull out your, your crystal ball. Um, you know, I mentioned earlier Robert Kennedy at HHS, Dr. Oz , at CMS, obviously , um, we're seeing other personnel changes across government , uh, within the Department of Justice. Um, what kind of an impact will the, the new administration have on enforcement initiatives beyond what you said, Al , what, what you shared already?

Speaker 4: 23:06

So, Joe, I'm actually really excited to talk about this and , and try to look into the future because I think there are so many ways this can go. And it's so interesting to me in terms of, of where this may go in terms of healthcare enforcement. L let's start here. There is a new administration , uh, whether you love this administration or hate this administration, and I think we can agree there doesn't seem to be a lot of middle ground. Um, this administration has been very clear that it intends to place an emphasis on immigration and violent crime . I suspect that what we're gonna see within the Department of Justice is a massive redeployment of assets from white collar cases to those areas. Um, I suspect what that means is we're gonna see a fairly dramatic decrease in government initiated healthcare fraud investigations and prosecutions simply as a product of reduced resources. Now, normally, and this is to me where it gets really interesting, normally what that would mean is that it would be up to private plaintiffs, the relators, we talked about the, the False Claims Act earlier in , in the, in the show, it would be up to those private plaintiffs, the relators to fill that gap. In other words, you might see far more key TAM cases if the FBI and the OIG aren't investigating cases on their own, but <laugh> , and there are two pretty significant buts. Um, first, the administration, I believe, is gonna redeploy resources away from white collar crime. What this means, I think, is that all of those civil AUSAs who normally may be salivating at getting their hands on good keam cases, may be doing other things, or maybe their positions won't be filled at all. Uh, I'm aware of a US attorney's office right now that is uniformly declining all ke tam cases, regardless of merit , uh, because they don't have the manpower, the person power to, to handle these cases. Now, there's one more really big, but , um, in October, 2024, so right at the end of the year, a district court judge, a federal district court judge in Tampa, Florida, dismissed a key TAM case on the grounds that the key TAM provision of the False Claims Act is unconstitutional, that it violates the appointments clause of the Constitution. This was in , in False Claims Act land, a dramatic ruling. The, the False Claims Act, the ketan provision had been in place since 1986. And in 2024, we had a district court judge say it's unconstitutional. Now, we could, regardless as a one-off, this judge made this decision in this case, except the district judge who issued the opinion is a former law clerk to Justice Clarence Thomas. If this case winds its way through the Appeals Court, and it's pending , uh, in front of the 11th Circuit right now, and it makes its way to the Supremes, how do we think Justice Thomas and his conservative brethren will rule on this? The, the briefing is ongoing. In that case, the defendants who prepare , who prevailed at the district court level just filed their responsive brief in the middle of March. So we don't have any answers. It may be a year or two before we get a conclusive decision from the Supreme Court, but I think it's a huge development to keep an eye on. So on the one hand, you may see , uh, you see it , it sort of pivots back and forth. You're gonna see less investigations by the government, which normally would mean more investigations by private relators, but you have may have less AUSAs to intervene in the case. And then you've got this really significant court case, which may say the relator provision, the ketan provision of the False Claims Act is unconstitutional. So we are in the middle, Joe, of complete uncertainty, and it's not a satisfying answer , uh, because I'd love to, to get on the show and say, I'm pretty sure this is exactly what's gonna happen, but what I can do is say, we are in a world of uncertainty right now, and I think it's gonna take a year or two for this all to sort of shakeout.

Speaker 3: 28:18

Yeah, thanks. And I , I was talking to someone recently that said their crystal ball is broken right now. So , uh,

Speaker 4: 28:24

<laugh> , I think that's right.

Speaker 3: 28:26

You were , uh, so I really appreciate that. And then weaving in the references to the book, again, it's, it's a , a , it , it's, it's a really helpful , uh, handbook as, as our those listening in are trying to navigate this challenging environment. Um, crane , any final thoughts for the audience before we wrap up?

Speaker 4: 28:46

Uh, I just really want to thank you, thank a HLA for having me on today. It's something I enjoy doing. Uh, and if people listening have questions or wanna talk about something that we discussed today or something that's in the book, they should feel free to reach out. Uh, my email address, c pomerance@clarkhill.com . Uh, I welcome those kinds of contexts .

Speaker 3: 29:10

Good , good thought too. I mean , uh, and I, I echo that. I , I think there's so much change going on in the market that every data point that we have , uh, I i , is just so important. And so, you know, crane , thanks for sharing your , uh, your perspectives today and , and your insights from the book. Um, thanks to all of you for listening in to today's podcast. Um, we're always looking for more volunteers within A HLA and within the Fraud Abuse Practice Group . So, to all you listening , uh, please reach out to me on LinkedIn , um, if you'd like to be on a future episode or if you have an idea what we should be covering going forward, if you have ideas for webinars, this is a dynamic environment, and I , I've heard some really interesting topics from people just reaching out. And so please do reach out , uh, to, to people like Crane and myself. We're , we're , we're , we're navigating this environment as well. Um, we'd love to find a way to get you all involved in the mix at A HLA as well. Uh, thanks to everyone for tuning in. Uh , have a great day. Take care, crane .

Speaker 2: 30:18

Thank you for listening. If you enjoyed this episode, be sure to subscribe to ALA's speaking of health Law, wherever you get your podcasts. To learn more about a HA and the educational resources available to the health law community, visit American Health law.org.