On April 20, 2022, the U.S. Department of Justice (“DOJ”) announced a nationwide coordinated law enforcement action to combat health care-related COVID-19 fraud. In line with the announcement, the federal government has continued throughout this year to focus its enforcement on fraud in the COVID-19 space, particularly on misuse of Provider Relief funds and COVID-19 testing fraud.

In addition to DOJ, the Small Business Association (“SBA”) and the U.S. Department of Health and Human Services (“HHS”) have also confirmed their concentration on PPP fraud and COVID-19 testing fraud. Inspector General Hannibal “Mike” Ware of the SBA Office of the Inspector General (OIG) has stated that “[t]he Paycheck Protection Program is intended to provide a lifeline to the nation’s small businesses and its employees. OIG will aggressively investigate allegations of wrongdoing in SBA’s pandemic response programs.” Similarly, Inspector General Christi A. Grimm of HHS-OIG stated “[t]he attempt to profit from the COVID-19 pandemic by targeting beneficiaries and stealing from federal health care programs is unconscionable. . . HHS-OIG is proud to work alongside our law enforcement partners at the federal and state levels to ensure that bad actors who perpetrate egregious and harmful crimes are held accountable.”

In a recent example of enforcement in this space, in early April, Physician Partners of America LLC (“PPOA”) (a Florida entity), its founder, and its former chief medical officer, agreed to pay $24.5 million to resolve allegations that they violated the False Claims Act by, in part, making a false statement in connection with a loan obtained through the Small Business Administration’s (“SBA”) Paycheck Protection Program (“PPP”) (Press Release). A number of PPOA affiliated entities were also held jointly and severally liable for the settlement amount, including the Florida Pain Relief Group, the Texas Pain Relief Group, Physician Partners of America CRNA Holdings LLC, Medical Tox Labs LLC and Medical DNA Labs LLC.

The government alleged that PPOA engaged in overbilling for unnecessary services, including submitting claims for medically unnecessary urine drug testing (“UDT”) and requiring physicians employees to order multiple tests at one time without determining whether any testing was reasonable and necessary, or even reviewing the results of initial testing (presumptive UDT) to determine whether additional testing (definitive UDT) was warranted. Additionally, the government alleged that in response to Florida’s suspension of all non-emergency medical procedures due to the COVID-19 pandemic, PPOA compensated for lost revenue by requiring its physician employees to schedule unnecessary evaluation and management (“E/M”) appointments with patients every 14 days (as opposed to PPOA’s prior one-month standard), and instructed its physicians to bill these E/M visits using inappropriate high-level procedure codes.

In connection with the above overbilling, in order to secure a PPP loan from the SBA, the government asserted that PPOA falsely represented to the SBA that it was not engaged in such unlawful activity in order to obtain a $5.9 million in PPP funding.

PPOA also entered into a five-year Corporate Integrity Agreement (“CIA”) with the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG). Under the CIA, PPOA agreed to undertake significant compliance efforts, including: maintaining a compliance department, medical director and oversight board; retaining a compliance expert; providing management certifications; maintaining written standards, training and education; obtaining multiple annual claims reviews by an Independent Review Organization; establishing a risk assessment and internal review process; and implementing monitoring of testing referrals.

Similarly, in January 2022, a Florida man pled guilty today in the Southern District of Florida to a $6.9 million conspiracy to defraud Medicare by paying kickbacks and bribes to obtain doctors’ orders for medically unnecessary lab tests that were then billed to Medicare (Press Release). The government alleged that the defendant exploited the COVID-19 pandemic by bundling COVID-19 testing with other forms of testing that patients did not need, including genetic testing and tests for rare respiratory pathogens.

The defendant, owner of Boca Toxicology LLC (dba Lab Dynamics), allegedly exploited patients’ fears of COVID-19 by bundling COVID-19 tests with more expensive, medically unnecessary testing, including respiratory pathogen panel testing and, at times, genetic testing for cardiovascular diseases, cancer, diabetes, obesity, Parkinson’s, Alzheimer’s and dementia. In total, the defendant caused his laboratory to submit over $6.9 million in false and fraudulent claims to Medicare for these medically unnecessary tests.

The defendant pled guilty to one count of conspiring to commit health care fraud. He was sentenced to 78 months in prison on March 30, 2022.

It is clear that the government’s enforcement focus remains targeted towards fraud in the COVID-19 space, with violators subject to severe civil and criminal consequences. Indeed, on July 20, 2022, the U.S. Department of Justice announced charges against 36 defendants for $1.2 billion in health care fraud relating to “payment of illegal kickbacks and bribes by laboratory owners and operators in exchange for the referral of patients by medical professionals working with fraudulent telemedicine and digital medical technology companies.” Recipients of COVID-19 relief funds and/or those involved in the COVID-19 testing space should take great care to ensure their processes are compliant with the Stark Law and the False Claims Act, as well as the Anti-Kickback Statute (“AKS”), Eliminating Kickbacks in Recover Act (“EKRA”), and any other applicable state laws.

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