Editor’s note: Nadia de la Houssaye is a partner at law firm Jones Walker. She is co-leader of the firm’s Healthcare Industry Team and chairs the firm’s digital health and telemedicine team. Donald W. Washington is also a partner at Jones Walker, and a member of the corporate compliance and white collar team. Washington is a former U.S. Attorney and served as director of the United States Marshals Service from 2019 to 2022.
From a purely technical and scientific standpoint, healthcare stands as one of the most intricate, complex and demanding fields one can choose to pursue.
Yet, despite years of rigorous training, there remains a critical educational gap: practitioners are often unprepared to navigate the legal and regulatory risks and complexities inherent in providing care.
This lack of preparation is not occurring in a vacuum. We are seeing increased scrutiny of innovative healthcare business models and a rising number of investigations triggered by third-party complaints. These complaints often originate from whistleblowers, competitors and consumer advocacy groups. Their allegations span a wide spectrum of issues including:
Percentage compensation arrangements
Patient-referral practices
Physician supervision
Training adequacy
Overtreatment and overuse of medical services
Transparent, ethical billing practices.
Based on our collective experience, these issues are raising significant challenges for providers, payers, regulators and law enforcement officials alike. According to a recent American Health Law Association report, fraud and abuse concerns loom large for all healthcare stakeholders.
Specifically, violations of these federal laws can create significant financial exposure for a medical practice:
The False Claims Act (FCA), which is aimed at preventing false or fraudulent claims
The Anti-Kickback Statute, which prohibits improper inducements related to patient referrals
The Physician Self-Referral Law (Stark Law), which also regulates physician referrals
Exclusion authorities that can prohibit provider participation in federal programs
The Civil Monetary Penalties Law, which provides guidance on penalties related to violations of the above, and other laws.
By understanding and adhering to the correct legal frameworks, however, healthcare professionals can safeguard patient well-being, maintain ethical standards and contribute to a robust healthcare system. In today’s environment, providers must be aware of these frameworks.
Recent federal court decisions favor whistleblowers over providers
Over the summer of 2023, two federal court decisions dramatically increased the risks for healthcare providers with respect to fraud and abuse disputes. In June 2023, the Supreme Court issued a ruling in United States ex rel. Schutte v. SuperValu Inc. This was quickly followed by a decision from the U.S. Court of Appeals for the Seventh Circuit in United States ex rel. Heath v. Wisconsin Bell Inc.
The upshot of these two decisions is that alleged FCA violations can go to trial more easily, even if the evidence shows that the defendants have adopted reasonable legal positions, as long as there exists at least some factual dispute.
Similarly, the federal government appears poised to give whistleblowers more opportunities to file claims. In April 2023, the Senate passed the Administrative False Claims Act, which provides additional incentives for whistleblowers. While the House of Representatives has not yet taken action on the bill, it is clear that a significant number of lawmakers are in favor of increased scrutiny on healthcare companies.
The specter of COVID-19 still looms
In February, at the Qui Tam Conference of the Federal Bar Association, Assistant U.S. Attorney General Brian Boynton noted that COVID-19-related fraud will continue as an enforcement priority this year. In a press release issued the same day, the Department of Justice celebrated that its record-setting 543 FCA-related settlements and judgments exceeded $2.68 billion in the fiscal year ending Sept. 30, 2023.
Similarly, in its 2023 annual report, the Health Care Fraud and Abuse Control Program identified several pandemic-era fraud schemes that remain a focus of attention. Such schemes include:
Providing “unnecessary services” to patients, in addition to COVID-19 tests, in exchange for the patients’ personal information, which is subsequently used to bill federal healthcare programs
Making false and fraudulent representations about COVID-19 testing, treatments or cures
Obtaining COVID-19 healthcare relief funds through false claims and fraudulent applications.
Telemedicine fraud remains a law-enforcement priority
Although telemedicine solutions have been available for decades, their value in providing quality care to patients (especially those from traditionally underserved groups) became clear during the pandemic lockdowns. Despite no clear connection between telemedicine and healthcare fraud and abuse, however, the rapid expansion of this form of care delivery made it a target of regulatory and law enforcement agencies.
In February, the Health Care Fraud Unit at the DOJ published a report indicating its belief that fraud schemes involving telemedicine had “exploded.” This characterization is somewhat misleading: While the data provided showed that the unit has indeed prosecuted more telemedicine-related cases over the past two years, there is little evidence demonstrating that the overall rate of fraud in healthcare has increased significantly.
In other words, fraudsters follow the money — and given the rapid increase in the use of telemedicine over the past few years, existing bad actors have simply shifted toward telemedicine.
That said, telemedicine fraud will likely continue as an area of focus for regulators and law enforcement officials. Medical professionals must ensure that they are providing good care while also ensuring compliance with relevant laws and regulations.
Regulators are helping providers identify and address fraud and abuse
On a positive note, regulatory agencies are developing tools to help providers identify, correct and self-report potential noncompliance. For example, in the spring of 2023, the HHS’ Office of Inspector General launched a new toolkit that can help public and private entities, private health plans, state Medicaid fraud control units and federal healthcare agencies conduct compliance assessments, which can in turn minimize potential telehealth-related healthcare fraud and abuse risks. The toolkit includes tools for identifying and analyzing telehealth claims data as well as program integrity measures.
Ultimately, the burden of ensuring compliance with healthcare laws and regulations is on the shoulders of healthcare professionals, many of whom lack necessary regulatory knowledge. It is important to seek the counsel of experts to ensure that actions taken to improve patient health and quality of care do not unintentionally give rise to unexpected consequences.
