Uncertainty surrounds healthcare fraud enforcement. Here are some trends to watch in 2019

A magnifying glass over the word "fraud"
Fraud enforcement is still a central focus under the Trump administration, even if they’re taking some new approaches. (Getty/Tashatuvango)

There’s plenty of uncertainty around fraud enforcement heading into 2019, but that doesn’t mean it shouldn’t stay a key focus for healthcare organizations, according to a new report. 

Bass, Berry & Sims, a law firm, released its annual review of healthcare fraud and abuse, and the group says that several factors, including turnover at the federal level and shifting priorities at the Department of Justice, are driving that ambiguity around what the future holds for fraud enforcement. 

However, one thing is clear, according to the report: It’s still a central focus under the Trump administration, even if they’re taking some new approaches.

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“I think that, for healthcare providers, it’s important to realize that uncertainty doesn’t necessarily mean there will be significant changes in the enforcement environment,” Matthew Curley, a member of the firm’s Healthcare Fraud Task Force and the report’s editor, told FierceHealthcare in an interview. “Fraud enforcement has always been good business for the government.” 

RELATED: DOJ charges more than 600 in historic fraud takedown involving $2B in false claims

Top trends that will play a key role in fraud enforcement this year include: 

  1. How federal prosecutors react to two DOJ memos, both of which signal a new path for the government in analyzing fraud allegations.
  2. The intersection of fraud enforcement and the opioid epidemic.
  3. Ongoing impacts as a result of the Supreme Court’s 2016 decision in the Universal Health Services, Inc. v. United States ex rel. Escobar case, in which the court set a higher standard for “materiality” in fraud litigation. 

One of 2018’s crucial changes at DOJ, Curley said, was the Brand memo, which directed federal prosecutors to limit the use of agency guidance to bring fraud cases. Whistleblowers and prosecutors have used federal guidance as evidence of billing noncompliance fairly often previously, he said—and it’s a practice defense attorneys have objected to. 

“I think that the developments in the memo are significant for providers because defense attorneys have long argued enforcement under the False Claims Act must be based on alleged violations of applicable legal requirements … not merely on alleged noncompliance with guidance,” Curley said. 

RELATED: Jeff Sessions announces more prosecutors for crackdown on opioid providers 

A second document, called the Granston memo, outlines how prosecutors can dismiss fraud cases, even if whistleblowers want to continue the suits, Curley said. This memo suggests that DOJ is looking to avoid wasteful litigation and prevent setting unfavorable precedents for other fraud cases, according to the report. 

The Escobar decision also continues to leave open questions about how whistleblowers need to plead their cases for them to move forward effectively—and with additional cases at the appellate level, it’s likely the Supreme Court will need to weigh in again to further clarify what the ruling means, according to the report. 

For example, should the federal government continue to make payments to a provider accused of fraud, it could suggest to the courts that the government views the fraud allegations as immaterial because payments otherwise continued as usual, Curley said. The ruling, the report said, has already undone $1 billion in judgments from some cases.

In addition to the legal changes, the political focus on the opioid epidemic is a key trend in fraud, according to the report. DOJ has been increasing its scrutiny on prescribing habits, and as legislators look to potentially retool the existing Stark Law and anti-kickback statutes, the healthcare industry has been formally put on notice about potential opioid-related fraud enforcement. 

“We think that certainly has the possibility of opening the doors to a flood of broader enforcement,” Curley said.

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