DOJ increasing scrutiny on coronavirus-related provider fraud

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Healthcare Alert

COVID-19 Alert


Since the start of the coronavirus disease 2019 (COVID-19) crisis, federal and state authorities across the country have announced joint task forces to tackle fraud related to the pandemic. These task forces typically consist of federal and state prosecutors, investigators, and regulatory agencies that share information among themselves, including fraud complaints and data analysis, and leverage the diverse range of investigatory, prosecutorial, and administrative resources available across the group. They focus on fraud activity of the highest importance and also on emerging schemes that officials are hoping to deter. In support of these task forces, United States Attorney’s Offices have been issuing press releases to request assistance from the public and amplify messaging on key enforcement priorities.

At the outset of the pandemic, there was a rush of enforcement activity against price gouging, but recent press releases on enforcement activity suggests a new focus on providers, with a particular focus on telemedicine companies. DOJ has publicized two arrests, one in New Jersey and the other in Georgia, concerning kickback schemes involving laboratories that paid kickbacks to providers who would improperly bundle Respiratory Pathogen Panel (RPP) tests with COVID-19 tests − the reimbursement rate for RPP tests is approximately four times greater than the reimbursement rate for the COVID-19 test. DOJ has also publicized new cases brought related to fraudulent COVID-19 tests and medically unnecessary COVID-19 treatments.

Many of these cases involve telemedicine providers, a recent area of DOJ focus. Over the past year, DOJ has pursued more than three billion dollars in fraud claims related to telemedicine providers. These cases include (i) a nationwide $2.1 billion telemedicine fraud scheme involving dozens of telemedicine companies, marketers, and diagnostic laboratories that were responsible for ordering medically unnecessary genetic tests and soliciting kickbacks; (ii) a nationwide $1 billion telemedicine fraud scheme charging 48 defendants from a number of telemedicine companies and compounding pharmacies with ordering medically unnecessary medications; and (iii) a $410 million Georgia-based scheme in which the owners of two telemedicine companies solicited kickbacks in exchange for ordering orthotic braces.

Regulations have been relaxed across the healthcare sector in response to the pandemic, most notably with respect to telemedicine and copayment waivers, but providers should not misapprehend this gesture as a blanket endorsement. DOJ and its state partners will continue enforcing healthcare fraud rules such as the False Claims Act, Anti-Kickback Statute, and Stark Law. Indeed, given the political significance of COVID-19 related frauds, the explosive growth of telemedicine in the post-pandemic world and government funds flowing into the space, and the DOJ’s pre-existing focus on telemedicine as a priority area for healthcare fraud, providers may anticipate a thorough approach to enforcement in the future. Between that and the rapidly changing regulatory environment, compliance is more complex and critical than ever. Healthcare providers adapting to this new world are urged to be sensitive to the heightened concerns of law enforcement and take steps to mitigate the risk that actions taken in a time of crisis will later be viewed as fraud.

To learn more, please contact any member of the Healthcare team or your DLA Piper relationship attorney.

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This information does not, and is not intended to, constitute legal advice. All information, content, and materials are for general informational purposes only. No reader should act, or refrain from acting, with respect to any particular legal matter on the basis of this information without first seeking legal advice from counsel in the relevant jurisdiction.