DOJ Healthcare Fraud Section 2020 Review: Action on Opioid Epidemic, Telemedicine, and COVID-19

Posted On Wednesday, March 10, 2021
By: James W. Kraus

In a narrative that seems likely to be repeated in the coming year, the DOJ Healthcare Fraud Unit’s (HCF Unit) contribution to the Fraud Section’s 2020 Year in Review emphasized its enforcement action in three areas:

  1. Opioid epidemic
  2. Telemedicine
  3. COVID-19

With an entire year of healthcare delivery during a pandemic now behind us, and a new administration assessing its priorities, it is likely that the focus on each of these subjects will be broader and deeper in the coming year. 

Two Focuses of the Take-Down Were Telemedicine and Substance Abuse Treatment Facilities

By the overall numbers, the HCF Unit touted 167 individuals charged, with $3.77 billion in alleged loss, along with 144 individuals convicted, including 10 at trial.  Not surprisingly, the report put a spotlight on the September 2020 Healthcare Fraud and Opioid Take-Down, where 345 defendants were charged across 51 federal districts, including 100 doctors, nurses and other licensed medical professionals.  

Two of the focuses of the Take-Down were telemedicine and substance abuse treatment facilities.  Of the $6 billion in false and fraudulent claims alleged as part of that take-down, $4 billion were alleged to be connected to telemedicine, and $845 million were connected to substance abuse treatment facilities.  Given the rapid expansion of telemedicine during the COVID-19 pandemic, and the continued opioid epidemic, it is very likely that providers in both areas will be increasingly targeted.

Established the National Rapid Response Strike Force

The Fraud Section also established the National Rapid Response Strike Force (NRRSF) in 2020, with the purpose of having an organization to quickly respond to emerging multi-jurisdictional healthcare fraud cases and priorities, without diverting attorneys from direct specific strike forces.  The NRRSF was critical in coordinating DOJ’s efforts to combat telemedicine fraud in 2020 as part of the national Healthcare Fraud and Opioid Take-Down.  Since 2019, the Fraud Section has charged 73 defendants involving more than $3.7 billion in alleged fraud loss across 16 districts in matters relating to schemes that exploited telemedicine. 

The DOJ also credited the NRRSF’s role in the prosecution of a nationwide $1.4 billion rural hospital billing fraud scheme relating to alleged medically unnecessary laboratory testing in United States v. Jorge Perez.  In that case, several defendants obtained control over four separate rural hospitals that typically received high reimbursements from insurers due to their location and patient base.  They then billed insurers through the rural hospitals for medically unnecessary lab tests, performed for non-hospital patients, at outside laboratories owned by other defendants. 

Established the COVID-19 Fraud Working Group

The HCF Unit also established the COVID-19 Fraud Working Group and expects that it will continue to generate criminal prosecutions in several areas, including COVID-19 test bundling schemes, securities fraud cases involving healthcare technology companies, and Health Resources and Services Administration (HRSA) fraud cases.  Prosecutions during 2020 included prosecution of an individual for her role in a laboratory testing scheme in which she caused Respiratory Pathogen Panel (RPP) tests to be ordered, referred and performed ostensibly for COVID-19, despite the fact that RPP tests did not and could not test for the virus.  The defendant admitted that she caused those tests to be ordered, referred, and performed for the sole purpose of increasing the reimbursement rate for patient samples.

First Coordinated Enforcement Action in DOJ History on Fraud Schemes in Substance Abuse Treatment Industry

Finally, the HCF Unit highlighted the “Sober Homes Initiative” as the first coordinated enforcement action in DOJ history focused on fraud schemes in the substance abuse treatment industry.  To date, the Sober Homes Initiative has resulted in 13 individuals charged for roles in various schemes to defraud healthcare programs of more than $940 million.  These schemes involve substance abuse treatment facilities paying illegal kickbacks and bribes to patient recruiters in exchange for their recruitment of addicted patients whose care can be billed to private insurance for treatment.  The recruiters in turn arrange for transportation of the patients to the geographic area, and pay kickbacks to the patients in exchange for entering treatment at a specific facility.  Once there, the operators bill for excessive tests and services.  In some cases, recruiters provided opioids, benzodiazepines, and other drugs to the addicted patients before admission to the facility to make sure the patients qualified for a higher-reimbursing level of treatment.