Bradley’s Government Enforcement and Investigations Practice Group is pleased to present the False Claims Act: 2020 Year in Review, our annual review of significant False Claims Act (FCA) cases, developments and trends. Despite the pandemic and the smallest recoveries for the Department of Justice in over a decade, FCA enforcement remains robust. As always, the healthcare industry remains the most frequent subject of FCA cases and investigation. While there were no Supreme Court rulings on the FCA this year, the Care Alternatives and Winter cases in the circuit courts created and deepened a divide on the issue of whether and when physician medical opinions may be “false” under the FCA, potentially setting up Supreme Court action on the issue in 2021. We cover these and other major developments in FCA jurisprudence from last year, along with practitioner-friendly summaries of cases, analysis of policy documents, and a brief forecast for what’s to come in 2021.

INTRODUCTION

This year saw substantial activity in FCA settlements and litigated court cases. Although no single case or development dominated the discourse this year, several important court decisions were issued, including two that may warrant Supreme Court attention in 2021. Multiple settlements demonstrated that notwithstanding the investigatory challenges presented by the global pandemic, DOJ and other authorities continue their focus on FCA enforcement.

The year saw significant cases showcasing the government’s enforcement priorities. Enforcement of the Anti-Kickback Statute (AKS) through FCA actions clearly remains an area of focus for DOJ and a significant risk for many companies. The two largest FCA settlements of the year were based on alleged AKS violations. In January, DOJ announced a criminal and civil global resolution with a health information developer accused of soliciting and receiving kickbacks from drug manufacturers in exchange for manipulating its electronic health record program to increase prescriptions for the manufacturers’ opioid drugs. The company agreed to pay $118.6 million to settle FCA liability. In July, DOJ announced the largest FCA settlement of the year — $642 million — against a pharmaceutical company for allegedly funneling physician kickbacks through its speakers program and improperly paying patient copayments thru charitable foundations. DOJ also filed suit against two pharmaceutical manufacturers alleging they conspired with purportedly independent foundations to illegally subsidize Medicare copayments for the drug Copaxone in violation of the AKS.

DOJ also announced settlements with several nursing home companies in 2020. These settlements included allegations of “upcoding” therapy RUG scores or providing unnecessary rehabilitation services to inflate RUG scores. Such matters included settlements of $15.4 million and $9.5 million in February, $10 million and $4 million in April, and $16.7 million in July. Also in the category of therapy RUG-related settlements, the 11th Circuit partially reinstated a jury verdict against a rehabilitation company that could result in over $260 million in liability.

DOJ continued its pursuit of Medicare Advantage plans this year by filing suit against Anthem, Inc. in April 2020, alleging the company engaged in retroactive chart reviews to add diagnosis codes that would increase plan payments, but intentionally failed to delete inaccurate diagnosis codes that led to unjustifiably high payments under the plan. Ominously foreshadowing the amount of damages at stake in such cases, DOJ alleged that the inaccurate codes generated $100 million or more per year in excess revenues for the company. This case is especially significant because it appears to be a DOJ-generated case as opposed to a whistleblower complaint, demonstrating that DOJ is actively investigating and pursuing such cases on its own initiative.

As demonstrated in the summaries below, the courts were also active in 2020, with important appellate decisions in the areas of medical necessity, government authority to dismiss, binding authority of sub-regulatory guidance, and materiality. Two appellate courts addressed the AseraCare question of whether competing expert medical opinions can serve as evidence of falsity in cases based on whether a service was medically necessary. These cases prompted petitions for a writ of certiorari, potentially setting up a Supreme Court showdown later this year. Appellate courts brought further clarification to the government’s dismissal authority under 31 U.S.C § 3730(c)(2)(A), suggesting in the process that the timing of the government’s attempt to dismiss a case over relator’s objection can be critical to the standard applied.

By the numbers, the 2020 enforcement environment appears as busy if not as fruitful as in years past. Although the total amount of FCA recoveries in 2020 was the lowest since 2008, the number of newly received referrals, investigations, and qui tam actions increased from 2018 and 2019. Notably there was a significant spike in new non-qui tam investigations. The relatively lower recovery, therefore, doesn’t stem from lack of enforcement activity but from fewer blockbuster settlements. With only two FCA settlements exceeding $100 million in 2020, DOJ’s $2.2 billion in total 2020 recoveries pales in comparison to past years.

Once again, healthcare led the way from an industry perspective, accounting for $1.8 billion — over 81% of the $2.2 billion total recovered. Government contractors involved in various types of procurement represented a significant portion of the remaining recoveries. The qui tam provisions of the FCA, which allow whistleblowers to initiate cases on behalf of the government against alleged violators, remain the most common vehicle for FCA claims. Whistleblowers filed 672 cases in FY2020, and their recoveries accounted for over $1.6 billion of the total.

The DOJ also emphasized its continued efforts to hold individuals accountable under the FCA, citing several notable multimilliondollar settlements with doctors and government contractor owners in its announcement of 2020 FCA results. DOJ’s continued pursuit of individual accountability represents a key risk for doctors and other healthcare providers, as well as industry executives doing business with the government.

As we continue to watch for new trends in 2021, we review the key decisions and policy developments from 2020.

READ MORE