The Department of Justice (DOJ) and the Department of Health and Human Services (HHS) jointly announced the relaunch of a Working Group to enhance enforcement of the False Claims Act (FCA) across the healthcare and life sciences industries.
Originally established in the waning days of the first Trump Administration, this initiative reinforces and strengthens a coordinated federal approach to investigating and prosecuting FCA violations, with an emphasis on cross-agency collaboration, data-driven approaches, increased whistleblower engagement, and efficient management of the government’s investigative resources.
Key enforcement priorities
The Working Group, led by senior officials from HHS’s Office of General Counsel, the HHS Office of Inspector General (OIG), and the DOJ’s Commercial Litigation Branch, will prioritize enforcement in several areas, namely:
- Medicare Advantage
- Drug, device, and biologics pricing, with scrutiny of arrangements involving discounts, rebates, service fees, formulary placement, and price reporting
- Barriers to patient access to care, such as violations of network adequacy requirements
- Kickbacks related to drugs, medical devices, durable medical equipment (DME), and other federally reimbursed products
- Materially defective medical devices that may impact patient safety
- Manipulation of electronic health records systems to drive inappropriate utilization of Medicare-covered products and services
Expedited investigations and data-driven enforcement
The Working Group is expected to expedite ongoing investigations and identify new leads by leveraging enhanced data mining and cross-agency intelligence sharing. HHS-OIG audit reports and findings that identify red flags for potential fraud will be systematically referred to the DOJ for further evaluation and possible enforcement action.
Although the government has been increasing its use of data analytics in recent years to enhance its enforcement activities, the announcement signals an even deeper commitment to use advanced analytics and interagency cooperation to uncover and address nuanced and complex investigative theories.
Whistleblower incentives and qui tam actions
Consistent with recent DOJ policy statements, the Working Group’s announcement underscores the government’s eagerness to work with bona fide whistleblowers (qui tam relators) who have knowledge of FCA violations in priority areas. Relators who initiate successful qui tam lawsuits may be entitled to receive up to 30 percent of the government’s recovery, providing a significant incentive for potential whistleblowers. The DOJ’s announcement could spur an increase in FCA enforcement activity targeting healthcare providers, pharmaceutical companies, and other entities involved in federal healthcare programs. At the same time, Working Group leadership is mindful that some qui tam lawsuits lack merit and needlessly drain the government’s enforcement resources. For this reason, the Working Group will consider “whether DOJ shall move to dismiss a qui tam complaint” over the whistleblower’s objection under Section 3730(c)(2)(A) of the FCA.
Key takeaways for healthcare and life sciences companies
Given the DOJ and HHS’s clear directive to intensify cross-agency FCA enforcement, companies operating in the healthcare and life sciences sectors may consider proactively assessing and improving their compliance systems.
Healthcare providers can review internal compliance programs and billing practices to ensure accuracy and transparency, particularly in high-risk areas such as Medicare Advantage and product pricing.
Life sciences companies can (1) evaluate promotional materials and sales practices for potential off-label promotion or misbranding risks; (2) review pricing and payment mechanisms – particularly novel or innovative measures to defer or discount customers’ payments through rebates, discounts, and similar tools – to ensure each pricing decision is supported by thorough fair market value analysis; and (3) consider the nature of their relationships with healthcare providers. In particular, companies are encouraged to ensure that arrangements such as appointments to medical boards – and any hospitality in connection with meetings – are not provided in expectation of or compensation for the use of the company’s medication or equipment.
Both providers and life sciences companies may consider strengthening internal whistleblowing procedures to encourage employees to report suspected violations internally, allowing for prompt investigation and remediation, and monitoring ongoing developments in FCA enforcement priorities before adapting compliance strategies accordingly.
Conclusion
The formation of the DOJ-HHS Working Group marks an escalation in federal efforts to detect, investigate, and prosecute healthcare fraud under the FCA.
The Working Group announcement also comes just a few days after the DOJ unveiled criminal charges against more than 300 individuals for healthcare fraud schemes amounting to over $14 billion, which the DOJ noted is the largest healthcare fraud enforcement action in history.
Additionally, the DOJ recently expanded the criminal division’s pilot whistleblower program to incentivize whistleblowers to report criminal healthcare fraud schemes.
These measures all point to heightened scrutiny that may well augur additional investigations and whistleblower-initiated litigation in the months ahead.
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