DOJ Announces FY 2016 False Claims Act Recoveries – Impact for Compliance Programs

For those compliance officers and leaders looking for another way to educate or influence their colleagues and decision-makers about the need for proactive and effective compliance programs in their organizations, a recent U.S. Department of Justice (DOJ) press release is a must-read.

DOJ reported on Dec. 14, 2016, that of the $4.7 billion it had recovered in the 2016 fiscal year pursuant to the False Claims Act (FCA), the majority ($2.5 billion) was from the healthcare industry, including hospitals, nursing homes, physicians, laboratories, drug companies, and medical device companies.

All leaders in the healthcare industry should continue to be acutely aware of FCA risk and the government’s success in leveling draconian fines and penalties against healthcare providers that have engaged in non-compliant behaviors. Justification and validation efforts to secure all the resources necessary to manage an effective compliance program (an experienced compliance officer, appropriate skilled staff, auditing/monitoring, education, hotline, enforcement of discipline, consultants, subject matter experts, technology, etc.) should include accurate and forceful communication about the risk present today and in the future of failing to comply with all the complicated rules and regulations. The information contained in the aforementioned DOJ press release is a good way to focus this communication.

In each of the last seven years, DOJ healthcare recoveries under the FCA have exceeded $2 billion. The FCA is the government’s primary civil remedy to redress false claims for government funds under Medicare and other programs. Congress strengthened the FCA in 1986 by amending it to increase incentives for whistleblowers to file lawsuits alleging false claims on behalf of the government. 

DOJ has recovered $19.3 billion in healthcare fraud claims from January 2009 through the 2016 fiscal year. Whistleblowers (who can receive up to 30 percent of each recovery) filed 702 qui tam suits in 2016. Thus, a key component of everyone’s compliance program education should be to enforce those aspects of your program (hotline, non-retaliation policy, etc.) that reduce the potential for whistleblower situations at your organization. One other point of justification is the amount of time, disruption from your mission, and legal expenses that can be incurred if the “whistleblower bomb” goes off in your institution.

The statistics announced by DOJ should come as no surprise to those who have been following the compliance happenings in the healthcare industry in the last several years. The two announcements I frequently reference when speaking about healthcare compliance to clients, C-suite leaders, and board members, and at industry conferences, are a) the June 2015 U.S. Department of Health and Human Services (HHS) Office of Inspector General’s (OIG’s) Fraud Alert titled “Physician Compensation Arrangements May Result in Significant Liability;” and b) the September 2015 DOJ memo, commonly known as the Yates Memo, that focused on the increased prosecution that targets individuals and executives involved with such crimes. 

Both of these announcements were an indication that enforcement of non-compliant physician arrangements and questionable executive behavior would be increased. DOJ’s 2016 FCA report has a section called “Holding Individuals Accountable” that refers to the Yates Memo and lists a handful of executives who were held personally liable for alleged false claims. Each of these personal liability cases was for $1 million or more. If you are having difficulties in securing resources for your compliance program, or if your leadership does not want to invest in compliance or take it seriously, all of this information is important to share. 

If your leadership doesn’t appreciate the compliance risk, this ultimately means that your previous compliance education efforts have not been very effective. The good news is that the DOJ 2016 FCA Report is a good place to begin crafting an updated compliance education program targeted at the appropriate individuals. There should be a laser focus on the current high-risk environment in healthcare. If you have not been able to effectively communicate this message via internal resources in the past, consider engaging an external expert to lecture your leadership and board about compliance risk. I strongly advise against hiring attorneys who have a current relationship with the organization or do not have a specialized focus on healthcare compliance to conduct the education. Instead, find a compliance veteran who has been a compliance officer to share his or her career experiences without any potential conflict of interest. 

As validated by the DOJ 2016 Report of Recoveries and Judgements from False Claims Act Cases, the era of increased enforcement related to healthcare fraud and abuse will continue.

Now is the time to make sure your organization’s compliance program is equipped to handle this challenge.