Healthcare companies paid 90% of False Claims Act settlements in 2021

Healthcare companies paid almost 90% of the fraud settlement proceeds the U.S. Justice Department collected in fiscal 2021, the federal government said Tuesday.

The DOJ’s civil division secured $5.6 billion in False Claims Act settlements and judgments in the year ended September 30, 2021, the second largest annual total in the law’s history. Of that, more than $5 billion related to fraud and false claims in the healthcare industry, including managed care providers, hospitals, drug and medical device manufacturers, hospice providers, labs and doctors.

The DOJ said in a news release that its healthcare fraud enforcement efforts aim to restore funds to federal programs like Medicare, Medicaid and Tricare, the healthcare program for military service members and their families.

“But just as important, the department’s vigorous pursuit of healthcare fraud prevents billions more in losses by deterring others who might try to cheat the system for their own gain,” the department said. “In many cases, the department’s efforts also protect patients from medically unnecessary or potentially harmful actions.”

Healthcare comprised 80% of settlement proceeds between 2017 and 2020. The DOJ noted that the $5 billion in healthcare settlements doesn’t include additional amounts recovered for state Medicaid programs.Far and away the largest FCA settlement in fiscal 2021 were those reached with prescription drugmakers for their role in fueling the opioid epidemic. Purdue Pharma agreed to a $2.8 billion unsecured bankruptcy claim in October 2020 as part of an agreement to resolve civil allegations that the company promoted its drugs to healthcare providers for uses known to be unsafe and paid kickbacks to increase prescriptions of its drugs. Another manufacturer, Indivior, paid $209 million to resolve civil allegations regarding inappropriate prescriptions for the opioid addiction treatment drug Suboxone.

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A number of settlements related to the popular, almost $350 billion Medicare Advantage program, which pays a capitated amount to private health insurers for each patient enrolled in their plan according to a risk calculation. The California-based not-for-profit health system Sutter Health, for example, paid $90 million to settle a lawsuit that it knowingly submitted unsupported diagnosis codes for certain visits to inflate payments. Kaiser Foundation Health Plan of Washington, formerly Group Health Cooperative, paid $6.3 million to resolve similar allegations.

There were a number of settlements involving illegal kickbacks. For example, the electronic health records vendor Athenahealth paid more than $18 million to resolve claims that it invited customers and would-be customers to all-expense-paid sporting, entertainment and recreational events to boost sales.

The mail-order diabetic testing supply company Arriva Medical and its parent company agreed to pay $160 million to settle allegations it paid kickbacks to Medicare beneficiaries by offering them free diabetic testing glucometers and by routinely waiving copayments for diabetic testing supplies.

The settlements also involved claims of providing unnecessary medical services. In one case, SavaSeniorCare agreed to pay $11.2 million over claims that it provided medically unreasonable, unnecessary or unskilled rehabilitation services to Medicare patients.

Of the $5.6 billion in settlements obtained under the False Claims Act, more than $1.6 billion stemmed from lawsuits filed under the law’s qui tam, or whistleblower, provisions. The government paid $237 million to whistleblowers who filed qui tam lawsuits.

The DOJ in recent years began naming private equity owners as defendants in its False Claims Act lawsuits against healthcare companies, and a department official in 2020 pledged to ramp up enforcement against those financial investors.