Federal False Claims Act Enforcement Continues to Gather Steam

Despite the COVID-19 pandemic and continued sequestration of enforcement funds, federal false claims enforcement activity seems to be gathering momentum. Reversing recent trends, the federal Health Care Fraud and Abuse Control Program (Program) reversed recent trends and recovered more money in FY 2020 than it had the year before. In fact, recoveries for the year reached nearly $3.1 billion, the highest return since 2016. Here’s a briefing for lab compliance managers on the July 14  OIG report and what it says about the current state of federal health care fraud enforcement.

ROI Increases for Second Year in a Row

The Program was created as part of the Health Insurance Portability and Accountability Act of 1996 (HIPAA) under the joint direction of the Attorney General and HHS Secretary, acting through the OIG, to coordinate federal, state and local law health care fraud and abuse enforcement activities. The Annual Report describes the Program’s financial performance in the previous fiscal year. While the narrative is somewhat helpful, the real value of these annual reports, at least from a lab compliance officer’s perspective, are the enforcement and recovery statistics. Tracking these numbers over a three-year period gives a good sense of the current energy and direction of federal fraud activity, including with regard to labs.

Among the most significant metrics in the annual report is Program ROI, which measures how much money the Program returns for every dollar invested. Program ROI is calculated by dividing the total monetary results to the federal government in judgments, sentences, settlements and other recoveries (not including relator payments in qui tam lawsuits) by the annual appropriation for the Program Account in a given year (not including portions of CMS funding dedicated to the Medicare Integrity Program). Because the annual ROI tends to vary from year to year depending on the number and type of cases that are settled or adjudicated during the year, DOJ and HHS use a three-year rolling average ROI for results contained in the report.

And since FY 2013 when ROI peaked at $8.10, ROI has been trending steadily down, with five consecutive years of decline. FY 2019 finally saw the losing streak come to an end, with ROI increasing from $4.00 to $4.20 in 2019. The upward movement continued this year, with the three-year rolling average ROI reaching $4.30 in FY 2020.

 Annual Program ROI, FY 2013 to FY 2020 (3-Year Rolling Average)

FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020
$8.10 $7.70 $6.10 $5.00 $4.20 $4.00 $4.20 $4.30

 By the Numbers

During FY 2020, the federal government won or negotiated nearly $3.1 billion ($3,075,834,684) in health care fraud judgments and settlements. That’s up from $2.6 billion in FY 2019, even though the number of convictions during the same period actually declined from 528 to 440. Civil actions, which have traditionally been the cash cow of federal health care fraud enforcement efforts, were up sharply in FY 2020, from 1,112 to 1,498, which portends higher recovery levels in the years ahead when these new actions yield judgments and settlements. However, exclusion numbers were fell off by nearly 25 percent to 2,148.


Metric FY 2020 FY 2019 FY 2018
Total recoveries $3.1 billion $2.6 billion $2.3 billion
New DOJ criminal health care fraud investigations 1,148 1,060 1,139
New DOJ Civil Health care fraud investigations 1,498 1,112 918
New Criminal cases filed 578 485 572
Convictions 440 528 872
Exclusions issued by OIG 2,148 2,640 2,712

 The increases in most of the enforcement metrics occurred even though sequestration reduced the enforcement funding available to the DOJ, FBI, HHS and OIG. A total of $11.0 million was sequestered from the Program in FY 2020, for a combined total of $150.6 million in mandatory funds sequestered in the past eight years. Including funds sequestered from the FBI ($70.0 million in the past eight years), $220.6 million has been sequestered from mandatory Program funds since FY 2013.

Takeaway and Impact on Labs

Although labs are a perennial favorite target for enforcers, they were especially prominent for the wrong reasons in FY 2020. Genetic and other testing labs played a prominent role in the Operation Rubberstamp national takedown of telemedicine fraud, the biggest takedown collaboration in history.

 In addition to the usual kickback and Stark recoveries that take place each year, enforcers targeted COVID-19 add-on tests, i.e., high-priced and medically unnecessary tests carried out on patients tested for SARS-CoV-2, including the Respiratory Protection Panel (RPP), antibiotic resistance tests, genetic testing and cardiac panels CPT codes. “Providers are also billing respiratory, gastrointestinal, genitourinary, and dermatologic pathogen code sets with the not otherwise specified code CPT 87798,” according to the report.


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