Rarely does a day go by without the Department of Justice announcing an investigation, indictment, plea or conviction in cases involving COVID-19 fraud schemes. In June, a federal jury convicted a Michigan man for a wire fraud and money laundering scheme to obtain more than $4.1 million in Paycheck Protection Program (PPP) and Economic Injury Disaster Loans (EIDLs) guaranteed under the Coronavirus Aid, Relief, and Economic Security (CARES) Act by the Small Business Administration (SBA). Also last month, eight defendants were charged with fraudulently obtaining more than $7 million in PPP loans, EIDLs and pre-pandemic Small Business Administration (SBA) loans.
These cases, however, are comparatively small potatoes compared to the DOJ's recent announcement that it is pursuing criminal charges against 21 defendants in nine different federal districts in connection with the defendants' alleged involvement in fraud schemes arising out of the COVID-19 pandemic. The DOJ claimed this alleged fraud resulted in a total of $149 million in false and fraudulent charges to federal programs and federally funded pandemic assistance.
The alleged fraud schemes included:
- Collecting patients' personal identifying information and fluid samples through COVID-19 tests and using the information and samples to submit false claims for unrelated, medically unnecessary tests or office visits that did not occur.
- Exploiting COVID-19 related policies that the Centers for Medicare and Medicaid Services (CMS) implemented to increase access to telemedicine by billing for telemedicine sessions that did not occur and ordering unnecessary genetic testing in exchange for telemedicine patients.
- Misappropriating financial assistance intended for frontline medical providers from the Provider Relief Fund.
- Manufacturing and distributing fake COVID-19 vaccination cards.
At the same time, CMS's Center for Program Integrity also announced that it has initiated 28 administrative actions against providers, asserting fraud, abuse and waste schemes related to the provision of COVID-19 care and other allegedly opportunistic schemes.
These moves come nearly a year after U.S. Attorney General Merrick B. Garland created the COVID-19 Task Force to "marshal the resources of the Department of Justice in partnership with agencies across [the] government to enhance enforcement efforts against COVID-19 related fraud." Some of the earliest PPP fraud cases involved schemes that amounted to little more than the simple theft of pandemic relief funds. Citing the federal government's efforts to provide critical relief to offset the economic impact of the pandemic and the potential for relief programs to be abused, Attorney General Garland said, "The Department of Justice will use every available federal tool--including criminal, civil, and administrative actions--to combat and prevent COVID-19 related fraud."
As Task Force Investigations progress, healthcare providers should anticipate an increase in government enforcement actions related to fraud associated with COVID-19 activities. We expect DOJ to focus on schemes that involve personal protection equipment (PPE), including the unauthorized distribution of PPE, Paycheck Protection Program loans, including the improper receipt of PPP loans, misuse of PPP loan funds, and the submission of false statements in PPP loan applications, and Provider Relief Funds, including improperly retained or calculated Provider Relief Funds.
Due to the expected increase in enforcement, healthcare providers would be wise to carefully review their billing practices for any COVID-19 care, including telemedicine, and track their receipt or use of any pandemic-related financial assistance. Providers should also consider putting protections in place to ensure that COVID relief funds are not diverted or misused, lest they find themselves the target of what we can expect to be a growing list of investigations, prosecutions and convictions published each week by the Department of Justice.
JD Thomas is a partner at Waller and a former federal prosecutor. He advises healthcare clients in government investigations and prosecutions, qui tam and False Claims Act defense and other enforcement actions.
Andrew Solinger is an associate at Waller where he assists clients in responding to investigations, audits and other inquiries brought by federal and state government agencies and regulators.