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DOJ SIGNALS INTENTION TO USE THE FALSE CLAIMS ACT TO PROSECUTE COVID

DOJ SIGNALS INTENTION TO USE THE FALSE CLAIMS ACT TO PROSECUTE COVID-19 FRAUD SCHEMES

On June 26, 2020, Principal Deputy Assistant Attorney General Ethan P. Davis delivered remarks on the False Claims Act before the U.S. Chamber of Commerce in Washington, D.C.  During his remarks, Davis clearly signaled that the Department of Justice (“DOJ”) will be moving aggressively under the FCA to prosecute unscrupulous fraudsters who would seek to profit off the current COVID-19 public health emergency.  

Davis declared that “[DOJ] will energetically use every enforcement tool available to prevent wrongdoers from exploiting the COVID-19 crisis,” and that “[i]n that effort, the False Claims Act is one of the most effective weapons in our arsenal.”  Specifically, Davis explained that “[DOJ] will deploy the False Claims Act against those who commit fraud related to the various COVID-19 stimulus programs, like the Paycheck Protection Program and the Main Street Credit Facility” that were created under the CARES Act.   

The Paycheck Protection Program (“PPP”) offers loans to provide incentives for small businesses to retain employees on payroll, and those loans are forgiven if businesses those employees are retained for eight weeks and the money is used for payroll, rent, mortgage interest, or utilities.  Thus far, the PPP has issued forgivable loans totaling more than $500 billion. Davis explained that those receiving such loans are required to certify compliance with the program’s conditions, and when seeking forgiveness of the loan, must certify that the funds were used for eligible costs.  If the borrower offers false certifications, FCA liability may result. Given that the federal government is injecting enormous financial resources into the economy, Davis stressed that “vigorous FCA enforcement is more important than ever to ensure that taxpayer dollars are spent as intended,” and that “the Civil Division’s Fraud Section has implemented a number of initiatives to identify, monitor, and investigate potential violations of the FCA in this area,” including coordination within DOJ and with other agencies to “identify potential program vulnerabilities and safeguard PPP funds, as well as to identify any potential wrongdoing that warrants investigation.”

Likewise, Davis addressed the fraud risks involving other assistance programs like the Main Street Credit Facility (“MSCF”), which provides loans to small and medium-sized businesses that require financial assistance to maintain their operations during the current public health emergency, and the Provider Relief Fund (“PRF”), under which HHS has been providing billions of dollars to providers “on the front lines of the COVID-19 crisis.” 

The MSCF requires funding recipients to comply with certain requirements, including eligibility requirements, and Davis stated that DOJ “will use the False Claims Act to hold accountable those who knowingly attempt to skirt those requirements.”  Likewise, providers who receive funds under the PRF must agree to various terms and conditions, including that they have provided or are providing care to those with actual or possible cases of COVID-19, and must agree to restrictions on balance billing patients.  Davis emphasized that “[w]here a provider knowingly violates these requirements, the False Claims Act may come into play.”

Davis also indicated that DOJ’s enforcement actions may include civil prosecution of private equity firms investing in companies receiving CARES Act funding.  According to Davis, “[w]hen a private equity firm invests in a company in a highly-regulated space like health care or the life sciences, the firm should be aware of laws and regulations designed to prevent fraud” and that if that firm “takes an active role in illegal conduct by the acquired company, it can expose itself to False Claims Act liability.” Davis warned that “[w]here a private equity firm knowingly engages in fraud related to the CARES Act, [DOJ] will hold it accountable.”

At the same time, Davis assured his audience that, consistent with the FCA not being an “all-purpose anti-fraud statute” designed for “garden-variety breaches of contract or regulatory violations,” DOJ would not pursue businesses for making “immaterial or inadvertent technical mistakes in processing paperwork, or that simply and honestly misunderstood the rules, terms and conditions, or certification requirements.”  Rather, Davis stressed that DOJ would “pursue cases only where the borrower knowingly failed to comply with material legal obligations and certifications” and that companies who have acted in good faith “will have nothing to fear from [DOJ],” which is “concerned only with actionable fraud.”

Given the hundreds of billions of taxpayer dollars that Congress has appropriated in response to the COVID-19 pandemic, and DOJ’s determination to use the FCA to recover any amounts taken through fraud, we can expect to see many such cases filed over the course of the next year and beyond.  Whistleblowers who uncover and bring such FCA cases on behalf of the government are eligible to receive 15%-30% of any recovery.  If you have information concerning any such fraud schemes, Kaiser Law Firm, PLLC will be happy to assist you in evaluating the merits of the case.  Just call toll free at 844-800-6657 or complete an email contact form on our website: https://kaiserfirm.com/contact-us/

An Overview of the False Claims Act

AN OVERVIEW OF THE FALSE CLAIMS ACT.

The False Claims Act gives assurance to workers who are fought back against by a business in light of the representative’s cooperation in a qui tam activity. The assurance is accessible to any representative who is terminated, downgraded, undermined, bugged or in any case victimized by their boss in light of the fact that the worker examines, documents or takes an interest in a qui tam activity.

Think You Have a Case? Speak With Kaiser Law Firm, PLLC – False Claims Act Law Firm

Whistleblowers offer a significant support by exposing extortion that blocks powerful administration and wastes citizen cash. Experienced lawful portrayal improves the opportunity that your case will be effectively settled and your informant recuperation will be ensured. A legal advisor can likewise assist with guaranteeing that your employer doesn’t make retaliatory move against you for recording a case.

Before you blow the whistle, talk with the broadly perceived New York City law office of Kaiser Law Firm, PLLC During a free case audit we’ll clarify the entirety of your lawful rights and alternatives as they relate to the False Claims Act.

FALSE CLAIMS LIABILITY AND THE PROVIDER RELIEF FUND

FALSE CLAIMS LIABILITY AND THE PROVIDER RELIEF FUND

Geoffrey R. Kaiser, Esq.

The Coronavirus Aid, Relief, and Economic Security (CARES) Act created a $175 billion Provider Relief Fund (“PRF”) for expenses and lost revenues attributable to the coronavirus pandemic.  Those funds are being disbursed through “General” and “Targeted” distributions.  Significantly, all providers retaining funds must sign an attestation and accept the terms and conditions associated with payment, and keeping the funds after 90 days is viewed as acceptance of those terms and conditions. Further, the Department of Health and Human Services (“HHS”) stated that it reserves the right to audit Provider Relief Fund recipients in the future and collect any PRF amounts that were used inappropriately. The requirement that providers agree to specific terms and conditions in accepting funding immediately raises the prospect that the government might not merely request that funds improperly obtained or utilized be returned, but that may also pursue providers under the False Claims Act (“FCA”) for accepting funding under false pretenses.  If that happens, the provider may be liable for up to three times the amount of the funding accepted plus civil monetary penalties, and those who uncover and bring such FCA cases on behalf of the government are eligible to receive 15%-30% of any recovery.

Among other things, a provider must certify (1) that it was eligible to receive the funds (because it providers or provided after January 31, 2020, diagnoses, testing, or care for individuals with possible or actual cases of COVID-19); (2) that the funds were used as permitted (i.e., to prevent, prepare for, and respond to coronavirus); (3) that it will not use the payment to reimburse expenses or losses that have been reimbursed from other sources or that other sources are obligated to reimburse; and (4) that for care provided to actual or presumptive COVID-19 patients, it will not engage in prohibited balance billing by charging a patient an amount greater than what the patient would otherwise be required to pay to an in-network provider. Violating any of these conditions could create a predicate for the government to argue that the provider violated the FCA.

HHS has stated that it will have significant anti-fraud monitoring of the distributed funds and will provide oversight as required in the CARES Act to ensure appropriate use of the money.  Therefore, providers who accept money without being eligible or use money in unauthorized ways run a risk that their behavior will come under scrutiny.  The guidance identifies various expenses and lost revenues that are considered eligible for reimbursement.  Some qualifying expenses include: 

  • supplies used to provide healthcare services for possible or actual COVID-19 patients; • equipment used to provide healthcare services for possible or actual COVID-19 patients;
    • workforce training;
    • developing and staffing emergency operation centers;
    • reporting COVID-19 test results to federal, state, or local governments;
    • building or constructing temporary structures to expand capacity for COVID-19 patient care or to provide healthcare services to non-COVID-19 patients in a separate area from where COVID-19 patients are being treated; and
    • acquiring additional resources, including facilities, equipment, supplies, healthcare practices, staffing, and technology to expand or preserve care delivery. 

Qualifying “lost revenues” attributable to coronavirus may include revenues lost as a consequence of fewer outpatient visits, canceled elective procedures or services, or increased uncompensated care, and may use the funding to cover any cost that the lost revenue would otherwise have paid for, provided that the cost is one which prevents, prepares for or responds to coronavirus. Examples of such costs might include employee or contractor payroll, employee health insurance, rent or mortgage payments, equipment lease payments and electronic health record licensing fees.  When the health emergency is over, providers also are expected to return any unused PRF money that they were unable to spend on authorized expenses or losses.  If the provider uses the funding for unauthorized categories of expenses and revenues that are unrelated to COVID-19, there is always the potential for FCA liability.

Given the enormous amount of funding allocated to the PRF and rushed into the marketplace, it is inevitable that unscrupulous providers will seek to take advantage of the program through fraud.  If you have information concerning any such fraud schemes, Kaiser Law Firm, PLLC will be happy to assist you in evaluating the merits of the case.  Just call toll free at 844-800-6657 or complete an email contact form on our website: https://kaiserfirm.com/contact-us/

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