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April 19, 2024

Department of Justice Expands Its Focus to Third Parties Involved with Managed Care False Claims

In a talk at the 2024 Federal Bar Association’s Qui Tam Conference in February, Principal Deputy Assistant Attorney General Brian M. Boynton commented that the Department of Justice (DOJ) will be increasing its focus on third parties that cause the submission of false claims, particularly under Medicare Part C (Medicare Advantage). DOJ expects to focus on third parties, such as vendors and providers, that play a role in activities that underlie potential false claims submitted by Medicare Advantage plans.

The False Claims Act (FCA) covers not only individuals and entities that directly submit false claims; it also covers parties that “cause” false claims to be submitted. According to DAAG Boynton, in the healthcare industry, particularly in Medicare Advantage, "there is a wide collection of actors that may influence the claims that are ultimately submitted to the government.” Furthermore, DOJ “[has] seen how common technology, like electronic health record software, can be corrupted to bias certain types of medical decisions. We have also witnessed the proliferation of coding consultants and billing specialists, who are supposed to help providers accurately bill for their services, but sometimes instead find ways for providers to improperly inflate their Medicare payments by upcoding or otherwise submitting unsupported claims.”

Intentional acts of inflating payments can include submitting inaccurate diagnostic codes for patients, so they appear to require more care or coding assistance where algorithms that do not follow CMS guidelines are used to diagnose a patient, resulting in a patient appearing sicker than they may be. Inappropriately structured algorithms can be the underlying rationale for improper claims to the government. Additionally, intentionally assisting with the use of improperly structured technology or similar types of activity can be the basis for a claim that a party has “caused” the filing of a false claim.  

DOJ’s return on investment in FCA cases is significant. For the 2023 fiscal year, the DOJ recovered $2.7 billion and resolved 543 settlements and judgments under the FCA. In that respect, the DOJ expressing its expansion of its focus to third parties that may have “caused” false claims isn’t surprising. However, parties that are not direct submitters of claims to government programs need to take heed that the DOJ is now focused on how their activities may have contributed to the submission of false claims.

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