The Department of Justice is prioritizing the prevention of fraud during the coronavirus pandemic, and health care is a particularly fertile ground for scams.
There will always be unscrupulous individuals and organizations, even in health care, that seek illegitimate gains during a crisis. Below are recent fraud-fighting efforts by the DOJ and a look at what to expect in the health-care industry as this pandemic continues.
Test Kit Scams
A March 23 fraud alert from the the Department of Health and Human Services Office of Inspector General (OIG) warns about several health-care fraud scams, including scams offering Medicare beneficiaries Covid-19 testing kits in exchange for personal information.
The fraud alert points out that fraud perpetrators are targeting beneficiaries through telemarketing, social media and door-to-door visits. The DOJ also said March 24 the department had received reports of, fraudulent and criminal behavior and detailed the specific authorities that are at the disposal to DOJ attorneys to punish Covid-19 related wrongdoing.
Some of these authorities included computer fraud, health-care fraud, identification fraud and aggravate identity theft, terrorism-related violations, and violations under the Defense Production Act.
No doubt an immediate priority will be for DOJ prosecutors to use traditional mail and wire fraud statutes to make examples of those who victimize the public by touting fake cures for the virus or obtaining personal/financial information from individuals and organizations by posing as government or health-care agencies.
Indeed, in its first reported action, on March 21, DOJ attorneys went to court to shut down the website coronavirusmedicalkits.com, which was peddling fake virus vaccines.
Health-care lawyers and their provider clients should be especially vigilant regarding claims for “treatments,” “drugs,” “vaccines,” or “tests” touted for Covid-19.
In addition, the government is reporting “phishing emails from entities posing as the World Health Organization or the Centers for Disease Control and Prevention” and other “malicious websites and apps that appear to share coronavirus-related information to gain and lock access to your devices until payment is received, and involve seeking donations fraudulently for illegitimate or non-existent charitable organizations.”
Additional malfeasance schemes include medical providers obtaining patient information for Covid-19 testing and then using that information to fraudulently bill for other tests and procedures.
The CARES Act
Another potential hot bed for fraud will surely be the $2 trillion aid and stimulus package in the CARES Act and signed into law March 27. Under the act, billions of dollars in grants and loans will be available to hospitals, health-care organizations and other providers that have been adversely affected by Covid-19.
As with any federal program, applications for monies should be scrutinized by counsel for accuracy and completeness.
Insider Trading and Investments
Politicians who astutely sold shares in companies immediately after a confidential briefing regarding Covid-19, thereby avoiding millions in losses, have faced a public outcry regarding their conduct.
Indeed, shortly after the story broke about U.S. senators selling stocks to avoid millions in loses, the SEC posted a warning on its website that corporate America should not use the current crisis to enrich themselves via insider trading.
Especially in the health-care field, lawyers need to be especially vigilant regarding insider trading. Professionals at pharmaceutical companies have access to clinical trial results regarding potential Covid-19 drugs and vaccines before the general public. Their share trading practices should be monitored, as well as those of family members, because no doubt the SEC and DOJ will be looking at such actions closely.
Similarly, there is potential for increased investment scams relative to products and services to prevent, detect and cure the coronavirus.
Hoarding, Price Gouging and False Advertising
While certainly not acceptable conduct, it is unlikely that the DOJ will expend extensive resources to address hoarding/price gouging of supplies and products in short supply due to the Covid-19 crisis. To be sure, Attorney General William Barr has announced the formation of a task force, headed by the U.S. Attorney for the District of New Jersey, to address these issues.
However, we should expect that DOJ prosecutions to be limited to egregious cases, such as doctors writing fake prescriptions to family members and friends for drugs in short supply. Enforcement efforts regarding hoarding/price gouging are typically left to state attorney generals’ offices who apply state consumer protection statutes to address this conduct.
Similarly, unsubstantiated claims for products related to Covid-19 are typically addressed by the Federal Trade Commission, which monitors advertising in all forms of media including the internet. Indeed, the agency has already issued multiple warning letters to companies making false claims about products purporting to address Covid-19.
This column does not necessarily reflect the opinion of The Bureau of National Affairs, Inc. or its owners.
Anjali N.C. Downs is a member of the firm in the Health Care and Life Sciences practice, in the Washington, D.C., office of Epstein Becker Green. Her practice focuses on fraud and abuse and federal and state regulatory compliance within the health care industry.
Anjana D. Patel is a member of the firm in the Health Care and Life Sciences practice, in the Newark and New York offices of Epstein Becker Green. Her practice focuses on health care transactions and regulatory compliance counseling.
Jack Wenik is a member of the firm in the Health Care and Life Sciences and Litigation practices of Epstein Becker Green. He represents health care clients in various regulatory compliance matters and litigation, including state and federal investigations, Medicare appeals, Board of Medical Examiners inquiries, and other proceedings.