DOJ Health-Care Fraud Enforcement Demands Physicians’ Diligence

The Department of Justice’s intensified efforts against health-care fraud have led to a significant increase in enforcement actions—which likely won’t stop anytime soon. In this environment, physicians should think critically about their business arrangements and seek legal counsel to scrutinize payment sources and deals.

The 2024 National Health Care Fraud Enforcement Action resulted in criminal charges against 193 defendants, including 76 medical professionals. These individuals were implicated in schemes involving approximately $2.75 billion in intended losses and $1.6 billion in actual losses.

Many of the fraud claims were centered on wound grafts, unlawful prescription of Adderall and other stimulants, and schemes involving telemedicine and laboratories. Matters relating to the health-care industry comprised the largest portion of False Claims Act fiscal year 2024 settlements and judgments.

The DOJ last month highlighted the opioid epidemic, unnecessary services, substandard care, Medicare Advantage, unlawful kickbacks, Stark Law violations, and Covid-19-related fraud as specific enforcement priorities moving forward.

People may wonder if the Trump administration will affect enforcement. Many False Claims Act and anti-kickback cases take years to work up, so they aren’t always affected by changes at the helm. Also, health-care fraud enforcement is a huge moneymaker for the federal government, so it’s always a priority regardless of who is in office.

A regulatory freeze, halt on former President Joe Biden’s policies, and hiring restrictions may have a higher impact on fraud enforcement. But because fraud cases are so fact-specific, the initiative known as the Department of Government Efficiency—instructed to modernize the government’s software and information technology systems—may be able to better prove fraud and abuse cases using technology and tracking of claims data.

Given that fraud enforcement is such a good income generator for the government, more money likely will be put toward it. And if Trump’s new DOJ appointments want to take a more hands-on approach, they may have more oversight and involvement in shaping settlement decisions.

One of the Trump nominees is Mehmet Oz, the proposed administrator for the Centers for Medicare and Medicaid Services. Oz called traditional Medicare dysfunctional and proposed an expansion of Medicare Advantage plans, the cost of which could be shared by employers and employees.

But Democratic lawmakers wrote an open letter to Oz saying that Medicare Advantage insurers overcharged the Centers for Medicare and Medicaid Services by $83 billion in 2024 due to upcoding and other improper billing purposes. It’s unclear what changes he will make to Medicare rules or regulations that may alter enforcement.

Even with a new administration and potentially shifting priorities, the hot topics of health-care enforcement such as clinical lab arrangements, durable medical equipment supply contracts, telemedicine use, pharmacy benefit managers, and kickbacks with pharmaceutical companies will still be hot topics this year.

Many clients never expect to be involved in a fraud and abuse scheme. They can be led astray by vendors, company executives, and sales representatives.

The telemedicine cases that were prosecuted involved genetic testing that was supposed to indicate an elevated risk of cancer, cardiovascular disease, Parkinson’s disease, and other serious illness—but they weren’t used in the patients’ treatment. Many physicians think their prescription power can be used to help patients, agreeing to remote patient monitoring and certain labs. But if often backfires and ends up putting them in a fraud situation they didn’t expect.

Physicians and individual clinical practices need to understand that enforcement of Medicare regulations and the False Claims Act won’t go away. If they accept federal plans, they should think carefully about business arrangements and whether the reason for the arrangement is to make money, refer patients, funnel labs to a specific place they may own, or some other illegal reason.

Doctors must use diligence when payments are linked to referrals and ownership interests. Engaging in or being associated with fraudulent activities can lead to severe legal consequences, including substantial fines and imprisonment. They should have legal counsel review any side deals, scrutinize payment sources to ensure they are legitimate and documented correctly, and see if arrangements fall within safe harbors.

Physicians are beginning to leave “traditional” medicine and starting up cash-based practices to avoid these onerous burdens and stop feeling like they have to look over their shoulders. Even if physicians don’t accept federal plans but want to accept insurance—“hybrid” plans—they are still bound by compliance rules found in traditional insurance agreements, which often mirror federal compliance regulations.

The direct patient care model has grown exponentially in recent years, fueled by doctors wanting out of traditional insurance and Medicare rules and regulations altogether. In those cases, doctors still must follow state law, ensure patient privacy, deal with employment law issues, and have a mindset for business. But they avoid the risk of jail time and fraud penalties.

In the meantime, physicians and health systems accepting federal plans must continue to maintain strong compliance plans and systems, watch out for side deals, and ensure their agreements and deals are reviewed by a health-care attorney. Don’t fall prey to health-care schemes—the government is watching.

This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law and Bloomberg Tax, or its owners.

Author Information

Amanda Hill is owner and founder of Hill Health Law Group and has nearly 25 years of health-care law expertise.

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