Oct 29, 2024
On October 24, The Capitol Forum’s Sara Sirota hosted a conference call with Eva Gunasekera and Renée Brooker, partners at Tycko & Zavareei, to discuss the latest legal trends in healthcare fraud. The full transcript, which has been modified slightly for accuracy, can be found below.
SARA SIROTA: Good afternoon and welcome to our conference call on Legal Trends in Healthcare Fraud. I’m Sara Sirota, a Correspondent at The Capitol Forum. Today’s guests are Renée Brooker and Eva Gunasekera, partners at the law firm of Tycko & Zavareei.
Today we’ll be discussing legal trends in healthcare fraud, including the False Claims Act, the anti-kickback law, and the impact on drug makers, providers, and other healthcare companies. Renée and Eva, thank you both for joining us today, we’re very excited to have you.
RENÉE BROOKER: Thank you for having us.
SARA SIROTA: Before we get started, I’d like to go over a few housekeeping items. You’ve joined the presentation listening using your computer speaker system by default. If you’d prefer to join via telephone, just select telephone in the audio pane and the dial-in information will be displayed.
To submit questions to today’s presenters, type them into the questions pane of the control panel. We’ll collect questions throughout the call and address them during the Q&A session at the end of today’s conversation.
So, to jump right in, Eva and Renée, thank you again for joining us. Can you tell us about your representation of whistleblowers and how that process works?
RENÉE BROOKER: Sure. I’ll start off, Eva, and you can jump in. We may have different thoughts about any of your questions. And just to repeat what Sara said, we’re really happy to take questions from the audience or listeners about any subjects that we’re here to talk about. And every time Eva and I talk about the different subjects in our space, we always learn things as well from other people. So, we really welcome the input of others.
So, Eva and I work together on our whistleblower docket and we came from DOJ together, from DOJ Civil Frauds, where we both work in the healthcare fraud space as well as government contracting and financial fraud at DOJ Civil Fraud. And we have been partners for a number of years, dating back a long time ago while at DOJ, and we did a three-month trial together, a healthcare fraud trial. So that kind of bonded us for life.
So, we work as a team. We have a Qui Tam team at our firm. And we really enjoy talking to whistleblowers or potential whistleblowers or folks who have concerns about what they are seeing either at their employers or in their space, whatever type of healthcare space they work in. And so that is what we spend a significant amount of our time doing, is speaking to individuals who reach out to us.
And people can reach out to us in all kinds of ways. We get reached out to on LinkedIn. A lot of attorneys who don’t work in our space bring us cases or clients to evaluate for potential whistleblower concerns. And then we have people just somehow show up on our doorstep, find us, because they’ve either listened to one of these shows or have somehow heard about us. And so, a significant amount of our time is spent evaluating cases and listening to the concerns that people bring to us.
Every time someone has a concern, even though they may be valid, they’re not always going to meet the elements of a false claim in that case, or another whistleblower reward program. And today we’re talking about healthcare fraud. So, healthcare fraud cases, generally speaking, we’re going to be evaluating for false claims at Qui Tam, allegations.
And so, for us, the process works really just by, as I said, initial outreach. And we try to communicate with folks informally initially, just to see if we think they may be in the right place. And if we really think they’re not in the right place right out of the gate, we don’t go further with the process. And a lot of times, we refer individuals to other types of attorneys, maybe an employment attorney or any number of type of referrals that we may make.
And in the beginning, what we’re really trying to do is just we’re really kind of in listening mode. We want to hear—we start off always by asking folks, what are your concerns? What are you seeing? And what are you concerned about? And then we go from there.
And our evaluation process involves looking at evidence. We always want to see hard evidence from the whistleblowers. We want to see corroboration and not just one person’s word. And depending on the level that an individual has, what kind of a seat at the table they have to the fraud, if you will, will dictate how deep we need to dive into documentary evidence. But we’re usually looking for what Eva and I generally refer to as hard evidence.
And so, usually we can tell in a first call or two whether this is a conversation we should continue or whether the person maybe is just not in the right place with us. And if it is a conversation we want to continue, then we set up a series of meetings with our potential client, and we continue the discussion, including considering evidence, considering liability theories, considering whether they have—what I always say—do they have the goods? Can they prove with documents or claims data, or documents and claims data, the allegations? And then we just really go from there.
And usually, people are weeded out through that process until we get to a place where we decide, after maybe weeks, maybe months of conversations, that this is a case that is meritorious, meets the elements of the False Claims Act, that the person has what we need, and then we move forward.
Eva, do you want to add anything to that?
EVA GUNASEKERA: No, that was an excellent summary by my partner. This is Eva. Basically, in a nutshell, we take the vetting process very seriously. And so, for persons who are aware of whistleblowers and are aware of these types of False Claims Act cases and think that anybody who has a gripe with their former employer or otherwise thinks they know more and is just filing things willy-nilly is a misplaced assumption. Whistleblowers under the False Claims Act are, in our opinion, to some extent, even more credible, frankly, than whistleblowers under filing cases under any other federal program. Because there are fewer False Claims Act cases that actually are meritorious enough to get the attention of the Department of Justice and launch an investigation. So, the vetting process—in any case, but especially in health care fraud cases—is something that we, Renée and myself, take very seriously and involves a lot of time and effort and understanding of the applicable regulatory scheme.
SARA SIROTA: So, a few follow-up questions to that. First, you mentioned that there’s a distinction between whistleblower cases and then other types of cases, like employment, that perhaps a potential client should be pursuing instead. How do you make that decision that something is a whistleblower case?
And then you also mentioned interest from the Justice Department. So, what is it that the Justice Department is looking for that it might be inclined to get involved in?
RENÉE BROOKER: Well, I would say in the first question that you ask, it really just takes our experience. I think it’s just hard to start out in this space and be able to say that you would know, starting out, what would be a valid False Claims Act case or sound like one, such that you should continue the conversation or send someone to an employment attorney. But I guess it’s hard for me to, just in a global way, answer that question because all the cases are so different.
But just based on our experience, we are able to weed out, sort of separate the two piles of whistleblowers. And maybe there’s three piles. There are people who are expressing concerns that could lead to a false claim and we want to continue the conversation, continue discussing the evidence and so forth.
Then there’s maybe the second pile of people were right away. We know, from our experience, that what they’re even alleging or what their concerns are really aren’t related to something that would develop potentially into a False Claims Act case.
And then there’s a third bucket of people who maybe do have really valid concerns, but for whatever reason, it’s not a case that—Eva and I know based on our experience—is going to lead to potential false claims. It might be valid. If we think it’s a valid concern they have and it’s employment related, those are the ones that we’re going to call one of our employment colleagues and send the client there. Because if we think that the person may have a claim, but it’s not our bailiwick, we’re going to send them.
We never send people who we think don’t have any valid claim to someone. We just don’t do that. I don’t like to send just everybody who reaches out to us to another lawyer who then has to deal with having that conversation.
So really, Sara, it’s just based on decades of experience of vetting cases to know when somebody falls within one of those categories.
SARA SIROTA: Right.
RENÉE BROOKER: And then your second question, I mean, look. Eva and I are really broadly focused. So, I know we’re talking about, and we’re focused on and we are going to focus on, healthcare fraud today—and it is the biggest bucket of cases that the DOJ receives from whistleblowers and therefore tends to have more resolutions in the healthcare fraud space—but we really, at DOJ and in our private practice representing whistleblowers, we’ve done it all.
And frankly, Eva and I are both on the same wavelength. There’s not a favorite type of fraud that we like. If it’s fraud, we’re super interested. Whether it’s like a tried-and-true case that we’ve done a million times, like anti-kickback violations, which we’ve seen over and over and over and over again, and arguably are probably the most common type of healthcare fraud, Qui Tam case, like there’s a kickback allegation in it, whether it’s that or whether it’s a totally new case of first impression, it doesn’t matter to us. If we think it’s fraud, if it smells like fraud, if we can develop it into a fraud case, and it’s concerning to me and Eva, and we’re going to pursue it. And that’s true of government contracting fraud, financial fraud, like the whole kit and caboodle.
So, neither of us has like a favorite, really. We’re super anti-fraud, and we may come at it for different reasons. But we are very open to all kinds of cases. And there’s not much that is new to us or surprises us. But every now and again, we get a totally new case of first impression.
SARA SIROTA: And are there certain trends or issues that the DOJ is more or less interested in now? You mentioned kickback cases are of strong interest, or perhaps just quantity wise what DOJ tends to pursue often. But in addition to a trend or is there a type of company? The healthcare industry is obviously so broad, there’s insurers, there’s providers, there’s pharmaceuticals. So, what is DOJ, from your expertise, most interested in right now?
RENÉE BROOKER: So, maybe Eva, maybe you could answer the type of healthcare fraud cases that you see mostly with DOJ. And I was just going to start off by saying DOJ doesn’t wake up one day and say—except maybe with PPP loan fraud. They woke up one day, and they knew that there was going to be PPP and loan fraud cases, and that they were going to pursue them. But generally speaking, DOJ is directed by the whistleblower bar. So, the vast majority of cases that are opened and investigated are ones brought by Qui Tam relators, by whistleblowers. So, that is what drives the interest of DOJ.
Now, Eva can talk about—because she was the senior counsel for healthcare fraud at DOJ—what is it the DOJ is typically, investigating?
EVA GUNASEKERA: So, I don’t think DOJ priorities are specific to certain discrete industries. They are looking at claims data and ways in which the federal programs—and it’s really the largest insurance program in the country—Medicare is being defrauded. And unfortunately, it’s being defrauded, not just by people who are directly submitting claims to the program, but those entities that can also cause false claims to be submitted. And that’s really important distinction. Under the False Claims Act, that liability can attach to you, even if you’re not in direct privity with the Medicare program as a beneficiary or provider. And that’s where pharmaceutical companies and device manufacturers end up being held liable under the False Claims Act.
In terms of subject matter trends, yes, there are definitely going to be cyclical enforcement trends that you see. And so, for instance, in the early 2000s, through really, I would say like 2015 and maybe as late as 2020, you were seeing a lot of pharmaceutical and device manufacturer cases being pursued successfully, very successfully, for both anti-kickback and Stark law violations, and also off-label violations. For those who are not familiar, off-label violations are when a pharmaceutical or device manufacturer is marketing a device or a drug for an indication that the FDA has not approved, is not on-label, hasn’t gone through the extensive vetting process and approval process that the FDA has set up, and yet the pharmaceutical company is marketing the drug for that indication.
And one of the most clear examples of that – that resulted in hundreds of millions of dollars in settlements and recovery on behalf of the Medicare program—were the antidepressants that were being marketed to adolescents and pediatric patients when they were not approved for that population. And you can just imagine the possible adverse side effects that would result from the pharmaceutical companies marketing those drugs to that population before it went through the rigorous approval process that it was safe and effective.
So that was one big trend. Now, what you’re seeing—and this really implicates every healthcare provider and entity that somehow either causes or receives federal funds—is managed care. And managed care is Part C claims. So typically, the Medicare program has insured beneficiaries who are, a majority of them, 65 years or older, under Medicare Parts A and B.
A typically covers inpatient costs.
B typically covers what we think of as fee-for-service or outpatient costs.
But then Part C was at genesis from earlier administrations where they decided, the government decided, that they would actually delegate the responsibility of administering the Medicare program to private insurers like UnitedHealthcare, Aetna, Anthem, Blue Cross Blue Shield, all of those entities that have their own privately insured commercial patients that they ensure care is provided for.
Now, you have the Medicare program being administered by those private insurers under the Part C program. And the significance of the Part C program is really, as of last year, there are more Medicare beneficiaries who are enrolled in private Part C plans than enrolled in traditional Parts A and B Medicare fee-for-service. That’s really significant because the Part C program almost entirely delegated the responsibility of administering Medicare benefits and ensuring that proper claims were being paid to private insurers.
And the way in which they did that is in a very complicated methodology of capitated payments. But basically, what has resulted from that, very unfortunately, is that the lack of Medicare’s oversight into the Part C program, because they are no longer administering that program in the same way that they were Parts A and B, has been ripe for fraud, basically. And fraud both by providers, boots-on-the-ground persons who are purportedly providing care to Medicare beneficiaries, and also by insurers.
And even within that, it becomes more involved. There are a number of different intermediaries and vendors that have cropped up to assist in facilitating the Part C program who have also engaged in fraud and helped cause the submission of false claims. So, managed care is really a big part of DOJ enforcement efforts right now, in all cases. And it’s something that is really getting a lot of traction, as you can likely see in the cases that the DOJ is intervening on.
In addition to managed care, of course, you still have all your usual types of healthcare fraud, including payment of claims for unnecessary, unsupported, and excessive services, payment of claims for services that were never performed, payment of claims for services that were upcoded.
One other trend, though, in that same space, in that universal like these are common healthcare fraud schemes that providers and healthcare groups have capitalized on, is also private equity. And the enormous investment that private equity is now making in the healthcare space, they’ve been investing in healthcare since really the last 20 plus years. It’s only recently gotten the attention of the Department of Justice, because some of those private equity firms are now being pursued and have been held accountable for causing the submission of false claims. And private equity’s interest in the healthcare industry is in part for two reasons, based on our observation.
One, you have healthcare components to hospitals, provider groups, who are facing financial hardships, particularly in light of things like COVID. The pandemic definitely caused a lot of debt accumulation in the healthcare industry, and private equity companies came in to help relieve that debt and otherwise infuse capital into an industry that needed it. But in addition to that, unfortunately, these private equity firms are using their furnishment of funds to control the way in which they get to get value out of their investment.
And what we’re seeing is private equity and investment firms actually dictating how healthcare should be rendered for government insured beneficiaries. And in many instances, unfortunately, they too are engaged in the fraud in an attempt to make as much money on their investment in a particular healthcare entity as possible before getting out and cutting loose. And so, that’s yet another area.
So, I know I shared a fair amount. Frankly, it’s the tip of the iceberg in terms of enforcement priorities, both for the Department of Justice and also just for Renée and me personally, in the docket that we prioritize.
SARA SIROTA: And within the DOJ, are there particular offices that have more expertise in healthcare fraud than others? Like what does the internal dynamic look like?
RENÉE BROOKER: Well, there’s one DOJ office at main Justice that enforces the False Claims Act. That’s DOJ Civil Fraud, where Eva and I came from. And DOJ Civil Fraud does—they are experts on the False Claims Act. So, they do everything, anything and everything that falls under False Claims Act and FIRREA, which is really primarily bank fraud. So, that’s a separate thing. But really their major work, their bread and butter, is False Claims Act Enforcement, and they are the national experts.
You also have all of the U.S. Attorney’s Offices—I don’t know how many, 94 district courts, however many U.S. Attorney’s Offices, a significant number of them—all of them have at least one person in their office who is their Affirmative Civil Enforcement Attorney. And you have bigger offices like Southern District of New York, the District of Massachusetts, the Eastern District of Pennsylvania, lots of districts that have an entire arm, like a section of attorneys, that do nothing but Affirmative Civil Enforcement under the False Claims Act.
So, you have like a national practice at the Department of Justice. But the agencies are really the subject matter experts of whatever the fraud allegations are. And they’re also the defrauded agency. So, they’re kind of like the subject matter expert and the victim. And so, whenever a case is filed, the first thing that the DOJ does is they have somebody from the Office of Inspector General at HHS-OIG, which is really like an investigative arm. They pair up with the DOJ on the case. And if a subject matter expert on whatever the underlying, whether it’s managed care, it’s always going to be like CMS or FDA, but they will sometimes need the help of what I consider a subject matter expert at the agency, someone knowledgeable about the program, to assist from time-to-time with the case. And sometimes someone from the Office of General Counsel at the agency, not the OIG, will also be assisting with the case. It just kind of depends on exactly what the fraud is. And so, that’s how the government tries to put together its team when it’s evaluating a healthcare fraud case or a False Claims Act, Qui Tam case.
SARA SIROTA: Got it. And is there any way to sort of interpret how perhaps severe a case is based on who’s working on it?
RENÉE BROOKER: You mean like which attorney gets assigned?
SARA SIROTA: Yeah. I mean, if it’s DOJ main office or if it’s one of the local attorneys.
RENÉE BROOKER: Oh, I see. Yeah. So, at the start of the case, main justice gets every single one of them, like every case that’s filed in the United States. Whereas, the district will obviously only get notice of the case that’s filed in their district. And so, each case that—at main justice, it’ll have what I call a line attorney, a person who could be a super experienced attorney. They could be a senior trial counsel, but they’ll be like the line attorney assigned to the case. And then they’ll have a supervisor assigned as well. And that supervisor will work with the U.S. attorney’s office where the case was filed to try to figure out at the outset and it’s not—and it’s the furthest thing from a perfect science. And sometimes the government has to reconsider its initial thinking, but they try at the outset.
And when you have deep experience, like sometimes it’s not that hard in the usual case that comes in to determine is this something that main justice should put time and effort into? Or is this something that the U.S. Attorney’s Office, maybe it’s their bread and butter. It’s a standard medical necessity case involving one provider in the U.S. Attorney’s Office backyard that they can handle themselves and they don’t need maybe the extra support or expertise of main justice. Then the U.S. Attorney’s Office will handle it, and it’s very imperfect.
So, a case could get assigned to somebody at main justice and someone at the U.S. attorney’s office, but maybe one of the two of them doesn’t have as much time to put into the case. And so, one or the other of them will emerge as the person spending more. It’s very imperfect. It’s really just every case is the government trying its best to utilize and shift and reshift and figure out how much resources should we put on this case versus another?
And then, of course, if the case goes into litigation, if it gets intervened in, then everything changes because typically, people will be added at that point. Maybe people who weren’t involved in the investigation will need to step up and help with the litigation because litigation is often more involved. And the other side’s going to have an army. And so, DOJ never has an army on one side, but they may need to add a person or two. And not always. Because they’re just, like I said, they’re every day trying to marshal and re-marshal their resources. So, it’s very imperfect. People are just trying to make good judgment calls about where to put the effort.
SARA SIROTA: Got it. So, it sounds like it could be a mixture of things. Perhaps how resource intensive a particular case might be, but also just based on the expertise and experience of the particular attorney that’s handling the case.
RENÉE BROOKER: Yeah, it really is. Because the U.S. Attorney’s Offices, some of them have really deeply experienced False Claims Act prosecutors. And so, they may just be like, we got this and we don’t need as much involvement and help from main Justice. And then the human element plays a factor. So, some people prefer big teams and they’re like, I’ll take all the help I can get. Other people prefer to really kind of lead the way themselves. They want to lead a case. So maybe they’re not going to welcome or ask for as much help from main Justice as maybe another district that’s more welcoming of it, for either resources or expertise. But there’s a good number of U.S. Attorney’s Offices that have really deep expertise in the False Claims Act space as main Justice does.
SARA SIROTA: I see. So, you mentioned managed care earlier as being of particular interest. And then I think you also mentioned that there were perhaps other intermediaries or other types of companies that DOJ is particularly interested in right now. Can you expand a little bit more on that?
EVA GUNASEKERA: Yeah, sure. It’s a great question. So, the managed care claims that are being submitted to the Medicare program are being kind of in direct privity with the insurance companies. And those are names that everyone’s familiar with. Like I said before, UnitedHealthcare is an excellent example, and one of the insurers that the DOJ is, in fact, in litigation with presently. When you’re talking about the insurance company engaging in fraud on the Medicare program, the primary theory that’s been pursued by the DOJ there is called risk diagnosis fraud, where the insurance company has fraudulently inflated diagnoses of patients to receive more money for that patient’s care. And as I mentioned before, the way in which the Medicare program pays these insurance companies to administer the Medicare program on their behalf is through a capitated payment.
And so, Medicare says, we’re going to give you $10,000 per patient per month to cover all of the care associated with their oncology diagnosis, their oncology, diabetes and heart diagnoses, for instance. That amount could end up becoming $20,000 per patient per month if you add another high-risk diagnosis such as COPD or a number of other types of diagnoses that would attach greater services and a greater amount that would need to be spent and otherwise insured for that patient. What insurance companies have been alleged to have been doing is that they have been inflating or otherwise fraudulently identifying those diagnoses that generate greater capitated payment.
And what ends up happening is because those patients don’t, in fact, have those disease states and don’t otherwise need those more expensive services, the insurance company is entitled to retain whatever savings they enjoy from the capitated payment that is not spent on the patient’s care. And the reason that the program was set up that way was with good intent. The purpose of the PRXI program was to, in fact, save the Medicare program money by incentivizing everyone, including mainly the insurers, to be efficient and expeditious in ensuring that their patient population doesn’t get more sick.
So, the idea was actually there was good intent here. We want to incentivize insurance companies to actually provide the best care and the most immediate care for their patients so they do not get more sick and cost the program more money. And the way we’re going to incentivize them is they get to retain whatever amounts are not spent on that particular patient in that particular month.
Well, what ended up happening, unfortunately, was that there was a gap that insurers, some insurers, have decided to take advantage of. So that’s really what you’re seeing in the headlines in terms of insurance fraud under the PRXI program. In addition to that, you have a number of vendors and intermediaries who either directly assist the insurance companies in assessing appropriate and complete diagnoses for patients.
And you’re seeing that some of those vendors and intermediaries, when they do assessments of these patients in their homes or in their facilities, like a nursing home or even in the doctor’s office, they are also facilitating fraud through the use of certain computerized programs that automatically default to high-value diagnoses. And so, that’s how you’re seeing vendors and intermediaries causing false claims to be submitted by the insurance company. On the other side of that, you still have all the providers, hospitals, and physician practice groups that are actually rendering the care for the patients.
And what I don’t want to be kind of lost, I feel like often when we talk managed care fraud, people forget that providers and hospitals and groups can still engage in managed care fraud. It’s just they’re doing it boots on the ground in the same way that fraudsters have been gaming the Medicare system for years. They can also still be held liable for managed care fraud.
And so, what happens there is that there are incentive payments that are afforded to physician practice groups and ACOs, for example, affordable care organizations and hospitals, if they too are engaged in efficient care where they are ensuring continuity of care for patients and they’re consolidating their healthcare services for those patients, the Medicare program has also created ways to incentivize those groups to get more greater payment if they’re in fact ensuring continuity of care.
In that instance, you again have both intermediaries and vendors gaining the system in order to make patients either appear more sick or in some instances less sick than they actually are in order to capture more of the value that the Medicare program is furnishing the industry with good intent, again, of trying to make care more efficient, ensure continuity of care. But the vendors take the form of medical record reviewers, they take the form of nurse practitioners who actually are in the doctor’s office facilitating all of this record keeping, they take the form of billers, they take the form of quality review organizations, and it’s those quality review reports that CMS relies on to pay incentive payments to practice groups. And so, unfortunately, you’re just seeing fraud permeate all of these aspects of the healthcare industry and it just becomes exacerbated in the Part C context because CMS doesn’t have their eyes on the program in the same way that they do under Parts A and B.
SARA SIROTA: That’s all really helpful. I’d love to dive into some recent cases. There’s a lot of interest right now in Acadia Healthcare, which just, of course, there was a settlement with DOJ involving a whistleblower suit that you were very involved with.
Can we talk about that case and the significance of it?
RENÉE BROOKER: We can, Renée. I don’t know if you want to get started or if you’d rather I start. Oh, yeah, no.
I mean, yeah, so Eva and I filed that case back in 2017. Interestingly enough, it was the first case we filed when we left DOJ and became Private Relators Council. And our whistleblower had worked as a senior person at several of the facilities.
We also had two other whistleblowers. There were a total of three whistleblowers who filed the lawsuit. And the government did a long investigation at all times.
The case was actively under investigation, lots of conversations with the defendants. There was a long-time settlement discussion taking place.
So, it is kind of an example of how long these cases can take for the government investigation and that’s just how some of these go. So, I think it was seven years.
And that might sound crazy to people who work outside of our state to be involved in an investigation for that long that results in a resolution. But that’s not that’s kind of middle of the road. I wouldn’t say that’s totally uncommon.
And so, what would you like to know about it? And Eva can feel free to jump in if you want to say at the highest level, Eva, what the covered conduct was that was released. Maybe that’s a good way for us to start off.
Yeah, sure. I mean, the case actually covered a number of fraudulent practices that Acadia was engaged in, where they were admitting beneficiaries who were not eligible for inpatient treatment. But of course, inpatient treatment carries a pretty hefty price tag for the Medicare and Medicaid programs.
And they were failing to properly discharge those patients when they no longer needed inpatient treatment. So that led to excessively long lengths of stay for patients who may not have even been eligible for inpatient care to begin with.
They also failed to provide adequate staffing and training. And this was really significant because it was resulting in patients being put into an even more dangerous situation than if they had never been admitted at all, but actually had a behavioral health condition that required treatment. It was causing patients who were admitted to not receive their medication. It was causing assaults. It was causing elopements. It was causing suicides. It was causing other very significant harm that was all going undetected, unreported, and unknown by the Medicare and Medicaid program until whistleblowers, like our client, came out and notified the DOJ about these practices. And that led to a seven-year investigation.
And so, patients were not getting the care that they actually needed when they did in fact have a behavioral health diagnosis that required treatment. And patients were being taken advantage of and abused when they didn’t actually qualify for the types of facilities that Acadia runs. And Acadia has exploded. In the course of this investigation, they have expanded to hundreds of facilities nationwide. Because providing behavioral healthcare is not easy and it is a very delicate, important, significant area of the healthcare practice.
And so, Acadia has been very successful in buying up other hospitals. And this is where kind of the private equity arm of things, there’s a lot of parallels here, where they’re coming in with an investment that these other organizations need nationwide and making certain promises about how they can take over and run things more efficiently. But really at the end of the day, by running things more efficiently, they’re just not rendering the care that is required, but still receiving payment for that care from government insurance programs.
SARA SIROTA: And so, there was just a settlement that was reached. Acadia agreed to pay nearly $20 million to the federal government in Florida, Georgia, Michigan, and Nevada. Now that that has happened, and you mentioned that Acadia has been growing over the course of the investigation, so there might be more interest in other allegations. Would the government be more likely now to come back and want to investigate a company like Acadia in the future? Or is it completely new in the way that it might investigate another company that it hadn’t prior been interested in?
RENÉE BROOKER: It all depends on whistleblowers. So, this case was put to bed. There’s very specific covered conduct over certain years and certain programs, as you mentioned, like there’s Medicaid. That was Medicaid claims over limited periods of time, only in certain states that were released by the settlement.
So, if today, another whistleblower were to come forward with the same allegations or different allegations, the government would—as long as it’s not covered by the release—because they’ve already gotten a release, and the release was very limited in terms of—I forget what our ending year date was in the release, but it might have been 2017.
EVA GUNASEKERA: It’s 2017.
RENÉE BROOKER: So, let’s say the same allegations, or different ones, were filed today under seal by a whistleblower, and it was the same conduct post-2018 or different conduct pre-2018 or post-2018, then the government would look at that new case. It would start its own investigation if it found the claims meritorious. It would just be a whole new investigation. Of course, that investigation would also be under seal. It would highly likely be assigned to a completely different team at DOJ because people move on and it wouldn’t necessarily go to the same team, probably wouldn’t go to the same team. It would be assigned to someone else and it would just be a new investigation. And if the claims are meritorious, then the government will follow the trail.
So, it won’t really take into consideration that Acadia has already paid or already been investigated. It won’t motivate them to do it again or not do it again. It’ll just be let us look anew at these fresh allegations that we haven’t looked at before. Because every case is different and every whistleblower has different evidence to bring forward.
So that’s how it works. And you’ll see a lot of recidivism in our space. So, you will see, Eva and I could probably come up with a long list in five minutes, if we were going to take an exam, we would be like, okay, five minutes. Let’s figure out all the companies that have paid multiple false claims at settlements. In fact, when we get a new client and we’re evaluating their case, the first thing we do is go to the Google machine and we look and see, has this company paid a False Claims Act settlement before? Like, are they a recidivist? It doesn’t really change our evaluation of the case, but it’s something that we always want to know right away. What has been their experience, this company, with the False Claim Act before? And you’ll see some of the same companies, especially if they’re larger companies, paying a False Claim Act settlement over and over again.
SARA SIROTA: What if a company that has already been investigated and perhaps settled a False Claims Act and there’s other federal statutes that the government has investigated that company under, or perhaps there is private litigation against that company, could that incentivize the government to reopen an investigation under the False Claims Act? Or would it have to be motivated by a whistleblower?
RENÉE BROOKER: I mean, the government’s either going to be motivated by a whistleblower case or DOJ. And this was a big initiative that Eva started when she was in her role as Senior Counsel for Healthcare Fraud at DOJ. There’s always evaluation, data analysis, that DOJ is doing of industry to see if they should start—and they have started investigations based on what they’re seeing in the data.
So, I mean, when I was there, sure. Occasionally, for the agencies that I was responsible for, I would read every day the news. I would read the New York Times, the Washington Post. And if I saw a government contractor, there’s some report or just some story on a government contractor, for example, defrauding veterans or whatever was in the news. I would call the agency and say, hey, agency, did you see this report? Is there anything that you all should be looking at based on this news report that I’m seeing? It sounds like fraud. And the agency would have to be interested and consider opening an investigation.
Generally, that’s how it worked. But I think DOJ is very busy with whistleblower lawsuits and with their own data analysis. So, I’m not sure how often they are, frankly, opening cases based on what they see in the press. It’s not that it can’t be done. It’s just a matter of resources and how motivated you are to open a new investigation that isn’t based on a case that’s already sitting on your desk and filed, and you have deadlines and have to move on.
But occasionally, I would do that. I would reach out to the agency and ask them, could you guys take a look at this? Because it’s all over the Washington Post. What’s going on with that government contractor? Is there something there that you all should be taking a look at?
So, sure, that is definitely possible. And Eva and I saw that there was—I think it was last week or the week before, we saw on Mall 360, if I’m not mistaken, I think it’s Acadia that has an investor suit now or something. So, that might have risen out of the lawsuit. I don’t know. I have no idea. We don’t really know anything about it. But presumably, that investor lawsuit arose out of the DOJ settlement. I’m not sure, but it wouldn’t surprise me if that’s what happened.
SARA SIROTA: And you mentioned DOJ doing its own data analysis or industry analysis that I think Eva initiated. What kind of litigation would that lead to? What kind of litigation would that lead to? I mean, because False Claims Act, Qui Tam cases, are based on whistleblowers coming forward. So, what could be the basis for a case under that?
RENÉE BROOKER: It could still be. So, I’ll just say this little piece. There’s the False Claims Act statute at large, and then there’s the Qui Tam provision of it. So, DOJ can file its own False Claims Act cases without a whistleblower. It’s just that it’s very challenging to know where you should look and where the fraud is without an insider who’s bringing you the information. And there are so many whistleblower cases filed each year and outstanding each year still under investigation that DOJ is very busy focusing on those. And it’s very helpful to DOJ to have an insider pointing them in the right direction. But Eva will tell you how DOJ has and can, like with unlimited resources, they can tell you what DOJ could do with data.
EVA GUNASEKERA: Yeah, a lot. I mean, right? Like the data is a wealth of information about the way in which different providers are billing for different services. And one of the easiest examples in looking at data is matching data up between patients, for a kickback scheme, for instance, and seeing how the same patients are being cycled back and forth between two practice groups on different dates of service for what we would allege are excessive or unnecessary services. But also with Part D data, there is just so much information that you can learn when you match and marry up all the data.
So again, on the kickback context, if you were to look at a doctor’s prescribing pattern for a particular drug, and you know that the doctor received a $20,000 payment the year prior or the quarter prior from the pharmaceutical company, and then their prescribing practice for that particular drug just spikes subsequent to receiving that payment, you’re right, Sara. Like that may not be enough alone to prosecute the pharmaceutical company and/or the provider, the doctor, for a kickback violation. But it’s certainly strong evidence that there was causation and that the patient caused the doctor to prescribe more of the drug. And, of course, you want to see this over a period of time and look for trends that are evidence of pattern and practice.
So, that’s why the data can really help focus DOJ’s enforcement efforts. And for us, as private whistleblower counsel, it actually corroborates whatever our whistleblowers or relators are bringing to the government’s attention. So, we often point the government in the direction of what they should be looking at in the data when we initially file one of our cases. Because based on our relator, or our whistleblower, we know what trends they should be seeing in the data. And so, we ask our DOJ colleagues to look at the data and tell us is it, in fact, presenting in the way that the whistleblower said? And if it is, you now have the data which proves kind of the falsity, the false claim that’s being submitted to the program, and you have our client, the relator, who typically, has a ton of scienter evidence in the form of emails and policies and practices and just different ways in which the practice was engaged in business. And that’s your knowledge, the scienter evidence. And now you’ve met the elements of the False Claims Act that would allow one to actually approach the provider and try to figure out some kind of a resolution. So, the data is just such a fantastic and frankly objective piece of evidence that the DOJ can use and rely upon to both prove falsity, but also to prove scienter because you’re going to see patterns and practice in the data.
Another good example of how to use the data in the managed care context is the risk diagnosis fraud that we told you about. One of the successful what ways in which the DOJ has been able to prove false claims in those cases is by looking back in the data to see whether or not a patient had a particular high-risk diagnosis. So, diabetes is a great example. If you see diabetes showing up on a patient’s record all of a sudden, and you either don’t see any record of insulin for that patient in the Part D data, or alternatively you don’t see a diagnosis of diabetes by any other provider who is caring for that patient, that’s a red flag. That’s a red flag. That’s a red flag that you can discern from just the data. Don’t need to do any witness interviews, don’t need to have necessarily even any indicia of fraud that the company is engaged in a bad act. It’s just looking at the data and thinking why is this person being diagnosed with diabetes, but they’re not submitting any claims for insulin? That wouldn’t really make sense. And frankly, that person wouldn’t be alive for years and years and years with that diabetes diagnosis without any insulin medication. So really just kind of digging in. And I think it’s just such a fascinating space to be involved in, such a good metric, for both the DOJ and defendants who are being the subject of the investigation to dig in on and better understand.
SARA SIROTA: So, we are nearing the 4:00 o’clock mark. I just want to be mindful. I don’t see any other questions in the chat, but are there any other closing remarks that either of you would like to add before we wrap up?
RENÉE BROOKER: This is Renée. I guess I would just say that our message always when we’re talking to any audience is to really encourage whistleblowers to report their concern to law enforcement and to at least reach out to somebody who is a whistleblower attorney to evaluate their potential case. Because the program can’t operate fraud-free without people stepping up and reporting what’s happening inside the healthcare industry.
And so, it does make a difference. Even though there are recidivists, it does matter to the industry. Because behavior has changed over time based on law enforcement efforts and the False Claims Act. And that’s why whistleblowers are financially incentivized because we know they have to stick their neck out. It’s not easy to be the person who is the sole person who’s raising their hand and reporting fraud. But the financial incentives are important. I believe in them. That’s what keeps the system honest and keeps the industry—to me, the False Claims act is the most important enforcement law that keeps the industry honest. And protecting patients is paramount to the government, both the agency or any of the affected agencies and the DOJ.
So, Eva and I like to encourage people if they see something, say something. It’s a small message, but it is an important one. And to just get good representation and have somebody confidentially evaluate your concern. I mean, that’s always my big message. Eva, I don’t know if you have anything more particular to healthcare fraud.
EVA GUNASEKERA: Yeah, I mean, just keep your eyes and ears open is what I would encourage in the industry. Because fraud doesn’t help anybody. I mean, I think sometimes the industry thinks that we are out to get them as a whole and that’s not the case at all. We’re actually trying to preserve the integrity and the foundation of the program that supports the entire industry. And so, unfortunately, there are bad actors in every industry, as we’ve learned., And it’s just a fact. And this is one of the tools, and one of the more effective tools, to ferret out those bad actors and still preserve the Medicare program, and really all government insurers, in doing what we would expect them to do and what we hope that they do when we are eligible for those programs. And so, I really always hope that we’re generally on the same page. And sometimes I think it’s just misinformation and lack of awareness of what False Claims Act states are intended to do. So, thank you for this opportunity, Sara.
SARA SIROTA: Yeah. Thank you so much for joining us. This has been such a great conversation and really appreciate your time and expertise. And thank you everyone who joined this call.
