DOJ Announces Largest-Ever Coordinated Law Enforcement Action Targeting COVID-19 Healthcare Fraud

On April 20, the Department of Justice (DOJ) announced criminal charges against eighteen defendants for various alleged COVID-19 healthcare fraud schemes. Spanning nine federal districts and alleging that the defendants misappropriated almost US$500 billion in federal pandemic funds, these criminal prosecutions are the result of the “largest-ever” nationwide coordinated law enforcement effort targeting COVID-19 healthcare fraud.

Spearheading that effort was the COVID-19 Fraud Enforcement Task Force established in May 2021 to combat fraud related to pandemic relief programs such as the Paycheck Protection Program (PPP) and the Economic Injury Disaster Loan (EIDL) program. But as these new charges demonstrate, DOJ is committed to using its full suite of enforcement options to root out all types of pandemic-related fraud, not just fraud related to federal economic relief programs.

One such example is last week’s announcement that multiple defendants were charged with defrauding the Health Resources and Services Administration (HRSA) COVID-19 Uninsured Program. This program gave uninsured patients access to testing and treatment and reimbursed healthcare providers for treating uninsured patients. DOJ now alleges that certain defendants defrauded the program by submitting supposedly fraudulent claims on behalf of patients who were actually insured and by billing for services never rendered. In the case of one defendant in the Central District of California, the allegedly fraudulent claims ballooned to approximately US$230 million. The Uninsured Program was shut down when its funding was exhausted in 2022.

DOJ also brought charges under the Health Care Fraud Unit’s Provider Relief Fund (PRF) Initiative. The PRF, a component of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, is designed to provide pandemic-related financial assistance to frontline healthcare providers. DOJ alleges that a healthcare provider in the Eastern District of Louisiana misappropriated PRF funds by submitting false loan agreements and other documentation and then failing to use the acquired funds for their intended and attested purpose of delivering medical care to Americans suffering from COVID-19. This action joins 11 other prosecutions against defendants for misappropriating funds intended for frontline healthcare providers.

DOJ also brought “first-of-their-kind” charges against suppliers of COVID-19 over-the-counter test kits. Medicare coverage was extended to these test kits in April 2022 for beneficiaries who requested them, but according to DOJ, the supplier defendants exploited the program by repeatedly supplying tests to patients — and in some cases, deceased patients — regardless whether the patient requested or wanted the kit. Allegedly, the suppliers accomplished this by illegally purchasing the Medicare beneficiary identification numbers of these patients online, which they then used to ship the unrequested test kits, resulting in over US$8.4 million in fraudulent Medicare claims.

Finally, two defendants also were charged with fraudulently seeking and obtaining PPP and EIDL loans. A summary of those charges will join the growing list of federal pandemic relief fraud actions catalogued in our CARES Act Fraud Tracker.

In light of the DOJ announcement, we can expect continued healthcare fraud enforcement efforts. In the words of Attorney General Merrick Garland, the federal government will leverage “every available resource to combat and prevent COVID-19 related fraud and safeguard the integrity of taxpayer-funded programs.”

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Arnold & Porter represents healthcare providers, as well as borrowers, lenders, and other service providers, in all manner of issues arising under healthcare fraud laws and the PPP and other CARES Act programs. Our team of former high-level government prosecutors, experienced litigators, and seasoned regulatory attorneys provides unparalleled insights and extensive experience in investigations, defense, regulatory, and compliance matters involving the various CARES Act programs, including on matters before the Department of Justice, SBA-OIG, state attorneys general, OCC, FDIC, and Federal Reserve Board. Healthcare providers, lenders, and borrowers with questions about what these enforcement actions mean for them are encouraged to reach out to the authors of this post, their current Arnold & Porter contact, or one of the many Arnold & Porter partners and counsel working on these issues.

© Arnold & Porter Kaye Scholer LLP 2023 All Rights Reserved. This blog post is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.