Legal Alert

False Claims and Coronavirus: Prevent the Spread of Fraud

March 17, 2020

On March 16, the National Whistleblower Center (NWC) called on Attorney General William Barr to form a nationwide task force to monitor and investigate False Claims Act (FCA) allegations related to the Covid-19 pandemic.

The FCA, enacted in 1863 in the midst of the Civil War, was designed to stop fraud in the sale of substandard goods and services to Union troops. Today, it remains a powerful statute that sets criminal and civil penalties for falsely billing the government, over-representing the amount of a delivered product, or under-stating an obligation to the government.

The NWC, in a letter to Barr, specifically seeks the creation of “a nationwide task force to monitor and investigate” all cases filed under the FCA with the following mandate:

  1. Insure a prompt and aggressive federal response to any allegations of fraud related to the coronavirus, including fraud that impacts patient care.
  2. Investigations of any whistleblower claim should be initiated on the basis of a whistleblower’s “disclosure statement.”
  3. Prioritize the investigation of all Coronavirus cases.
  4. If a FCA case has merit, the case should be promptly prosecuted, and any fraudster should be held accountable to the fullest extent of the law (both civilly and criminally).
  5. If a case lacks merit, the whistleblower should be immediately informed so that they can continue to work without concern as to the legality of what they have witnessed.

According to the NWC, establishing such a task force “can send a message to all persons involved in fighting the Coronavirus that they must act honestly and ethically in their administration of these critical programs … The key during this crisis is to deter anyone from engaging in misconduct.”

While the DOJ has not yet responded to the NWC’s call for the establishment of an FCA-specific task force vis-à-vie the disbursement of coronavirus-related financial assistance, previously (on March 3) the DOJ announced a National Nursing Home Initiative, targeting abuses at nursing homes and advocating using the FCA to police these abuses. Meanwhile, the government has released tens of billions of dollars in emergency relief funds and loosened rules and regulations in order to assist hospitals in the surge of patients related to the coronavirus. For example, the Department of Health and Human Services is now authorized to waive federal licensing regulations so out-of-state physicians can treat patients via telehealth technology in states with large coronavirus outbreaks. In that same vein, the Centers for Medicare & Medicaid Services is authorized to provide up to $500 million in reimbursement for providers using telehealth to treat seniors at home.

There is little doubt that with the unprecedented release of billions of dollars from federal coffers, all levels of government will prioritize efforts to ensure that these funds are properly disbursed (for example, the Emergency Economic Stabilization Act of 2008 established the Office of the Special Inspector General for the Troubled Asset Relief Program to serve as the “watchdog” for all those who might want to misuse TARP funds for fraud, waste, and abuse). No entity can navigate this fluid and complex environment without paying constant and careful attention to meet the challenges of achieving regulatory compliance. At a minimum, there must be proper procedures and protocols in place to ensure that relief funds are used appropriately, and that documentation is maintained in the event an audit or inquiry arises.

With a broad understanding of the regulatory landscape, Ballard Spahr is uniquely positioned to assist entities of all shapes and sizes suppliers with corporate, transactional, regulatory, reimbursement, compliance, enforcement, and litigation matters.

The members of Ballard Spahr’s Health Care Group, Business and Transactions Department, Finance Department, and Litigation Department can advise individuals, as well as private and public companies, on these and other issues and considerations raised by the coronavirus. Should an individual or company receive a subpoena or become the subject of an inquiry from a government agency, our White Collar Defense/Internal Investigations Group is particularly well-positioned to help.

Copyright © 2020 by Ballard Spahr LLP.
(No claim to original U.S. government material.)

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This alert is a periodic publication of Ballard Spahr LLP and is intended to notify recipients of new developments in the law. It should not be construed as legal advice or legal opinion on any specific facts or circumstances. The contents are intended for general informational purposes only, and you are urged to consult your own attorney concerning your situation and specific legal questions you have.

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