Deeper Than the Headlines: The DOJ Reminds You to be Compliant

On June 14, 2018, the Acting Associate Attorney General Jesse Panuccio delivered remarks at the American Bar Association’s 12th National Institute on the Civil False Claims Act and Qui Tam Enforcement. For those of us in healthcare compliance, we know the FCA and the whistleblowers (qui tam relators) who bring most of the FCA cases to the government’s attention are a major reason many organizations have implemented compliance programs. And regardless of the reason why your organization’s compliance program exists, the FCA is something you need to be concerned about.

Mr. Panuccio’s comments might be positive for both sides of an FCA allegation case. On the one hand, he explained scenarios where it might be appropriate for the government to dismiss an FCA case. He said, “One important development relates to the dismissal of qui tam actions that the Department determines are not in the public interest and therefore should not proceed.

The number of qui tam suits has grown considerably since 1986 and now routinely clocks in at over 600 per year. And while the Department does not have the resources to pursue every meritorious qui tam case, it is also true that the Department declines to intervene in some cases due to the lack of legal or factual support. In these circumstances, if the relator nevertheless elects to pursue the matter, the Department should consider whether the relator’s continued pursuit of the case is warranted or whether the Department should exercise its dismissal authority to advance the interests of the United States.”

Many organizations who have FCA allegations made against them may feel this is good news. And if the government decides the case lacks legal or factual support, then it may be good news for the healthcare organization against which the allegations have been made.

However, if there is merit to the case, Mr. Panuccio explained the DOJ will do what it must protect the public. In this regard, he said, “So long as greed remains a human vice, fraud will persist—and even as we close one scheme or another, fraudsters are always finding new ways to cheat the taxpayer…That’s why vigilant and rigorous anti-fraud work is so vital to good government: the fraudsters will never stop and neither can enforcement efforts.”

It’s interesting that so many of the cases he commented in his remarks had to do with FCA cases in the healthcare arena. Some of the examples he cited included:

• A $155 million settlement with a national electronic health records software vendor. The allegations, in this case, included concealment by the company that its electronic health records software did not comply with the requirements that go to the reliability of electronic health records. The government alleged that to obtain the necessary certification for the software, instead of programming the capability to retrieve any drug code from a complete database, the vendor hardcoded the only drug codes that would be used in the certifying entity’s test—essentially, the company was cheating for the test.
• A $350 million settlement with a pharmaceutical company. The case alleged that the company used kickbacks and other unlawful methods to induce clinics and physicians to use or overuse its product, which was a bioengineered human skin substitute.
• A $465 million settlement with a pharmaceutical company. One of the allegations was that it treated its product, which is used to treat anaphylactic shock, as a generic drug for Medicaid rebate purposes. The company’s scheme enabled it to raise its prices dramatically while avoiding paying additional rebates it owed for its product that would have insulated Medicaid from these price hikes.
• The DOJ’s Civil Division recently filed a suit against a leading compounding pharmacy and several of its executives alleging that the pharmacy grossly inflated the price of compound medications reimbursed by TRICARE, a federally-funded health care program for military personnel and their families.

What is one to do? Well, a starting point is to develop or strengthen your organization’s compliance program. The DOJ supports the idea of compliance programs and gives credit to organizations who have an effective compliance program.

Mr. Panuccio said, “As we deter fraud by holding individuals accountable, we also want to be sure that we continue to reward companies that invest in strong compliance measures…Things go wrong in every organization. When something does go wrong, however, the greatest consideration should be given to companies that do not just adopt compliance programs on paper, but incorporate them into the corporate culture.”

The driving principle behind compliance programs and the DOJ’s efforts on enforcement are centered in the principle of fairness. Panuccio said, “Competition requires a level playing field. If some businesses evade the rules, others lose out by following them. We recognize that and it motivates our False Claims Act enforcement and our partnership with all of you.”

It’s important for each of us, as compliance professionals, to not lose sight of the real purpose of compliance programs. These comments, by the Acting Associate Attorney General, help put compliance efforts into perspective.