In response to the COVID‑19 pandemic, Congress has allocated $100 billion to the Coronavirus Aid, Relief and Economic Security Act (CARES Act), and another $75 billion through the Paycheck Protection Program and Health Care Enhancement Act. Both allocations direct funding to the health care industry in order to combat the pandemic. The goal is simple: help the health care industry “prevent, prepare, and respond to [COVID‑19.]”
The U.S. Department of Health and Human Services (HHS) is responsible for distributing the funds through what’s known as the Provider Relief Fund (the “Fund”). Fund payments were separated into “General” distributions and “Targeted” allocations. Importantly, most Fund payments were automatic; providers likely received a check in the mail or a direct deposit into their bank accounts. While this facilitated a quicker distribution of funds, it placed the burden on providers who did not wish to retain the funds to formally reject the payment within 90 days.
The Fund has provided much needed economic relief to those hit hardest by the pandemic. According to data available on the Center for Disease Control and Prevention’s website, 8,519 Michigan providers had received Fund payments as of July 15, 2020. The payments are grants, not loans or advancements, and do not have to be repaid if terms and conditions are met. When the Fund was unveiled, the White House announced that there were “no strings attached” and that providers may spend the money in “any way that they see fit.”
In reality, there are strings attached. Specifically, health care providers who retain Fund money must sign an attestation. Not only does the attestation require providers to certify that they received the money, but significantly, it requires providers to agree to HHS’s terms and conditions, which include requirements on how funds are used, documentation and reporting obligations. For instance, the terms and conditions applicable to the general disbursement of funds include the following requirements, among others:
Retention of funds for at least 90 days, without contacting HHS concerning remittance, will be deemed acceptance of HHS’s terms and conditions.
If the requisite attestation does not cause one to pause, it should. Falsely certifying to HHS’s terms and conditions, or failing to document how the funds are being used, may require repayment or trigger a fraud investigation, potentially resulting in legal action under the federal False Claims Act (FCA). In general, the FCA prohibits parties from knowingly submitting or causing the submission of a false claim to the government. The FCA also prohibits what’s known as “reverse” false claims, i.e., failing to timely return an overpayment to the government. FCA violators may be subject to both criminal prosecution and civil claims. Civil fines are steep, ranging from $11,463 to $23,331 per claim. Persons who violate the FCA are also liable for three times the damages incurred by the government. In the FCA context, whistleblowers, known as relators, who initiate FCA actions on the government’s behalf are entitled to share in a portion of the recovery, plus attorneys’ fees, and are, therefore, incentivized to expose suspected fraud. Relators can come from anywhere, but most often, they are insiders with intimate knowledge about a facility or provider (e.g., employees and even executives in some instances). Finally, several states, including Michigan, have enacted their own version of a false claims statute.
The Fund’s terms and conditions set the stage for future FCA actions. They warn that “any deliberate omission, misrepresentation, or falsification of any information contained in [the] Payment application or future reports may be punishable by criminal, civil, or administrative penalties, including but not limited to revocation of Medicare billing privileges, exclusion from federal health care programs, and/or imposition of fines, civil damages, and/or imprisonment.” HHS states in no uncertain terms that there “will be significant anti-fraud and auditing work done by HHS, including the work of the Office of the Inspector General.” Nevertheless, health care providers feeling the pressure may have accepted the Fund money in haste without fully understanding the potential implications.
So what should Fund recipients do to avoid criminal, civil and administrative penalties? Here are a few things to consider:
The key to avoiding pitfalls that may result in fraud allegations is exercising due diligence and seeking guidance when needed. Providers must monitor new developments and understand and comply with the applicable terms and conditions. Audits are inevitable; providers should prepare accordingly by maintaining proper documentation and satisfying all reporting obligations.
Warner Norcross + Judd’s health care team understands your ever-changing industry, and we are ready to help you navigate health care fraud and abuse laws and regulations that apply in implementing your business goals. Additionally, our health care litigation team will guide you through the entire litigation process, from pre‑dispute strategy planning to resolution. If you would like to discuss the Fund or any other health care related issues, please contact Katherine Pullen, Alan Rogalski, Jeff Segal or any other member of our Health Law or Health Care Litigation Practice Groups.