AGG’s Government Investigations Team Insights provides periodic updates covering legal and regulatory topics.
In this edition, we analyze a recent Eleventh Circuit decision addressing False Claims Act penalties and the 8th Amendment’s prohibition on excessive fines, summarize PPP and COVID-related fraud prosecutions, and review 2022’s first OIG Advisory Opinion covering discount programs and the Anti-Kickback Statute.
Featured Articles
Is There a Constitutional Limit to Excessive Fines in False Claims Act Cases? Eleventh Circuit Says a Million Dollar Fine for a Few Hundred Dollars in False Claims Is OK
By Aaron M. Danzig and Sara M. Lord
In late December, the U.S. Circuit Court of Appeals for the Eleventh Circuit issued its decision in Yates v. Pinellas Hematology & Oncology, P.A. The appellate court affirmed the district court’s imposition of damages and penalties where the jury found that the defendant had violated the False Claims Act on 214 occasions by submitting claims for reimbursement of laboratory tests without a proper Clinical Laboratory Improvements Amendments (CLIA) certificate. The CLIA requires that any facility conducting tests on materials derived from the human body must obtain CLIA certification through the Centers for Medicare and Medicaid Services (CMS), and a valid CLIA certificate is required for Medicare reimbursement of those tests.
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What We Can Learn From Recent PPP Loan and COVID Fraud Cases
By Aaron M. Danzig and Sara M. Lord
Since April 2020, through the CARES Act, the government has provided billions of dollars in emergency financial assistance to Americans suffering from the economic effects caused by the COVID-19 pandemic, including through forgivable loans to small businesses for job retention and other specified expenses under the Paycheck Protection Program (“PPP”). Inevitably, and from the start, the program’s generous terms, coupled with the need to get the funds out as quickly as possible, proved irresistible to fraudsters. By the end of May 2020, the Department of Justice (“DOJ”) had announced at least four prosecutions for PPP loan fraud schemes involving millions of dollars. While many of these early cases involved low-hanging fruit — e.g., providing false information in loan applications, falsifying the numbers of employees and payroll costs, submitting multiple applications to different lenders, etc. — a growing number of cases have exposed more sophisticated multi-state fraud schemes involving multiple individuals, evidence that the DOJ’s focus on PPP loan and other COVID fraud investigations is also evolving.
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OIG’s First Advisory Opinion of 2022 Allows for Expansion of Discount Programs
By Lisa J. Churvis
On January 19, 2022, the Department of Health and Human Services, Office of Inspector General (“OIG”) released a favorable advisory opinion, OIG Advisory Opinion No. 22-01 (the “Opinion”), analyzing a proposed expansion of discount programs for low-income individuals. The Requestor, an owner of retail pharmacies, inquired about whether its pharmacies adding Medicaid enrollment as an eligibility category for its low-income discount program would constitute grounds for sanctions under the federal Anti-Kickback Statute (“AKS”) or the Beneficiary Inducements Civil Monetary Penalty (“CMP”) Provision. The OIG concluded that although the proposed arrangement would generate prohibited remuneration under the AKS (if the requisite intent were present) and the Beneficiary Inducements CMP Provision, the OIG would not impose administrative sanctions on Requestors in connection with the proposed arrangement.
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