United States: Pharma And Life Sciences Investigations And Prosecutions: The First Two Years Of The Biden Administration

With the two-year mark of the Biden presidency looming, the administration's approach to prosecuting and investigating entities and individuals in the life sciences industry has begun to present itself with greater clarity. The administration has relied more heavily upon certain civil actions and less heavily upon others as compared to its predecessor. And while prosecution figures have remained steady, the Department of Justice (DOJ) has, like other federal agencies, tailored its enforcement efforts to combatting COVID-19-related fraud while, at the same time, continuing its focus on healthcare fraud of all forms.

False Claims Act Enforcement

The early years of the administration have been marked by a significant uptick in settlements and judgments obtained by the DOJ under the False Claims Act. In February 2022, the DOJ announced that it obtained $5.6 billion in settlements and judgments for the fiscal year ending September 30, 2021, the largest total since 2014 and a more than two-fold increase over the year prior.¹ Of the $5.6 billion in federal losses recovered, more than $5 billion was related to the healthcare industry.² In announcing the FCA figures, the DOJ made clear that it was "instrumental" in recovering amounts fraudulently or falsely obtained from state Medicaid programs, which were not included in the $5.6 billion total.³

Corporate Integrity Agreements

While FCA settlements and judgments have surged, the last two years have been marked by a decline in the number of Corporate Integrity Agreements entered into the by Department of Health and Human Services Office of Inspector General ("HHS-OIG") to settle federal healthcare investigations. While the HHS-OIG entered into 47 Agreements in 2020, it only entered into 31 Agreements in 2021 and has only agreed to 26 in 2022 as of this writing.⁴ This may be explained by open (yet non-public) investigations that have yet to be resolved, or may reflect a conscious decision of the administration to move towards other enforcement actions and tools.

Criminal Prosecutions

During the 2021 fiscal year, United States Attorneys' offices initiated 831 new healthcare fraud investigations and brought criminal charges in 462 cases involving 741 defendants.⁵ Additionally, 312 defendants were convicted of crimes relating to healthcare fraud.⁶ While these figures do not vary considerably from the year prior,⁷ the new administration appears committed to expanding the enforcement efforts against COVID-19-related fraud. In May 2021, Attorney General Merrick Garland formally announced the creation of a COVID-19 Fraud Enforcement Task Force⁸ followed by the announcement of a Task Force Director in March 2022.⁹ In both 2021 and 2022, the Department brought sweeping enforcement actions against dozens of defendants across multiple federal districts for pandemic-related fraud schemes.¹⁰ Other federal agencies have adopted this COVID-focused regulatory posture, with the SEC bringing enforcement actions and suspending trading in companies for false and misleading COVID-19 related statements.¹¹ Healthcare fraud remains a target of the Department, with many U.S. Attorney's Offices and the Criminal Division's Fraud Section opening or maintaining healthcare fraud task forces.

Footnotes

1 Press Release, Department of Justice, "Justice Department's False Claims Act Settlements and Judgments Exceed $5.6 Billion in Fiscal Year 2021" (Feb. 1, 2022), https://www.justice.gov/opa/pr/justice-department-s-false-claims-act-settlements-and-judgments-exceed-56-billion-fiscal-year ; Press Release, Department of Justice, "Justice Department Recovers Over $2.2 Billion from False Claims Act Cases in Fiscal Year 2020" (Jan. 14, 2021), https://www. justice.gov/opa/pr/justice-department-recovers-over-22-billion-false-claims-act-cases-fiscal-year-2020.

2 Id.

3 Id.

4 U.S. Department of Health and Human Services Office of Inspector General, Corporate Integrity Agreement Documents (Nov. 18, 2022), https://oig.hhs. gov/compliance/corporate-integrity-agreements/cia-documents.asp.

5 The Department of Health and Human Services and the Department of Justice, Health Care Fraud and Abuse Control Program annual Report for Fiscal Year 2021 (July 2022), https://oig.hhs.gov/publications/docs/hcfac/FY2021-hcfac.pdf.

6 Id.

7 The Department of Health and Human Services and the Department of Justice, Health Care Fraud and Abuse Control Program annual Report for Fiscal Year 2020 (July 2021), https://oig.hhs.gov/publications/docs/hcfac/FY2020-hcfac.pdf.

8 Press Release, Department of Justice, Attorney General Announces Task Force to Combat COVID-19 Fraud (May 17, 2021), https://www.justice.gov/opa/ pr/attorney-general-announces-task-force-combat-covid-19-fraud.

9 Press Release, Department of Justice, Justice Department Announces Director for COVID-19 Fraud Enforcement (Mar. 10, 2022), https://www.justice.gov/ opa/pr/justice-department-announces-director-covid-19-fraud-enforcement.

10 Press Release, Department of Justice, Justice Department Announces Nationwide Coordinated Law Enforcement Action to Combat Health Care-Related COVD-19 Fraud (Apr. 20, 2022), https://www.justice.gov/opa/pr/justice-department-announces-nationwide-coordinated-law-enforcement-action-combat-health-care; Press Release, DOJ Announces Coordinated Law Enforcement Action to Combat Healthcare Fraud Related to COVID-19 (May 26, 2021), https://www.justice.gov/opa/pr/doj-announces-coordinated-law-enforcement-action-combat-health-care-fraud-related-covid-19.

11 Investor Alert, Watch Out for Fake COVID-19 Claims When Investing (May 31, 2022), https://www.sec.gov/oiea/investor-alerts-and-bulletins/watch-out-fake-covid-19-claims-when-investing-investor-alert.

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