The Clock Is Ticking: DOJ Sets Timeline for FCA Investigations Involving “Benefits Fraud”

The Civil Division of the US Department of Justice (DOJ) recently issued a memorandum outlining unprecedented reforms aimed at accelerating the review and pursuit of certain qui tam complaints filed under the False Claims Act (FCA). Among other things, DOJ has announced that it will complete its review of new “benefits fraud” complaints — those alleging fraud against “federally funded, state-administered benefits programs” — within 120 days. Although the new policy seems based on unrealistic expectations, health care companies and providers should be prepared for a new normal in the pace of certain FCA investigations and an increase in litigation led by relators rather than the federal government. 

While “benefits fraud” is not clearly defined, the new policy is aimed, at least in part, at Medicaid fraud. The memo references the recent Executive Order establishing the Task Force to Eliminate Fraud, which directed DOJ to “take appropriate action” to pursue meritorious qui tam complaints and to ensure prompt review of such actions. Since the release of the Executive Order, DOJ has ramped up its Medicaid fraud enforcement efforts, and the Civil Division’s memo presumably is a related development. 

At the heart of DOJ’s reforms is a commitment to expedite and streamline the review of qui tam complaints involving benefits fraud. Within 60 to 120 days of the filing of a qui tam complaint, DOJ will: (1) permit the relator to proceed, subject to the government’s supervision and control; (2) conclude that the allegations warrant further government investigation; or (3) seek dismissal. The memo provides a non-exhaustive list of factors DOJ will consider in determining whether the relator should proceed to litigate the action, and they include, among other things, the presence of aggravating factors such as beneficiary harm. If the relator is authorized to proceed, DOJ expects that the relator’s complaint will be detailed enough to meet the heightened pleading requirements applicable in FCA cases.

When Further Investigation is Warranted, a 120-Day Investigative Period Begins

Where DOJ opts for further investigation, a 120-day clock starts. During this “Investigative Period,” the DOJ attorneys handling the case must devise an investigation plan including a schedule for prompt issuance of subpoenas and civil investigative demands (CIDs), and early witness interviews. DOJ’s guidance encourages use of targeted requests, and interviews or examinations as alternatives to production of certain document categories. Defendants should be given a definitive time frame to respond to these requests; if that deadline is not met, then, absent reasonable justification, DOJ should file an action to enforce the subpoena or CID, which rarely happens under current policy. 

DOJ expects attorneys handling qui tam cases to follow a practical, streamlined approach. To conserve government resources during the Investigative Period and to facilitate case advancement, DOJ attorneys may seek assistance from relator’s counsel, and they may opt to develop a damages assessment during discovery, rather than require this refinement to occur prior to making an intervention decision. 

At the end of the Investigative Period, the Department’s attorneys should determine the course of action, as described above. If further investigation is needed, approval of an additional 120 days must be sought from the Deputy Assistant Attorney General of the Commercial Litigation Branch; any subsequent extension requires approval from the Assistant Attorney General of the Civil Division.

Accelerated Timelines and an Increase in Relator-Led Litigation: Optimistic or Unrealistic?

While the Civil Division’s reforms signal an increased willingness — indeed, even an expectation — to rely on relators to litigate benefits fraud qui tam actions, relators’ counsel may be unwilling to shoulder the burden DOJ expects them to carry, given the time and financial resources required to litigate a qui tam action.

At the same time, DOJ expects it will continue to “assume primary responsibility for investigating and pursuing the majority of incoming qui tam matters.” This projection is curious given that it does not comport with recent data regarding intervention in health care related matters, which occurs at the rate of 20-25%.

In theory, the new timetables for review and disposition of qui tam cases should result in a significant sea change in current practice, but it seems unlikely that DOJ will be able to make decisions in every case according to the accelerated investigations timeline. Practically speaking, important components of responding to a government investigation can require the amount of time under which the new policy would call for the investigation to conclude. It may be both unrealistic and unreasonable to force DOJ attorneys and the companies responding to their inquiries to tightly compress such important processes.

That said, these reforms may allow DOJ to conserve resources and delegate to relators smaller qui tam cases and may even lead to the quick dismissal of non-meritorious cases. DOJ would then focus government resources on larger, more complex cases, such as those relating to kickbacks, risk adjustment, regulatory non-compliance, and other theories that can yield larger dollar recoveries for the government.

Considering the policy’s unclear purview and seemingly unrealistic expectations about what can be accomplished during the time frames established, time will tell as to the real impact of these reforms. In the meantime, health care companies and providers should brace themselves for increased time pressure during the investigative phase of FCA cases and a possible increase in relator-led litigation. We will be watching to see how these reforms unfold in real time.
 

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