Principal Deputy Assistant Attorney General Brian M. Boynton Delivers Remarks at the 2024 Federal Bar Association’s Qui Tam Conference

Remarks as Prepared for Delivery

Good afternoon. It is great to be here.

It is not every day that you find an entire conference room full of lawyers who want to talk about the False Claims Act. I am excited to discuss the department’s recent efforts and enforcement priorities.

But before I begin, I would like to thank the Federal Bar Association, Gisele Joffrey of Arnold & Porter and Jake Shields of the department’s Civil Fraud Section for organizing this fantastic event.

I last spoke at this conference in 2021 — right after I took my current position. Needless to say, a lot has happened in the world of the False Claims Act since then.

For starters, we all have been very busy. That definitely includes the Department of Justice. Today, we are releasing our latest enforcement statistics for fiscal year 2023. Thanks to the efforts of many, including many in this room, it was a very good year.

For some context, the Department of Justice has recovered more than $75 billion in settlements and judgments under the False Claims Act in the nearly 40 years since the 1986 Amendments revitalized the Act. Of that amount, more than $10 billion has been recovered since just January 2021.

In fiscal year 2023, the department recovered nearly $2.7 billion. This marks the 15th straight year that our recoveries have exceeded the $2 billion mark.

Fiscal year 2023 was also notable for the number of matters we resolved. We had 543 separate False Claims Act settlements and judgments — the most ever in a single year. That is a 54% increase from fiscal year 2022, which up to that point was the second highest year ever.

But even these numbers do not capture the full breadth of our enforcement efforts. Last year, the department received and began investigating 712 qui tam lawsuits. That is the third highest yearly total ever. And it’s the fourth time in the last ten years that the number has exceeded 700.

Additionally, while qui tam relators remain a critical source of our enforcement efforts, last year the department opened more than 500 new False Claims Act matters that were not qui tams — another all-time record.

And finally, as many of you may witnessed firsthand, we also set a record for Civil Investigative Demands. In fiscal year 2023, the Fraud Section issued 1,504 CIDs for documents, interrogatory responses, and testimony — the most ever in a single year.

In short, by every measure, fiscal year 2023 was another strong year for False Claims Act enforcement.

For those of you on the relator side of the v, thank you for your efforts. We could not have done this without you. And for those of you on the defense side, we also share our thanks for your professionalism and zealous representation of your clients. Reaching an equitable resolution of a False Claims Act matter requires the engagement of both sides.

With that, let me now turn to looking forward. I’d like to spend a few minutes discussing areas that will be particular enforcement priorities for the department in the coming year.

Many of these are ones you have heard us discuss before.  But our focus is always evolving, and this coming year will be no different in that respect.  

The first priority I’d like to mention is cybersecurity. In October 2021, the department announced the Civil Cyber-Fraud Initiative. The initiative is dedicated to using the False Claims Act to bring enforcement actions when government contractors fail to follow federal cybersecurity requirements, putting government data and information systems at risk.

Over the past year, the results of our efforts include a settlement with a government contractor that disclosed and remediated cybersecurity failures on contracts to provide trusted internet connections to the General Services Administration.

We also settled with a website design company and its manager for failing to secure personal information on a federally funded Florida children’s health insurance website.

The department is currently investigating many more cases involving alleged violations of cybersecurity requirements. These cases have come from a variety of sources, including from whistleblowers and from companies making voluntary disclosures.

We continue to encourage companies to take advantage of the government’s False Claims Act cooperation policy. It offers companies an opportunity to mitigate their potential liability. It also is the right thing to do for our security.

In partnership with agency inspectors general (IGs), we will continue to dedicate resources to investigating companies that fail to comply with their cybersecurity obligations. We expect these cases to continue to be a significant area of enforcement in the coming years.

Another priority is pandemic fraud. The False Claims Act has been a critical part of the department’s COVID-19 Fraud Enforcement Task Force and has been used to pursue a variety of pandemic related fraud schemes.

A significant focus has related to the Paycheck Protection Program (PPP). That program was enacted to provide loans guaranteed by the U.S. Small Business Administration (SBA) to eligible small businesses for payroll, rent, utility payments and other business-related costs.

The program was a lifeline for many businesses. But we have also seen a significant amount of fraud. In fiscal year 2023 alone, the department resolved approximately 270 False Claims Act matters involving PPP loans.

Many of these cases are fairly small. But we also have had some larger matters. For example, in April 2023, the department filed two bankruptcy proofs of claim against Kabbage, Inc., a fintech company that processed loan applications for PPP lenders and underwrote other PPP loans itself. The government alleged that Kabbage systemically miscalculated tens of thousands of PPP loans resulting in inflated loan amounts. We also alleged that the company knowingly failed to implement appropriate fraud controls to comply with applicable Bank Secrecy Act and Anti-Money Laundering requirements. The government’s losses were alleged to exceed $60 million.  

Our pandemic fraud work has also extended to other programs. For example, in one recent case, the department pursued both criminal and False Claims Act claims against an individual who provided false information in support of loans under the Economic Injury Disaster Loan Program as well as the PPP. The United States alleged that the individual used the loan proceeds for unlawful purposes, including purchasing property in Mexico and a Ferrari. Unfortunately, we were not able to seize the Ferrari.

And last July, the department filed a False Claims Act lawsuit against an individual and several laboratory companies that sought to use the pandemic as an opportunity to defraud federal health care programs. The United States alleged that the defendants offered COVID-19 tests to nursing homes as a way to create an opportunity to bill Medicare for a wide array of other tests that were medically unnecessary and often never even ordered by physicians.

A third priority continues to be healthcare fraud. As most of you are likely aware, since the early 2000s, healthcare has consistently been the largest area of enforcement and recovery under the False Claims Act.

In fiscal year 2023, nearly $1.9 billion of our nearly $2.7 billion in False Claims Act recoveries related to health care fraud schemes. While these schemes can take many different forms, let me highlight a few that are a particular focus for us.

One area of focus is the use of financial inducements to generate referrals. The department continues to play a lead role in preventing such inducements from undermining the objectivity of physicians and other providers who participate in federal health care programs. The False Claims Act provides an important vehicle for enforcing the Anti-Kickback Statute and the Stark Law, both of which are designed to prevent the influence of inducements.

Just this past December, the U.S. Attorney for the Southern District of Indiana and I announced the largest ever False Claims Act settlement predicated on Stark Law violations. Community Health Network, a non-profit health network in Indiana, agreed to pay $345 million to resolve allegations that it knowingly submitted claims to Medicare for services that had been referred by physicians to whom Community paid salaries that were well above fair market value or bonuses that were based on referrals.

In another case, a diagnostic scan supplier and its owner agreed to pay $85 million to settle alleged violations of the Anti-Kickback Statute in connection with compensation it provided to cardiologists for supervisory services.

The department also settled two matters involving kickback schemes relating to electronic health records. The department recovered over $45 million in one case where the technology vendor was receiving the kickbacks in exchange for lab referrals and over $31 million in the other case where the vendor was paying the kickbacks. 

Kickback schemes have always been an unfortunate part of the health care landscape. But we are increasingly encountering more sophisticated efforts to buy referrals. For example, we have been pursuing a wide-ranging scheme relating to unlawful laboratory referrals. The scheme involved sham investment distributions to physicians by management service organizations. To date, the department’s pursuit of this kickback scheme as has resulted in settlements with 43 physicians totaling over $46 million.

Another area that I want to highlight is our use of the False Claims Act to combat schemes involving nursing homes.

Nursing home residents are among the most vulnerable members of our society — as we tragically witnessed during the COVID-19 pandemic. They often are victims of fraud schemes that are completely out of their control.  

Our cases have involved many different types of fraud, including medically unnecessary rehabilitation therapy, the misuse of antipsychotic medications to chemically restrain residents and medically unnecessary lab tests.

Perhaps the worst cases we encounter are those that involve grossly substandard care. We have aggressively pursued these cases.

In February 2023, for example, the department recovered more than $7.1 million relating to the operation of a facility called the Saratoga Center for Rehabilitation and Skilled Nursing Care. The operators failed to adequately staff the facility, and residents suffered medication errors, unnecessary falls and the development of pressure ulcers. As part of that resolution, the operators were excluded from participating in federal health care programs.

It is also worth noting that our False Claims Act work is just one component of the department’s comprehensive efforts to combat elder abuse, neglect and financial exploitation.

Another significant health care fraud priority for the department is protecting the Medicare Advantage Program, also known as Medicare Part C.

In 2023, 30.8 million people were enrolled in Medicare Advantage plans. That was more than half of all Medicare beneficiaries. And the federal government paid these plans more than $450 billion — more than half of all Medicare expenditures.

Unlike traditional “fee-for-service” Medicare, Medicare Part C pays a capitated amount for each patient. That capitated amount is risk-adjusted based on a patient’s demographic information and health status. The department has pursued investigations of a variety of practices relating to risk adjustment. 

During this past year, the department settled claims with Cigna for $172 million and with a company called Martin’s Point for $22.5 million. The department is also litigating similar claims with several major health insurers, including UnitedHealth Group, Independent Health Corporation, Elevance Health (formerly Anthem) and the Kaiser Permanente consortium.

Going forward, the department expects to expand its focus on the Medicare Part C Program to include an examination of the role that vendors and providers play in the diagnoses that are submitted to the government.

Finally, I would like to emphasize the department’s commitment to holding accountable third parties that cause the submission of false claims. These third parties can include private equity firms, among others.

One reason why the False Claims Act has been so successful is its wide reach. It covers those who submit false claims and those who cause such claims to be submitted. It is no defense that an individual or entity did not sign or transmit the specific claim at issue if their conduct played a significant and foreseeable role in advancing the scheme.

This aspect of the False Claims Act is of particular importance in the healthcare industry. There is a wide collection of actors that may influence the claims that are ultimately submitted to the government. We have long known about the effects of kickbacks and other financial inducements. In the past few years, however, we have also seen other ways that third parties can influence the type and frequency of claims that are submitted.

For example, we have seen how common technology, like electronic health record software, can be corrupted to bias certain types of medical decisions. We have also witnessed the proliferation of coding consultants and billing specialists, who are supposed to help providers accurately bill for their services, but sometimes instead find ways for providers to improperly inflate their Medicare payments by upcoding or otherwise submitting unsupported claims.

Another source of influence on provider behavior that we are increasingly seeing are investors, such as private equity firms or venture capital firms. These entities may influence patient care by providing express direction for how a provider should conduct their business, or more indirectly by providing revenue targets or other indirect benchmarks intended to prioritize reimbursement. As with electronic health record vendors or coding consultants, if an investor knowingly engages in conduct that causes the submission of false claims, they may subject themselves to liability.  

Third-party actors are not inherently problematic, and they can play positive roles in the healthcare industry. But we also know that they can undermine medical judgment, inappropriately influence the doctor/patient relationship, and cause the submission of false claims to federal healthcare programs. In those instances, the department will not hesitate to pursue them for their roles in defrauding the government.

We have already had a few cases involving private equity firms. And given the significant role that private equity is increasingly playing in the healthcare field, we anticipate that their impact on healthcare billings will continue to grow as well.

This is, of course, just an overview of our current priorities. We stand ready to address new types of fraud as they arise. I know all of you do too.

One of the benefits of conferences like this is to take stock not only of where False Claims Act enforcement efforts currently stand, but also where they are heading.

Thank you for the opportunity to share a few thoughts on the department’s efforts.  I hope you enjoy the rest of the conference.