The U.S. Department of Justice (DOJ) reported its False Claims Act (FCA) statistics for the fiscal year ending Sept. 30, 2021. The Justice Department obtained more than $5.6 billion in settlements and judgments from civil cases involving fraud and false claims against the government. Of the more than $5.6 billion, over $5 billion related to matters involving the health care industry, including drug and medical device manufacturers, managed care providers, hospitals, pharmacies, laboratories, and physicians.
Congress strengthened the FCA by increasing incentives for whistleblowers to file lawsuits alleging false claims on behalf of the government. A qui tam, or whistleblower action, under the FCA allows individuals known as “relators” to sue a company or individual who has defrauded the government. If the government feels the whistleblower’s claim has merit, it may opt to intervene and take over the case. Involving a forensic accountant in FCA matters is critical as they have the skill set to analyze vast amounts of data and identify patterns and irregularities and summarize and present vast amounts of data in a manner that is both understandable and supportable.
Forensic accountants can assist plaintiffs, defendants and government agencies in health care litigation matters in either prosecuting or defending violations such as upcoding, kickbacks, billing for unnecessary services and COVID-19 related fraud by being able to quickly and efficiently analyze large amounts of claims data and assist with the quantification of damages.
Forensic accountants can help assist plaintiffs and/or government agencies by analyzing statistically sampled claims data, billing records and/or medical records to identify indicia of fraud and calculate financial damages especially when claim by claim analysis is not feasible. This involves designing and selecting a statistically valid random sample of patient records and/or billings to assess patterns in billing activity and extrapolate results of the sample. A skilled forensic accountant should be able to manage voluminous records and documents and distill the information into clear and concise schedules and/or written communications to counsel and governmental agencies.
Forensic accountants can also assist in defending medical providers who may be accused of receiving overpayments from governmental agencies by assisting in reviewing and analyzing the sampling and extrapolation methodology utilized by the government, relator and/or an opposing expert. They can work with defense counsel by scrutinizing the sampling process for weaknesses in the government’s presumptions from the claims data.
Additionally, forensic accountants should review the sample set to determine whether the sample was truly random as it relates to the data set analyzed. As an example, were too many high-value sample claims selected in comparison to the percentage of high value claims, which would greatly impact the amount of overpayment? Forensic accountants consider these factors to invalidate the sample set. Establishing that a sample set is improper can immediately invalidate any extrapolation methodology used.
The DOJ has been investigating many large numbers of matters involving the Medicare Advantage Program (Medicare Part C). The DOJ has been pursuing plans and healthcare providers that submit unsupported diagnosis codes to make patients appear sicker than they are. Additionally, they have been involved in matters in which providers billed health care programs for medically unnecessary services or services not rendered as billed. Forensic accountants can help assist in forensic investigations of provider practices to assess, identify, and quantify the disputed amount or financial loss from issues of improper code billing.
Paycheck Protection Program Fraud
In response to the COVID-19 crisis, the Paycheck Protection Program (PPP) was enacted to provide loans guaranteed by the U.S. Small Business Administration to eligible businesses for payroll, rent, utility payments and other business-related costs.
The DOJ has been actively pursuing businesses and/or individuals that have improperly received government funds and with respect to those funds, did they use the funds in an appropriate manner in accordance with the statute. They can assist by helping prove or defend whether a business met all the eligibility requirements when applying for the loan, whether a business calculated their loan correctly and whether the business used the funds for business-related expenses.
Specifically, forensic accountants look at whether the business reported payroll accurately, they can review documents for authenticity, determine whether a borrower submitted multiple applications and whether the relief funds were utilized for business-related purposes. This could involve reviewing applications and supporting documentation, analysis of the forgiveness application and usage of funds and/or the tracing of relief fund proceeds.
Bring In the Experts Early
These various healthcare litigation matters typically require a company to collect electronic and hard copy documents spanning multiple years and locations. Damage theories in these matters can be complex and may require the special skills of forensic accountants to formulate damage theories and quantify damages amounts. After assessing the damages, forensic accountants can assist with settlement and mediation negotiations. In a litigation setting, accountants can serve as an expert witness, offering opinions as to damages and calculate potential penalties and/or critique the opposing side’s damage methodologies, assumptions, and calculations. Whether uncovering evidence relevant to assessing financial losses, tracing the sources and uses of funds, applying data analytics, identifying co-conspirators, or consulting with counsel for trial, forensic accountants should be brought in early in litigation matters.
Forensic accountants are critical in developing a strategy and defense in litigation matters. Whether you are a plaintiff, defendant, or government agency, you need a skilled forensic accountant with experience handling cases with many records and documents that can effectively extract accurate and succinct results and confidently deliver communications to counsel and government agencies.
Sareena Sawhney is a director of the Valuation, Forensic Accounting and Litigation Support team of BST & Co. with 25 years of experience in the fraud, forensic accounting, and litigation support fields.
As published in the New York Law Journal on March 13, 2023 at 10:00 AM. Click here to read the original article.