Introduction

Clinical laboratories such as respiratory and clinical labs that bill Medicare, Department of Health and Human Services (“DHHS”) programs, and other federal programs are subject to oversight by the Office of Inspector General (“OIG”). The OIG is responsible for overseeing healthcare providers’ practices including enforcing compliance obligations, conducting investigations, or analyzing a provider’s billing practices. If there is evidence of billing fraud or other healthcare frauds such as fraudulent COVID-19 testing, then either a criminal or civil litigation can be initiated. This can lead to substantial fines and penalties, disgorgement orders, injunctions, inability to receive funds from government programs in the future, and significant reputational harm.

Because of this reality, respiratory and clinical labs need to make OIG compliance a priority, especially now as the Department of Justice (“DOJ”) remains eager and vigilant of prosecuting labs for COVID-19-related frauds.

DOJ Efforts Against Labs for Fraudulent COVID-19 Testing

The DOJ has recently increased its prosecutorial discretion towards respiratory and clinical labs for COVID-19-related frauds and fraudulent COVID-19 testing. The DOJ has made clear that it will not tolerate labs taking advantage of federal programs by performing too many lab tests on patients or ordering tests deemed unnecessary by the DOJ. On May 17, Attorney General Merrick B. Garland announced the establishment of the COVID-19 Fraud Enforcement Task Force to work in tandem with other government agencies to bring enforcement actions against individuals/entities for COVID-19-related frauds.

Mass prosecutions are already underway. In late May, the DOJ announced criminal charges against 14 defendants in seven federal districts for their alleged participation in multiple healthcare fraud schemes that took advantage of COVID-19. For instance, these defendants were alleged to have offered COVID-19 tests to Medicare beneficiaries in exchange for their personal identifying information and saliva or a blood sample. The defendants then submitted claims to Medicare for "unrelated, medically unnecessary, and far more expensive laboratory tests, including cancer genetic testing, allergy testing, and respiratory pathogen panel tests." Their elaborate scheme resulted in over $143 million in false billings.

This aggressive prosecutorial approach has put tremendous pressure on labs seeking to carry out their daily clinical activities and work with federal programs. Labs now face difficulties with obtaining clinical necessity, validating orders from doctors, and securing the proper validation forms. Such shortcomings are exacerbated by the ongoing novel coronavirus, which further escalates DOJ scrutiny and puts additional strain on labs. Implementing and maintaining a comprehensive OIG compliance program takes the stress out of everyday clinical tests, orders, and documentation for labs.

What is an OIG Compliance Program?

An OIG compliance program is a policy implemented and maintained throughout the lab that is designed to identify, monitor, and correct both internal weaknesses and noncompliance with legal and regulatory requirements. Its objective is to limit liability exposure of labs by preventing violations from occurring in the first place or mitigating a violation’s consequences. If a federal investigation is initiated, these compliance programs also demonstrate to the investigating agency that the lab did everything possible to maintain full compliance with the law.

It is important to stay abreast of legal and regulatory changes as well as to be sure that each provider is following the correct OIG guidelines for its healthcare industry segment. The OIG has developed compliance program guidance documents for nursing facilities, hospitals, home health agencies, and clinical laboratories, for example. These guidances help ensure that the clinical lab industry is doing everything possible to reduce fraud and abuse within their companies.

Key Elements of an OIG Compliance Program

Respiratory and clinical labs are being targeted by the DOJ for COVID-19-related frauds. It is therefore critical that they heed the OIG’s Clinical Laboratories Guidance. These Guidelines identify key elements that labs should have within their OIG compliance program:

• Written policies, procedures, and standards of conduct: These policies and procedures should promote the lab's commitment to full compliance and address areas that are more susceptible to fraud such as coding and claims submissions.
• Compliance officer and committee: These bodies are vested with the authority to monitor the compliance program and report the resulting findings to the CEO.
• Effective training and education: All affected personnel members employed by the lab should be consistently and regularly involved in training and education.
• Effective communication: This includes a reliable and secure way to voice complaints without fear of retaliation. Effective communication within the lab also ensures that complaints are kept anonymous to protect whistleblowers.
• Enforcement of standards through well-publicized disciplinary guidelines: The guidelines should respond to allegations and enforce disciplinary actions against employees who commit violations.
• Internal monitoring and auditing: These tools evaluate compliance and assist the lab in reducing identified problems.
• Prompt response to offenses and corrective action: This includes investigating and correcting problems as well as addressing the employment status of individuals within the lab.

In addition to the above elements from OIG Guidance, labs should ensure that their OIG compliance programs are supplemented by the following:

• Maintain a “tone at the top” culture through strong ethical leadership;
• Make personnel aware of its code of conduct and code of ethics;
• Employ robust risk assessment procedures;
• Create a risk profile for novel or high-value transactions;
• Utilize effective due diligence procedures;
• Monitor internal controls and accounting practices;
• Maintain detailed documentation and recordkeeping;
• Ensure that the compliance program is regularly updated and evaluated in response to changes in the legal and regulatory environment.

How Labs Can Respond to a Federal Investigation or Indictment for COVID-19-Related Frauds

If you have been incited or are under investigation for COVID-19-related frauds, time is of the essence. Below is a list of steps labs can take when they find themselves in these circumstances:

• Retain a defense attorney as soon as possible. The defense attorney should be experienced in OIG compliance, healthcare fraud, recent statutes enacted as a result of COVID-19, and DOJ investigations.
• Carefully read the information in the relevant federal document such as the subpoena. The subpoena often contains hints as to what the federal authority is investigating and why. It may be possible for your attorney to ascertain the scope of the subpoena including its allegations. Also, remember that it is critical that you address and comply with all the requests and deadlines in the subpoena.
• Do not reveal any information to the DOJ. This also applies to any federal authority and law enforcement asking questions about the case. Always consult with your attorney first.
• Start accumulating information you may need in preparation of your defense. This includes evidence that supports your defense such as information that shows regular billing practices, appropriate use of government program funds, or medically necessary testing—including proper COVID-19 ordering and testing.
• Maintain open communication with the federal authority investigating your case. Cooperation goes a long way with federal authorities, most notably when it comes to imposing penalties. An attitude of cooperation and negotiation may help to limit liability.

“The DOJ will waste no time prosecuting cases that it deems to have infringed on federal programs, especially when due to misrepresentation, fraud, or abuse involving COVID-19 testing and billing. If your laboratory’s practices are being investigated by the DOJ or you suspect that your lab is under investigation, there is no time to waste in securing legal counsel experienced in OIG investigations and defense. An attorney can review your lab’s coding and billing practices, advise on the best defense strategy based on the individual circumstances of your case, and set up and implement an efficient OIG compliance program.” – Dr. Nick Oberheiden, Founding Attorney of Oberheiden P.C.

Conclusion

The OIG is responsible for regulating healthcare providers’ business operations for instances of fraud, abuse, and other forms of misconduct. As the nation continues to battle the consequences of COVID-19, the DOJ has found it necessary to ramp up prosecutions of respiratory and clinical labs for unnecessary COVID-19 testing and improper billing/coding. It is incumbent upon labs to develop and implement comprehensive OIG compliance programs. A compliance program hand-tailored to the specific needs of the lab’s business needs will help respiratory and clinical labs identify and respond to internal weaknesses as well as instances of noncompliance.