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On January 15, the Department of Justice (DOJ) reported that False Claims Act (FCA) recoveries for civil cases in fiscal year 2024 totaled approximately $2.9 billion, representing about a $200 million increase from 2023. And these numbers do not account for two major settlements that were reached shortly after the close of the fiscal year that would have added an additional $830 million to the total. Of the total recovered by DOJ in 2024, approximately $1.67 billion (58%) related to matters involving the health care sector. Although a lower percentage of these recoveries related to health care than prior years, the health care sector remains the primary industry under scrutiny.  

For the second year in a row, the total number of qui tam lawsuits increased, demonstrating continued fraud enforcement by the agency and an active environment for private whistleblowers. The 979 qui tam cases filed in 2024 is a new record, blowing past the prior record of 757 cases in 2013 and far exceeding last year’s total of 713. And while the number of government-initiated cases dropped from last year’s record pace, the 423 non qui tam cases filed in 2024 is an order of magnitude higher than any other year since 1986.

This increase in FCA activity comes at a time of uncertainty for the law. As Reed Smith covered last fall, a federal judge in Florida ruled that the qui tam provisions of the FCA violated the Appointments Clause of the Constitution by investing core executive powers into unappointed whistleblowers. That decision followed reasoning in a Supreme Court dissent and is on appeal to the U.S. Court of Appeals for the Eleventh Circuit. Incoming Attorney General Pam Bondi assured senators during her confirmation hearing that she would defend the constitutionality of the provisions.Continue Reading DOJ exceeds $2.9 billion in FCA recoveries in 2024 and reports a record number of qui tams

This month, the Centers for Medicare & Medicaid Services (CMS) has begun an off-cycle revalidation process directed at all Medicare-participating skilled nursing facilities (SNFs). The process is designed to implement provisions of the Affordable Care Act (ACA) that require facilities to detail their ownership structures and key managerial personnel.

CMS is seeking information about ownership of SNFs by private equity firms and real estate investment trusts (REITs). In September, CMS revised Form 855A to require a SNF to report those types of ownership interests. The agency has also released a guidance document detailing the requirements and how a SNF should go about filling out the form.

CMS indicated that it would seek this off-cycle revalidation process as part of its effort to implement the disclosure requirements of Section 1124(c) of the Social Security Act (42 U.S.C. § 1320a-3(c)) in a Final Rule issued in November 2023 (88 Fed. Reg. 80,141).Continue Reading CMS Ramps up Process for Identifying Private-Equity Ownership of SNFs

The Federal Trade Commission (FTC), the Department of Justice’s Antitrust Division, and the U.S. Department of Health and Human Services jointly announced a cross-government inquiry into the impact of private equity investment and other forms of “corporate greed” in the health care sector. As part of the announcement of this effort, the agencies produced a…

The Department of Justice (DOJ) reported that its False Claims Act (FCA) recoveries for civil cases raked in approximately $2.7 billion for fiscal year 2023, representing a $450 million jump from 2022 recoveries.  Of the $2.7 billion recovered by the DOJ for 2023, approximately $1.8 billion (67%) came from the health care sector.

The real headline, however, may be the record-setting number of new FCA cases initiated in 2023 ­–– 500 initiated by the government and 712 initiated by private relators, for a total 1,212 new cases, over 250 more than the next-highest year (2022). Previous trends aside, this signals busy times ahead for the FCA.Continue Reading DOJ Announces $2.7 Billion in FCA Recoveries and Enforcement Priorities

The Centers for Medicare & Medicaid Services (CMS) has published its final rule that requires nursing homes enrolled in Medicare and Medicaid to disclose additional ownership and management information to CMS and state Medicaid agencies. The rule finalizes CMS’s proposed rule from February, with just two differences, as we describe further below.

The rule implements Section 1124(c) of the Social Security Act, which was added by the Affordable Care Act to require the disclosure of additional information about ownership and oversight of nursing facilities. Medicare-enrolled skilled nursing facilities (SNFs) and Medicaid-enrolled nursing facilities (NFs) will soon be required to report many detailed aspects of their ownership and management structure, including both the executive leadership and any members of the facilities’ governing bodies.

CMS plans to gather the information in 2024, beginning when the revisions to the Form CMS-855A is completed, regardless of where a facility is on its current five-year revalidation schedule. The information will then be made publicly available within one year.

Of note in the final rule is that CMS declined to finalize a broad definition of “real estate investment trust” (also known an “REIT”) from its February proposed rule and instead has finalized a definition that it finds more consistent with current federal law and industry practice.Continue Reading CMS Finalizes Nursing Home Ownership Rule

On May 3, New York Governor Kathy Hochul signed into law provisions that will require health care entities to submit a notification to the state Department of Health (DOH) providing information about any material transaction involving that health care entity.

The law, passed as part of the state’s budget, was originally crafted to give the DOH authority to review and approve those transactions. Ultimately, following several iterations during the legislative process, that approval power was stripped out by the state general assembly and replaced with the current notice requirement.

The law will take effect on August 1, 2023 and states on its face that it will apply to all “material transactions” involving health care entities that close on or after that date. That said, the requirements for transactions that close between August 1 and August 31 are a somewhat open question, given the 30-day notice requirement in the law. The DOH is tasked by the law with creating regulations that may address this situation.Continue Reading New York Passes Health Care Transaction Notice Requirements

Centers for Medicare & Medicaid Services (“CMS”) published a proposed rule on February 15, 2023 that would require Medicare-enrolled skilled nursing facilities (“SNFs”) and Medicaid-enrolled nursing facilities (“NFs”) to disclose additional ownership and management information to CMS and state Medicaid agencies.

The proposed rule would implement Section 1124(c) of the Social Security Act, which was created by the Affordable Care Act to require the disclosure of information about ownership and oversight of SNFs and NFs. CMS first published a proposed rule in 2011 to implement the provision; after receiving public comments, that rule was not finalized. Twelve years later, CMS is trying again, citing concerns about the standard of care that residents receive in these facilities, including those owned by private equity companies and real estate investment trusts (“REITs”).Continue Reading CMS Wants to Know Who Owns Nursing Facilities