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The federal No Surprises Act is now in effect, and it is changing how medical practices, ambulatory surgery centers, and hospitals interact with patients and health insurers.  See our initial Fox Rothschild Alert here and stay tuned to the Health Care Law Matters Blog for more information, including our Part II Alert on what physicians need to know.

Should you have questions specific to your practice, please contact Edward J. Cyran, Esq. or Sarah M. Rozek, Esq.

On January 13, 2022, by a vote of 5-4, the U.S. Supreme Court stayed a pair of injunctions that had prevented implementation of the CMS Vaccine Mandate in 24 states. The Supreme Court’s ruling means that, for now, the CMS Vaccine Mandate should be in effect nationwide.1

How Did We Get Here?

On November 1, 2021, the Centers for Medicare & Medicaid Services issued the “CMS Vaccine Mandate” which requires in part:

  • vaccination of all employees of health care providers that participate in the Medicare and Medicaid programs, regardless of responsibility or patient contact, unless the employee is granted a medical or religious exemption; and
  • development of policies and procedures related to the same.

On November 29 and 30, 2021, Federal District Courts in Louisiana and Missouri granted injunctions to block the implementation of the CMS Vaccine Mandate. The Missouri injunction covered the states involved in that case. The Louisiana Court issued a nationwide injunction. The Biden Administration appealed the Louisiana case to the Fifth Circuit Court of Appeals and the Missouri case to the Eighth Circuit Appeals. The Fifth Circuit reduced the scope of the injunction issued by the Louisiana Court so that the Louisiana Court injunction applied only to the states that were parties to the case.

As a result, 26 states were not covered by either injunction. The Biden Administration then petitioned the Supreme Court to lift the injunctions.

The Court’s Decision

Based on the Supreme Court’s Decision, the CMS Vaccine Mandate must now be followed in the 24 states that were parties to the Louisiana and Missouri cases in addition to the 25 states, the District of Columbia, and the territories that were not covered by any injunctions. In reaching its decision to stay the injunctions, the Court noted that perhaps the most basic mission of the U.S. Department of Health and Human Services (DHHS) is to ensure that health care providers who care for Medicare and Medicaid patients protect their patients’ health and safety.

The Court also noted that the DHHS Secretary has long required that providers maintain and enforce an infection prevention and control program designed to help prevent the development and transmission of communicable diseases and infections. Finally, the Court determined that Congress had conferred upon the Secretary sufficient authority to require vaccination against infectious diseases in the context of a global pandemic and that the interim final rule, making vaccination against COVID-19 a requirement to maintain Medicare and Medicaid funding, was within that authority and was not arbitrary or capricious.

What Should Applicable Health Care Providers Do Next?

Check for any applicable state or local mandates
If a state or local mandate provides stricter vaccination or infectious disease control protocols, you should follow the state mandate. If your state or local mandate is less strict than the CMS Vaccine Mandate or that prohibits a vaccine mandate, the CMS Vaccine Mandate preempts the state or local mandate and must be followed based on the language of the CMS Vaccine Mandate.

Develop and implement policies and procedures

Providers from the 24 states that were parties to the Missouri and Louisiana cases, Alabama, Alaska, Arizona, Arkansas, Georgia, Iowa, Idaho, Indiana, Kansas, Kentucky, Louisiana, Mississippi, Missouri, Montana, Nebraska, New Hampshire, North Dakota, Ohio, Oklahoma, South Carolina, South Dakota, Utah, West Virginia and Wyoming, must be fully prepared to meet the first CMS Vaccine Mandate deadline by February 14, 2022.2

By that date, the following should occur:

  • policies and procedures for ensuring all facility staff are vaccinated or received an exemption should be in place and
  • 100% of staff should have received at least one dose of the COVID-19 vaccine, or have a pending request for, or have been granted, an exemption, or have been identified as needing a temporary delay before receiving the vaccine.

Work toward full implementation
By March 15, 2022, 100% of staff should be fully vaccinated or have been granted an exemption.

What Happens Next?

The Court’s decision only lifted the injunctions issued by the District Courts in Louisiana and Missouri and did not decide the validity of the injunctions. The validity of the original District Court decisions issuing the injunctions will now be considered by the Fifth and Eighth Circuit Courts of Appeal. The Supreme Court’s stay will remain in place and the CMS Vaccine Mandate must be followed while the injunctions are being considered by the appellate courts and during the expected appeals to the Supreme Court of the decisions by the Fifth and Eighth Circuits.


1 – Texas was not a party to the Louisiana or Missouri cases, but a District Court in Texas separately issued an injunction staying the implementation of the CMS Vaccine Mandate in Texas after the decisions in the Louisiana and Missouri cases. The Texas case was not part of the appeal to the Supreme Court and is not specifically covered by the Supreme Court’s order. The Biden Administration has appealed the District Court’s issuance of the injunction and it is expected that the Texas injunction will also be lifted consistent with the Supreme Court’s order.

2 -CMS issued guidance on January 14, 2022, which gives the 24 States that were parties to U.S. Supreme Court cases, additional time to meet the current CMS Vaccine Mandate deadlines.

To assist health care providers that will soon be required to enforce a COVID-19 vaccine mandate, the Centers for Medicare & Medicaid Services issued guidance on December 28, 2021 regarding updated timelines for compliance and available enforcement remedies.

As noted in our December 16, 2021 alert, the Omnibus COVID-19 Health Care Staff Vaccination Interim Final Rule or “CMS Vaccine Mandate,” was permitted to move forward in states that were not covered by a court-ordered stay.

The CMS Vaccine Mandate requires:

  • vaccination of all employees of health care providers that participate in the Medicare and Medicaid programs, regardless of responsibility or patient contact
  • development of policies and procedures related to the same

While employees may submit requests for medical or religious exemptions from the vaccination, they cannot choose to be tested rather than vaccinated.

The new guidance is directed to health care providers and surveyors and focuses on how to proceed in Washington, DC and the 25 states that are currently subject to the CMS Vaccine Mandate.

The 25 states are: California, Colorado, Connecticut, Delaware, Florida, Hawaii, Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, New Mexico, New York, North Carolina, Oregon, Pennsylvania, Rhode Island, Tennessee, Vermont, Virginia, Washington, and Wisconsin.

Compliance Deadlines

By January 27, 2022, covered health care providers must demonstrate the following to be deemed in compliance with the CMS Vaccine Mandate:

  • policies and procedures for ensuring all facility staff are vaccinated or received an exemption have been implemented, and
  • 100% of staff have received at least one does of the COVID-19 vaccine, or have a pending request for, or have been granted, an exemption, or have been identified as needing a temporary delay in receipt of vaccine. (A delay may be necessary if a staff member has recently had COVID-19 or for other medical reasons.)

If a provider does not meet the above criteria but can show that 80% of its staff are vaccinated or received an acceptable exemption/delay and the provider has a plan in place to achieve a 100% vaccination rate by March 28, 2022, then the provider will not be subject to additional enforcement actions at this time.

By February 28, 2022, covered health care providers must demonstrate:

  • policies and procedures for ensuring all facility staff are vaccinated or received an exemption have been implemented, and
  • 100% of staff have received the necessary doses to complete the vaccine series (one dose of a single dose vaccine, all doses of multiple dose vaccine) or have been granted an exemption or identified as needing a temporary delay prior to receipt of the vaccine.

If a provider does not meet the above criteria but can show that more than 90% of its staff are vaccinated or received an exemption or notice of delay and there is a plan to achieve a 100% vaccination rate by March 28, 2022, then the provider will not be subject to additional enforcement actions at this time.

At this time CMS is not considering a booster shot to be necessary to have completed the vaccine series. However, CMS is asking providers to implement a process by which staff obtain recommended booster doses and track and document the receipt of booster doses.

By March 28, 2022, providers must be maintaining 100% compliance with the vaccination standard to be deemed in compliance with the CMS Vaccine Mandate.

Possible Enforcement Mechanisms

CMS has noted that it has a variety of enforcement mechanisms available from issuance of civil monetary penalties and denial of payments for new admissions to termination of participation from the Medicare and Medicaid programs. CMS has stated that its goal is for all Medicare and Medicaid health care facilities to be in compliance with the CMS Vaccine Mandate, and termination would only be implemented as a last resort after giving the provider the opportunity to make corrections and come into compliance.

Provider Specific Guidance

In additional to the general guidance, CMS has published additional provider specific guidance for the following providers:

(a) Long-Term Care Providers, (b) Ambulatory Surgery Centers, (c) Hospices, (d) Hospitals, (e) Psychiatric Residential Treatment Facilities, (f) Intermediate Care Facilities for Individuals with Intellectual Disabilities; (g) Home Health Agencies, (h) Comprehensive Outpatient Rehabilitation Facilities, (i) Critical Access Hospitals, (j) Outpatient Physical Therapy Providers, (k) Community Mental Health Centers, (l) Home Infusion Therapy Providers, (m) Rural Health Clinics/Federally Qualified Health Clinics, and (n) End-Stage Renal Disease Facilities.

The provider specific guidance can be accessed here.

What’s Next?

The U.S. Supreme Court is set to hear oral arguments regarding the CMS vaccine mandate on January 7, 2022. A decision by the U.S. Supreme Court should provide clarity regarding whether the CMS Vaccine Mandate is enforceable against covered health care providers. However, this decision may not be issued prior to January 27, 2002.

It is advisable for providers in Washington DC and states currently subject to the CMS vaccine mandate to move forward with implementing the requirements of the mandate to avoid enforcement actions in the coming months.  All providers are also cautioned that there could be existing state or local laws containing additional vaccination requirements that may be applicable whether a not a provider is governed by the CMS vaccine mandate.

A nationwide injunction that prevented a health care worker COVID-19 vaccine mandate from taking effect has now been narrowed by a federal appellate court to apply only in the states involved in the lawsuits against the Centers for Medicare & Medicaid Services (CMS).

As outlined in our prior alert, a federal judge in Louisiana issued a nationwide injunction on November 30, 2021. CMS appealed to the 5th Circuit, which has now upheld the injunction as to the 14 states involved in the Louisiana case but refused to extend it to states that were not involved in the lawsuit. Another 10 states were already subject to an injunction issued by a federal judge in Missouri.

The impact of the December 15 order from the 5th Circuit Court of Appeals is that the CMS vaccine mandate is currently in effect for the following 26 states: California, Colorado, Connecticut, Delaware, Florida, Hawaii, Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, New Mexico, New York, North Carolina, Oregon, Pennsylvania, Rhode Island, Tennessee, Texas, Vermont, Virginia, Washington, and Wisconsin.

Background

On November 5, 2021, CMS published the Omnibus COVID-19 Health Care Staff Vaccination Interim Final Rule, requiring vaccination of all employees at health care facilities that participate in the Medicare and Medicaid programs, regardless of responsibility or patient contact.

The states of Alaska, Arkansas, Iowa, Kansas, Missouri, Nebraska, New Hampshire, North Dakota, South Dakota and Wyoming filed suit in the U.S. District Court for the Eastern District of Missouri and requested a preliminary injunction to temporarily block the implementation of the CMS vaccine mandate. U.S. District Court Judge Schelp issued the requested injunction as to those 10 states on November 29, 2021. On December 13, 2021, the 8th Circuit Court of Appeals allowed the injunction to stand.

During the same time frame, the states of Alabama, Arizona, Georgia, Idaho, Indiana, Kentucky, Louisiana, Mississippi, Montana, Ohio, Oklahoma, South Carolina, Utah, and West Virginia, filed suit in the U.S. District Court for the Western District of Louisiana and sought a preliminary injunction to temporarily block the implementation of the CMS vaccine mandate. U.S. District Court Judge Terry A. Doughtry issued an injunction that covered the 40 remaining states, not just the 14 states involved in the case.

Texas has also challenged the mandate and requested an injunction to block the enforcement of the CMS vaccine mandate in the U.S. District Court for the Northern District of Texas. There was a hearing on its motion for preliminary injunction, but the case was stayed on December 5, 2021 because of the nationwide injunction issued in the Louisiana case. Florida has also filed suit, but the Florida District Court refused to enjoin the vaccine mandate, finding a likelihood that CMS would succeed. On December 7, 2021, the 11th Circuit Court of Appeals upheld the District Court’s decision and refused to enjoin the CMS vaccine mandate.

Fifth Circuit Decision

Although the 5th Circuit enjoined the OSHA vaccine mandate, which applied to all businesses with more than 100 employees, in BST Holdings, LLC v. OSHA, it acknowledged differences between the CMS vaccine mandate and the OSHA vaccine mandate. In its December 15, 2021 decision, it noted that CMS identified “meaningful distinctions between its rule for Medicare and Medicaid-funded facilities and the broader OSHA rule — the statutory authority for the rule is different; Medicare and Medicaid were enacted under the Spending Clause rather than the Commerce Clause; and the targeted health care facilities, especially nursing homes, are where COVID-19 has posed the greatest risk.”

Nonetheless, the 5th Circuit would not say that the Secretary had made a strong showing of likely success on the merits of these arguments. As a result, it allowed the Louisiana court’s injunction to remain in place as to the 14 states that filed in Louisiana.

However, the 5th Circuit determined that in this particular case, one district court should not have made a binding judgment for the entire country. While injunctions can be binding throughout the country, not all of them should be. “The district court here gave little justification for issuing an injunction outside the 14 States that brought this suit.” The 5th Circuit also acknowledged that the states that have not brought suit “may well have accepted and even endorsed the vaccination rule” and predicted that CMS would prevail on its effort to limit the scope of the injunction.

What’s Next?

The CMS vaccine mandate is now enjoined only in the 10 states involved in the Missouri case and the 14 states involved in the Louisiana case. The CMS vaccine mandate is not enjoined in the remaining 26 states.

However, following the issuance of the two injunctions in Missouri and Louisiana, CMS issued an update to its vaccine mandate FAQs that included the following statement: “While CMS remains confident in its authority to protect the health and safety of patients in facilities funded by the Medicare and Medicaid programs, it has suspended activities related to the implementation and enforcement of this rule pending future developments in the litigation.”

We expect further guidance from CMS as to whether and how it will proceed to implement and enforce the mandate in the remaining 26 states, particularly given that the deadline for the initial vaccine has already passed. We also expect further appeals of the pending cases, and more of the 26 states not currently covered by the injunction could file lawsuits and seek injunctive relief as Texas and Florida have already done.

In a preliminary injunction issued on Tuesday, November 30, 2021, a federal judge in Louisiana temporarily blocked the implementation and enforcement of an interim final rule by the Centers for Medicare & Medicaid Services (CMS) that would require employees of Medicare and Medicaid certified health care providers and suppliers to have an initial COVID vaccine by December 6, 2021 and be fully vaccinated by January 4, 2022.

The Court chose to issue a nationwide injunction that will apply in all states, with the exception of 10 states already subject to a preliminary injunction issued on November 29, 2021 – Alaska, Arkansas, Iowa, Kansas, Missouri, Nebraska, New Hampshire, North Dakota, South Dakota and Wyoming – by the U.S. District Court in Missouri.

The 34-page order by U.S. District Judge Terry A. Doughtry temporarily blocks the vaccine mandate, as well as the CMS requirements that providers have in place certain policies and procedures related to documenting vaccinations, providing medical and religious exemptions from the vaccination requirement, and identifying and implementing accommodations for employees who are not fully vaccinated.

Background

On November 5, 2021, CMS published the Omnibus COVID-19 Health Care Staff Vaccination Interim Final Rule, requiring vaccination of all employees at health care facilities that participate in the Medicare and Medicaid programs, regardless of responsibility or patient contact.

The states of Louisiana, Montana, Arizona, Alabama, Georgia, Idaho, Indiana, Mississippi, Oklahoma, South Carolina, Utah, West Virginia, Kentucky and Ohio filed suit in the U.S. District Court for the Western District of Louisiana and requested a preliminary injunction to temporarily block the implementation of the CMS mandate.

Injunction Order

In his memorandum and order, Judge Doughtry detailed the basis for his decision to issue an injunction, and he found that the plaintiff states were likely to succeed on their claims that:

  • The CMS vaccine mandate caused “particularized and concrete” injuries including alleged loss of jobs, business, and tax revenue.
  • CMS was required to provide a 30-day “notice and comment period” before implementing the CMS vaccine mandate unless CMS could show good cause for avoiding this requirement. Good cause was not demonstrated in this case.
  • The mandate has “vast economic and political significance” and CMS exceeded its authority in enacting the CMS Mandate.
  • The mandate was contrary to law and arbitrary and capricious.
  • The mandate would cause irreparable harm including:
    • depriving the states of a procedural right to protect their interests
    • depriving the states of a right to enforce their laws and requiring them to incur the costs of training on and enforcing the CMS Mandate and having their police power encroached
    • placing a burden on the liberty interest of the states’ citizens requiring them to choose between losing their jobs or taking the vaccine
    • burdening health care facilities and suppliers by requiring them to comply with the vaccine mandate or lose Medicare and Medicaid funding

Ultimately, Judge Doughtry determined the threatened harm of the CMS vaccine mandate outweighs any harm that may result if it is not implemented, and that the public interest is served by maintaining the current constitutional structure and maintaining the liberty of individuals who do not want to take the COVID-19 vaccine.

What’s Next?

If CMS appeals, the case will be heard by the U.S. Court of Appeals for the 5th Circuit – a court that has recently addressed COVID vaccine mandate issues in a different context. In BST Holdings, LLC v. OSHA, the 5th Circuit enjoined the OSHA vaccine mandate, which applied to all businesses with more than 100 employees. Judge Doughtry described the issues presented in BST Holdings as “almost identical” to the considerations presented in the pending case involving the CMS vaccine mandate.

The fate of the CMS vaccine mandate is still uncertain. However, it is clear that the courts will continue to be involved.

Stay tuned.

In a preliminary injunction issued on Monday, November 29, 2021, a federal judge in Missouri blocked the implementation and enforcement in 10 states of an interim final rule by the Centers for Medicare & Medicaid Services (CMS) that would require employees of Medicare and Medicaid certified health care providers and suppliers to have an initial COVID vaccine by December 6, 2021 and be fully vaccinated by January 4, 2022.

The 32-page order by U.S. District Court Judge Matthew T. Schelp applies only to Medicare and Medicaid certified providers and suppliers in Alaska, Arkansas, Iowa, Kansas, Missouri, Nebraska, New Hampshire, North Dakota, South Dakota and Wyoming.

In addition to blocking the vaccine mandate, the order also stays CMS requirements that providers have in place certain policies and procedures related to documenting vaccinations, providing medical and religious exemptions from the vaccination requirement, and accommodations for employees who are not fully vaccinated.

Background

As outlined in our prior alert, CMS on November 5, 2021 published the Omnibus COVID-19 Health Care Staff Vaccination Interim Final Rule, requiring vaccination of all employees at health care facilities that participate in the Medicare & Medicaid programs, regardless of responsibility or patient contact.

Just five days later, on November 10, the states of Alaska, Arkansas, Iowa, Kansas, Missouri, Nebraska, New Hampshire, North Dakota, South Dakota, and Wyoming filed a lawsuit challenging the CMS vaccine mandate and soon after requested a preliminary injunction.

Injunction Order

In his memorandum and order, Judge Schelp discussed the basis for his decision to issue an injunction:

  • Given the vast economic and political impact of the CMS vaccine mandate, CMS needed clear authorization from Congress before issuing such a mandate, which it did not have.
  • Even if CMS is authorized to mandate COVID-19 vaccination for health care workers, it could not lawfully do so without a notice and comment period before the effective date.
  • The plaintiff states established that they were likely to succeed with their claim that the CMS vaccine mandate was arbitrary and capricious.
  • The plaintiff states would be irreparably harmed if the vaccine mandate was not enjoined.
  • The alleged irreparable harms included:
    • inability of the states to enforce their own laws regarding vaccination mandates and proof of vaccination
    • exacerbation of already existing health care facility staffing shortages
    • significant economic harm, especially in rural areas where vaccination rates are relatively low

Judge Schelp also remarked that the status quo, without the vaccine mandate, is better than it was even a few months ago and is sufficient to protect the public’s interest in stopping the spread of COVID-19.

What’s Next?

If CMS appeals, the appeal will go to the U.S. Court of Appeals for the 8th Circuit.

The injunction in the Missouri case applies only to the 10 plaintiff states involved in the Missouri lawsuit and does not apply to the other 40 states. Three other challenges to the CMS vaccine mandate are pending in federal courts in Florida, Louisiana and Texas. The Florida court has previously declined to enjoin the enforcement of the CMS vaccine mandate.

The status of the CMS vaccine mandate in the remaining 40 states could change if other states join the Missouri lawsuit, if the courts in Louisiana and Texas decide to follow Judge Schelp’s ruling, or if CMS decides to take a different approach.

Stay tuned.

The Centers for Medicare & Medicaid Services (CMS) has published the Omnibus COVID-19 Health Care Staff Vaccination Interim Final Rulerequiring vaccination of all staff at health care facilities that participate in the Medicare & Medicaid programs, regardless of responsibility or patient contact.

The following summarizes who must abide by the regulations and what covered providers/suppliers need to complete by the Phase 1 deadline of Dec. 6, 2021, and Phase 2 deadline of January 4, 2022.

Who is covered by the Health Care Staff Vaccination Rules?

The rules cover current and new staff, including employees, licensed practitioners, students, trainees, volunteers and individuals who provide care, treatment or other services for the facility and/or its patients under contract or other arrangement, who are present at the following Medicare and Medicaid certified providers and suppliers:

  • Ambulatory surgery centers
  • Community mental health centers
  • Comprehensive outpatient rehabilitation facilities
  • Critical access hospitals
  • End-stage renal 2 disease facilities
  • Home health agencies
  • Home infusion therapy suppliers
  • Hospices
  • Hospitals
  • Intermediate care facilities for individuals with intellectual disabilities
  • Clinics
  • Rehabilitation agencies and public health agencies as providers of outpatient physical therapy and speech-language pathology services
  • Psychiatric residential treatment facilities
  • Programs for All-inclusive Care for the Elderly (PACE) organizations
  • Rural health clinics/federally qualified health centers
  • Long term care facilities, including skilled nursing facilities and nursing facilities

Who is NOT covered by the Health Care Staff Vaccination Rules?

(1) Staff who provide services 100% remotely for one of the entities listed above and have no direct contact with patients and other staff.

(2) Staff of the following providers/suppliers:

  • Religious nonmedical health care institutions
  • Organ procurement organizations
  • Portable x-ray suppliers

(3) Staff of facilities not subject to CMS health and safety regulations including:

  • Assisted living facilities,
  • Group homes
  • Medicaid home care and home- and community-based service providers

What Do You Need to Accomplish by December 6, 2021?

(1) Establish a process or policy to vaccinate all employees

  • ALL staff must be vaccinated or deemed exempt from vaccination requirements; there is no option to test unvaccinated staff.
  • If there is a state or local law prohibiting vaccine mandates, the facility/provider must follow CMS regulations pursuant to the Supremacy Clause of the U.S. Constitution

(2) Establish a process or policy by which staff may request a medical or religious exemption from the vaccine.

(3) Establish a process or policy to track and securely document vaccination status of each staff member, including those for whom there is a temporary delay in vaccination because of a recent receipt of monoclonal antibodies or convalescent plasma.

(4) Establish a process or policy ensuring the implementation of additional precautions to mitigate the transmission and spread of COVID-19 for all staff who are not fully vaccinated.

(5) Ensure staff at all health care facilities covered by the regulation have received, at a minimum, the first dose of a primary series COVID-19 vaccine (Pfizer or Moderna) or the single dose COVID-19 vaccine (Johnson & Johnson).

What Do You Need to Accomplish by January 4, 2022?

All applicable staff must be fully vaccinated for COVID-19, except staff who have been granted exemptions from COVID-19 vaccination or workers for whom COVID-19 vaccination must be temporarily delayed.

Staff will be deemed to have met the 60-day deadline if they receive the second/final dose of a primary vaccination series by the 60th day even though they will not be considered “fully vaccinated” until 14 days after the second dose.

Further details and analysis to follow. 

Fox Rothschild Partners William Maruca, Esq. and Catherine Wadhwani, Esq. recently recorded a podcast summarizing key points on physician hiring, especially considerations when hiring and contracting with foreign national physicians.  We invite you to listen: https://soundcloud.com/fox-rothschild-llp/physician-recruitment-podcast-episode-1 to the podcast and contact Mr. Maruca or Ms. Wadhwani, for further advice.

This post is a courtesy of Fox Rothschild attorneys Matthew D. Lee, Esq. and Marissa Koblitz Kingman, Esq., and was first published as an alert on Fox’s website.

The U.S. Justice Department’s COVID-related health care fraud crackdown continues to intensify. On a single day in September 2021, the Justice Department announced criminal charges against 138 defendants in 31 federal districts throughout the United States, alleging about $1.4 billion in losses. Among those charged are 42 doctors, nurses and other licensed medical professionals.

For businesses that took advantage of the $2.2 trillion in federal pandemic aid programs, this latest enforcement action demonstrates that an audit or investigation may be inevitable. Therefore, it is essential to ensure that compliance protocols are in place to avoid criminal consequences.

The CARES Act

The Coronavirus Aid, Relief, and Economic Security (CARES) Act, enacted in March 2020, provided emergency financial assistance in the form of forgivable loans to businesses to cover payroll and other specified expenses through the Paycheck Protection Program (PPP). It also included the Provider Relief Fund, which provided needed medical care to Americans suffering from COVID-19.

From the outset, the government vowed to ensure that it would take measures to prevent recipients from fraudulently taking advantage of the CARES Act programs.

Focus on Fraud in Health Care Sector

The Justice Department has been focused on COVID-19 health care related fraud since the pandemic’s inception. As Assistant Director Calvin Shivers of the FBI’s Criminal Investigative Division recently stated, “health care fraud targets the vulnerable in our communities, our health care system, and our basic expectation of competent, available care. Despite a continued pandemic, the FBI and our law enforcement partners remain dedicated to safeguarding American taxpayers and businesses from the steep cost of health care fraud.”

A coalition of federal and state law enforcement agencies are working together to investigate and prosecute alleged COVID-19 related fraud. The agencies include the Department of Health and Human Services Office of Inspector General, the FBI, the Drug Enforcement Administration, the Health Care Fraud Unit of the Criminal Division’s Fraud Section, the Health Care Fraud and Appalachian Regional Prescription Opioid Strike Force and the U.S. Attorneys’ Offices throughout the country.

Recent COVID-Related Criminal Charges

Recent criminal charges associated with the COVID-19 pandemic include a variety of allegations related to false billings. The defendants are alleged to have misused patient information to submit claims to Medicare for unrelated, medically unnecessary, and expensive laboratory tests, including cancer genetic testing.

Individual defendants are also alleged to have misused Provider Relief Fund monies for their own personal expenses, including for gambling at a Las Vegas casino and payments to a luxury car dealership.

Other recent charges include individuals accused of telemedicine fraud. In 11 judicial districts, charges have been filed against 43 defendants who allegedly paid doctors and nurse practitioners to order unnecessary durable medical equipment, genetic and other diagnostic testing, and pain medications, either without any patient interaction or with only a brief telephonic conversation with patients they had never met or seen.

Durable medical equipment companies, genetic testing laboratories and pharmacies then purchased those orders in exchange for illegal kickbacks and bribes. Prosecutors allege they also submitted more than $1.1 billion in false and fraudulent claims to Medicare and other government insurers. The claims included sham telehealth consultations that did not occur. The proceeds of the scheme were allegedly spent on luxury items, including vehicles, yachts, and real estate.

Criminal charges also included allegations that the defendants made false and fraudulent claims for tests and treatments for patients seeking treatment for drug and/or alcohol addiction through a national sober homes initiative program. Other medical professionals have been charged with over-proscribing millions of doses of opioids and other prescription narcotics and submitting false billings.

What to Expect Next

The federal government will soon make available an additional $25.5 billion for health care providers affected by the pandemic, including $8.5 billion allocated to the American Rescue Plan for providers who serve rural Medicaid, Children’s Health Insurance Program or Medicare patients, and $17 billion to the Provider Relief Fund.

The federal government’s estimate of $1.4 billion in alleged fraud losses to date underscores why its enforcement efforts are rapidly intensifying. Health care professionals and business owners should proceed with caution when taking advantage of the latest round of aid funding.

The recent spate of charges shows that even health care fraud unrelated to the pandemic is a top priority for federal investigators. Any health care business owner who is concerned about compliance with the CARES Act or is concerned about potential fraud exposure should consult counsel and not wait to be contacted by law enforcement. Those who have already received a subpoena or inquiry from any law enforcement agency should immediately consult with counsel who can assess the full potential for civil and criminal exposure prior to responding.

If you have any questions regarding your practice’s compliance with federal fraud and abuse laws, please contact Matthew D. Lee, Esq. or Marissa Koblitz Kingman, Esq.

On September 10, 2021, the U.S. Department of Health and Human Services (HHS) offered updates regarding its Provider Relief Fund program, including $25.5 billion in new funding that will soon be made available to health care providers.

Here is what you need to know:

Additional $25.5 Billion in Funding

Starting September 29, 2021, health care providers can apply to receive additional funds to be disbursed as follows:

  • $8.5 Billion from the American Rescue Plan for providers in rural areas who serve individuals enrolled in the Medicaid, Medicare, and/or Children’s Health Insurance Program (CHIP).
  • $17 Billion from the Coronavirus Response and Relief Supplemental Appropriation Act of 2020. These “Phase 4” Funds will be distributed based on providers’ lost revenues and COVID-19 expenditures between July 1, 2020 and March 31, 2021, with a focus on getting funds to smaller providers who serve vulnerable or isolated communities. Bonus payments will be disbursed to providers who serve Medicaid, CHIP and/or Medicare patients, including low-income children, pregnant woman, people with disabilities and seniors.

The Health Resources and Services Administration (HRSA) will use existing claims data to calculate payments to providers.

Reconsideration of Phase 3 payments

HRSA has published the detailed payment calculation methodology utilized for Provider Relief Fund “Phase 3” disbursements. Providers who believe the payments they received under Phase 3 were incorrect can now review the specific methodology. Those providers who still believe the Phase 3 payment was incorrect will have the opportunity to request a reconsideration.

Details regarding how to request a reconsideration are forthcoming.

Grace Period for First Reporting Deadline

The September 30, 2021 deadline remains for providers to demonstrate that Provider Relief Funds received between April 10, 2020 and June 30, 2020 were utilized in accordance with their specified terms and conditions. HHS, however, recognizes the impact that recent natural disasters and the surge of COVID cases has had on some providers, so they are instituting a 60-day “grace period.”

While providers who do not submit a report by September 30, 2021 will technically be deemed out of compliance, HRSA will not initiate collection activities or similar enforcement actions until after November 30, 2021.

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