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<h5>Introduction</h5>  On March 18, 2021, the Senate narrowly confirmed Xavier Becerra, the former attorney general of California, as U.S. Department of Health and Human Services (“HHS”) Secretary.<a href="#1">[1]</a> With the confirmation of an aggressive litigator, rather than a doctor, as head of HHS, the healthcare industry should brace itself for heavier enforcement under the Biden administration.<a href="#2">[2]</a>  <h5>Healthcare and COVID-19-Related Fraud Enforcement Under the Biden Administration</h5>  Combatting healthcare fraud has long been a priority for the Department of Justice (the “DOJ”).<a href="#3">[3]</a> In Fiscal Year 2019, the DOJ pursued 1,060 criminal healthcare fraud investigations, filed criminal charges in 485 cases involving 814 defendants, and convicted 528 defendants of healthcare fraud-related crimes.<a href="#4">[4]</a> Meanwhile, the Federal Bureau of Investigation dismantled the criminal hierarchy of 151 healthcare fraud criminal schemes.<a href="#5">[5]</a> Investigations conducted by HHS’s Office of Inspector General resulted in 747 criminal actions against individuals or entities that committed crimes related to Medicare and Medicaid.<a href="#6">[6]</a>  In Fiscal Year 2020, the DOJ initiated twice as many new fraud matters against healthcare entities as it did in Fiscal Year 2019.<a href="#7">[7]</a> Whistleblowers filed 672 new qui tam actions, 456 of which related to the healthcare industry.<a href="#8">[8]</a> The DOJ obtained $2.2 billion in settlements and judgments from civil cases involving fraud and false claims against the government, $1.8 billion of which related to matters involving the healthcare industry.<a href="#9">[9]</a>  With the outbreak of the pandemic, the DOJ aggressively pursued fraud related to COVID-19 during the Trump administration. In the early days of the pandemic, former Attorney General William Barr directed the DOJ to remain vigilant in investigating and prosecuting criminal activity related to COVID-19, warning that “[t]he pandemic is dangerous enough without wrongdoers seeking to profit from public panic and this sort of conduct cannot be tolerated.”<a href="#10">[10]</a>  Combatting COVID-19-related fraud will undoubtedly be a priority during the Biden administration as well. Given the increase in government spending related to COVID-19, there will likely be a corresponding increase in investigations and enforcement actions targeting COVID-19-related fraud. Stimulus measures related to COVID-19 provide a new source of False Claims Act (“FCA”) enforcement actions. For example, the federal government has allocated $178 billion to be distributed through the Provider Relief Fund, under which healthcare providers must attest that they used the funds for expenses related to COVID-19.<a href="#11">[11]</a> The Biden administration will likely scrutinize the use of these funds to uncover potential fraud.  In response to COVID-19-related fraud, we may see increased coordination between the DOJ and regulatory agencies such as the Food and Drug Administration (the “FDA”) and the Federal Trade Commission (the “FTC”). The FDA helps the DOJ police the healthcare marketplace by scrutinizing the promotion of medical products for false or misleading statements. During the pandemic, the FDA has been monitoring the healthcare industry and issuing warning letters to firms that market and sell fraudulent products with claims to treat COVID-19.<a href="#12">[12]</a> The FTC is likewise bringing enforcement actions against fraudsters who are leveraging the pandemic to deceive consumers by promoting bogus products and treatments for COVID-19.<a href="#13">[13]</a> The DOJ will likely expand coordination with regulatory agencies such as HHS, the FDA, and the FTC to target fraud related to the pandemic.  <h5>Secretary Becerra’s Hard Line on Enforcement</h5>  As California’s attorney general, Becerra relentlessly targeted fraudsters and transformed California’s healthcare fraud division into one of the more aggressive and successful healthcare fraud prosecutorial agencies in the nation, with 101 criminal filings and 85 convictions related to healthcare fraud in the past year alone.<a href="#14">[14]</a>  Focusing resources on systematic abuses, Becerra secured several blockbuster fraud settlements, including a $102 million settlement in 2018 with BP Energy Company, resolving whistleblower allegations that the company intentionally overcharged the State of California for natural gas.<a href="#15">[15]</a> According to Becerra, “BP thought it could get away with providing false and misleading information in order to line its own pockets. . . . [C]heating the People of California will cost you more than it’s worth.”<a href="#16">[16]</a> In 2019, Becerra secured a $150 million settlement with Morgan Stanley, resolving allegations that the bank misled investors, including teachers and public employees, about the high risk of its pension products.<a href="#17">[17]</a> Noting that his office had recovered over $1 billion from cheaters on Wall Street since the financial crisis, Becerra commented that “Morgan Stanley lied about the risk of its products and put profits over teachers and public employees who relied on its advice.”<a href="#18">[18]</a> This past September, Becerra secured an $11.8 million settlement with a major pharmaceutical company, resolving whistleblower allegations that the company paid kickbacks to healthcare practitioners to encourage them to prescribe its drug products. Commenting on the settlement, Becerra warned that kickbacks “cost you dearly once you’re caught.” Based on his strong record of fraud enforcement, Becerra will likely take an aggressive enforcement approach as HHS Secretary and use whistleblowers and the FCA to combat healthcare fraud.  In addition to aggressive litigation, Becerra sharpened other tools in the California law enforcement arsenal to combat fraud. Insisting that “[w]e must do everything in our power to put an end to tax fraud that hurts our communities,” Becerra sponsored legislation this past June aimed at strengthening the California False Claims Act.<a href="#19">[19]</a> The legislation would increase prosecutorial power to investigate fraudulent claims and recover public funds lost due to fraud or misrepresentation and incentivize whistleblowers to report fraud by providing more protections from retaliation and civil liability.<a href="#20">[20]</a> Becerra also expanded a California Department of Justice fraud bureau to focus on Medi-Cal, California’s medical assistance program.<a href="#21">[21]</a> In January, responding to increased Medi-Cal enrollment and the need to protect elders and nursing home residents during the COVID-19 pandemic, Becerra elevated the Bureau of Medi-Cal Fraud and Elder Abuse to a full-fledged division and directed additional resources toward this bureau.<a href="#22">[22]</a> Becerra explained that this bureau would “build upon our previous success aggressively protecting our state’s most vulnerable citizens against fraud, abuse and neglect.”<a href="#23">[23]</a>  Becerra’s track record as attorney general of California reflects a strong commitment to combatting healthcare fraud, and his appointment clearly signals the Biden administration’s interest in promoting increased enforcement by HHS itself. Indeed, during his confirmation hearings, Becerra pledged to prioritize “robust enforcement” of healthcare price transparency and other initiatives.<a href="#24">[24]</a> Becerra will likely push HHS to collaborate more aggressively with the DOJ, including the healthcare strike force, to enhance healthcare fraud enforcement efforts.<a href="#25">[25]</a>  <h5>Recommendations</h5>  With the expected increase in healthcare enforcement under Becerra’s leadership of HHS and the Biden administration’s overall pro-regulatory enforcement approach, it is critical for companies to evaluate their risk profiles and the effectiveness of their corporate compliance programs. Statutes such as the FCA present extensive compliance requirements and challenges for healthcare companies. The financial and reputational penalties for noncompliance under these statutes give companies the strongest of incentives to create and maintain ethical corporate cultures and robust compliance programs.  Recommended actions include:  <ul> 	<li>Stress-test the compliance program: Companies should stress-test the compliance program to identify areas for improvement and reinforce a culture of compliance.</li> 	<li>Document procedures: Companies should document efforts to create a culture of compliance, conduct internal reviews, and improve the compliance program.</li> 	<li>Report concerns: Companies should encourage reporting of concerns about potential misconduct to independent board members or to a risk committee.</li> 	<li>Seek the advice of outside counsel: Companies should seek the advice of outside compliance counsel to demonstrate a good-faith commitment to compliance.</li> </ul>  Authorship Credit: John J. Carney, Bari R. Nadworny, Kimberly S. Ruark, Audrey van Duyn and Kristen McDermott Woodrum  <hr /> <a id="1" name="1"></a>[1] Alex Rogers, Senate narrowly confirms Xavier Becerra as Health and Human Services secretary, CNN (Mar. 18, 2021), <a href="https://www.cnn.com/2021/03/18/politics/xavier-becerra-confirmation-vote/index.html">https://www.cnn.com/2021/03/18/politics/xavier-becerra-confirmation-vote/index.html</a>.  <a id="2" name="2"></a>[2] Lydia Wheeler, Becerra Brings Tougher Scrutiny on Health Fraud, Hospital Deals, Bloomberg Law (Dec. 21, 2020), <a href="https://news.bloomberglaw.com/health-law-and-business/becerra-brings-tougher-scrutiny-on-health-fraud-hospital-deals">https://news.bloomberglaw.com/health-law-and-business/becerra-brings-tougher-scrutiny-on-health-fraud-hospital-deals</a>.  <a id="3" name="3"></a>[3] Press Release, U.S. Dep’t of Justice, Government Intervenes in Lawsuit Against Florida Cardiologist Alleging Unnecessary Peripheral Artery Interventions and Payment of Kickbacks (Jan. 5, 2015), available at <a href="https://www.justice.gov/opa/pr/government-intervenes-lawsuit-against-florida-cardiologist-alleging-unnecessary-peripheral">https://www.justice.gov/opa/pr/government-intervenes-lawsuit-against-florida-cardiologist-alleging-unnecessary-peripheral</a> (“Fighting Medicare and other health care fraud is one of [the DOJ’s] most important priorities.”).  <a id="4" name="4"></a>[4] Dep’t of Health and Human Servs. & Dep’t of Justice, Health Care Fraud and Abuse Control Program Annual Report for Fiscal Year 2019 (June 2020), available at <a href="https://oig.hhs.gov/publications/docs/hcfac/FY2019-hcfac.pdf">https://oig.hhs.gov/publications/docs/hcfac/FY2019-hcfac.pdf</a>.  <a id="5" name="5"></a>[5] Id.  <a id="6" name="6"></a>[6] Id.  <a id="7" name="7"></a>[7] Press Release, U.S. Dep’t of Justice, Justice Department Recovers Over $2.2 Billion from False Claims Act Cases in Fiscal Year 2020 (Jan. 14, 2021), <a href="https://www.justice.gov/opa/pr/justice-department-recovers-over-22-billion-false-claims-act-cases-fiscal-year-2020">https://www.justice.gov/opa/pr/justice-department-recovers-over-22-billion-false-claims-act-cases-fiscal-year-2020</a>; U.S. Dep’t of Justice, FY 2020 Fraud Statistics, <a href="https://www.justice.gov/opa/press-release/file/1354316/download">https://www.justice.gov/opa/press-release/file/1354316/download</a>.  <a id="8" name="8"></a>[8] Id.  <a id="9" name="9"></a>[9] Id.  <a id="10" name="10"></a>[10] Press Release, U.S. Dep’t of Justice, U.S. Attorneys Announce Federal Prosecutors to Fight COVID-19 Fraud, Warn Public Against Fraudsters and Unscrupulous Schemes (Mar. 19, 2020), available at <a href="https://www.justice.gov/usao-sdms/pr/us-attorneys-announce-federal-prosecutors-fight-covid-19-fraud-warn-public-against">https://www.justice.gov/usao-sdms/pr/us-attorneys-announce-federal-prosecutors-fight-covid-19-fraud-warn-public-against</a>.  <a id="11" name="11"></a>[11] HHS CARES Act Provider Relief Fund: For Providers, <a href="https://www.hhs.gov/coronavirus/cares-act-provider-relief-fund/for-providers/index.html">https://www.hhs.gov/coronavirus/cares-act-provider-relief-fund/for-providers/index.html</a> (last visited Mar. 22, 2021).  <a id="12" name="12"></a>[12] FDA Fraudulent Coronavirus Disease 2019 (COVID-19) Products, <a href="https://www.fda.gov/consumers/health-fraud-scams/fraudulent-coronavirus-disease-2019-covid-19-products">https://www.fda.gov/consumers/health-fraud-scams/fraudulent-coronavirus-disease-2019-covid-19-products</a> (last visited Mar. 22, 2021).  <a id="13" name="13"></a>[13] FTC Coronavirus Response: Enforcement Actions, https://www.ftc.gov/coronavirus/enforcement (last visited Mar. 22, 2021); see also Pierre Thomas, Gerry Wagschal, Alexander Mallin, & Robyn Weil, FTC, DOJ crack down on surge of allegedly fraudulent COVID-19 ‘treatments’, ABC News (May 21, 2020), <a href="https://abcnews.go.com/US/ftc-doj-cracks-surge-allegedly-fraudulent-covid-19/story?id=70557712">https://abcnews.go.com/US/ftc-doj-cracks-surge-allegedly-fraudulent-covid-19/story?id=70557712</a>.  <a id="14" name="14"></a>[14] Cal. Dep’t of Justice, Medi-Cal Fraud, https://oag.ca.gov/dmfea/medical (last visited Mar. 22, 2021).  <a id="15" name="15"></a>[15] Press Release, Cal. Dep’t of Justice, Attorney General Becerra: BP Energy Company Pays $102 Million in Settlement for Overcharging Californians for Natural Gas (Jan. 11, 2018), available at <a href="https://oag.ca.gov/news/press-releases/attorney-general-becerra-bp-energy-company-pays-102-million-settlement">https://oag.ca.gov/news/press-releases/attorney-general-becerra-bp-energy-company-pays-102-million-settlement</a>.  <a id="16" name="16"></a>[16] Id.  <a id="17" name="17"></a>[17] Press Release, Cal. Dep’t of Justice, Attorney General Becerra Announces $150 Million Settlement Against Morgan Stanley for Misleading California’s Teachers and Workers with Pensions (Apr. 25, 2019), available at <a href="https://oag.ca.gov/news/press-releases/attorney-general-becerra-announces-150-million-settlement-against-morgan-stanley">https://oag.ca.gov/news/press-releases/attorney-general-becerra-announces-150-million-settlement-against-morgan-stanley</a>.  <a id="18" name="18"></a>[18] Id.  <a id="19" name="19"></a>[19] Press Release, Cal. Dep’t of Justice, California State Assembly Advances AG-Sponsored Legislation to Strengthen the False Claims Act and Protect California Taxpayers from Fraud (June 10, 2020), available at <a href="https://oag.ca.gov/news/press-releases/california-state-assembly-advances-ag-sponsored-legislation-strengthen-false">https://oag.ca.gov/news/press-releases/california-state-assembly-advances-ag-sponsored-legislation-strengthen-false</a>.  <a id="20" name="20"></a>[20] Id.  <a id="21" name="21"></a>[21] Stephanie Armour & Sabrina Siddiqui, Biden’s Health-Secretary Pick Becerra Plans Focus on Covid-19—if He Gets Job, Wall Street Journal (Dec. 18, 2020), <a href="https://www.wsj.com/articles/bidens-health-secretary-pick-becerra-would-focus-on-covid-covid-covid-11608266847">https://www.wsj.com/articles/bidens-health-secretary-pick-becerra-would-focus-on-covid-covid-covid-11608266847</a>.  <a id="22" name="22"></a>[22] Press Release, Cal. Dep’t of Justice, Attorney General Becerra Announces Establishment of Division of Medi-Cal Fraud and Elder Abuse (Jan. 27, 2021), available at <a href="https://oag.ca.gov/news/press-releases/attorney-general-becerra-announces-establishment-division-medi-cal-fraud-and">https://oag.ca.gov/news/press-releases/attorney-general-becerra-announces-establishment-division-medi-cal-fraud-and</a>.  <a id="23" name="23"></a>[23] Id.  <a id="24" name="24"></a>[24] Nick Hut, Prospective HHS secretary: ‘We will do robust enforcement to make sure that price transparency is there for all Americans’, Healthcare Financial Management Association (Feb. 23, 2021), <a href="https://www.hfma.org/topics/price-transparency/prospective-hhs-secretary-pledges-robust-transparency-enforcement.html">https://www.hfma.org/topics/price-transparency/prospective-hhs-secretary-pledges-robust-transparency-enforcement.html</a>.  <a id="25" name="25"></a>[25] Lydia Wheeler, Becerra Brings Tougher Scrutiny on Health Fraud, Hospital Deals, Bloomberg Law (Dec. 21, 2020), <a href="https://news.bloomberglaw.com/health-law-and-business/becerra-brings-tougher-scrutiny-on-health-fraud-hospital-deals">https://news.bloomberglaw.com/health-law-and-business/becerra-brings-tougher-scrutiny-on-health-fraud-hospital-deals</a>.

Biden’s New HHS Secretary Promises “Robust Enforcement”

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