Podcast - The New Rules of Healthcare Fraud Enforcement

Morgan Ribeiro: Welcome to "Counsel That Cares." This is Morgan Ribeiro, the host of the podcast and a director in Holland & Knight's healthcare practice. Today, we're diving into the high-stakes world of healthcare False Claims Act investigations. To help us navigate this topic, I am joined by Meredith Auten, who recently joined us as a leader of our Philadelphia False Claims Act team, and Jessica Sievert, a partner in our Jacksonville and Miami offices and a former Department of Justice (DOJ) trial attorney. Meredith and Jessica, welcome to the show.

Meredith Auten: Thank you, Morgan. It's great to be here.

Jessica Sievert: Yeah, I'm looking forward to our conversation.

Morgan Ribeiro: Great, well, before we dive into the meat of our discussion, I would love just for each of you to provide a little bit more background about yourselves. Meredith, I'll start with you.

Meredith Auten: Happy to. So I've been practicing in the white collar defense space for over 25 years. And within that space, I have focused my practice on defending False Claims Act investigations and litigation. And I have practiced in over 30 jurisdictions across the country in these False Claims Act matters. And I have concentrated my practice in the False Claims Act space, primarily on clients who are in the life sciences and the healthcare industries.

Morgan Ribeiro: Amazing, well, thank you for that. Jessica, how about yourself?

Jessica Sievert: Yeah, so like Meredith, I, too, specialize in False Claims Act work and have been almost exclusively working in the healthcare space almost my whole career. I started out in private practice doing government investigations for all different types of healthcare entities and False Claims Act work, and then I ended up going to DOJ for 10 years. I was at several different offices, two U.S. attorney's offices. I was also at DOJ Civil Frauds, and I was the deputy of the Civil Division in the Southern District of Florida, where I supervised the False Claims Act practice there. And then I just came back to Holland & Knight about a year ago, and I'm really excited to be jumping back in on the defense side and taking on various different types of healthcare fraud-related matters.

Morgan Ribeiro: Amazing. Well, you both have very relevant experience for today's discussion. So timely here is that the most recent major announcement that came out of the Department of Justice involving healthcare fraud was the formal rollout of the National Fraud Enforcement Division just earlier this month. Acting Attorney General Todd Blanche issued a memo officially transferring several major units, including the Health Care Fraud Unit, under this new dedicated division, so that National Fraud Enforcement Division. And to get us started, Jessica, just given that you have recently joined us from the DOJ, would love to get your perspective and have you tell us a little bit more about what this announcement means.

Jessica Sievert: Sure, so some of the background: One of the Trump Administration's priorities is cracking down on fraud involving taxpayer-funded programs like Medicare, Medicaid and others. And so what the administration did was they created this National Fraud Enforcement Division, which a lot of people have been referring to as NFED. And what it is, it's a stand-alone division of DOJ that is going to have its own newly appointed assistant attorney general, and it's going to centralize the supervision of various units – fraud-related units like the Health Care Fraud Unit at DOJ – under one umbrella. So, where typically various prosecutors in these units reported up to all of their individual chiefs, they will now have another layer where they report up to the NFED, this new enforcement division. So it's kind of interesting, you know, it's not a task force, it is not a working group, it is actually a whole new litigating division of DOJ. And what it means is that each district is going to have a prosecutor that's detailed to the NFED. So because it's a detail, you know, that's generally a change in position and supervisors. And so that means the Assistant United States Attorney (AUSA), local AUSAs around the country, are going to be reporting up through the NFED. Why that matters is because the administration, the folks at main Justice, people in D.C., their insight into what's happening at the local level and their ability to influence what cases are brought, I think that's going to shift. They're going to have more visibility and influence, and that'll also be supported by the fact that there are reporting requirements from the U.S. attorney's offices to the NFED about the types of cases and those kinds of things.

You know, just one more comment on this before we move on. I think one of the big questions out there that people are asking is, well, what kind of cases is this new National Fraud Enforcement Division going to focus on? And the best forecast of that so far, other than obviously taxpayer-funded programs, is the cases that were announced in a press release on the same day the NFED was launched. So these cases, you know, they're not the result of the NFED. They've likely been going on for years, but they're examples straight from the horse's mouth about what kind of cases they're interested in. First, there are Medicare Advantage allegations of fraudulently enrolling consumers into these fully subsidized Affordable Care Act (ACA) plans and also submitting fraudulent ACA health insurance plan applications. There's also medically unnecessary prescriptions in many cases that weren't provided to the beneficiaries. Those are two of the three cases that were in that press release. And the third one is a business owner that was fraudulently claiming COVID tax credits. So, they have the hallmarks of your typical False Claims Act (FCA) healthcare enforcement cases, parallel proceedings, high-dollar cases, you know, the headline states half a billion dollars. So, for the most part, I think we're going to see a lot of focus on any kind of Medicare-related program.

Morgan Ribeiro: Well, I mean, that certainly kind of continues this trend that we've seen, but it sounds significant, particularly given just the announcement that happened on the same day of those three separate cases. Meredith, I want to move over to you. This most recent announcement follows an announcement from January that, fiscal year 2025, the DOJ reported a record $6.8 billion in False Claims Act settlements, with over $5.7 billion of that originating from healthcare cases. Can you tell us more about some of the key enforcement trends that we see in those numbers?

Meredith Auten: Sure. So 2025 was a record-breaking year for False Claims Act enforcement, and it was record-breaking in two primary ways. One was the amount of recoveries, and the second was the number of qui tams filed. And if you look at the statistics over the last two decades, and in your question you alluded to the amount of recoveries that were from the healthcare industry, that is nothing new. The vast majority of FCA enforcement recoveries over the last two decades has been from the healthcare space, the healthcare industry. And we expect that to remain the case because with this administration, this DOJ, healthcare fraud remains a top priority. We have already seen, now that we're through the first quarter of 2026, the statistics are already outpacing the record-breaking statistics from 2025. And by that, I mean, again, the amount of recoveries already in this first quarter from healthcare entities and the healthcare industry is outpacing the plan from last year. And we are also seeing the number of qui tams is outpacing the record-breaking amount that we had last year. As of just the end of February, there were close to 500 qui tams already filed. So we expect 2026 will be another record-breaking year and particularly so with focus on the healthcare industry. Another significant statistic from last year was that non-intervened or declined qui tams had more recoveries than DOJ-initiated cases or DOJ-intervened cases. And that's significant to show that relators and whistleblowers are the drivers in many instances of False Claims Act enforcement. We have seen that over the last number of years. We are continuing to see that with the statistics I just cited about already in 2026, close to 500 qui tams have been filed.

With respect to the healthcare industry, I want to highlight a couple of areas where we are seeing DOJ very actively enforced. The first is Medicare Advantage, otherwise known as the Part C program. This is not a new enforcement area. Medicare Advantage has been an enforcement priority for a number of years, but we are certainly seeing, just within the last couple of months, a number of significant settlements in this space in the hundreds of millions of dollars. And to be clear, DOJ and relators are not just looking at the plans and not just looking at the insurers. They are looking at any entity or any individual person who is connected to potentially inflated diagnosis assessments, anyone connected to medical necessity of care providers, it's a very broad view of the Medicare Advantage priority.

Another main area that DOJ is focusing on is drug pricing, and here they're particularly looking for, is there a difference between the pricing that's being offered to consumers and customers, and the pricing that's being reported to the government. Obviously, any disconnect there can lead to issues and potential enforcement by DOJ.

Another area which isn't new but has gotten a renewed focus from DOJ is medical necessity cases and standard-of-care cases. These are always a challenge for DOJ because it becomes a battle of the experts of what was medically necessary, what is the proper standard of care. So from the defense perspective, we've always had a very strong defense in these by talking about experts may disagree, but objectively the care was reasonable, the care was provided. But certainly this is an area, particularly where there could be patient safety issues, patient harm issues, that is getting top priority from DOJ. And within this particular space, the hottest enforcement area right now is wound care. And whether the wound care being provided, which has very high levels of government reimbursement, is medically necessary and is being properly provided. So that is definitely a new area we've seen over the last couple of months, already a couple of settlements, many open investigations.

And then the final area I will highlight again is nothing new. Anti-Kickback Statute violations, Stark violations, those have been a focus of enforcement for many years. But particularly now, speaker programs continue to be a main focus. We've seen settlements in the hundreds of millions just in the last number of months on speaker program, AKS cases, and we're continuing to see investigations in that space.

Morgan Ribeiro: Very helpful, all very interesting. Jessica, I want to go back to you. I mean, you can't really have a conversation about really any industry right now, but certainly in healthcare, around some of these kind of newer, evolving areas like the use of technology and AI. Would love to hear from you just about some of the more nontraditional areas of enforcement that are growing.

Jessica Sievert: Absolutely. So how healthcare companies are utilizing that technology and how the technology is impacting the validity and accuracy of claims that are submitted to the government is a big focus for DOJ right now. One example of that is last summer the DOJ announced the False Claims Act Working Group between DOJ and Health and Human Services (HHS) and outlined their priorities. And one of those was manipulation of electronic health record (EHR) systems to drive inappropriate utilization. So if you're a digital health company, if you're an electronic medical records (EMR) provider, or if you provide software for healthcare entities, I think those companies can expect to see more scrutiny to the extent that certain features or tools within their programs might be causing the submission of false claims. So it's not going to be just the providers. I think it's going to extend to the companies that providers are contracting with to supply their technology features or their AI features. Another area where I expect some nontraditional enforcement, so to speak, is in the Medicare Advantage space, which Meredith mentioned, and typically we've seen most enforcement in that area relating to improper diagnosis codes or upcoding diagnosis codes, or fraudulently enrolling beneficiaries in the plan. Since Medicare Advantage is a taxpayer-funded program at its core, and since now more than half of Medicare beneficiaries receive their care and their services through these managed care programs, I think DOJ is going to be looking at how can we bring these claims that are submitted to the managed care companies under our umbrella. So not just, again, like Meredith said, the insurers themselves and what they're doing, but looking at the providers and what they're submitting to Medicare Advantage.

Morgan Ribeiro: I'm curious on all of this, what you've covered just now, Jessica, as well as Meredith and just sort of the larger numbers. Do you all feel like this increase in activity or having that steady percentage of healthcare as a portion of the overall FCA activity? I mean, is this indicative of a trend with the government being more aggressive? Meredith, I'll start with you.

Meredith Auten: I think it is, Morgan, and I say that for a couple reasons. We are seeing DOJ be more active in enforcement in this space, and let me be clear, they have been active in enforcing fraud recovery through the False Claims Act for many, many years. But there seems to be an increased focus over the last year on really making this the number one tool, the primary tool they are using to enforce. And we are seeing them staff up both at main Justice and local U.S. attorney offices across the country with people to focus on and prosecutors to focus on False Claims Act enforcement. And as I mentioned earlier, we are seeing record numbers of relators filing qui tams. So the combination of the Department of Justice ramping up, staffing up, and the relators and both of them teaming up, I think certainly we are seeing increased enforcement and more of an enhanced focus. And certainly in the areas in which we practice at Holland & Knight, a number of our markets where there are major healthcare systems, major healthcare entities, hospital systems, life sciences companies [in locations like] like Philadelphia, Boston, Florida – those are areas where we are seeing the local U.S. attorney offices staff up in a tremendous way. And we're seeing a rise in activity coming out of those offices, which have historically been very strong offices in this space. But I am seeing more, I'm seeing more Civil Investigative Demands (CIDs) come through the door to clients, particularly from some of those U.S. attorney offices, some of those jurisdictions.

But on the positive, I also like to highlight good things. So on the positives, even with this increased enforcement and more aggressive enforcement, record-breaking numbers, there are a couple of positives I want to highlight. So the first is we are certainly seeing DOJ confirming to us in the industry on the defense side that regulatory guidance, which had historically been the basis for some False Claims Act actions, is not going to be the basis for actions  – at least in this DOJ, at least during this administration. And we welcome that on the defense side because regulatory guidance does not have the force or effect of law. It's often confusing, conflicting and ambiguous for clients to understand. And that should not form the basis of a fraud recovery. So DOJ confirming that they are not going to use the sub regulatory guidance as a basis for their enforcement is encouraging.

The other thing I want to highlight is something we've been advocating for from the defense and industry side for years, which is that DOJ use its dismissal authority to get rid of qui tams where they choose to decline to intervene. They have broad discretion to use that authority, they used it exceedingly rarely. Last year, however, there were 25 of those dismissals. That is a record number in a year of dismissals, and this Department of Justice has committed now to a formal process by which they will evaluate every declined qui tam for whether it meets the factors of dismissal. And we certainly welcome that, we'd love to see those numbers grow, because for our clients, the time and cost and the distraction of the business from these long-running, very expensive, time-consuming False Claims Act cases, there are times when the government ought to step in and dismiss those. So we're not subject to them.

The other thing I would mention is this Department of Justice has been very open to dialogue with industry, dialogue with the defense bar, on cases, on general issues. And again, we welcome having that dialogue. And in particular, what we are seeing have traction on the defense side is arguments on the defense about scienter. That is an imperative element of a False Claims Act case. That is an element that we are seeing the Department of Justice take seriously, when we are presenting on the defense side, that there is no scienter in these particular cases.

Then the final thing I'll mention that we're keeping an eye on is the constitutionality of the qui tam provisions. As I mentioned, qui tams and relators are the drivers, but there is an open question before the 11th Circuit right now whether those provisions are constitutional. And we expect any day we could have an opinion from the 11th Circuit on that. This issue is also on appeal before the 3rd Circuit here in Philadelphia, also before the 5th Circuit. The 6th Circuit recently concluded in rejecting an interlocutory appeal that the provisions are constitutional, but we have a number of open circuits that are looking at the issue that could have a significant impact if these matters cannot move forward using the qui tam provisions.

Morgan Ribeiro: Wow. There's a lot to unpack there. Jessica, before I even jump into my next question, I just would love to see if you have any reaction to that. Sort of the pros and cons and if this is sort of a larger trend that we're seeing with the government being more aggressive.

Jessica Sievert: I definitely think it is and it will be. So the flip side of the government being more aggressive is that a lot of people have left DOJ in the past year or so, and there are resource issues. How that's come across in my cases is not investigations being shut down. I mean, maybe there have been delays if the case gets transferred to another attorney, things like that. But given what was announced as a part of the National Fraud Enforcement Division launch, I don't think we should get too comfortable about that. I mean, in the press release, they talked about developing a hiring plan that's aimed at rapidly and substantially expanding DOJ's prosecutorial investigative capacity. So perhaps as resources dipped, they might be going right back up.

Morgan Ribeiro: Great, thank you for that. And so Jessica, you're coming at this from the other side, having served as a U.S. attorney in a very active healthcare market. Meredith mentioned Florida being one of those. What should providers in particular be looking at or looking for in terms of current DOJ priority sectors. 

Jessica Sievert: I think the fact is that if you do business with federal healthcare programs right now, DOJ is interested just because of where their priorities are and all of the announcements about the taxpayer fraud. And I think any chance that they can get to have a press release in that space, they will take. While the allegations and the industry is definitely range, I mean, DOJ is conducting significant investigations from the hospice space, skilled nursing, lab testing, upcoding. It is very dynamic and varied. But I will say the sectors where I've seen the most enforcement and I think will continue, in addition to the things we've been talking about today, private equity, they're still receiving a lot of scrutiny. There's a lot investment as we know in the healthcare space, and to the extent that they have a hand or even a say in the claims being submitted, I think there's exposure and DOJ is interested in that. The other area is medical device companies, especially where there are defective devices and patient safety risks. DOJ has brought several of those cases recently. And lastly, hospitals, they remain in the mix since they touch on so many services and they can involve so many allegations. So everything from upcoding, the appropriateness of the admissions, quality of care, cost reporting, it goes on and on. So I think they are also one of the sectors that DOJ has frequently looked at in the past and will continue to scrutinize. We've already talked about Medicare Advantage and digital health. So while those are important sectors that will continue to receive scrutiny, I don't want to continue to harp on them, but kind of related to the digital health piece is telehealth, especially with all of the data use, where if there are any, you know, high-volume billing, things like that that can be easily seen through the data will just impact additional enforcement in that area.

Morgan Ribeiro: You just touched on a point, which we obviously talked about AI earlier in terms of how companies are using AI in their day-to-day business, both in the clinical setting as well as administrative functions, but the government is also using AI. So how is that playing a role in investigations now?

Jessica Sievert: It's interesting because it's a bit of a double-edged sword. So on the one hand, AI is helping the government analyze these massive data sets and generate fraud cases. But at the same time, the government's looking at how healthcare organizations are using AI. So is the organization creating guardrails for implementing the AI? Are there features of these AI tools that might be creating false claims? You know, one of the things that happened recently in this area was that DOJ announced they were creating a new data fusion center. And the idea is that it will compile a ton of data from all different sources. It will have various agencies involved from DOJ, HHS, all of the interested parties. And it will be prosecutor-led. And so why that is significant is because it means that DOJ intends to use artificial intelligence and these advanced data analytics to identify the fraud patterns and to proactively identify cases. So with all of that going on and given the priority areas we've been talking about today, I think it's really important that healthcare companies are looking really closely at their agreements that they have with AI companies, with third-party software companies, anyone that they might be receiving these services from, and make sure that first of all, they fully understand the features, but secondarily that the contract adequately protects them by using indemnification clauses and similar provisions, so that when there is an investigation, if the AI or technology was doing something it shouldn't have been doing, that that burden gets shifted back to the company.

Morgan Ribeiro: And I think, kind of ending on that practical note, right, there's a lot of information here, a lot trends that we're reporting on, but it's helpful to think about sort of the practical nature of what do you do with all this information and how does this impact how our clients ultimately sort of best prepare themselves and position themselves and to remain compliant. Meredith, would love to hear just from you kind of to wrap things up, other kind of practical compliance strategies that you have to offer up.

Meredith Auten: Sure. So I think the key that we always say to clients is your compliance program is your best defense. And having a robust and effective compliance program puts you in the best position when the government does come knocking. And there are a couple of things that I think in addition to what Jessica highlighted, practically speaking, that's important to highlight. And one is it's always good to be out in front of the trends. So particularly because we are seeing so much activity in the data mining area, both by the government and, I will say, by relators and their counsel, they are also doing data mining and trying to look for outliers. The more that part of your regular audit plan is to look for any potential coding or diagnosis codes that are starting to pop up as outliers, getting ahead of that and finding out on your own, we may have some outliers and looking and determining, are we OK with the outliers? Is there some reason for them? Getting out in front of it is a good idea because data mining is certainly something that both DOJ and the relators bar are actively looking and using. So we should be using our own data as well to get out in front of it. The other thing I would mention is it's important when you have government audits, you pick audits that are going on, and if issues are raised, important to get out in front of those issues, run those issues to ground. We are seeing more and more referrals from CMS to DOJ on particular issues that came up during these audit processes that they believe could be not only a civil violation, potentially a criminal violation. So any interaction you're having with auditors during that process is a good idea to wrap your arms around what they are seeing, what their findings are, and get your ducks in a row on those because we are seeing more referrals in that area, particularly through the new reconstituted FCA working group that is made up of DOJ, HHS and CMS. The goal of that group is to foster more referrals from HHS and CMS to DOJ on these cases. So those audits are a good sign of where the government might be looking. Again, get out in front of them. 

Morgan Ribeiro: Awesome, well, I think that's a great place to wrap. Appreciate all of the data and the tips and information in this area. It's important to our clients and the work that we do across the firm. I think it's really impressive, the team that we've built here between the two of you being recently added, but just kind of across the country between very experienced litigators, former AUSAs, and I know that that's very valuable to our clients. So appreciate both of you joining me today.