Criminal Charges Brought in COVID-Related Fraud

Betty Q. Hixson

The Department of Justice and the US Attorney offices around the country are continuing to be in hot pursuit of cases of fraud related to the COVID-19 pandemic. On April 20, 2022, the Department of Justice announced a new round of criminal charges against 21 defendants in nine federal districts across the United States for their alleged participation in various health care-related fraud schemes related to the COVID-19 pandemic resulting in over $149 million in false billings. Newly appointed Director for COVID-19 Fraud Enforcement, Kevin Chambers, announced these charges, noting the “scale and complexity” of the schemes and the vast interagency effort to prosecute them.  In the two years since the pandemic began, over 1,000 defendants have been criminally charged with alleged losses exceeding $1.1 billion and there are civil investigations into more than 1,800 individuals and entities for alleged misconduct related to pandemic relief loans totaling more than $6 billion. The wide-ranging nature of the charges announced on April 20th is illustrative of the government’s relentless effort to discover all individuals and entities who sought to take illegal benefit of the pandemic at the expense of others.

In one of the first federal responses to the pandemic’s financial impact, the Coronavirus Aid, Relief, and Economic Security (CARES) Act, the government created multiple sources of funds for affected individuals and businesses, including the Provider Relief Fund (PRF). The PRF was intended to provide financial assistance to medical providers to maintain necessary medical care for Americans suffering during the pandemic. The program went almost a year without seeing criminal prosecution, compared to 500 other COVID-related indictments. In February 2021, the first PRF indictment was announced related to a woman who never operated a health care company during the pandemic and instead stole the funds for personal use. These latest charges announced by the DOJ include two defendants also accused of misappropriating PRF funds, bringing the total cases so far to ten defendants with three who have already pleaded guilty.

In addition to continued enforcement relating to CARES Act funding, agencies all over the United States have been involved in counteracting evolving scams aimed at taking money and information from consumers left vulnerable during the pandemic. Several of the recent charges announced involve defendants who allegedly offered COVID-19 testing to induce patients to provide their personal identifying information and a saliva or blood sample. The defendants are alleged to have then used the information and samples to submit false and fraudulent claims to Medicare for unrelated, medically unnecessary, and far more expensive tests or services. Some of the proceeds of these fraudulent schemes were allegedly laundered through shell corporations in the United States, transferred to foreign countries, and used to purchase real estate and luxury items.

While these early cases may have targeted the more obvious frauds, the expectation is that the DOJ will eventually turn its focus on more complex and sophisticated schemes. As Assistant Attorney General Kenneth A. Polite, Jr. of the Justice Department’s Criminal Division said, “today’s enforcement action sends a clear message that we will stop at nothing to root out COVID-19 related health care fraud wherever it may be found.”  As such, those involved in the health care industry should carefully review and evaluate any involvement with COVID-19 related programs including reviewing the receipt of PRF funds and Paycheck Protection Program (PPP) money to ensure compliance with the conditions of each program.

© Polsinelli PC, Polsinelli LLP in California
National Law Review, Volume XII, Number 115

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