The Trump administration’s aggressive pursuit and enforcement of healthcare fraud cases as a central part of its white collar crime agenda has reached the Southeast, with recent significant actions by the Department of Justice in North Carolina and South Carolina.
By way of background, last summer the administration established a cross-agency DOJ-HHS False Claims Act Working Group committed to ferreting out abuse of government funds in the healthcare sector. And on January 8 of this year, the Justice Department added a new, ninth division to the agency — the National Fraud Enforcement Division — to emphasize its focus on government waste. On the heels of that announcement, the department also declared reaching nearly $6.8 billion in settlements and judgments in fiscal year 2025 under the False Claims Act (FCA), the primary federal law to pursue government-related fraud. Of that money, over $5 billion was related to healthcare fraud cases.
Businesses and providers in the Carolinas have been targets of such enforcement efforts. This past December, the United States Attorney for the Eastern District of North Carolina announced that the state’s largest behavioral health practice — Mindpath Care Centers, North Carolina, PLLC — agreed to a $1.9 million settlement for false Medicare billing. Mindpath settled the False Claims Act case brought by the United States alleging the company “systematically billed for fraudulent Psychotherapy treatments, without required documentation of the separate time and Psychotherapy treatments of patients to maximize their profits, all in blatant disregard of Medicare billing requirements … [and] failed to adequately correct problems repeatedly raised by Mindpath employees[.]”
The False Claims Act is a powerful civil enforcement tool for the government to use. The law imposes triple damages (i.e., three times the amount of alleged harm) and can add a penalty of up to $28,000 per false claim filed with the government. In other words, that penalty can be applied for every single knowingly unjustified invoice a healthcare entity might submit to the government for reimbursement — hence damages can easily run into the millions of dollars. And the government often relies on whistleblower provisions in the law to entice employees or others who have witnessed potential wrongdoing by a promise of rewarding them with a portion of the recovery, as well as the fees and costs of the lawyer representing the whistleblower.
This is just part of the government’s arsenal. In addition to these civil financial penalties, often parallel criminal and administrative actions for the same conduct could result, for example, in convictions for a company or employees, and/or debarment from future receipt of funding from government programs.
One such parallel enforcement action was closed just last month, when the U.S. Attorney for the District of South Carolina announced that the clinical laboratory LTD Holding LLC, along with its founder and CEO Joseph Labash, agreed to pay $6.8 million to settle civil kickback allegations. The corporation, LTD Holding LLC, also pled guilty to five counts of violations of the criminal Anti-Kickback statute. The criminal charging documents said that the lab company paid third parties for every patient referred to them, for whom the lab then turned around and billed Medicare for services.
It is clear that companies and organizations who operate in regulated environments such as the healthcare industry and who receive federal funding should evaluate their compliance programs and reporting mechanisms before federal agents come knocking at their door with a warrant. This administration clearly will not hesitate to do so.
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