The government’s continued dedication of resources to investigating and prosecuting fraud against COVID-19 pandemic relief programs appears to have borne fruit according to the results of the COVID-19 Fraud Enforcement Task Force’s (CFETF) report released on April 9, 2024. The CFETF, which represents a concerted effort across numerous federal agencies to investigate pandemic-related fraud, has, according to its 2024 report, succeeded in prosecuting over 3,500 defendants in criminal enforcement matters, in bringing civil enforcement actions resulting in more than 400 civil settlements and judgments, and in securing more than $1.4 billion in seizures and forfeitures. The report itself is a showcase of the CFETF’s COVID-19 fraud enforcement efforts to date.

Despite the CFETF’s apparent success, however, the report begins with a plea from the CFETF for legislation that would increase its total funding and simultaneously extend the statutes of limitations for all COVID-19 fraud related offenses. On the same date of the report’s release, Senators introduced a sweeping billion-dollar legislation package to fuel the government’s pandemic fraud fighting efforts and raise the statute of limitations on pandemic unemployment insurance fraud and the White House released a fact sheet detailing the Biden Administration’s proposals related to investigation of pandemic fraud. Chief among the President’s proposals is the enactment of several bills, some of which would meet the CFETF’s requests.

The 2024 COVID-19 Fraud Enforcement Task Force Report

Although the CFETF’s request for assistance is, on its face, general in nature, reading through the report it appears that the CFETF may be concerned with its ability to operate within budgetary and statutory constraints to investigate the newly opened 1,200 civil fraud matters related to multiple pandemic-related programs. According to the report, over half of these matters are qui tam cases. The Department of Justice (DOJ) Civil Fraud Section observed a steady increase in pandemic fraud actions filed under the False Claims Act year-over-year from 2020 through 2023. “Combined with the growing number of investigative leads developed through data analytics, the Civil Fraud Section anticipates that civil pandemic fraud enforcement will continue to require substantial resources for years to come.” We have noted previously how the wave of civil pandemic fraud enforcement that we expected has not yet publicly materialized, and the report offers a glimpse as to why.

One potential reason for the slower resolution of pandemic-related civil enforcement actions may be the underlying complexity of the schemes that the DOJ has chosen to pursue beyond the many criminal cases prosecuted to date involving receipt of pandemic fraud funds to which the recipient is not entitled (but subsequently spends on various luxury items). For example, the CFETF’s report includes examples of particularly nuanced theories of pandemic-related fraud. In one instance, the DOJ Tax Division, along with the U.S. Attorney’s Office for the District of New Jersey, charged a defendant with preparing more than a thousand false tax returns seeking tens of millions of dollars in refunds based on the Employee Retention Credit and the COVID-related Sick and Family Leave Credit. The report notes how the Tax Division has implemented a nationwide training program and assigned trial attorneys to COVID-19 fraud strike forces to assist with the development and prosecution of such fraud cases.

Another example of the escalating complexity of COVID-19 fraud prosecutions can be seen in DOJ’s investigations related to the submission of false claims to Medicare for medically unnecessary respiratory pathogen panels (RPPs) paired with COVID testing. Although prior prosecutions have focused on pursuing criminal convictions for allegedly medically unnecessary RPP testing performed in conjunction with COVID testing, a recent criminal plea and civil settlement against a Georgia laboratory owner demonstrates how the prosecution of these matters may be evolving. According to the settlement, independent contractor sales representatives forged physician signatures on requisition forms, added sham diagnosis codes that distorted the medical condition of the seniors for whom providers had ordered COVID testing, and fraudulently added RPP testing to COVID testing orders in exchange for volume-based commissions payments from co-defendants. Defendants knowingly submitted or caused the submission of false or fraudulent claims to Medicare, Medicaid, the Health Resources and Services Administration, TRICARE, and the Railroad Retirement Medicare Program for medically unnecessary RPPs tainted by volume-based commissions prohibited by the Anti-Kickback Statute. 

The difficulty faced by investigators is that as the complexity of the alleged fraud schemes grow, so too do the time and resources needed to investigate those schemes. Despite the government’s apparent success in prosecuting COVID-19 fraud, given their plea for additional funding and extended statutes of limitations, the government appears concerned that it may be unable to successfully prosecute pandemic fraud schemes without more time and money.

Proposed COVID-19 Fraud Legislation

Fortunately for pandemic-fraud investigators, the White House, along with a bipartisan group of legislators, have put forth several proposals that, if enacted, would further support the investigators’ efforts.

On April 9, 2024, Senators Gary Peters (D-MI), Dick Durbin (D-IL), and Ron Wyden (D-OR) introduced a comprehensive anti-fraud proposal, largely modeled on the Biden Administration’s anti-fraud proposal included in the White House FY 2025 Budget. The bill, whose text has yet to be released by the Senators as of this writing, would, among other things: 

• Provide $300 million to triple the amount of COVID-19 Fraud Strike Force teams created by the DOJ. According to the CFETF’s report there are currently five – based in California, Colorado, Maryland, New Jersey, and Florida.
• Increase the Program Fraud Civil Remedies Act (PFCRA) cap to $1 million from $150,000. The PFCRA allows federal agencies to initiate administrative proceedings on claims of $150,000 or less, when the DOJ might not otherwise pursue these smaller claims for enforcement via the False Claims Act. According to the White House, the increase would “ensure that all remedies are available to recapture large, six figure fraud that might otherwise fall below the prioritization threshold for prosecution.”
• Provide $250 million to the Small Business Administration and Department of Labor (DOL) Offices of Inspectors General, allowing the DOL to hire long-term investigators to pursue special cases of organized pandemic fraud.

Another piece of legislation introduced in the Senate includes the bipartisan proposal put forth by Senate Finance Committee Chair Ron Wyden (D-OR) and Ranking Member Mike Crapo (R-ID) that would, among other things, raise the statute of limitations for pandemic unemployment insurance (UI) fraud from 5 years to 10 years. The Wyden-Crapo proposal is similar to the “COVID–19 EIDL Fraud Statute of Limitations Act of 2022” and the “PPP and Bank Fraud Enforcement Harmonization Act of 2022,” that extended the statute of limitations for the prosecution of Economic Injury Disaster Loan and Paycheck Protection Program fraud, respectively, to ten years.

Conclusion

It is unclear which, if any, of the above legislation will be enacted into law. But given the plea of the CFETF in its report, there is a possibility that without additional resources investigators may need to pull back on the number of fraud cases they can investigate and eventually resolve. If the proposals put forth are enacted, and the CFETF’s requests are met, then we could expect to see the number of COVID-19 fraud prosecutions not only continue, but potentially skyrocket. Given the estimates of over $300 billion in fraud on pandemic relief programs thus far and the over $1.4 billion in fraudulently obtained CARES Act funds recouped by the CFETF, the $300 million proposal appears to be a worthwhile investment.