Behavioral Health Industry Saw ‘Marked Uptick’ in FCA Settlements in FY 2020

Whistleblower lawsuits filed under the False Claims Act (FCA) were up last fiscal year, with the increase hitting the behavioral health industry especially hard.

Those are just a couple takeaways from Bass, Berry & Sims’ recent 2020 Healthcare Fraud & Abuse Review. The law firm publishes the report annually to document health care fraud and abuse trends across the nation.

The Department of Justice (DOJ) data highlighted in the report confirms what sources have been telling Behavioral Health Business for months: Given the increase in federal attention and funding for the behavioral health industry, providers in the space are more vulnerable to federal investigations and enforcement actions than ever before.


That’s further evidenced by the number of settlements in the space last fiscal year.

“There was a marked uptick in FCA resolutions involving behavioral health and substance abuse treatment providers and related individuals,” the authors of the review wrote. “Many of the settlements resolved allegations related to inflating bills for services rendered.”

Three such examples include Preferred Family Healthcare, which agreed to pay $6.5 million; Tree of Life, Inc., which agreed to pay $1.65 million; and East Tennessee Recovery, which agreed to pay $530,000.


Meanwhile, one of FY 2020’s largest settlements was also in the behavioral realm. In July, Universal Health Services, Inc., UHS of Delaware, Inc. and an affiliated facility agreed to pay $122 million to resolve a number of FCA allegations.

It’s worth noting that many providers hit with government audits could be forced to settle rather than ride out the lengthy legal process for financial reasons. Plus, even the most ethical, well-intentioned provider can be hit with an audit — all it takes is one disgruntled employee turned whistleblower. 

Across all areas of health care, there were 672 qui tam lawsuits filed under the FCA in FY 2020, according to the Bass, Berry & Sims report. In qui tam suits, whistleblowers can receive a portion of any recoveries in return for helping the prosecution. Last fiscal year, the total amount paid to those whistleblowers across all sectors was about $309 million, according to the Bass, Berry & Sims report.  

Behavioral health providers must take the financial incentives associated with whistleblowing seriously, according to Asher Funk, a shareholder at the law firm Polsinelli who previously connected with BHB to discuss the rise of enforcement actions in behavioral health.

“The incentives given to private whistleblowers or relators to the False Claims Act are absolutely staggering,” Funk told BHB. “The fact that … someone within an organization can observe what they perceived to be fraud against the government and bring an action in the name of the government … and ultimately receive a substantial portion of any recovery — you just can’t underestimate the power of that.”

As such, it’s important for behavioral health providers to have a solid compliance plan in place and to make employees with complaints feel heard. 

In addition to qui tam lawsuits, FY 2020 also saw 250 new non-qui tam civil fraud lawsuits within health care — a jump of more than 100 such suits from FY 2019. 

Overall, health care organizations paid a total of $1.8 billion in recoveries during the fiscal year ended September 30, 2020. A year earlier, in FY 2019, that number was more than 44% higher, coming in at $2.6 billion.

Companies featured in this article: