COVID-19 PPE Fraud Litigation Defense
Personal protective equipment (PPE) continues to be in high demand during the COVID-19 crisis. Federal authorities are using their authority to make sure that critical PPE is available, and this includes taking aggressive action against PPE fraud.
Among the many storylines that have taken center stage in the media during the COVID-19 pandemic, one of the most-surprising for many was the limited availability of personal protective equipment (PPE) in the United States, particularly for healthcare providers. When the media reported massive shortages of face masks, face shields, aprons, and even plastic gloves, many people were shocked to learn just how ill-prepared the nation was to combat an outbreak of this scale.
As a result of the PPE shortages, President Trump invoked the Defense Production Act (DPA), and all types of companies began scrambling to produce PPE that could be supplied to healthcare providers, and the public at large, across the country. These efforts also made headlines, and many companies were lauded for doing their part to fight the COVID-19 crisis.
But, the PPE shortage had another consequence as well: It led to a number of companies and individuals engaging in fraud involving PPE, and this in turn led to close scrutiny of the PPE supply chain as a whole at the federal level. Subsequently, the U.S. Department of Justice (DOJ) filed charges in several cases, and in April 2020 the DOJ announced that it is continuing to closely monitor companies that manufacture, sell, and resell PPE. Quoting Attorney General William Barr and U.S. Department of Health and Human Services (DHHS) Secretary Alex Azar, the DOJ’s announcement states:
“‘If you are amassing critical medical equipment for the purpose of selling it at exorbitant prices, you can expect a knock at your door. . . . The Department of Justice’s COVID-19 Hoarding and Price Gouging Task Force is working tirelessly around the clock with all our law enforcement partners to ensure that bad actors cannot illicitly profit from the COVID-19 pandemic facing our nation.’
“‘Cracking down on the hoarding of vital supplies allows us to distribute this material to the heroic healthcare workers on the frontlines who are most in need.'”
What Constitutes PPE Fraud During the COVID-19 Crisis?
While hoarding PPE is one form of fraud that is high on the DOJ’s and DHHS’s radar, there are various other forms of PPE fraud that can lead to charges against companies and their owners and executives as well. Our federal defense attorneys are available to represent businesses and individuals in civil and criminal cases involving allegations such as:
1. Hoarding and Price Gouging PPE
Although there is not a federal statute that specifically outlaws hoarding and price gouging, various laws can be used to prosecute companies and individuals that engage in these activities with regard to PPE during the COVID-19 pandemic. When federal authorities find evidence that PPE is being hoarded illegally, they have the power to immediately seize the equipment under the DPA, and then the alleged illegal actors can subsequently be prosecuted in federal district court.
2. Making False or Misleading Claims about the Effectiveness of PPE in Protecting Against COVID-19
Another form of PPE fraud involves making false or misleading claims about the effectiveness of the equipment in protecting against COVID-19 exposure. For example, if a face mask or face shield is marketed as providing “complete protection” when in reality wearers could still be exposed to the virus, then this could lead to prosecution under the Federal Trade Commission Act (FTC Act) and other federal laws. Even if a marketing claim is accurate, if a company does not have evidence to substantiate the claim at the time it was made, this too can lead to federal prosecution.
3. Selling Ineffective “PPE”
There have also been some cases of companies selling PPE that is not actually effective in protecting the individuals who wear it. Selling ineffective “PPE” can be extremely dangerous, as it not only exposes the individual who wears the ineffective equipment, but it also exposes patients and others with whom the wearer come in contact. Due to the significant risks involved, cases involving sales of ineffective personal protective equipment tend to be heavily prosecuted with substantial penalties on the table.
4. Making Fraudulent Representations in Order to Secure PPE Contracts
Making fraudulent representations in order to secure PPE contracts with hospitals, other private companies, and government agencies is another form of fraud that can lead to civil litigation and the potential for criminal prosecution at the federal level. This includes fraudulent representations regarding the ability to deliver a specific quantity of PPE or to deliver PPE within a specified timeframe, the quality of PPE, minority ownership, insurance coverage, and other material contract terms.
5. Collecting Payment for PPE that is Not Actually Delivered
Companies can also face fraud allegations for failing to deliver PPE but then still collecting payment. Many of these cases involve intentional fraud schemes, although these types of allegations can arise in connection with legitimate business transactions as well. When accused of fraudulently collecting payment for PPE, companies must develop and execute custom-tailored defense strategies that take full advantage of any and all contractual and other defenses that are available.
6. Delivering PPE of a Lower Quality than That Promised in a Procurement Contract
Delivering PPE of a lower quality than that promised in a procurement contract is commonly referred to as “bait and switch,” and it is a legitimate complaint in some cases. However, disputes regarding the quality and effectiveness of the PPE to be delivered under a contract can arise for various reasons, and in many cases defending against fraud allegations will be a matter of relying on the relevant provisions of the parties’ agreement to show that the equipment delivered is sufficiently compliant.
7. Fraud Targeting Medicare, Medicaid, and Other Federal Healthcare Benefit Programs
For healthcare providers and PPE suppliers that bill Medicare, Medicaid, and other federal healthcare benefit programs, billing mistakes (as well as intentional overbilling) can lead to potentially-costly allegations of PPE fraud. Common allegations in Medicare and Medicaid billing fraud cases include upcoding, unbundling, billing for medically-unnecessary equipment, double-billing, and billing for PPE that is not actually purchased or delivered.
8. Fraud Targeting Private Insurance Companies
Similar to PPE fraud involving reimbursement requests submitted to Medicare, Medicaid, and other federal payors, healthcare providers and PPE suppliers can also face federal investigations for fraudulently billing private health insurance companies. The federal insurance fraud statutes impose criminal penalties for individuals who engage in unlawful billing practices, and penalties can include substantial fines and years or decades behind bars.
9. Consumer Fraud Scams
In addition to fraud targeting federal healthcare benefit programs, insurance companies, and other businesses, federal authorities are also aggressively prosecuting cases of PPE fraud targeting consumers. This includes scams involving false and misleading claims about the risks of COVID-19 exposure and the benefits of PPE, as well as advance payment scams in which companies collect payment from consumers and then never deliver the face masks or other protective equipment that the consumers ordered.
10. Mail Fraud, Wire Fraud, and Conspiracy Involving PPE
Finally, in addition to facing charges for insurance fraud, healthcare fraud, FTC Act violations, and other specific fraudulent acts, individuals charged with PPE fraud can face additional criminal charges as well. Mail fraud and wire fraud charges are commonly added to criminal prosecutions, and the breadth of the federal conspiracy statute allows multiple related or unrelated parties to be charged in connection with a single fraudulent act. Money laundering, tax evasion, and other charges are also common, and even “unsuccessful” efforts to defraud consumers, businesses, or the federal government can lead to charges for criminal attempt.
What to Do if You are Under Federal Investigation for PPE Fraud
Given the risks of facing PPE fraud allegations at the federal level, companies and individuals that are being targeted in DOJ, FBI, and other federal agency investigations must take swift action to protect themselves. Among other things, this means avoiding direct communications with federal agents, and it means engaging experienced federal defense counsel right away. At Oberheiden P.C., our federal attorneys and former federal agents are advising clients across the country during the COVID-19 crisis, and we have a proven record of success defending clients during high-stakes federal investigations.
When you engage Oberheiden P.C. for your federal COVID-19 PPE fraud case, your litigation defense team will:
- Promptly intervene in the government’s investigation
- Conduct a privileged internal investigation in order to identify defenses and assess risk exposure
- Develop a comprehensive and cohesive defense strategy
- Work diligently to secure a favorable outcome without formal charges being filed
- Take all additional steps necessary to protect you and your company against devastating penalties
Speak with a Federal PPE Fraud Defense Lawyer at Oberheiden P.C. in Confidence
Could you be at risk for federal civil or criminal prosecution for PPE fraud? To discuss your case with a senior federal PPE fraud defense lawyer at Oberheiden P.C. in confidence, call 888-680-1745 or request a free case assessment online now.