Combatting COVID-19 Fraud

In March 2020, the Department of Justice announced a shift in focus from prosecuting typical healthcare fraud matters to fraud related to the COVID-19 Pandemic. As an illustration of this initiative, the DOJ has established a National Center for Disaster Fraud (NCDF) Hotline and a NCDF Form to report COVID-19-related fraud. Particular focus areas for DOJ include:

  • Price gouging and hoarding of critical supplies;
  • Antibody testing fraud schemes;
  • Unsolicited emails and calls purporting testing, treatments, and vaccines;
  • IRS and treasury scams attempting to steal Emergency Impact Payments and taxpayer information; and
  • Fraudulent Paycheck Protection Program (PPP) Loans.

In a recent case, the DOJ has made it clear that it will not hesitate to bring criminal charges for acts for conduct related to COVID-19 fraud. Earlier this month, the DOJ arrested an individual following an indictment for fraud and introducing a misbranded drug into interstate commerce with intent to mislead. Following an undercover investigation, the individual, who is the president and CEO of Golden Sunrise Pharmaceutical, Inc. and Golden Sunrise Nutraceutical, Inc., was accused of falsely marketing an herbal mixture as an FDA-approved treatment for COVID-19. The mixture, sold by Golden Sunrise Companies and known as “ImunStem” contained olive leaf, yarrow, rosemary, yucca and cassia oil, and was marketed via email, websites and printed material as intended to treat HIV, cancer, hepatitis and COVID-19. Insurance claims for reimbursement of ImunStem were made through United Healthcare, Medicare, and MediCal.

The Indictment further alleges that  the individual made claims that ImunStem was FDA-approved as a prescription drug and received Regenerative Medicine Advanced Therapy (“RMAT”) designation from FDA. In April 2020, months prior to the indictment and arrest, the Federal Trade Commission ordered the individual to cease and desist making any claims related to ImunStem’s efficacy against COVID-19. The indictment charges that in May, the individual advised an undercover investigator to refrain from taking his elderly mother to the hospital and, instead, to use Golden Sunrise products and follow an Emergency-D Virus Plan of Care. Further, the labeling of the product was alleged to be false and misleading which would render the product misbranded under 21 U.S.C. §352(a)(1) and (f)(1).

The indictment and arrest in this case result from a coordinated effort between the Federal Bureau of Investigation, the U.S. Department of Health and Human Services Office of Inspector General, the U.S. Food and Drug Administration, the U.S. Postal Inspection Service, and the California Department of Health Care Services with assistance from the Tulare County District Attorney’s Office and the California Bureau of MediCal Fraud and Elder Abuse.  If convicted, the charged individual faces a maximum statutory penalty of 20 years in prison and a $250,000 fine on the mail fraud counts and three years in prison and a $10,000 fine on the misbranding counts. It must be noted that the indictment is only an allegation of wrongdoing and the entities and individuals involved are presumed innocent until proven guilty.

How Frier Levitt Can Help

Frier Levitt represents practitioners and healthcare entities in defending allegations brought by the government pertaining to fraud in the healthcare space, including fraud alleged by the DOJ’s recent initiatives. If you have implemented practices that bear on the screening, treatment, or prevention of COVID-19, contact Frier Levitt today to ensure that you have done so compliantly.

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