On Sept. 1, 2020, in an effort to curb the devastating financial impact of COVID-19 on assisted living communities, the U.S. Department of Health and Human Services announced that such facilities would be eligible to apply for emergency funding under the Coronavirus Aid, Relief, and Economic Security (CARES) Act’s Provider Relief Fund. Then, on Sept. 10, 2021, HHS released more than $25 billion in new relief for healthcare groups, including assisted living communities. Although welcome news for assisted living operators, as the history of congressional relief programs demonstrates, organizations availing themselves of such emergency funds also must accept the significant compliance “strings” attached to economic assistance. 

For example, since its creation in 2008, the Special Inspector General for the Troubled Asset Relief Program, or TARP, a federal assistance program established to aid financial institutions, has obtained criminal convictions of more than 350 individuals and recovered more than $11 billion in assets as a result of the failure of certain organizations to abide by TARP’s compliance obligations. For assisted living communities improperly using CARES Act funds, the Special Inspector General for Pandemic Recovery, or SIGPR, may well follow suit.

In fact, this year, U.S. Attorney General Merrick Garland created the COVID-19 Fraud Enforcement Task Force with the mandate to “use every available federal tool — including criminal, civil and administrative actions — to combat and prevent COVID-19 related fraud.” Highlighting this enforcement focus, on Sept. 17, the Health Care Fraud Unit of the Department of Justice, in coordination with HHS, announced criminal charges against 138 defendants in various healthcare fraud schemes — many related to the pandemic — that resulted in more than $1.4 billion in alleged losses.

Given increased scrutiny on the healthcare industry and CARES Act funding recipients, each assisted living community must ensure that its compliance program is functioning properly or risk exposure to government inquiry and, in some cases, enforcement. The silver lining is that, with a properly scoped and updated risk assessment, and tailored compliance program enhancements, enforcement risks can be mitigated. Here are six keys to keep in mind.

1. Conduct a fresh risk assessment

Operators, in coordination with legal and/or compliance teams, should update each assisted living community’s latest risk assessment, with a focus on shoring up fraud detection measures designed to enhance compliance capabilities for targeting the improper receipt and/or usage of CARES Act funds.

2. Establish compliance standards and controls

Assisted living communities also should establish clear compliance policies, procedures and processes customized to the allocation of CARES Act funding. Those standards should address and detail key functions and operations including, but not limited to:

  • How funds will be spent;
  • The employees making funding and expenditure decisions;
  • The institutional controls used to oversee and document those decisions;
  • The proactive record-keeping measures to be used; and
  • The individual(s) responsible for adherence to CARES Act policies and requirements.

3. Provide training

Compliance policies generally only are as effective as the officers and employees who understand, appreciate and enforce them. As such, once a comprehensive set of standards and controls related to the CARES Act are established, those charged with executing and abiding by them should be trained regularly on both the policies and the related regulatory developments.

4. Know your regulator

When applying for, receiving and spending Provider Relief Funds under the CARES Act, it is vital that assisted living communities understand the terms and conditions associated with those funds, including potential False Claims Act liability, and the regulators with whom assisted living communities will be required to interact. Although assisted living communities will be most familiar with the Office of Inspector General for HHS, the federal agencies charged with oversight responsibilities of CARES Act also include the DOJ, the Treasury Department and the Labor Department, as well as various state and local agencies.

5. Monitor compliance and report misconduct

In addition to establishing policies addressing CARES Act funds, assisted living communities should continually monitor compliance with these standards. This active monitoring should include government reporting and disclosure obligations, the process by which individuals may raise/report allegations of misconduct within the assisted living community, and routine testing of compliance program efficacy.

6. Track enforcement trends and guidance

Enforcement of CARES Act compliance is a rapidly evolving arena and, as such, assisted living communities must actively monitor enforcement trends and guidance from regulators. Doing so will allow operators to refine compliance programs to ensure that they are adapting to the developing regulatory landscape.

John P. Cunningham is a shareholder in the White Collar, Compliance & Investigations group at Buchanan Ingersoll & Rooney. He concentrates his practice on corporate compliance, internal and government investigations, and white collar defense. He advises clients on a broad range of compliance, regulatory and criminal concerns, representing companies before the Department of Justice, the FBI, the Department of Health and Human Services, the Food and Drug Administration, the Securities and Exchange Commission, the Financial Crimes Enforcement Network, the Office of Foreign Assets Control and other agencies. He has extensive enforcement experience, having served as a prosecutor with the DOJ and an investigator for the criminal division of the FBI.

The opinions expressed in each McKnight’s Senior Living guest column are those of the author and are not necessarily those of McKnight’s Senior Living.