DOJ Targets Executives for Healthcare Fraud, Seeks Cooperation of Corporations

This spring, the Department of Justice (DOJ) has gone on the offensive in a series of public speeches before bar associations concerning the DOJ’s emboldened and proactive approach to the investigation and prosecution of healthcare fraud against both individuals and corporations.  Given that the DOJ is ramping up its efforts to combat healthcare fraud, seeking hefty prison sentences, and actively prosecuting not only individual doctors but corporate health systems, practitioners and providers of all sizes must take the opportunity to ensure that they are in compliance with the multitude of federal fraud-related healthcare statutes, including the False Claims Act, the Stark Law, and the Anti-Kickback Statute.

In remarks given at the American Bar Association’s 25^th Annual National Institute on Health Care Fraud last month, Assistant Attorney General Leslie R. Caldwell, head of the DOJ Criminal Division, provided insight into the ever-evolving landscape of healthcare fraud prosecutions.  More specifically, Ms. Caldwell stated that the DOJ has come “a long way” since the days where prosecuting healthcare-related crimes were reactive and wherein the Centers for Medicare and Medicaid Services (CMS) maintained control of the health care billing and other data and prosecutors were forced to wait for CMS to refer cases to the DOJ.

Ms. Caldwell noted that in 2007, the Medicare Fraud Strike Force was created, placing prosecutors and federal law enforcement at the forefront of investigating and prosecuting, and striking a proactive stance against, healthcare fraud.  Ms. Caldwell suggested that the biggest precipitator of the DOJ’s move to proactively combatting healthcare fraud is that now, rather than relying on CMS data, the DOJ has near-real-time access to the data.  Such access to data allows the DOJ to bring cases more quickly, but, perhaps more importantly, allows the DOJ to identify fraud schemes as they emerge as well as to identify previously-unknown types of fraud schemes.

Nevertheless, Ms. Caldwell lamented that despite recent successes, “Medicare fraud remains a serious drain on our health care system.  In fiscal year 2014, the Justice Department recovered over $3 billion of fraudulent Medicare billings through civil, criminal and administrative actions.”

Ms. Caldwell suggested that in the past, billing Medicare for services which were not provided was the primary healthcare fraud scheme being perpetrated.  However, she describes the latest “frontiers” in fraud “in areas including Medicare Part D, laboratory services, hospital-based services and hospice care.”

More importantly, Ms. Caldwell stated that the DOJ will continue to focus on prosecuting fraud perpetrated by individual physicians, home health care providers, pharmacy owners and medical supply company executives, but emphasized the DOJ’s apparently newly-discovered interest in investigating and prosecuting fraud in “corporate boardrooms and executive suites.”  She stated that in 2014, the DOJ had only a few open corporate investigations, however, as of late last month, there are a dozen active corporate investigations and the “DOJ is steering additional prosecutorial resources to this area.”

Notwithstanding, Ms. Caldwell suggested that the DOJ, in applying the Principles of Federal Prosecution of Business Organizations (the FILIP factors) which are applied in general corporate prosecution matters, will still be applied in corporate healthcare fraud prosecutions, and in particular, that corporations may minimize the effects of a prosecution if they fully cooperate with the DOJ.  Ms. Caldwell noted, however, that simply producing documents in response to a grand jury subpoena will not result in the DOJ agreeing to credit for corporate cooperation, rather “companies seeking credit for cooperation must conduct a thorough internal investigation and turn over all available evidence of wrongdoing to our prosecutors in a timely and complete way. And that evidence must include information about the individuals who committed the crimes, no matter how high those individuals might have been on the corporate ladder.”  More generally, she stated that “[c]ooperation means that a corporation has made an affirmative effort to investigate potential wrongdoing, and that it has turned over the facts uncovered during that investigation in a timely way to our prosecutors.”

Ultimately, healthcare providers of all sizes must be aware that given the DOJ’s, and its federal law enforcement partners’, real-time access to CMS data, and apparent mandate from the White House, federal prosecutors are stepping up the investigation and prosecution of healthcare fraud.  As made clear in Ms. Caldwell’s speech, executives and the corporations they manage are subject to the DOJ’s anti-fraud push, and are presently a prime target for the DOJ.  While the DOJ has indicated that cooperation may serve to minimize certain penalties against a corporation, the DOJ has made clear that cooperation involves thoroughly assisting the DOJ’s prosecution as well as ensuring that all wrongdoers are held accountable – not only those low on the corporate ladder.  Again, given the DOJ’s public pronouncements of its intent to proactively investigate and prosecute all manners of healthcare fraud, all healthcare providers must review and ensure their compliance with applicable federal healthcare statutes.

Questions regarding this article may be sent to Publications@Capehart.com.