When U.S. Attorney’s Office Comes Knocking: What’s a Provider to do?

Linda Dale Hoffa, JD Dilworth Paxson, LLP

Renee H. Martin, JD, RN, MSNDilworth Paxson, LLP

A Limited Liability Partnership Formed in Pennsylvania1500 Market Street Suite 3500E Philadelphia, PA 19138 215-575-7000 fax: 215-575-7200

www.dilworthlaw.com Philadelphia, PA Cherry Hill, NJ Harrisburg, PA Washington, DC Wilmington, DE New York, NY

Healthcare Fraud (HCF) Investigations and Prosecutions

Who has jurisdiction in HCF?

Current law enforcement trends in HCF

How are the HCF investigations begun and what tools does law enforcement use?

What’s the difference between a civil case and criminal? What’s a parallel investigation?

What turns a HCF case from a civil matter into a criminal case?

Increased Oversight by Gov’t & DOJ’s Yates Memo

How to best protect your company

What is Fraud?

Simply a lie, trick, misrepresentation or omission to get something you are not entitled to have (money or some benefit).

Typical HCF - false billing (e.g., billing for services not rendered as billed for, or billing for unnecessary medical tests or procedures), kickbacks and bribes for referring patients or procedures, obstructing a Medicare or Medicaid audit, false statements in a health care matter.

Big priority for DOJ & for the AG’s.

Usually DOJ takes the lead in HCF prosecutions –but works with states –

Often through Medicaid Fraud Control Units (MFCUs)

MFCUs investigate and prosecute Medicaid provider fraud, as well as patient abuse or neglect in health care facilities, and in board and care facilities

How do the feds structure their HCF investigations?

93 U.S. Attorney Offices – 93 U.S. Attorneys running their own offices and they can do their own investigations/prosecutions. No DOJ approval needed to bring a HCF case civilly or criminally.

BUT DOJ Main Justice – plays an important coordinating role DOJ created around 2007 Medicaid Fraud Strike

Forces

in Baton Rouge, LA, in Houston, TX, in Los Angeles, CA, in Brooklyn, NY, and Miami, FL

Medicare Fraud Strike Force teams

each team brings the investigative and analytical resources of the FBI and HHS-OIG and the prosecutorial resources of the Criminal Division’s Fraud Section and the United States Attorney’s Office (USAO) to analyze data obtained from CMS and bring cases in federal courts.

DOJ reports that it uses cutting edge data analysis techniques to identify massive fraud cases.

So what tools are used to find these cases to investigate?

Data-driven law enforcement – look for outliers, spikes, changes, can track

relationships/associations/track money trails/track communications.

Use informants and whistleblowers – rewards for being a “relator” in a FCA.

Regulators / agency referral / other law enforcement agency referrals

Hotlines and anonymous tips

Media reports

Competitors complaints

What federal statutes are used?

Civil

False Claims Act (FCA) - main civil tool used by feds and states (note: in PA – no FCA here).

Criminal

Many statutes – mostly wire and mail fraud (18 U.S.C. 1341 and 1343), health care fraud (18 U.S.C. 1347) and attempt or conspiracy to commit health care fraud, and conspiracy to defraud the US (18 U.S.C. 371)

Current law enforcement trends

HCF remains one of DOJ’s priorities

Two huge takedowns just this summer

301 defendants in 36 federal districts with $900M in false billing (most defendants ever charged at one time) – brought in June 2016.

$1B HCF scheme in Miami – largest single criminal HCF case ever brought by DOJ – again with data driven technology.

Other examples

What’s the difference between civil and criminal cases in HCF?

In CIVIL cases the violators are NOT exposed to the possibility of incarceration

They face FINES; DEBARMENT; and gov’t has authority to impose OVERSIGHT CONDITIONS to ensure lawful conduct to prevent future violations –

(CIA: corporate integrity agreements).

What’s a parallel investigation?

civil and criminal sides work together

share information and resources/coordinate the timing and strategies of an investigation, provided grand jury secrecy is protected and not shared with civil side.

Big push for all HCF to be treated as parallel investigations at DOJ

What are the implications for this?

Criminal AUSA is being told about your civil investigation every step of the way.

What turns a civil case into a criminal case

Variety of factors.

The more egregious the conduct (greater the harm and the more vulnerable the victims), the more clear-cut, the more systemic, sustained, long-term the violations are the more likely it will be criminal.

Important to understand that what starts out as a regulatory matter can turn into a criminal case.

Investigative tools

Civil tools

Criminal tools

And how they differ and how they overlap

Criminal Corporate liability

NY Cent. & Hudson River RR Co. v. United States (1909).

US Supreme Court held in 1909 that corporations can be criminally responsible for crimes of its employees under a respondeat superior theory IF AND ONLY IF employee was acting within scope of his/her employment for the benefit (or partial benefit) of the corporation.

Reason for ruling: because of need for corrective justice.

Problem, what if employer has done all things it can possibly do to prevent such wrongdoing? And what if company has done all it can to maintain an ethical corporate structure?

DOJ policy on prosecuting business organizations

Prosecutor discretion

DOJ policy – corporations should be treated same as individuals plus -

9 additional factors

Game changer: Yates memo, Oct. 2015

Increased Oversight & Enforcement of Medicaid Managed Care Fraud

Managed Care Final Rule Published April 2016

Major Goal – increase transparency and program integrity in Medicaid State Plans and MCO level

Focus on program integrity & intensify enforcement of potential fraud & abuse

Enhanced performance standards applied equally in all states

Increased Oversight & Enforcement of Medicaid Managed Care Fraud

New Twist – management & leadership of MCO plans & providers more vulnerable Yates memo- “all attorney’s across DOJ are to be

consistent in best efforts to hold accountable individuals responsible for illegal corporate conduct”

Increased Oversight & Enforcement of Medicaid Managed Care Fraud

After Yates Memo – DOJ Criminal Division created new position of Compliance Counsel to provide expert guidance to prosecutors to assist is decision of whether to prosecute

Key factor in changing business enterprises is the existence & effectiveness of corporate compliance program

Has the organization taken meaningful remedial action to prevent, detect fraud, waste & abuse

7 elements up to date actually addressing, preventing, detecting & reporting fraud, waste & abuse

7 Elements of Compliance Plan

Develop written policies and procedures

Designating a compliance officer and compliance committee

Conducting effective training and education

Developing effective lines of communication

Conducting internal monitoring and auditing

Enforcing standards through well-publicized disciplinary guidelines

Responding promptly to detected problems and undertaking corrective action

What is Compliance Counsel looking for when helping DOJ to Prosecute?

Does the corporation ensure that it’s directors and managers offer support for corporate compliance policies?

Do compliance program staff have stature within the company? Are the compliance teams adequately funded and able to access needed resources?

Are compliance policies clear and in writing? Are they easily understood by employees?

Are the compliance program guidelines effectively communicated to employees? Are they easy to find and do employees get repeated training, including as to who to contact with concerns?

Are the compliance policies subjected to periodic review and updating as to evolving risks and circumstances?

Do mechanisms exists to enforce the compliance policies, is compliance incentivized, and are violators likely disciplined on an even-handed basis?

Are third parties (e.g., vendors, agents, consultants) informed of (and held accountable for) compliance expectations?

Implications for Providers

MCO’s feel pressure of need for better compliance from DOJ & MCFU Means trickle down effect to providers

MCO’s will push providers to enhance their compliance and more closely monitor providers in their MCO’s.

Discussion

What can you do to best protect your company.

Why effective compliance matters.

Why Tone at the Top matters.

Need for company plans in place if and when

subpoenas are issued

search warrants are served

employees are subpoenaed to the grand jury

Need for experienced white collar counsel early on –even before GJ subpoenas and search warrants issued.