Healthcare Fraud Prosecutions Continue to be a Government Priority

Frier Levitt Co-Founding Partner Daniel B. Frier recently summarized a variety of ways in which providers can become ensnarled in fraudulent schemes disguised as legitimate business models.  Since the publication of that article, a significant number of prosecutions alleging high-dollar fraud schemes have been announced.  While the COVID-19 pandemic has disrupted many facets of life in 2020, it is apparent that the public health emergency has not slowed the investigation and aggressive prosecution of healthcare fraud.  Because health spending is estimated to comprise almost 18% of the Gross Domestic Product (GDP), it should not be surprising that substantial law enforcement resources remain dedicated to identifying and prosecuting fraud, waste, and abuse in our nation’s healthcare system.

What Triggers an Investigation?

Government investigations can be triggered by a variety of factors, including but not limited to flagged claims, routine audits, beneficiary inquiries, news articles, and often, whistleblower complaints from patients, disgruntled current or former employees, and even competitors. Qui tam actions allow whistleblowers to bring a lawsuit on behalf of the United States against a provider for alleged violations of the False Claims Act (FCA).  FCA enforcement actions often allege violations of the Anti-Kickback Statute and the Stark Law, and the statute permits treble damages and significant per-claim penalties.  The whistleblower, known in a qui tam case as a relator, has a significant economic incentive to pursue the case, as the relator can net up to 30% of the government’s ultimate recovery.  

The Agencies Involved

The Department of Health and Human Services (HHS) routinely announces criminal charges and  sentencings related to healthcare fraud. In September 2020 alone, HHS posted over 30 criminal healthcare-fraud press releases, many of which involved multiple defendants.  Of note, the press releases do not include civil enforcement actions or even smaller-scale criminal actions that may not have been the subject of a formal press release. Federal healthcare fraud investigations typically begin with the HHS Office of the Inspector General (OIG). Depending on the size and scale of the scheme, additional resources, such as the Federal Bureau of Investigation (FBI), may be involved in the investigation, followed by prosecution by the Department of Justice (DOJ) through local U.S. Attorney’s Offices. At the state level, many Attorneys General have teams of attorneys, investigators, and support staff dedicated solely to investigating and prosecuting fraud related to the Medicaid program.

Mitigating Risk & Responding to Investigations

In light of the government’s continued zeal to identify and prosecute fraud, waste, and abuse and the anticipated uptick in qui tam activity alleging, providers must remain vigilant on two fronts.

Prevention: To reduce the risk of violating the law, providers are well-advised to proactively structure all new business transactions in a compliant manner.  For existing arrangements, providers should conduct periodic self-audits.  Whether it is the first proper review of the arrangement, or a compliance “check-up,” experienced healthcare counsel can help to evaluate risk, and in some instances, implement mitigation measures. Frier Levitt has extensive experience crafting compliant arrangements and helping clients to minimize the risk of an investigation resulting in an adverse determination.  

Defense: Upon the initiation of an investigation by a government agency, providers should immediately seek the advice of experienced healthcare counsel. Often, a broad request for information, whether in the form of a subpoena or a civil investigative demand, which appears to focus on a compliant area of the practice, quickly escalates when the information initially produced leads investigators to broaden the scope of the inquiry. Frier Levitt attorneys regularly assist clients in responding to subpoenas and civil investigative demands, and in some instances, it is possible to narrow the scope of the documentation request.

How Frier Levitt Can Help

To obtain a regulatory review of an existing or planned business arrangement, implement an internal compliance program, or for guidance regarding the process of responding to an investigation, contact Frier Levitt to speak with an attorney.