Understanding the Landscape

Healthcare regulators involve the so-called “alphabet soup” of government agencies, including the Department of Justice (DOJ), Federal Bureau of Investigation (FBI), Department of Health & Human Services (HHS)-Office of Inspector General (OIG), Drug Enforcement Administration (DEA), Food & Drug Administration (FDA), Medicare Fraud Strike Force/Health Care Fraud Unit (HCF); Medicaid Fraud Control Units (MFCUs); and state Attorneys General (AGs).

Medicare and Medicaid fraud implicates extensive laws and regulations; the more common scenarios, however, implicate the following criminal and civil statutes:

• False Claims Act (FCA): relates to fraud perpetrated on federal and state governments; incentivizes whistleblowers to file qui tam lawsuits; the FCA is a particularly powerful tool within the government’s arsenal, given the potential for treble damages under the statute and a fine of up to $23,331 per claim
• Anti-Kickback Statute (AKS): provides that it is a crime to offer, solicit, pay or accept remuneration in exchange for referrals of certain items/services covered by government programs
• Food, Drug & Cosmetic Act (FDCA): governs the distribution of misbranded or adulterated drugs
• Criminal Statutes under Title 18 of the United States Code:
  • Healthcare Fraud (18 U.S.C. § 1347)
  • Wire & Mail Fraud (18 U.S.C. §§ 1341 & 1343)
  • Bank Fraud (18 U.S.C. § 1344)
  • Money Laundering (18 U.S.C. § 1956)
  • False Statements (18 U.S.C. § 1001)
• Stark Law (or the physician self-referral law): prohibits referrals to entities in which the referring physician or immediate family member has ownership, financial interest or compensation arrangement
• Controlled Substances Act: applies to all entities within the distribution chain of controlled substances, including manufacturers, wholesalers, pharmacies, prescribers and even recipients of medication
• Civil Monetary Penalties (CMP): broad-based civil penalties, including presenting a claim for item/service not provided as claimed or that is non-reimbursable

Investigations may arise from a variety of sources, including “whistleblower” tips, qui tam relator complaints, referrals from private payors, PBMs, and the government’s analysis of claims data for deviations and outliers. In the initial stages, the government’s investigation typically proceeds covertly, and will not be known to its targets. At some point, however, the government will move to an overt phase, and either continue to collect evidence through search warrants, subpoenas and interviews, or file criminal, civil or administrative actions.

Getting Out in Front

We endeavor, together with our Compliance Department, to effectively manage legal risk through the appropriate scaling and implementation of compliance program strategy. This allows our clients to learn about and successfully remediate noncompliance events before outside disclosure—when costs and reputational consequences are lowest. Such early intervention also permits the implementation of prophylactic measures in the event external scrutiny arises, whether from public disclosure or regulatory action. In short, it has been our experience that clients who adopt such a proactive approach achieve the most favorable results in the event of regulatory action.

Given the complex interplay among healthcare laws and regulations, we recommend that our clients take immediate action at the first sign a government investigation may be underfoot. Critical opportunities and certain defense strategies may be lost once the government’s investigation has become overt. Thus, for example, if a Payor or Pharmacy Benefit Manager audit has raised concerns, it may be prudent to retain counsel to review the matter and provide advice based on the regulatory and enforcement environment. Similarly, any contact with regulators whatsoever, whether that be in the form of a search warrant, subpoena, or simply an investigator with “just a few” questions, should prompt serious consideration whether to retain counsel before responding. We have found that clients who retain counsel at the earliest stages of an investigation have the most flexibility in crafting defense strategy and managing the investigation toward favorable outcomes.

For example, from the outset, clients need to obtain a fulsome understanding of the conduct under investigation because criminal, civil and administrative liability may arise from the same operative facts. Counsel should be involved in any such fact gathering to protect the process and interpret the evidentiary significance of information learned. This provides opportunities to influence the investigation towards a more lenient resolution, i.e., civil vs. criminal disposition. If Fraud, Waste & Abuse is discovered, clients may be able to avail themselves of various Self-Disclosure Protocol (SDP) to limit exposure. In addition, clients may seek to limit potential liability through cooperation or other remedial action, including the implementation or amplification of compliance measures. In short, any government inquiry must be met promptly with affirmative action to influence the scope and potential outcome of any investigation.

At Frier Levitt, we have represented publicly traded corporations, middle-market and closely held entities, and executives and employees. Different strategic considerations apply to representation of entities compared to individuals. For example, the size and structure of the organization may influence the response to an investigation, including considerations of whether, and how, to appropriately handle employees, some of whom may be implicated in the conduct. In addition, federal prosecutors consider different factors when weighing whether to charge an entity versus an individual.

Self-Disclosure

Various agency protocols incentivize, through sanction leniency or forgiveness, the voluntary self-reporting of certain compliance failures or legal violations. Accordingly, we work closely with our clients to critically analyze and weigh a number of considerations which permit us to determine, based on our experience, whether a client may benefit from voluntarily self-reporting the matter to these agencies. Because, as a general rule, these programs cannot be invoked once the government’s investigation has become known, it is imperative that clients act expeditiously to fully investigate potential noncompliance and make self-reporting decisions before such opportunities are lost. Finally, it has been our experience that, in the significant majority of such cases, voluntary self-disclosures to agencies, including OIG and CMS, are effective to mitigate penalties and avoid the most draconian remedies, including exclusion from participation in federal programs.

Collateral Consequences

Will I Still Be Able to Practice My Profession? We understand the lifelong dedication and commitment that healthcare and life sciences professionals have made to their careers. The ability to continue in the profession is often the most pressing concern for many of our clients. And for good reason, as government matters often implicate myriad collateral consequences, including:

• Professional licensure (revocation, suspension, conditions of licensure and limitations)
• DEA registration and/or state CDS registration
• Insurance, payor and/or medical staff credentialing
• Medicare and Medicaid eligibility
• Exclusion from participation in federal programs by OIG and/or Defense Health Agency
• National Practitioner Data Bank reporting

Accordingly, a negotiated agreement on these terms should be included in any resolution. Here, at Frier Levitt, we employ numerous attorneys with specialized expertise in various disciplinary and administrative proceedings to successful navigate the collateral consequences that may arise with any government matter.

How Frier Levitt Can Help

Knowledge of your rights and quality representation is imperative with respect to any governmental contact, whether that be an indictment, complaint, civil investigative demand, subpoena or other regulatory action. Our decades of government experience, combined with Frier Levitt’s focused representation of entities and individuals across the healthcare and life sciences supply chain, enables clients to navigate these daunting challenges with confidence.

Contact Frier Levitt today to speak to an attorney about regulatory concerns or government inquiries.