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, MSN
Dilworth Paxson, LLP
A Limited Liability Partnership Formed in Pennsylvania
1500 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
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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).
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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
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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
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Key factor in changing business enterprises is the existence & effectiveness of
corporate compliance program
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Has the organization taken meaningful remedial action to prevent, detect
fraud, waste & abuse
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7 elements up to date actually addressing, preventing, detecting & reporting
fraud, waste & abuse
7 Elements of Compliance Plan
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Develop written policies and procedures
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Designating a compliance officer and compliance committee
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Conducting effective training and education
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Developing effective lines of communication
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Conducting internal monitoring and auditing
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Enforcing standards through well-publicized disciplinary
guidelines
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Responding promptly to detected problems and undertaking
corrective action
What is Compliance Counsel
looking for when helping DOJ to Prosecute?
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Does the corporation ensure that it’s directors and managers offer support for corporate
compliance policies?
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Do compliance program staff have stature within the company? Are the compliance teams
adequately funded and able to access needed resources?
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Are compliance policies clear and in writing? Are they easily understood by employees?
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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?
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Are the compliance policies subjected to periodic review and updating as to evolving risks
and circumstances?
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Do mechanisms exists to enforce the compliance policies, is compliance incentivized, and are
violators likely disciplined on an even-handed basis?
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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.