United States: Healthcare Fraud Takedowns

As a former federal prosecutor in Chicago, I am well acquainted with the phrase "takedowns." For the unwary, a subject-area "takedown" is a practice used by federal prosecutors to send a message to a given industry. Prosecutors investigate and prepare to charge cases in a given industry sector and then release the charges nationally on the same day along with a press release. The idea is that such public "takedowns" serve as a deterrent to future criminal activity in the industry. For example, almost every April 15th, prosecutors across the country release charges in dozens of tax-fraud cases.

Recently, this practice has expanded into the healthcare industry. See more on the The Department of Health and Human Services Office of Inspector General website. In June 2016, there was the largest healthcare fraud takedown in DOJ history – prosecutors charged more than 300 defendants in 36 federal judicial districts (and this does not even include civil fraud investigations).

Based on recent subpoenas, interviews, and CIDs that have been issued to healthcare fraud entities in the Chicago-area, I suspect the DOJ is gearing up for another takedown, likely to occur in the summer of 2017.

As such, now is a good time for those in the healthcare industry to reflect on what organizational changes they can (and perhaps should) make to ensure that they never end up caught it a takedown. They may also want to heed the advice of attorneys who specialize in handling health-care fraud audits, compliance and enforcement investigations from inception, identification, investigation, and even indictment. The government is now going after where the money is and the health-care industry certainly has its fair share. The DOJ's focus on healthcare fraud should give the industry pause to reflect on the federal government's new priorities and what it can do to insulate itself from potential civil and criminal penalties. Mishandling the initial inquiry can substantially impact what direction an investigation can take.

Below are some do's and dont's to consider when dealing with the government-funded health-care system and a quick "how to" when a federal agent comes knocking at your door or you receive a subpoena in the mail.

Don'ts

  1. Don't commit fraud. This should go without saying, but so many are cutting corners or breaking the law, and you will be evaluated under the specter of their misconduct.
  2. Don't talk without legal counsel present, even if you have nothing to hide (and especially if you might). A simple miscommunication can yield a misunderstanding that, once written up in an investigative report, is the government's reality. Simply say: "I am happy to assist. Please call my attorney to schedule a time for us to talk."
  3. When you ignore No. 2, don't lie. Do not lie to the investigators in any way, shape or form. Doing so can turn what may not be a problem into a serious problem. As one of my current clients found out (who I managed to shield from a charge of both healthcare fraud and aggravated identity theft) lying to federal investigators during the course of an investigation is its own crime, and prosecutors can and will charge this crime if they cannot prove the underlying fraud. Don't make a bad situation worse — it limits your options.
  4. Don't turn over any documents. Coordinate with counsel first. When it comes to healthcare, the government already has access to everything it needs before it knocks on your door. Whatever you do or don't produce can be used against you. This is a good area in which to work with trained professionals.
  5. Don't panic. Whatever circumstances you are facing, there are ways to clarify any confusion or minimize the consequences of actual misconduct. Take the necessary steps to protect your business and yourself.

Do's

  1. Know whom you are going to call. Know it before the government knocks on the door. Few respond well in a crisis, and it is essential to have access to a qualified lawyer who knows how to handle health-care fraud investigations.
  2. Have a robust compliance program created and managed by professionals. Not only have one in place, but actually comply with it. The government will use any failure to comply with your own policy against you, and when none of your employees can cite to its requirements, it is hard to describe it as being robust.
  3. Tell your employees what to do. You practice for fires, but hope not to need the skill. Tell your employees what to do if they are approached by government investigators. They should know you will coordinate arranging legal counsel for them at no expense. Investigators will find the last person you want anyone talking to and interview that person first.
  4. Understand that you will have to communicate. You are going to have to communicate, and potentially "cooperate," with government investigators. Ignoring the problem will only make it worse. Communicate first with legal counsel and let them navigate you through what lies ahead.
  5. Be nice to employees. Understand that the most likely source of an allegation or investigation is a disgruntled former employee or a quality employee who feels his concerns are not being taken seriously. How you treat your employees matters considerably. The government's focus on health-care fraud has reached long-term care. Having gone after home health and hospice, the government has shifted its attention to nursing homes. In the event that you are contacted by law enforcement, you may be a witness or a target, or that may yet to be determined. How you handle it has consequences. Consider taking the advice you would give a resident's family about caring for a loved one themselves. Let trained professionals give you the assistance you need to; do not try to do this on your own. Be proactive and seek legal counsel before the government is at your door.

Disclaimer: This Alert has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice. For more information, please see the firm's full disclaimer.

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