Justin C. Danilewitz, a Partner in the White Collar and Government Enforcement Practice at Saul Ewing Arnstein & Lehr, and former Assistant U.S. Attorney, represents physicians and practice groups in government investigations.

Justin C. Danilewitz

On July 20, the U.S. Department of Health and Human Services Office of Inspector General (“OIG”) released its first Special Fraud alert since November 16, 2020 (

 The most recent Alert encourages practitioners “to exercise caution and use heightened scrutiny when entering into arrangements with Telemedicine Companies” exhibiting certain “red flags,” and to perform sufficient due diligence to avoid potential violations of criminal, civil, and administrative law. The Alert, which coincided with the announcement by the U.S. Department of Justice (“DOJ”) the same day of a national operation charging several dozen defendants in connection with a $1.2 billion telemedicine fraud (

), nonetheless recognizes and reaffirms the value and need for bona fide telehealth services. Below we offer some thoughts on the Alert, as well as lessons from our own experience defending healthcare providers under investigation for telemedicine fraud.

The Alert notes the OIG “has conducted dozens of investigations of fraud schemes involving companies that purported to provide telehealth, telemedicine, or telemarketing services . . . and exploited the growing acceptance and use of telehealth.” These initiatives have included, for example, “Operation Brace Yourself” in 2019, which involves charges against 24 defendants and losses of over $1.2 billion (

), and, as noted above, the announcement just last week of criminal charges against 36 defendants in 13 different federal districts again alleging $1.2 billion in fraudulent telemedicine, clinical laboratory and durable medical equipment (“DME”) arrangements, including what the government says are “some of the first prosecutions in the nation related to fraudulent cardiovascular genetic testing, a burgeoning scheme.” (

). These are just two of the initiatives in recent years that, by DOJ’s estimation, have involved over $8 billion in fraud (

Although telemedicine schemes vary, the Alert identifies some frequently recurring elements. For example, many schemes involve allegations of orders or prescriptions for medically unnecessary DME, genetic testing, wound care, or prescriptions for medication, each resulting in reimbursement from a Federal health care program. The arrangements have also included domestic or international call centers, staffing companies, and marketers or brokers. Invariably, the arrangements require limited or no direct engagement by the affected practitioner with the patient allegedly in need of the DME, testing, care, or prescription, and no direct access to the patient’s medical record. In some instances, a practitioner may only be provided an intake form, ostensibly completed by another healthcare professional, but possibly in fact completed by a telemarketing representative. Frequently, the practitioner is paid on a volume basis, such as for each prescription written, perhaps characterized as payment “per review, audit, consult, or assessment of medical charts.”

The government’s concerns with these arrangements are several: (1) they result in Federal health programs (e.g., Medicare and Medicaid, among others) paying for medically unnecessary items and services; (2) beneficiaries themselves receive medically unnecessary or even harmful care; and (3) the integrity and independence of medical decision making is compromised. 

Accordingly, the Alert identifies seven potential “red flags” that healthcare providers should bear in mind, while noting that the list is illustrative, not exhaustive, and that the absence of any particular red flag will not serve as a defense, given the totality of the circumstances analysis the government will undertake:

the patient for whom the prescription is ordered is contacted directly by a telemarketing vendor

the ordering provider has limited or no contact with the patient before placing an order

there is no expectation or ability for the ordering provider to conduct routine patient follow-up

federal health programs are the only payor (i.e., commercial insurance may not be accepted to cover the prescribed product or treatment)

the telemedicine company claims to only accept private payor insurance but actually does bill Federal healthcare programs

a narrow range of products is offered by the telemarketing company, limiting the provider’s treating options

Finally, the Alert notes that this latest guidance “is not intended to discourage legitimate telehealth arrangements,” consistent with prior HHS-OIG statements.

 At the same, those acting outside the scope of legitimate conduct face serious criminal, civil, or administrative exposure (including exclusion from Federal health programs).

How then, should a provider distinguish between bona fide telehealth arrangements and those that could result in serious penalties and collateral consequences? In addition to the helpful HHS-OIG guidance, providers should:

confirm the provider’s current primary employment agreement permits extracurricular moonlighting of the kind contemplated by a telehealth arrangement

assuming the primary employment agreement permits participation in the telehealth arrangement, perform meaningful due diligence on the telemarketing company

seek references from other providers working with the company

assure yourself that the telehealth company is willing to provide complete transparency regarding the identity of all involved parties in the business relationship, including subcontractors and affiliates

confirm that an appropriate provider-patient relationship will exist, with unfettered access to the patient and the patient’s medical history, as well as ability to conduct follow-up

understand the nature of the patient intake and referral process

confirm the telemarketing company’s expectations and the term and termination provisions of any written agreement

request that the telemarketing company share any relevant legal compliance opinions

share all relevant facts with your own experienced counsel to obtain the full benefit of independent review

Hard working providers, frequently with the burdens of education debt and other expenses, may be easily targeted and duped by unscrupulous actors. But it remains the case that there is no such thing as “easy money,” and the hint of “easy money” should itself serve to forewarn. Providers who unknowingly enter into illegal arrangements or who do not conduct necessary due diligence face criminal, civil, and administrative exposure.But by acting with caution, asking the proper questions, and sharing all relevant facts with their own experienced counsel to obtain the full benefit of independent review, providers should be able to distinguish between the promise of genuine telehealth that helps patients gain healthcare access necessary to obtain medically necessary care, and a fraudulent mirage.

Bruce D. Armon, a Partner and Chair in the Healthcare Practice at Saul Ewing Arnstein & Lehr, counsels clients on how federal and state health care laws affect health care providers and businesses.

Justin C. Danilewitz, a Partner in the White Collar and Government Enforcement Practice at Saul Ewing Arnstein & Lehr, is a former Assistant U.S. Attorney who represents physicians and practice groups in government investigations.

 The last alert related to Speaker Programs

 On February 26, 2021, HHS-OIG Principal Deputy Inspector General Christi A. Grimm issued a statement—against the backdrop of the COVID epidemic, noting that “[w]here telehealth and other remote access technologies were once a matter of convenience, the public health emergency made them a matter of safety for many beneficiaries,” and “[i]n some cases, health care providers needed regulatory flexibility to provide safe and effective care remotely during the ongoing pandemic.”

Statement of Principal Deputy Inspector General Grimm on Telehealth (February 26, 2021), 

https://oig.hhs.gov/coronavirus/letter-grimm-02262021.asp

 (last visited July 25, 2022). The statement recognized “that telehealth can be an important tool to improve patient access to behavioral health services,” and that “OIG recognizes the promise that telehealth and other digital health technologies have for improving care coordination and health outcomes.”

Articles

Many schemes involve allegations of orders or prescriptions for medically unnecessary DME, genetic testing, wound care, or prescriptions for medication, each resulting in reimbursement from a Federal health care program.

HHS OIG warns healthcare providers of dangers of telemedicine fraud

On June 27, the United States Supreme Court held (6-3) in 

 that in prosecutions under the Controlled Substances Act (“CSA”), the government can sustain a conviction only by proving beyond a reasonable doubt that a defendant prescriber issued a controlled substance prescription knowing or intending to do so without authorization. The issue arises in the context of Title 21 of the United States Code, Section 841(a), which states that, “[

 . . . it shall be unlawful for any person knowingly or intentionally . . . to manufacture, distribute, or dispense, or possess with intent to manufacture, distribute, or dispense, a controlled substance.” 21 U.S.C. § 841(a) (emphasis added).A related regulation states that “[a] prescription for a controlled substance to be effective must be issued for a legitimate medical purpose by an individual practitioner acting in the usual course of his professional practice.”21 C.F.R. § 1306.04(a).

The question before the Court was whether the so-called 

, the mental intent requirement of “knowing” or “intentional” conduct) applies only to the action (

, the manufacture, distribution, or dispensing) or whether it also applies to the prescriber’s awareness of the authorization for issuing the prescription.The majority concluded that the mental intent requirement does indeed apply not only to the conduct in issuing a prescription but also to a prescriber’s awareness of whether the prescription is authorized.In other words, in future prosecutions of prescribers, the U.S. Department of Justice will now be required to prove that a prescription was not issued “for a legitimate medical purpose” and “in the usual course of . . . professional practice” by proving the prescriber issued the prescription knowing or intending that the prescription would be issued without authorization.And in such prosecutions it will no longer be sufficient for federal prosecutors to prove that no reasonable physician could have believed the prescription was appropriate; instead, the prosecution will have to prove that the particular prescriber subjectively believed the prescription was inappropriate.

Under prior case law, the prosecution could merely rely upon an objective standard to prove that a prescriber was not acting in “good faith,” “reasonably,” or with “honest effort” in issuing a prescription.But as the Court pointed out, this came much too close to a standard of negligence, which is routinely used in civil cases, but is generally insufficient in most criminal cases, where the mental intent element typically requires proof of a higher state of awareness, such as knowledge and intent.Or, as the Court put it, the government’s preferred good faith reasonableness or “honest effort” standard “would turn a defendant’s criminal liability on the mental state of a hypothetical ‘reasonable’ doctor, not on the mental state of the defendant himself or herself.”

Consequently, rather than prove the objective standard of what a reasonable prescriber would or should have known to be the case, the government must now satisfy a harder subjective standard—that is, proof of what the particular prescriber actually knew or intended regarding his or her authority to issue the prescription.Naturally, this all makes the task of prosecutors harder; the task of defense counsel correspondingly easier.

The case against Drs. Xiulu Ruan and Shakeel Kahn arose from their convictions for dispensing controlled substances not “as authorized.” The Court ruled the jury instructions in the doctors’ respective trials (which did not require jurors to consider whether the physicians subjectively believed they were prescribing in good faith) were wrong based upon its analysis of the statute.That analysis led the Court to conclude that proof of a prescriber’s intent applies to the authorization to issue the prescription for several reasons, including:(1) the language of the statute; (2) the fact that criminal law typically requires proof of elevated intent; (3) the fact that the authorizing language in the statute is critically important to the distinction between blameworthy conduct meriting prosecution (

, improper prescribing not for a proper medical purpose and outside the usual course of professional practice) and blameless conduct that is socially beneficial (

, prescribing for a proper medical purpose in the usual course of professional practice); (4) the very serious implications of a conviction (which include lengthy prison sentences and substantial fines); and (5) the vagueness of the associated regulatory language in § 1306.04(a).

Justice Samuel Alito authored a concurring opinion, which Justice Clarence Thomas joined and Justice Amy Coney Barrett joined in part. Justice Alito opined that the “except as authorized” language in the statute is not an element of the offense the government is required to prove; rather it is an affirmative defense a defendant can raise.Consequently, the intent element adopted by the majority is inapplicable to the authorization of the prescription.Justice Alito would instead have required proof that the physician merely acted in good faith in issuing the prescription.

In our roles both as a former federal prosecutors who has prosecuted opioid diversion, and as defense counsel who regularly represent prescribers under investigation, we have had front-row seats both to the challenges of appropriate prescribing, and to the effects of improper prescribing.As the statistics and recent government enforcement announcements make clear, the opioid epidemic has hardly ceased.

Physicians should continue to consult appropriate federal and state prescribing guidance, and seek legal counsel when appropriate.

 According to the Center for Disease Control and Prevention (“CDC”), more than 11.5 million Americans, aged 12 or older, reported misusing prescription opioids in 2016. 

Centers for Disease Control and Prevention, 

About CDC’s Opioid Prescribing Guideline

https://www.cdc.gov/opioids/providers/prescribing/guideline.html

. The over prescribing of opioid drugs by health care professionals is a leading cause of the crisis. Initiatives to contain and eliminate the widespread illegal distribution of opioids focus upon both health care fraud and prosecution of drug diversion offenses. Recently, the DOJ’s Criminal Division announced the formation of the New England Prescription Opioid (“NEPO”) Strike Force to identify and investigate health care fraud schemes and prosecute individuals involved in the illegal distribution of prescription opioids and other prescribed controlled substances.

 Press Release, U.S. Dep’t of Justice, “Justice Department’s Criminal Division Creates New England Prescription Opioid Strike Force to Focus on Illegal Opioid Prescriptions,” 

https://www.justice.gov/opa/pr/justice-department-s-criminal-division-creates-new-england-prescription-opioid-strike-force

Saul Ewing Arnstein & Lehr attorneys regularly counsel physicians and health care professionals with respect to prescribing issues and defend clients with regard to federal and state investigations related to these activities.

Bruce D. Armon, a Partner in the Healthcare Practice at Saul Ewing Arnstein & Lehr, counsels clients on how federal and state health care laws affect health care businesses and providers.

Athira Sivan, an Associate in the Healthcare Practice at Saul Ewing Arnstein & Lehr, represents organizations and health care businesses on corporate matters.

The majority concluded that the mental intent requirement does indeed apply not only to the conduct in issuing a prescription but also to a prescriber’s awareness of whether the prescription is authorized.