Sara Kropf

For the last post in this series, we will explore recent enforcement trends of the Department of Justice (DOJ). Although it is impossible to predict with certainty what the government will choose to target in the coming months and years, there are some indicators from recent cases and statements by DOJ officials. This post will address three trends from upcoming investigations and criminal cases.

1. Use of Data Analytics to Identify Suspicious Conduct

Some agencies, like the Securities and Exchange Commission (SEC), have long used data analytics to uncover potentially wrongful conduct. DOJ is now getting into the game in the healthcare arena.

In May 2017, the acting Assistant Attorney General of DOJ's Criminal Division spoke at a conference on healthcare fraud. Kenneth Blanco specifically highlighted that DOJ now has "an in-house data analytics team headed by some of the best and brightest. Analyzing billing data from [Centers for Medicare and Medicaid Services] has become a key part of our investigations because it permits us to focus on the most aggravated cases and to identify quickly emerging schemes and new types of Medicare fraud." He explained that the DOJ employs data analytics to "identify aberrant billing patterns and emerging schemes."

His statements are not just bluster. In August 2016, DOJ demonstrated a data analytics' application in the real world. It announced a $7.4 million settlement of False Claims Act allegations against a drug screening provider, Coastal Spine and Pain. What's interesting is not the settlement itself (although it was large), but rather that the genesis of the case was DOJ's data analytics work. According to the DOJ's press release announcing the settlement:

This case was developed from the proactive review of claims data. Coastal was a statistical outlier in terms of billing for quantitative drug test screens. In fact, in each and every instance that Coastal billed for a qualitative drug test screen, it also billed for a quantitative drug test screen. This statistical outlier prompted questioning and investigation by the DOJ.

If the DOJ finds early success using data analytics to identify what it believes to be potentially illegal or wrongful conduct-and extracts hefty settlements as a result-the industry can certainly expect the agency to rely more and more on this type of analysis. Even though these analytics cannot alone prove a crime, they do provide DOJ with solid leads about what to investigate. For all the reasons I've talked about in earlier posts, the investigation itself can wreak havoc on your practice even if you are ultimately 

You won't necessarily know your practice is an outlier until the DOJ comes knocking. One preventative measure you can take is to attend industry conferences or retain reputable consultants to learn best practices in Medicare billing.

, the DOJ has long been interested in illegal kickbacks. Cases about kickbacks in 2016 and early 2017 show this to be a continuing trend. The DOJ continues to focus on this area, even as kickbacks get more creative (and more brazen).

For example, in March 2016, a large medical device manufacturer named Olympus Corp. paid $646 million to resolve a criminal and False Claims Act investigation into violations of the Anti-Kickback Statute. The government alleged that Olympus had paid doctors and hospitals kickbacks, including travel funds and meals, grants to doctors, and free medical devices. One interesting fact in the Olympus case was that the False Claims Act lawsuit was 

 by the company's former chief compliance officer. As we talked about earlier, your own employees could be a whistleblower to report wrongful conduct.  

A few months after the Olympus settlement, in October 2016, Tenet Healthcare Corporation paid $513 million to resolve kickback allegations. These allegations involved claims that Tenet Hospitals paid kickbacks to prenatal care clinics for the referral of patients to Tenet Hospital labor and delivery services.

As the Olympus and Tenet cases show, there's no doubt the DOJ will continue to focus on illegal kickbacks in 2017 and beyond.

3. Focus on Charging Individuals in Healthcare

In Mr. Blanco's May speech, he highlighted a case against an individual in the health care industry, calling the case one of a "number of significant impactful matters on which the healthcare fraud unit has been working." This was a case against Philip Esformes.

Mr. Esformes has been accused, along with two others, with a healthcare fraud and money-laundering scheme. The size of the alleged gain is huge: approximately $1 billion in false claims to Medicare and Medicaid. The people charged criminally included the owner of several skilled nursing facilities and assisted living centers, a hospital administrator who allegedly helped facilitate kickbacks, and a physician's assistant who allegedly received kickbacks.

Think about that for a minute. DOJ went after a 

 for supposedly being part of a $1 billion scheme. It's clear that DOJ has no problem going after the highest-level executives and the lowest level employees.

Likewise, in the Tenet case, two individuals have pleaded guilty. In January 2017, DOJ charged a former senior executive of Tenet as participating in the scheme as well.

Assistant Attorney General Blanco finished his speech by touting their cases against individuals:

I could go on and on about all the cases that the Department of Justice is bringing against institutions, medical professionals, administrators and others, who have chosen to commit Medicare fraud to make money. I think that these three cases highlight the kind of important, complex healthcare fraud cases we are pursuing and will continue to pursue. Our prosecutors and investigators are committed and dedicated; they are working very hard every day, every night, on weekends, on holidays during family gathers gatherings, for all of us.

Mr. Blanco's tough talk is typical for DOJ officials, but in the healthcare field, DOJ has followed through on those threats. The Health Care Fraud Unit within DOJ continues to investigate and charge companies and executives in the health care industry. That trend is not slowing down one bit. 

Articles

A lawyer lays out three trends from upcoming investigations and criminal cases that physicians should keep in mind.

Criminal Investigation Trends in Healthcare

Like the False Claims Act, the Anti-Kickback Statute (AKS) remains a frequent tool used by the Department of Justice to investigate the healthcare industry. 

 the False Claims Act, the AKS imposes criminal penalties on violators. This post will outline the basics of how the statute operates, the penalties permitted by law, and the most common ways physicians' practices violate it.

The AKS prohibits offering, paying or receiving anything of value in return for referrals for which payments are made by a government program (including Medicaid, Medicare and Tricare). Specifically, you can be charged with a crime for:

1. Knowingly and willfully soliciting or receiving any "remuneration (including any kickback

bribe or rebate), directly or indirectly, overtly or covertly, in cash or in kind"

(A) in return for referring someone for "any item or service for which payment may be made in whole or in part under a Federal health care program" or

(B) in return for "purchasing, leasing, ordering, or arranging for" (or recommending) any goods or service that are paid for by a Federal health care program."

2. Knowingly and willfully offering or paying any remuneration

(A) to refer a person for an item or service paid for by a Federal health care program, or,

(B) to "purchase, lease, order, or arrange for" (or recommending) any goods or services that are paid for by a Federal health care program.

The statute is very broad. It covers both the person and company that offer or pays the kickback, and the person or company that solicits or receives the kickback.

There are certain "safe harbors" in the AKS and defined by regulations. These provisions describe certain conduct - such as payments to employees and discounts to customers. If you meet one of the safe harbors, you cannot be criminally prosecuted for the conduct. This sounds simple in theory, but there are many gray areas within them. You may 

 you meet a safe harbor, but if DOJ disagrees, you could be forced to defend your position during a criminal prosecution.

There are Department of Health and Human Services (HHS) Office of Inspector General Advisory Opinions that offer guidance about the safe harbors but an experienced healthcare regulatory attorney can help you navigate them.

There are serious penalties for violating the AKS. The statute provides that violations are a felony and sets a maximum penalty of five years in prison and a $25,000 fine.

As though these penalties aren't severe enough, prosecutors often charge other criminal violations along with an AKS charge, such as wire fraud. The ultimate sentence could be even longer than the 5-year limit in the statute. Plus, many False Claims Act cases are based on violations of the AKS, so the parallel civil fines may increase dramatically above the $25,000 cap in the AKS.

If your practice has a defined hierarchy - such as a CEO, CFO and COO - then your executives risk criminal liability under the AKS through what is known as the "responsible corporate officer" doctrine.

As the leading Supreme Court case explained, "a corporate agent, through whose act, default or omission the corporation committed a crime in violation of the [FDCA] may be held criminally liable for the wrongdoing of the corporation whether or not the crime required consciousness of wrongdoing by the agent." (

In other words, the leaders of a physicians' practice may be held liable for what others in the practice do, even if the leader did not know precisely what was going on. It has been called the "crime of doing nothing."

In addition, in September 2015, DOJ issued what is known as the "Yates Memo." The Yates Memo offers guidance to criminal prosecutors and instructs them to seek "accountability from the individuals who perpetrated the wrongdoing." In every investigation, then, DOJ will seek to charge individual physicians (or executives), in addition to the practice itself.

Although it is not entirely clear whether the new administration will continue to follow the Yates Memo (it could be withdrawn or superseded at any time), for now it remains the guiding policy of DOJ.

Kickbacks can take many forms. The word "remuneration" in the AKS simply means "anything of value." So, if you give or accept anything of value in return for Medicare referrals, then you risk criminal prosecution.

Of course, cash payments for Medicare referrals are the most obvious violations. But there are many other types of kickbacks prosecuted by the DOJ, including:

1. Providing free dinners or lunches to physicians;

3. Entering into consulting or research agreements with physicians under which payments are made, but minimal (or zero) work is done in return;

4. Other gifts, such as tickets to sporting events or electronics;

5. Laboratory pays a specimen processing fee to physicians above the fair market value for those fees;

6. Physician retention or recruitment agreements by hospitals, when those agreement provide for payments above fair market value or are made with the intent to induce Medicare referrals;

7. Agreements for speaking or teaching, where the payments are above fair market value or made with the intent to induce referrals.

8. Discount schemes that do not meet the safe harbor requirements;

As you can see, there are many ways to violate the AKS. Any one of them - if discovered by the government - can lead to a criminal investigation. Often, DOJ will find the entity who is paying the kickbacks and then seek to prosecute the physicians who accepted those kickbacks as well. If you intend to accept anything of value from someone to whom you could make Medicare referrals, you should consult an experienced health care regulatory lawyer to try to structure the transaction to comply with the law.

Receiving cash for a referral is the most obvious gift that violates the Anti-Kickback Statute. Here are eight more. 

9 Gifts that Violate the Anti-Kickback Statute

 to take when you discover that your practice may be under federal investigation for health care fraud. Now we turn to what you should do if you personally receive a subpoena.

Let's start with the basics. A subpoena is a legal document that orders a person or entity to either produce documents or appear for testimony. Depending on the jurisdiction, a subpoena can be signed by a judge, prosecutor, other government lawyer, or even a lawyer representing a private party. Instead of a subpoena, you may receive a "civil investigative demand" or CID, which operates like a subpoena.

A subpoena has several sections. At the top, it will list the court or agency that issued the subpoena. It will also list the date and time for the production of documents or for testimony. If it is a subpoena 

- a subpoena for documents-then it will usually have a separate page or more with numbered paragraphs listing the specific documents requested and the instructions for producing the documents. Finally, a subpoena will include the name and contact information for the person who issued the subpoena.

A subpoena cannot simply be emailed or emailed to you. Rather, the government must "serve" you with the subpoena by handing it to you personally. Most often, the government will use someone in law enforcement, such as from the U.S. Marshal's Service, the handle service of a subpoena.

Alternatively, a government agent (such as an FBI agent) or a government lawyer will get in touch with you and ask that you "accept service" of a subpoena. This means that you agree to take the subpoena without forcing the government to use a process server or federal marshal to serve you.

You must respond to a subpoena. Failing to respond may result in serious penalties. Under Rule 17 of the Federal Rules of Criminal Procedure, a person who "disobeys" a validly-issued subpoena may be held in contempt by a court. Being held in contempt results in a fine and even jail time (in very rare circumstances). As a practical matter, failing to respond causes the government to be very suspicious of you and could turn your status as a witness in the investigation into something much more serious.

The First Four Steps When You Receive a Subpoena 

First, you need to read the subpoena carefully. In particular, you can find out a lot from a request for documents, including what agency is interested in seeing your documents, the general topic of the investigation, and so forth. In particular, you need to learn who you can contact with questions and when you are supposed to respond.

Second, you need to be sure you do not delete any documents that may be responsive to the subpoena. This is critical. If you delete documents responsive to a subpoena after you receive it, this could be considered obstruction of justice. Even if you are never charged with any other crimes, an aggressive prosecutor could charge you with obstruction simply for deleting a few emails or texts. You also need to make sure relevant documents are not automatically deleted. If your home email account automatically deletes emails after 90 days, you need to turn off that function and save everything.

Third, you should consider calling a lawyer. A lawyer can help you navigate this situation by communicating with the government, negotiating how and when you will respond to the subpoena, and finding out more about your role in the investigation (a target or just a witness). Plus, a lawyer can help you challenge the subpoena in court, if necessary. Finally, you will also want to make sure that you do not disclose any privileged information and comply with HIPAA's requirements to protect private health information.

Fourth, be mindful that you may not realize why your documents are of interest to the government. For example, consider a situation where a doctor receives a subpoena asking for his communications (emails, texts, and so forth) with a specific sales representative for a laboratory company. The doctor's first thought may be, "No problem, I didn't do or say anything wrong in those emails. I'll just turn them over."

Here's the rub: The doctor may not realize why the emails or texts are problematic - in his reading, they show plans for get-togethers at local restaurants with the rep. The prosecutor has a very different perspective. He's looking for evidence of wrongdoing, perhaps an indication that the doctor traded Medicare business for dinners or lunch for his staff. The government may already have internal communications from the laboratory suggesting that the sales rep was having success bribing this doctor with dinners to send more Medicare business to the lab. All of a sudden, those "innocent" texts planning dinners are not so innocent.

The lawyer for the doctor can work with him to develop an explanation for the troubling communications to try to head off a legal problem. Simply turning the documents over without understanding the possible repercussions is a dangerous game. A follow-up interview by an FBI agent based on those documents could result in unintentionally incriminating statements by the doctor.

The purpose of this post is not to scare you. In fact, in many situations, there is nothing to fear from receiving a subpoena. The problem is that you don't know whether you should be concerned or not when you first get one. The best path is to tread carefully until you understand your role in the investigation.

Did you get a subpoena asking for documents or asking that you appear for testimony? Here's what you need to know.

Healthcare Fraud 101: Getting a Subpoena 

We have already covered the basics of the False Claims Act (FCA), 

including the steep penalties for violating it

. But what do you do if you learn that the government is investigating your practice for alleged false claims? What practical steps can you take to protect your practice and defend it against a possible lawsuit?

How Will You Learn About an Investigation? 

Most FCA cases are complex, and it usually takes the government time to investigate before it decides whether to intervene in the case. The good news is that you will often learn about the existence of the investigation during this stage. There are a few ways that you can be alerted to its existence.

First, your practice may receive a request for documents from the government directly, often through what's called a Civil Investigative Demand (CID) from the Department of Justice. Alternatively, if an agency is investigating you, you may receive an administrative subpoena. A CID and an administrative subpoena are very similar. They define certain categories of documents that you must produce to the government and provide instructions on how to respond. You are required by law to respond to them.

Second, you may learn that current or former employees have been contacted by the government to be interviewed voluntarily.

Third, you may learn from third party (such as vendors, patients, or even other practices) that they have received a subpoena or have been contacted for an interview and that the topic of interest is your practice.

When you learn of a possible investigation, the first step is always to try to find out what exactly the government is investigating. Is it a coding practice? Billing for medically unnecessary procedures? The receipt of possible kickbacks for using a medical device or drug?

Hiring outside counsel is critical; this is not the time to try to navigate the situation yourself. Using outside counsel will protect the confidentiality of many communications with employees and management. Most important, outside counsel can effectively contact the government and begin a discussion about the scope of the investigation.

You will also examine the government's request for documents carefully for clues about what is being investigated. For example, if the government asks about all of the lunches, dinners, or travel you have accepted from a specific medical device company, it is likely that kickbacks are at issue. Or if the government asks for the names of all patients who have visited your practice with a specific medical complaint and the codes for which you billed them, it is likely that some sort of billing practice is of concern.

The next step is to take immediate action to ensure that relevant documents are not destroyed or deleted. Once you know you are under investigation, your practice is under a legal obligation to preserve relevant documents. The safest bet is to preserve everything. Your lawyer will work with your IT employee or consultant to prevent the deletion of emails and other electronic documents and to instruct all employees to keep all relevant information.

This may seem like a minor (but expensive) step, but it is critical. A FCA case is civil; deliberately destroying documents to avoid disclosure to the government is criminal obstruction of justice. It is bad enough to be under investigation for an FCA case,  you do not want to kick the hornet's nest by engaging in any conduct that may raise the specter of criminal charges.

The third step is to ensure that your practice does not retaliate against any possible whistleblowers. You cannot engage in a "witch hunt" to try to find a whistleblower or fire the person you have identified as the possible whistleblower. The FCA contains steep penalties for retaliation.

The fourth step is to determine how best to convey to your employees the existence of the investigation. You want to be sure employees understand that they should not talk directly to any government agents if they are contacted. Instead, they should let the agent know that he has to talk to the company's lawyers first.

Once you understand the scope of the investigation from the government's perspective, you need to work with counsel to investigate the conduct in question. This is called an internal investigation and it serves two main purposes.

First, an internal investigation helps you get a handle on what happened and, if necessary, take steps to stop any problematic conduct. It is prudent to err on the side of stopping conduct that the government believes is wrongful, even if the practice has a good reason to continue it.

Second, an internal investigation assists your counsel in developing a defense to the possible FCA case. It will come as no surprise that sometimes a whistleblower or the government has the facts wrong, or has interpreted the facts in a questionable manner. Using the information learned during the investigation, your counsel can work to craft an argument to persuade the government that there is no wrongdoing.

All internal investigations share a few common threads. Counsel will interview your employees to find out what happened. Counsel will also review the relevant documents, internal policies and emails and research how all of these facts fit into the legal framework. Depending on the size of your practice and the conduct at issue, this investigation can take weeks or even months. It can be scaled to your budget, but you should be prepared as this is always an expensive undertaking.

In my view, it is best to hire outside counsel for this investigation who are different from the lawyers who advised you initially on how to comply with the law. The reason is simple: there may come a time when your defense to the FCA case is that you relied on the advice of your lawyers when you undertook the conduct. That can be an awkward (or impossible) defense if those lawyers who advised you that the conduct was legal are the same ones  defending you in court.

Your counsel should also be experienced in criminal investigations or have a colleague who is. That's because the government often engages in what are called "parallel investigations"-that is, the government will conduct a simultaneous criminal investigation and civil FCA investigation. A parallel criminal investigation creates a higher level of risk to mitigate.

Your defense to the claims may be that the conduct was perfectly legal, or it may be that you lacked any bad intent to do something wrong. Whatever your defense may be, the single goal of all of this effort is to convince the government not to intervene in the FCA case. This is not an easy goal - once the government has started an investigation, it can be a tough road to convince it to stop. But it is possible to do so, and a careful internal investigation provides the facts necessary to show the government that its case is weak or non-existent.

Next month, we'll discuss what to do if you are a doctor or other individual who receives a subpoena or request for an interview. 

When your practice is under a False Claims Act investigation, here are some steps to take from a legal perspective. 