Criminal Investigation Trends in Healthcare

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

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 cleared of wrongdoing.

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.

2. Continued Focus on Illegal Kickbacks

As we talked about before, 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 filed 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 physician's assistant 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. 

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