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Cooperating with the Government in a Medicare Fraud Investigation and Prosecution

By Ronald W. Chapman II

Recent data from the United States Sentencing Commission (USSC) confirms that ninety six percent (96%) of federal prosecutions in the Sixth Circuit are resolved by a plea1. This means that only four percent (4%) of cases proceed to trial. In Michigan, that number is slightly higher at five percent (5%). In addition to zealously advocating for their clients at trial, criminal defense attorneys representing health care professionals accused of health care fraud are well served increasing their proficiency in obtaining the best result possible in the event that cooperation serves the best interests of the client. In some cases, cooperation could mean the difference between your client practicing medicine again or jail, permanent revocation of their license, DEA registration, and ability to bill government services including Medicare.

Cooperating with the government during a health care fraud conspiracy requires that you develop your client as an expert witness for the prosecution to aid them in continuing their investigation of the conspiracy. Criminal defense attorneys without intricate knowledge of health law are at a disadvantage when preparing their client to cooperate with the government during multi-level complex health care fraud and drug trafficking conspiracies because of the highly complex regulatory nature of the heath care industry. In addition, certain other considerations below will aid a criminal defense attorney in obtaining the best deal for his or her client.

Speed vs. Preparation

Federal Prosecutions set up a classic prisoner’s dilemma in complex multi-level conspiracies; the first to the table generally gets the best deal. However, prior to recommending cooperation, counsel has an ethical duty to ensure that the attorney has completed a full investigation and study of the case, including an analysis of the evidence to be introduced at trial . In order to properly advise your client, you must first understand health law and the health care industry. Counsel not already equipped with the legal framework required to prove a criminal departure from the standard of care or counsel ill equipped to analyze medical billing, will be at a disadvantage when evaluating discovery for your cooperating Defendant. Therefore, if you anticipate defending health care professionals in this area, you will be best suited with a working knowledge of health law and medical billing, in addition to RAC, Stark, Anti-kickback, False Claims Act, and related statues.

Combining speed and preparation can be difficult in a Health Care Fraud or Medicare Fraud prosecutions, where discovery is not always available at the outset of a case and where discovery is sure to be voluminous. Counsel must be diligent to pursue discovery from the prosecution and conduct their own investigation as early as possible to determine if cooperation is appropriate. This includes a cursory review of discovery with experts, to fully understand your client’s potential criminal liability in the conspiracy. In rare occasions, the prosecution may even provide early discovery in order to permit an attorney to ethically advise his client that cooperation is the best approach. One benefit is that a client with inside knowledge of a health care fraud conspiracy or a drug trafficking conspiracy can usually deduce what the government knows or will know after other defendants have had a chance to cooperate. Thus, you must use your own client as an expert of sorts to develop your initial impression of the case.

You have an advantage if your client is able to retain you pre-indictment or as a result of a grand jury target letter. If information about your client’s role in the conspiracy is not public, your client’s cooperation may reap more benefit for the prosecution. Here, you may have the ability to approach the government regarding a proffer and obtain some discovery prior to cooperation. Generally, Assistant U.S. Attorneys understand our ethical obligation to obtain some information prior to deciding to cooperate. Where cooperation is appropriate, your client will be best served with a full and knowledgeable review of all available discovery as quickly as possible prior to deciding to cooperate. Thus, speed is essential when deciding to cooperate with the government.

Minimizing The Impact Of A Failed Proffer

Average sentences for Medicare Fraud and drug trafficking are extremely high. Even after U.S. v. Booker, the goal of any proffer agreement is to obtain that support from the government which permits downward departure because the weight given to the guidelines under 18 U.S.C. § 3553(a) is still high in most jurisdictions3. In evaluating whether or not the government will support departure under 5k1.1, the government will generally provide a “Kastigar”4 letter or a “Queen for a Day” letter. This letter permits a Defendant to provide the government information in exchange for the possibility of a motion on behalf of the government requesting downward departure from the “recommended” sentencing guidelines. The government has nearly unfettered discretion when it comes to requesting 5k1.1 credit5. Therefore, if you are not able to reach a suitable agreement after the proffer, counsel must be vigilant in minimizing the impact of a failed proffer.

When negotiating a proffer agreement, it is important to analyze and understand the circumstances, in which the government may use statements made by your client and evidence obtained as a result of statements made by your client, against your client. This is particularly important in health care fraud and drug trafficking cases, where guideline sentence ranges are directly tied to the value of money taken from the government or the quantity of drugs prescribed. Exposing the magnitude of a conspiracy, can significantly impact your client in the event of a failed proffer because with a poorly negotiated proffer agreement, the government will seek sentencing enhancement given the increase in the value of the fraud uncovered or narcotics delivered pursuant to your client’s statements. This deflates any leverage you have and puts your clients at the mercy of the government, when eventually negotiating a Rule 11 agreement.

Do I Have Any Leverage?

In Medicare Fraud prosecutions, where the Health Care Fraud Division of your particular jurisdiction is chiefly interested in expanding their dragnet, indicting the kingpin Defendants and increasing the value of health care fraud uncovered; you may have significant leverage depending on your client’s alleged role in the health care fraud conspiracy and the strength of the government’s evidence. Often, the higher levels of a health care fraud conspiracy are tough to crack because the “kingpin” of the conspiracy is relatively insulated from other members. Further complicating the government’s case, health care fraud conspiracies are highly intelligent and complex; testimony of an informant with actual knowledge of the inner workings is vital for investigators and DEA agents. Thus, you must analyze and identify your client’s role in the conspiracy and seek any amount of leverage your client can provide during the proffer.

How Can I Get The Best Deal?

If you are not experienced in health care fraud prosecutions, you are at an instant disadvantage. You may want to seek out the assistance of an attorney who specializes in the investigation and defense of health care fraud to assist you in preparing your client. The AUSA will likely be from the health care fraud division and be well versed in investigating and prosecuting health care fraud. Additionally, the Federal Agents present will likely have ten (10) to twenty years (20) of experience in handling complex health care fraud and Medicare fraud investigations. It is important to not only understand Health Care Fraud, Medicare billing, CPT codes, the standard of care for the prescription for narcotics, but to prepare your client on how to articulate the structure of the complex health care fraud, drug trafficking, or Medicare fraud conspiracy. The key to obtaining the government’s assistance is to become the best witness for the prosecution and articulate recantation of the conspiracy in a fashion that will be appealing to the jury, which will only increase your leverage above that of the other Co-Defendants.

In short, preparation and practice make perfect. When your client sits down with the AUSA, Federal Agent, your client should be prepared to: 1) tell the truth about his/her role in the conspiracy, 2) provide an honest description of his role in the conspiracy, and 3) educate the AUSA and Federal Agent regarding the details of the conspiracy. You must understand that the agents you will be speaking to may have in depth knowledge of the conspiracy, and will attempt to test your client’s knowledge of the conspiracy to determine his/her veracity. If your client is minimizing his/her role, the agents will generally be able to determine this quickly and your client’s further statements will be deemed less credible.

What Can I Expect To Receive In A Rule 11 Agreement?

If you have grand illusions of walking out of the proffer session with a signed agreement for no jail time, a check for your assets that were seized, and a hug from the prosecutor – you are mistaken. As a general rule, the government does not have the power to recommend a particular sentence. However, a flexible approach Federal Sentencing Guidelines provide a work-around. Under Rule 11(A), the government can move to dismiss certain charges (generally with the permission of the U.S. Attorney) and under Rule 11(B), the government can recommend or agree not to oppose the Defendant’s request that a particular sentence or sentence range is appropriate or a particular provision of the sentencing guidelines apply. If negotiated correctly, this can significantly minimize your client’s sentence recommendation and court permitting, your client’s sentence to an acceptable range. This is especially true in health care fraud conspiracies, where drug trafficking charges, money laundering charges, and health care fraud sentencing guidelines are highly dependent on the amount of drugs involved, and the amount of money involved. If you are negotiating pre-indictment, you may be able to negotiate or substantially limit the amount of narcotics involved, and the dollar value of the alleged fraud to further reduce your client’s sentence range.

Negotiating dismissal of charges is possible but unlikely in the current climate. Dismissal requires U.S. Attorney approval and this is generally only granted where it is apparent that the charging decision is made in error. However, it behooves you and your client to “shoot for the stars,” if you believe you have significant leverage.

21 U.S.C. § 841 And The “Safety Valve” In Drug Trafficking Cases

Many health professionals charged with health care fraud will be indicted for charges related to drug trafficking, 21 U.S.C. § 841, § 846, § 952-3, and § 960(b). With these charges, the minimum and maximum statutory penalties are driven by the type and the quantity of the drug involved; however, sentence minimums may be increased if the offense involved death or serious bodily injury. Depending on the amount of controlled substances, the statutory minimum could be as much as ten years . In conspiracy cases, the quantities of each drug distributed in the conspiracy can be aggregated to establish the statutory penalties . Therefore, a prescription drug conspiracy or “pill mill” will generally involve a high statutory minimum. This is where the safety valve comes into play.
If the court finds at sentencing, upon the government’s recommendation that your client possesses the following five factors, the Judge may depart from the mandatory minimum. The 18 U.S.C. § 3553(f), requires that the government shows that the Defendant: (1) does not have more than one (1) criminal history point, (2) did not use violence or possess a firearm in conjunction with the offense, (3) offense did not result in death or serious bodily injury to a person, (4) was not the “kingpin” or a continuing criminal enterprise, and (5) has cooperated with the government and provided information regarding the conspiracy.

The “Safety Valve” is generally applicable in most health care fraud conspiracies against all but the organizers of the conspiracy. If you can successfully obtain departure from the statutory minimum under the “Safety Valve,” you can avoid the mandatory minimum and receive two additional levels off of the guideline range. However, consideration under this statute requires early and substantial cooperation with the government.

Conclusion

In sum, preparation, speed, an intricate knowledge of health law, and related statutes will better serve you in defending your client in a complex health fraud conspiracy. An early and thorough assessment of the case, a prompt decision to cooperate, if warranted, followed by a well negotiated proffer letter will give you the leverage necessary to minimize your client’s sentencing exposure. It is imperative that you evaluate your client’s leverage prior to cooperation and get everything you can in exchange for your client’s testimony and cooperation. Always remember that a presentable, knowledgeable, credible, articulate, and cooperating witness will be valuable to the government, and will secure you the best deal for your client – preparation is key.

About the Author: Ron Chapman II is an attorney for the Chapman Law Group, a Michigan and Florida law firm devoted to defending licensed health professionals. Ron is a former prosecutor and after returning to the private sector is solely devoted to defending licensed health professionals. A large portion of Ron’s practice deals with representing physicians and other health professionals in Federal health care fraud, Medicare fraud, and drug trafficking charges.


Sources

  1. United States Sentencing Commission Statistical Information Packet Fiscal Year 2014 Sixth Circuit (2014) available at http://www.ussc.gov/research-and-publications/federal-sentencing-statistics/federal-sentencing-statistics-district-circuit-state/federal-sentencing-statistics-2014
  2. ABA Standards for Criminal Justice 4-6.1(b)
  3. USSC Analysis of Sentencing Post Booker (2012) available at http://www.ussc.gov/news/congressional-testimony-and-reports/booker-reports/report-continuing-impact-united-states-v-booker-federal-sentencing
  4. Kastigar v. United States, 406 U.S. 441, 460 (1972)
  5. Wade v. United States, 504 U.S. 181 (1992)
  6. 21 U.S.C. §841(b)(1)(A) and 960(b)(1)
  7. U.S. v. Pressley, 469 F.3d 63 (2d Cir. 2006)