Chapman Law Group is a multi-state health care law firm dedicated to the defense of health professionals and health care corporations nationwide. Chapman Law Group defense attorneys can work with individual practitioners and/or health care corporations to aggressively defend and prevent Health Care Fraud allegations. If you or your corporation are facing a Fraud investigation or are interested in developing a Compliance Plan, call Chapman Law Group today: (248) 644-6326.
Health Care Fraud criminal charges are unlike any other criminal charges a corporate or individual client will face. The regulatory scheme for health care in the United States is complex and largely unknown by most criminal defense attorneys. The defense of Health Care Fraud charges requires specialized knowledge of health care statutes, Medicare guidelines, criminal statutes, as well as the Health and Human Services, Office of the Inspector General (OIG) administrative rules and procedures. Attorneys should not represent a corporate or individual client accused of Health Care Fraud without the requisite knowledge and experience in this area of the law. Moreover, this area of the law is replete with deadlines, notification requirements, collateral consequences, and legal pitfalls that can trap those attorneys not well versed in Health Care Fraud.
A proper defense against Health Care Fraud charges requires that an attorney analyze thousands of records and have the right experts available at every stage of the criminal proceedings. Defense to formal Health Care Fraud charges can be costly, but can also be mitigated by an aggressive investigation at an early stage to prevent or pre-empt formal charges. This is a guide to aid individuals, owners, corporate officers, and attorneys in understanding Health Care Fraud charges and successful defense strategies.
What Is Health Care Fraud?
Health Care Fraud can be pursued civilly as a violation of the False Claims Act 31 U.S.C. §§ 3729-3733, or criminally as a violation of 18 U.S.C. §1347 and §1349 (Health Care Fraud and Conspiracy to Commit Health Care Fraud). The focus of this article is on criminal charges under 18 U.S.C. §1347 and §1349, although practitioners should be aware of the possibility of parallel civil proceedings initiated by the Government which may be under seal at the time criminal charges are levied.
Any person (including a corporation) who knowingly and willfully executes, or attempts to execute a scheme to defraud any health care benefit program can be convicted of Health Care Fraud. Examples include the following:
- Billing for services not provided or not medically necessary;
- Falsely certifying that a patient is home bound (i.e. Home Health Care Fraud);
- Paying for recruitment of patients or services (Anti-Kickback and Stark);
- Up coding, Unbundling;
- Misrepresenting dates of service;
- Misrepresenting provider of service;
- Waiving deductibles and/or co-payments;
- Billing for drugs not actually filled by a pharmacy;
- Incorrect reporting of diagnoses or procedures;
- Overutilization of services;
- False or unnecessary issuance of prescription drugs;
- Prescription drug buy-backs;
- Medicaid Fraud;
- Unlawful Prescribing and Dispensing.
The Anatomy of a Health Care Fraud Case
Prior to beginning a discussion of how to best defend fraud charges, we must understand the anatomy of a Health Care Fraud case. While there are possibly hundreds of avenues for prosecution in the Federal setting, our experience has uncovered that Health Care Fraud allegations generally develop in one of two ways.
First, the charges could come as a referral for investigation from a State, local, or regulatory body, such as the OIG or a Medicare Audit. This means that a regulatory entity conducts a routine pre-payment audit or post-payment audit of a physician, health care provider, or health care corporation, and uncovers fraud. Either because the value of the loss or evidence of criminal wrongdoing, the regulatory body would refer the case to the OIG for investigation. The OIG could either pursue recoupment civilly or pursue criminal charges under Health Care Fraud statutes. If criminal charges are sought, the OIG would refer the case to the Department of Justice and the OIG, FBI, and Department of Justice would conduct a criminal investigation and seek an Indictment.
The Second Avenue of investigation is where the OIG or FBI obtains information of criminal wrongdoing from a cooperating source or Qui Tam relator. Cooperating sources are used to investigate a web of Health Care Fraud activity where a number of companies, practitioners, and/or physicians are alleged to be engaged in a conspiracy to defraud the Federal Government. Cooperating sources agree to provide information to the Government in exchange for a reduced sentence during their own criminal prosecution. This provides a powerful incentive for those indicted for Health Care Fraud to provide information against individuals who may not have been involved in any fraudulent activity.
Health Care Fraud charges can also stem from an individual who brings a Qui Tam suit, which is a lawsuit filed by a private individual (called a “relator”) to recover for fraud. If the Qui Tam suit is successful, the relator can earn a percentage of the ultimate recovery, which also creates a powerful incentive to disclose fraudulent activity. While all Qui Tam suits begin as civil cases, they often turn into criminal investigations where the Government believes that the conduct is criminal in nature.
Particularly when a case originates from a Medicare Audit, the attorney’s goal should be successful resolution of the Medicare Audit (MAC, RAC, CERT or Program Integrity Audit) prior to OIG referral to pre-empt criminal charges. Given the complex nature of health care regulatory investigations, it is imperative that attorneys have knowledge of Medicare Audits and the effect they may have on the initiation of criminal charges. During an audit, the provider may submit information to the auditor in support of the medical necessity of services rendered. In the event of a claim denial, an appeal may be submitted through various levels of the claims process, up to and including a Federal District Court. Health care corporations and practitioners must know that any statement made in defense of a Medicare Audit can bind the practitioner or the corporation in later criminal proceedings. An admission of wrongdoing during resolution of an audit can even provide the basis for criminal charges. This is why it is imperative that the practitioner or corporation select an attorney (or a team of attorneys) that can adequately defend the audit while having enough knowledge of defending Health Care Fraud charges to prevent binding the corporation to a particular defense that may not be well thought out.
If after the conclusion of an investigation, the auditor (Medicare Contractor) believes that fraud has been committed, the case can be referred to the OIG. This stage is the first hint that criminal prosecution may be sought. Generally, the distinguishing factor between those cases which are prosecuted and those which are handled civilly by the OIG, is whether or not the practitioner or health care corporation knew, or should have known, that the claims were false or fraudulent.
Parallel Civil Proceedings
If the case began as a Qui Tam action, there will likely be a sealed parallel civil case filed against the Defendant. This is very important when considering resolution of the criminal action because resolution of the criminal case will not necessarily resolve all claims in the unsealed parallel civil Qui Tam case. Attorneys must be familiar with the defense of Qui Tam litigation when defending Health Care Fraud charges considering the frequency of parallel civil proceedings.
Defense is the Best Offense: Why You Need a Compliance Plan
Perhaps the best and most powerful defense to Health Care Fraud charges is evidence of a robust Compliance Plan initiated before the alleged Health Care Fraud. Now, more than ever, even the most scrupulous practitioners and health care corporations are concerned about the implications of Health Care Fraud allegations. You can be charged with Health Care Fraud even if you did not know you (or your corporation) were committing fraud, and even if you are relying on the advice of an attorney. In this context, your best defense is a comprehensive and thorough Compliance Plan to detect and disrupt fraudulent activity in your practice or corporation Evidence of a Compliance Plan can be used to show that the corporation or individual practitioner lacked the requisite intent to engage in Health Care Fraud. With the advice of a skilled health care attorney who is knowledgeable in Health Care Fraud, you can build a robust Compliance Plan that can prevent allegations of Health Care Fraud, Drug Diversion, and overbilling. The OIG requires even small and solo practice groups to have a Compliance Plan in place to detect fraudulent practices. From solo practice to large corporations, a Compliance Plan is necessary to obtain the benefit of reduced culpability when facing a Health Care Fraud investigation. If you do not already have a Compliance Plan in place, contact the Chapman Law Group for a free consultation.
Proper Negotiations Early Can Prevent Charges
Depending on the value of the fraud, Government proof, and a number of other factors, it is also possible to prevent the Government from initiating Health Care Fraud charges by entering into a Deferred Prosecution Agreement, or some similar agreement, prior to being formally charged. This is particularly important where a large health care corporation is involved and the Government is more interested in recovering money than in prosecution of specific individuals. At this stage, an experienced health care law attorney can greatly aid in your success by leveraging her/his knowledge of Health Care Law to identify weaknesses in the Government’s case. An early investigation into the alleged Health Care Fraud by your attorney can often pre-empt formal charges by identifying weaknesses in the Government’s case that may discourage prosecution, or at a minimum, reduce the dollar value of the alleged fraud.
Often, the first sign that a health care corporation is under investigation by Federal authorities (OIG, FBI, DEA) is during the execution of a search warrant. Search warrants are generally executed early in the morning during the arrival of staff and patients. Federal agents will surround the building and make entry with a search warrant. They will attempt to make contact with the owner or manager on site and immediately attempt to interview the owner or manager. Other agents will immediately attempt to interview staff and patients on-site in addition to removing evidence located on the premises. At this stage, it is vital that the owner immediately contact an attorney and obtain legal representation prior to agreeing to an interview. Owners, management, and other staff must be weary of Federal Obstruction of Justice Statutes during the conduct of the search and not attempt to destroy, hide, or make false statements to the Government. When an attorney has been contacted, the attorney can inform staff and management of their legal rights and attempt to obtain an independent attorney. The attorney can also contact Federal agents to aid in protecting privileged information and prevent any allegations of obstruction during the conduct of the investigation.
If a search warrant is being executed, it is also possible that arrest warrants have been issued for owners, physicians, and other employees. If this is the case, it is vital that an attorney is contacted so that arrangements can be made to provide the employees with appropriate counsel. Federal agents will attempt an interview of the individual arrested prior to taking the individual to the nearest Federal District Court for arraignment before a magistrate on the Complaint or Indictment.
The Initiation of Formal Health Care Fraud Charges
If the Federal Government wishes to proceed with prosecution, it will either proceed by filing a Complaint or by convening a Grand Jury. If a Complaint is filed, this is a sign that the Government intends to seek your cooperation prior to convening a Grand Jury and filing a formal Indictment. A Complaint is essentially an Affidavit drafted by a law enforcement officer (FBI, DEA, or OIG) and filed with the Court. A Federal Judge may find that there is sufficient evidence to issue the Complaint and arrest the Defendant to face formal charges. The case will then proceed to a Preliminary Examination where the Government will have to prove that there is probable cause to believe Health Care Fraud was committed and that the Defendant was responsible. However, the Government will generally seek an Indictment before a Preliminary Exam because the Federal Government generally does not like to put evidence on the record at a Preliminary Examination.
If the Government wishes to proceed with a Grand Jury, it is highly likely that the prosecution will issue Grand Jury Target Letters to you and your alleged co-conspirators informing you that a Grand Jury has been initiated and that you are the target. Once you receive this Target Letter, you can be sure that the Government has concluded a thorough investigation into your practice and has cause to believe that Health Care Fraud has occurred. If you have not already retained an attorney to assist you in this case, you must do so immediately.
Should I Cooperate With the Government and Provide Information in Exchange for a Plea Agreement?
Deciding whether or not you or your corporation should cooperate with the Government is the single most important decision anyone accused of Health Care Fraud can make. After the decision has been made to make a statement to the Government, success at trial will be severely diminished. Often, Federal Prosecutors seek cooperation early and the first to the table generally gets the best deal. Waiting to cooperate when all alleged co-conspirators have cooperated can leave you standing without a seat when the music stops, resulting in an unfavorable Plea Agreement. This, coupled with the fact that Sentencing Guidelines for Federal Health Care Fraud convictions are extremely high and based on the alleged dollar value of the fraud, creates a literal “prisoner’s dilemma” where co-defendants are pitted against each other to the Government’s benefit.
That being said, there is a way to break the cycle. A skilled attorney can properly investigate your case prior to or shortly after Indictment and give you a fair and honest assessment of your chances at trial. If success at trial is unlikely, cooperation should be sought early. An attorney cannot adequately make a recommendation regarding cooperation until a thorough investigation of the alleged conduct, billing, and medical necessity of the care is rendered. Be wary of the attorney that brings you to a meeting with Federal Prosecutors prior to conducting a thorough investigation – this can be a recipe for disaster and derail your chances for a successful defense.
What Are the Penalties for Health Care Fraud?
If you are convicted under the False Claims Act, you can receive a prison sentence up to life in prison, and a fine of $250,000. However, the penalties for Health Care Fraud vary depending on the statute charged and the dollar value of the loss to the Government as well as a number of case specific factors. The Federal Sentencing Guidelines will be used by the Judge to determine a recommended sentence. Federal Sentencing Guidelines are highly dependent on the dollar value of the alleged fraud. While most individual Defendants are focused on the amount of jail time they may receive, there are many other life altering and career ending penalties that should be considered before accepting a plea in Health Care Fraud case. Corporate Defendants risk severe fines, OIG exclusion, and the implementation of a Corporate Integrity Agreement. Individual Defendants face countless collateral consequences, especially if they hold a medical license. You should ensure that your chosen attorney is familiar with each of these penalties and the administrative process for mitigating or avoiding the penalties below. Here is a list of potential penalties to consider:
- Restitution and Fines
- Loss of State License
- Loss of DEA Registration
- Medicare Exclusion
- Denial of Insurance Billing Privileges
- Staff Privileges and Credentialing Actions
- Asset Forfeiture and Seizure
- National Practitioner Databank
- Corporate Integrity Agreements
It cannot be stressed enough – an early, thorough investigation into the Health Care Fraud charges must be conducted. This includes discovering the relevant documents and conducting detailed in-depth interviews of all available employees. Employees can be contacted, in some cases, before they are interviewed by the Government to advise them of their rights and provide them with appropriate counsel. Those involved in the billing process must also be thoroughly interviewed. In some cases, “pool counsel” can be contacted to provide legal assistance to those who are not a target of the investigation. Individual Defendants or targets must obtain an independent attorney to represent their interests during the course of the investigation or prosecution. Most Federal Judges frown on attorneys representing multiple targets of a criminal investigation.
In the event that the Government issues a Subpoena or Civil Investigative Demand, attorneys should be familiar with the proper scope of such a request and consider quashing any request that falls outside the scope. All responsive documents must be thoroughly analyzed to determine whether they are responsive to the request or if they are privileged. Efforts should be made to protect privileged communications from discovery.
Corporate counsel can obtain a Joint Defense Agreement so that all retained attorneys can avoid the expense of multiple-individual investigations of the charges. Additionally, a certified medical biller or a forensic auditor can be retained to thoroughly review the Medicare billing data to determine compliance. All electronic correspondence related to billing and internal memoranda must be investigated to determine if there is evidence of a conspiracy, or potentially exculpatory evidence that may suggest lack of intent or knowledge on the part of certain individuals.
Once a proper investigation is conducted, trial attorneys must prepare a strategy to properly defend Health Care Fraud charges at trial, which includes drafting and filing pre-trial Motions to exclude evidence, dismiss the Indictment, sever Defendants, or discover evidence favorable to the defense. A surgical and efficient approach to pre-trial Motions in Health Care Fraud cases will set up an effective trial strategy or aid in a favorable Plea Agreement.
The Government traditionally uses vast amounts of statistical data in attempting to prove the charges. Health care fraud defense attorneys should challenge the methodology for developing this statistical data through the appropriate use of expert testimony. The Government will also elicit testimony from medical billers and analysts to support the basis of their Health Care Fraud Indictment; this testimony can be easily challenged because many of these professionals are not health care professionals, and should not be permitted to testify to the medical necessity of a particular procedure or claim.
Defending Health Care Fraud Charges at Trial
Trial will be won or lost based on the experience of defense attorneys, defense strategy, experts, and strength of the prosecution’s evidence. There is no single road map to properly defending Health Care Fraud charges at trial. However, a proper investigation by knowledgeable attorneys coupled with the right experts and skilled advocacy in the courtroom will shift the odds in the Defendant’s favor. Proper formulation of jury instructions are also key to shifting the odds in the Defendant’s favor and preserving issues on appeal. Jury selection is also critical to obtaining a jury that lacks the bias and intense negative public sentiment against large corporations and individual practitioners accused of fraud. If possible, jury questionnaires should be submitted prior to trial to gauge the jury pool’s sentiment towards the Defendant(s).
Where medical necessity or over-utilization is a key issue, the prosecution and defense experts will be the most pivotal witnesses during trial. Diligent preparation of expert cross-examination includes researching the expert’s background to challenge the expert’s experience, education, or training. A detailed knowledge of Medicare guidelines and the standard of care in a particular field will aid a skilled attorney in a powerful confrontation of the prosecution’s expert. The Government routinely produces guidelines, opinions, newsletters, and regulations that may internally contradict each other regarding proper utilization and billing.
Similarly, the defense expert(s) must be well vetted, reliable, and sufficiently knowledgeable to withstand the prosecution’s attack. Retention and preparation of defense expert(s) should not be reserved to afterthought, and expert advice should be sought as early in the case as feasible.
Finally, character witnesses may be necessary to paint the Defendant(s) character as one of a law abiding citizen. For most individual Defendants, this is their first allegation of criminal wrongdoing and many are upstanding citizens with positive community interaction. Character witnesses should be considered a valuable part of your defense strategy.
Health Care Fraud is a highly complex area of law requiring detailed-specialized knowledge of ever changing rules and regulations. A proper defense to formal Health Care Fraud charges can be costly, but can also be mitigated by an aggressive investigation at an early stage to prevent or pre-empt formal charges. Further, a Compliance Plan implemented early may prevent or mitigate criminal charges and civil penalties for alleged violations. Finally, proper management of collateral consequences, parallel civil proceedings, and forfeiture proceedings are vital to holistically defending a Health Care Fraud Indictment. If you or your corporation are facing charges, or if you are interested in implementing a Compliance Plan, call the skilled Health Care Fraud Defense Attorneys at Chapman Law Group today.
 See ABA Model Ethical Rule 1.1:Competence