Compound Pharmacy Investigations
How Doctors Turn Defendants for Causing Medically Unnecessary Services
If there is one major trend in federal healthcare fraud investigations in 2018 and 2019, it is the criminal prosecutions of medical providers and healthcare business owners for rendering medically unnecessary services. This brief article addresses how physicians, psychologists, psychiatrists, dentists, and owners of laboratories or pharmacies have encountered criminal prosecutions in recent months—and how you can protect your business and your license against accusations of fraud.
About Oberheiden P.C.
Across the United States, Oberheiden P.C. attorneys are on the forefront of defending physicians, psychologists, psychiatrists, dentists, counselors, and other healthcare industry leaders against federal civil and criminal healthcare fraud audits and investigations. A team of seasoned healthcare fraud defense attorneys, many of which have joined from leading positions within the Department of Justice, represent healthcare providers and healthcare executives against unfair fraud accusations.
- Successfully Defended in Excess of 1,000 Healthcare Audits & Investigations
- Successfully Defended Hundreds of Grand Jury Proceedings
- Experienced Criminal Litigators & Federal Trial Attorneys
- Successfully Defended “Medically Un-Necessary” Fraud Accusations
If your business received an audit letter, a subpoena, a target letter or any other notice that you may be on the government’s radar, please read this article and learn why you should immediately consult experienced counsel at the absolutely earliest sign that something may not be right. Oberheiden P.C. offers free consultations by senior attorneys to address questions and concerns, including on weekends.
Government Lawyers Are Now Second-Guessing Medical Decisions
Everyone knows the classic healthcare fraud scenarios. The cases that have made headlines over the years are the ones where medical providers or business owners got into trouble for billing for services not provided, accepting or paying illegal kickbacks to stimulate referral patterns, defrauding Medicare by way of home health or hospice certifications (Form 485), upcoding, or theft of government funds, to name just a few examples.
While those types continue to exist, the government has conducted a remarkable paradigm switch to add a previously neglected category of enforcement reasoning. In essence, when the Attorney General of the United States in late 2017 announced the war against physicians for overprescribing and ordering “too many” opioids, what the government’s underlying message to physicians and pharmacy owners really meant was that FBI investigators will from now on second-guess medical decisions. Put differently, the professional judgment of physicians is no longer immune but under scrutiny. Medical decisions and medical orders are now subject to government fraud analysis. This development must be considered a major departure from traditional enforcement.
Is the government criminalizing medical malpractice? Those operating in the healthcare space have heard of—or even experienced— recent opioid prosecutions, investigations of laboratories, enforcement actions against compound pharmacies, and ZPIC audits of PGX providers. At its core, all of these cases share that the government questions the need for compound, opioids, urine drug testing etc. In fact, the government takes the position that referrals made and services provided are outside the ordinary course of medicine, thus constitute medically unnecessary billing and are therefore subject to criminal prosecutions.
These prosecutions have been based on two federal statutes for the most part. Under 18 U.S.C. 1347, which is the general healthcare fraud statute, it is a crime, punishable by up to 10 years, to knowingly or willfully pursue or attempt to execute a scheme designed to defraud a healthcare program. Notably, 21 U.S.C. 841 serves as the statutory basis to prosecute physicians and pharmacists for unlawfully distributing controlled substances such as opioids. Both statutes are frequently applied as so-called federal criminal healthcare fraud conspiracies pursuant to 21 U.S.C. 846 and 18 U.S.C. 371.
What Are the Signs of a Compounding Pharmacy Investigation?
When healthcare clients call Oberheiden P.C. and seek help to avoid or defend an indictment, one of the first questions in the free consultation that comes up is whether there have been any signs of an investigation. Strikingly, almost every client denies having encountered anything unusual. Quickly, however, during the course of the representation, that answer is rebutted by finding unsuspiciously looking audit requests, educational letters from government intermediaries, or otherwise neglected and dramatically underestimated early signs of a fraud and abuse allegation.
Few prosecutions come unannounced. In fact, most compound pharmacy investigations occur pursuant to common patterns. The key is to realize that an investigation is pending—and to act promptly. Don’t underestimate the significance of a healthcare audit! Admittedly, not every audit elevates to a formal government investigation and while it is correct to say that healthcare audits are common and a routine tool for insurance companies and government intermediaries to safeguard patients and to uncover fraud and abuse patterns, many modern audits appear to be more targeted and selective rather than randomly administered. Here are some general indications:
- You Are Declared an “Outlier”
- Your Business Received an Audit Letter (e.g. ZPIC Audit)
- You Received a Grand Jury Subpoena
- Your Business Was Served a Subpoena from the Office of Inspector General (OIG)
- Investigators or Agents Came by to Interview You
- You Received a Target Letter
- You Got Indicted
- You Hear Rumors Involving a Fraud Investigation Against You
Any of these events should prompt you to immediately seek the advice of experienced counsel. Too many doctors contact us at the late stage of indictment— when these indictments could have been perfectly avoidable. More obviously, but still underestimated, are subpoenas issued by the Office of Inspector General or a grand jury in an effort to gather and collect patient charts or documents such as corporate records, communications, or financial information. Do not hesitate. Discuss your concerns with us, free and confidential.
Here Are Recent Examples Where Oberheiden P.C. Avoided Criminal Charges
- Federal Fraud Investigation (FBI). Our client received notice that a certain medical procedure he applied frequently is deemed medically inappropriate. Four weeks later, agents from the Federal Bureau of Investigation showed up at his office informing him that he is now a target of a federal criminal investigation. Unlike the first letter, this visit certainly got his attention. Oberheiden P.C. was asked to help, and we did! We immediately reached out to the U.S. Attorney’s Office and got an agreement to pause the investigation until we had a chance to meet and make a presentation. So done, we accumulated all the facts, good and bad ones, and entered into a very productive and rewarding exchange with the government. We were able to clear our client and he ended up not being charged.
- Federal Fraud Investigation (OIG). The U.S. Attorney’s Office and the Office of Inspector General investigated a physician for allegedly practicing outside the scope of ordinary practice and, because of that, of billing for medically unnecessary services. Oberheiden P.C. became involved when the client received a grand jury subpoena and feared that the requested patient charts lacked sufficient reasoning to establish medical necessity. At issue, specifically, were the physician’s referrals to a compound pharmacy. After listening to the client and learning the circumstances of the referrals and their reasoning, we approached the federal government and sought an opportunity to meet and discuss their concerns. Several calls and in-person meetings with the two federal prosecutors in charge allowed us to convince the government not to pursue a case against our client and to discontinue its investigation. Mission accomplished!
- Federal Fraud Investigation (DEA). The Justice Department and the DEA accused a physician of prescribing controlled substances in violation of 21 U.S.C. 841, which penalizes the unlawful distribution of controlled substances such as opioids. The doctor hired Oberheiden P.C. attorneys to protect his license and his freedom in light of these severe allegations. Skilled and experienced negotiation led to desired results. We contacted the lead DEA agent and discussed the matter and the remedies that have taken place to avoid repeat mistakes. The DEA discontinued its investigation and the physician was neither reported nor charged for prescribing medically inappropriate drugs.
- Federal Fraud Investigation (DEA). The DEA, together with various other agencies, raided our client’s clinic. When we got engaged to represent the clinic and its owner, our attorneys were told that the clinic billed for medically not necessary services, among other problems related to drug enforcement. Several in-depth interviews and meetings with our client revealed quite a different story. We contacted the Assistant United States Attorney in charge of the investigation and obtained an opportunity to present our client’s side of the story prior to an indictment. We established medical necessity and saved our client from a federal indictment.
Let Oberheiden P.C. Defend Your License and Your Freedom
There are two ways to defend a federal compounding pharmacy investigation. One, you sit still and hope that the government, on its own, stops the investigation. That’s rare, and, at a minimum, requires luck and favorable decision-making on the end of the prosecutor. Two, the alternative, is for you and your attorney to impact the decision-making and to take control of the case. Countless presentations and successful negotiations at U.S. Attorney’s Offices, the Justice Department, and with FBI, DEA, OIG, and other special agents have allowed Oberheiden P.C. to conclude: there is no firm like ours! Call today or contact us online and find out how we can help you, your business, and your family.
Dr. Nick Oberheiden, founder of Oberheiden P.C., focuses his litigation practice on white-collar criminal defense, government investigations, SEC & FCPA enforcement, and commercial litigation.