FDA Fraud & Investigations

Health care providers, pharmacies, pharmaceutical and medical device manufacturers, and other individuals and organizations targeted by the U.S. Food and Drug Administration (FDA) can face civil or criminal charges. Our federal defense lawyers represent clients in FDA investigations nationwide.

While most people know the U.S. Food and Drug Administration (FDA) as the federal agency responsible for regulating what shows up on grocery store and pharmacy shelves, the FDA also plays a central role in the federal government’s fight against health care fraud. The FDA’s Office of Criminal Investigations (OCI) shares responsibility for investigating and prosecuting a variety of health care-related fraud offenses, and it often works in close coordination with the U.S. Department of Justice (DOJ), the U.S. Department of Health and Human Services Office of Inspector General (OIG), the Drug Enforcement Administration (DEA), and other agencies to combat waste, fraud, and abuse.

The FDA routinely targets health care providers, pharmacies (including compounding pharmacies, pharmaceutical and medical device manufacturers, and other individuals and organizations in fraud investigations. These investigations can target allegations ranging from prescribing and dispensing non-FDA-approved medications to making unsubstantiated claims about medical devices, dietary supplements, and other products. The OCI has Special Agents stationed in more than 40 cities across the country who use, “traditional law enforcement methods, professional contacts, and investigative techniques,” in order to, “protect[] the health and welfare of the public by investigating criminal allegations falling within FDA’s jurisdiction.”

The FDA’s headquarters and 13 primary Field Offices and Resident Offices are located in:

  • Atlanta, GA
  • Boston, MA
  • Chicago, IL
  • Dallas, TX
  • Kansas City, MO
  • Los Angeles, CA
  • Miami, FL
  • New Orleans, LA
  • New York, NY
  • Philadelphia, PA
  • San Francisco, CA
  • San Juan, Puerto Rico
  • Washington D.C. (headquarters and Metropolitan Washington Field Office)

“Health Fraud Scams”: A Top FDA Law Enforcement Priority

Among other efforts, the FDA is currently heavily targeting fraudulent activity falling into the category that the agency refers to as, “health fraud scams.” As explained on the FDA’s website:

“Health fraud scams refer to products [and services] that claim to prevent, treat, or cure diseases or other health conditions, but are not proven safe and effective for those uses. Health fraud scams waste money and can lead to delays in getting proper diagnosis and treatment. They can also cause serious or even fatal injuries.”

However, while this may sound like it is limited to targeting scam artists who intentionally engage in nefarious activity, experience has shown that the FDA is actually casting a much broader net that encompasses the medications, devices, and treatment services provided by legitimate pharmacies, companies, and health care providers. Examples of health care and prescription practices that can lead to investigation and prosecution by the FDA’s OCI include:

  • Compounding medications and dispensing compound medications without a valid prescription
  • Compounding medications that are inconsistent with physicians’ prescriptions
  • Compounding medications in bulk without a prescription
  • Compounding medications when FDA-approved drugs are available 
  • Compounding medications as replacements for drugs that have lost FDA approval
  • Prescribing and dispensing non-approved cannabinoids (including CBD oil) 
  • Manufacturing, prescribing and dispensing medications with unsubstantiated marketing claims
  • Manufacturing, prescribing, and dispensing mislabeled and counterfeit drugs
  • Prescribing and providing treatments for addiction, pain, and other serious conditions that are not scientifically supported
  • Illegally selling cannabinoids and opioids over the Internet and/or without valid prescriptions
  • Prescription drug diversion, including prescribing opioids to dependent patients and dispensing opioids without a valid prescription
  • Selling expired medical devices and supplying patients with non-approved or dangerous medical devices

Federal Offenses Targeted in FDA Fraud Investigations

FDA fraud investigations can target offenses under a variety of different federal statutes. This includes statutes that are both civil and criminal in nature. Examples of charges that can stem from FDA fraud investigations include violations of:

Food, Drug, and Cosmetic Act (21 U.S.C. Chapter 9)

The Food, Drug, and Cosmetic Act (FDCA) is the primary source of authority for the FDA’s law enforcement activities. Among other provisions, as summarized by the Congressional Research Service, the FDCA, “prohibits two basic acts: ‘adulteration’ and ‘misbranding.’” Sections 501 and 205 of the FDCA prohibit the acts of adulterating, misbranding, and prescribing and dispensing adulterated and misbranded medications and medical devices. “[T]he [FDCA] deems a ‘food’ [or drug] adulterated if it has been held under ‘insanitary conditions,’ and a ‘drug’ misbranded if its label does not contain the ‘name and place of business of the manufacturer, packer, or distributor.’ The language of the [FDCA] is ‘purposefully broad,’ providing the executive branch significant discretion over implementing rules and guidelines.”

Health Care Fraud Statute (18 U.S.C. Section 1347)

Under the federal health care fraud statute, “Whoever knowingly and willfully executes, or attempts to execute, a scheme or artifice—(1) to defraud any health care benefit program . . . in connection with the delivery of or payment for health care benefits, items, or services, shall be fined under this title or imprisoned not more than 10 years, or both.” The statute imposes enhanced penalties in cases involving serious bodily injury (up to 20 years in prison) and death (up to life in prison). Any case involving alleged unlawful activity relating to prescription drugs, medical devices, or medical services involves funds reimbursed by a federal health care benefit program (i.e. Medicare, Medicaid, Tricare, VA, or DOL) is likely to be prosecuted under 18 U.S.C. Section 1347.

False Claims Act (31 U.S.C. Section 3729)

FDA fraud investigations triggering the criminal provisions of the federal health care fraud statute will generally trigger liability under the False Claims Act (FCA) as well. The FCA imposes civil and criminal penalties for knowingly presenting “false or fraudulent” claims for payment by the federal government, including under Medicare, Medicaid, Tricare, and the VA or DOL health care benefit programs. Billing for non-FDA-approved devices and medications is considered to be a form of “false or fraudulent” claim, as is billing for diverted medications and other drugs, devices, treatments, and tests that do not meet the criteria for “medical necessity.”

Anti-Kickback Statute (42 U.S.C. Section 1320a-7b)

Investigations targeting multiple entities will often involve allegations under the Anti-Kickback Statute (AKS). The AKS makes it illegal to offer, make, solicit, or accept any form of “remuneration” in relation to a referral for a federal health care program beneficiary. Frequently, the FDA and other agencies will allege that pharmacies, doctors, clinics, manufacturers, telemedicine companies, and other entities are engaging in unlawful referral fee and “kickback” transactions in relation to program-reimbursed medications, devices, and treatment. Although most Anti-Kickback Statute investigations targeting legitimate health care entities and professionals are civil in nature (and there are many “safe harbors” that exempt transactions from prosecution), the statute also includes provisions for criminal prosecution.

Stark Law (42 U.S.C. Section 1395nn)

The Stark Law is similar to the Anti-Kickback Statute in its focus on unlawful financial transactions between health care providers. However, it applies only to physicians and their related entities, and it only applies in cases involving “designated health services.” It also only includes provisions for civil investigation and prosecution. However, as “designated health services” specifically include various types of durable medical equipment (DME) and outpatient prescription drugs, the Stark Law frequently comes into play in FDA fraud investigations.

Mail Fraud, Wire Fraud, and Other Federal Offenses

In criminal health care fraud cases, prosecutors with the FDA’s OCI and the DOJ have the option to pursue charges for a variety of general criminal offenses as well. Many federal statutes, including the mail fraud (18 U.S.C. Section 1341) and wire fraud (18 U.S.C. Section 1343) statutes, are so broad that they can potentially be applied in just about any fraud-related prosecution. Money laundering, import violations, conspiracy, attempt, and various other crimes are also commonly charged in FDA fraud cases.

Avoiding Civil and Criminal Charges During FDA Fraud Investigations 

If your practice or business is being targeted in an FDA investigation, the key to avoiding civil and criminal charges is to promptly engage experienced defense counsel. Our federal defense attorneys represent pharmacies, physician groups, pharmaceutical and medical device manufacturers, and other health care clients nationwide. When you engage Oberheiden, P.C. to represent you, our attorneys will:

  • Advise you and your key personnel regarding how to respond to the FDA’s requests for records and information (click here to learn about critical mistakes you need to avoid);
  • Represent you in all communications with the FDA and other federal authorities;
  • Promptly conduct a privileged internal assessment to determine whether and to what extent your practice or business may be at risk due to the FDA’s investigation;
  • Develop and execute a custom-tailored defense strategy that specifically targets the FDA’s factual allegations and that is designed to resolve the investigation without charges being filed; and,
  • Implement a proactive and aggressive defense while also helping you remedy any issues that are continuing to create potential exposure for your practice or business.

Speak with a Federal Health Care Fraud Defense Attorney at Oberheiden, P.C.

Is your health care practice or medical business being investigated by the FDA? To discuss your defense strategy in confidence, call 214-469-9009 or request a free case assessment with a federal health care fraud defense lawyer at Oberheiden, P.C. now.

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