Government Healthcare Investigation Lawyers

Healthcare violations ususally imvolve one of the following laws:

• Anti-Kickback Statute (42 U.S.C. § 1320a-7b)
• False Claim Act (31 U.S.C. §§ 3729-3733)
• False, fictitious or fraudulent claims (18 U.S.C. § 287)
• Physician Self-Referral Laws (§ 1877 Social Security Act)
• Patient Protection and Affordable Care Act (PPACA)
• Healthcare Fraud (18 U.S.C. § 1347)
• Social Security Act (§ 1128B, Medicare and Medicaid laws)

Anti-kickback laws provide civil and/or criminal penalties for individuals or entities, licensed or unlicensed, who knowingly and willfully offer, pay, solicit, or receive money or favors for referrals paid by Medicare or Medicaid programs, (42 U.S.C. 1320a-7b). The statute is broad in scope and considers transferring anything of value to be payment and thus a kickback: e.g. bribes, rebates, gifts, discounts, favorable credit arrangements or lease payments and, payment waivers. Some real life examples include frequent flyer miles and suspicious consulting agreements, etc. An interpretation of the law may cover any arrangement where one purpose of the payment is to obtain money for the referral of services or to result in further referrals, (United States v. Greber, 760 F.2d 68 (3d Cir. 1985), cert. denied, 474 U.S. 988 (1985); United States v. Borarasi, 639 F.3d 774 (7th Cir. 2011)).

The physician referral law bars physicians from referring patients for a particular health service if they or a member of their immediate family has a financial relationship with the service provider. However, an exception pursuant to 42 CFR Part 411, Subpart J, does apply. In addition, the law prohibits an entity from presenting a claim to Medicare for services provided under a prohibited referral. Note: the Physician Self-Referral Law is a strict liability law. Despite good intentions, some actions may violate its regulations.

Fraud under the False Claims Act goes into effect when a contractor knowingly presents a false claim to the United States. Also illegal is conspiring to defraud the government by having a false claim allowed or paid. The level of guilt in 18 U.S.C. § 287, does not require knowledge or reckless disregard, but willful conduct.

If a facility files false claims for products in violation of the False Claims Act, it could be named in the resulting investigation and potential prosecution. Fraud can occur in various forms.

• Billing Fraud (unperformed tests, double billing)
• Coding Fraud (up-coding, code jamming, unbundling)
• Testing Fraud (reflex and defective testing)
• Improper Cost Reports (unnecessary procedures, phantom equipment)
• Offering free services
• Routine waiver of patient co-payments

The Patient Protection and Affordable Care Act (PPACA) strengthens enforcement for perceived healthcare fraud and abuse. A key feature of PPACA is revision of standards under the anti-kickback statute. The Act removes the requirement for knowledge of, or specific intent to commit a violation. It’s now easier for the government to begin enforcement procedures and to win battles in court. The government must show that a defendant acted “knowingly and willingly” in offering or making payments to gain patient referrals. The government is NOT required to prove that a defendant knew the behavior was unlawful (United States v. Mathur, 2012 WL 4742833 (D. Nev. 2012)).

Most people never think about federal inquiries until agents from OIG, FBI, Secret Service, U.S. Postal Service, ATF, or DEA appear at their door. Or, in case of an administrative subpoena, receive notice of a federal investigation.

Governmental investigations can be administrative, civil, and criminal in nature. Search warrants and grand jury subpoenas give a clear indication an investigation is criminal in nature. A search warrant is issued by a judge based on the high standard of probable cause. Subpoenas, however, do not require a judge’s approval and are used to obtain evidence. Such evidence primarily comes from those who may have relevant information about the crimes of others.

Cooperation with lawful governmental requests is mandatory. Non-compliance can result in severe sanctions and fines. However, comments from panicked and overly talkative staff can quickly lead to irreversible statements. Unfortunately, self-incrimination frequently occurs. There is a fine line between polite cooperation and skillful protection of a client’s interests.

Estimates suggest legal fees based on refusal to obey governmental requests exceed penalties by about 3-5 times. Most would agree that legal assistance is in order when facing federal government enforcement agencies. The decision to choose competent and experienced healthcare fraud defense counsel can provide the best outcomes. Our ability to respond quickly to information requests or enforcement events depends on the case’s stage:

Preemptive Measures:

• Standby Legal Counsel
• Organized Filing System with Backup Copies
• Staff Role Assignment
• Document Retention Policy
• Proper Instructions to Employees & Staff
• Corporate Compliance Program

Pending Investigation:

• Initial Assessment with the Client
• Identification of Attorney-Client Privileges
• Document Preservation Notice
• Contact Federal Agency to Start a Dialogue
• Immediate Implementation of Compliance Elements
• Disclosure Considerations

Exposure for physicians comes from many sources and can result from:

• Patients (malpractice claims)
• Staff (wrongful termination; sexual harassment)
• Competitors (trade mark, non-compete, tortious interference)
• Landlord-tenant issues
• Corporate failure (corporate practice of medicine)
• Partnership Disputes (e.g. hospital investments)
• the Medical Board (disciplinary rules)
• the Government (Stark Law, Anti-Kickback)

Physicians can expose themselves in joint ventures with non-physicians based on referrals. Thousands of business contracts across the United States are based on physician participation. Physicians, syndicated surgery centers, toxicology joint ventures, or physician owned distributorships depend on the physician’s ability and willingness to produce business. Doctors must therefore practice due diligence when seeking or accepting referrals.

Laypersons and general-purpose corporations may not employ physicians to practice medicine. This leaves delivery of medical services to entities owned and controlled only by licensed medical experts. The law also prevents sharing fees between physicians and non- licensed entities.

Bans on corporate practice of medicine exist in state statutes, attorneys general opinions, medical practice acts or a combination thereof. Bans ensure that licensed healthcare professionals maintain independence over patient care without undue influence from unlicensed corporations and laypersons.

In some states, such as New York, violating the prohibition on corporate medical practice is a felony, (N.Y. Educ. Law § 6512).

 An administrative subpoena is the power held by various agencies to require either testimony or the production of documents (or both), to support an investigation or adjudication.

Administrative subpoenas have become a powerful and effective tool of the federal government. Currently, more than 300 departments have such subpoena authority in the United States.

Three reasons exist to explain this development. First, administrative subpoenas, despite ample academic and congressional critique do not require approval by a judge or other judicial officer. Such subpoenas can initially bypass judicial scrutiny. Second, if challenged, courts rarely grant objections. If the requested information is relevant— an arguably open-ended term— courts will not hinder the subpoena’s enforcement. Third, many recipients of such subpoenas are misguided by the word “administrative”. They tend to underestimate this powerful governmental tool. Although marked “administrative,” these subpoenas are often signs of serious criminal investigations.

Generally, administrative subpoenas fall in one of two categories: OIG subpoenas and subpoenas authorized under 18 U.S.C. § 3486.

1. OIG Subpoena

The Inspector General Act of 1978 charged new federal departments with rooting out corruption and fraud with audits, inspections, and investigations. An OIG investigation usually starts with a complaint of wrongdoing. Often, these complaints are anonymous acts of revenge by competitors and former employees.

Investigations start with a factual review before interviewing witnesses and issuing document requests. Once uncovering sufficient evidence of wrongdoing, the OIG refers the matter to the Department of Justice (DOJ) and the U.S. Attorney’s Office in the federal district where the investigation occurs.

The DOJ may accept or refuse mandatory assignment. In case of refusal, the OIG will finalize its investigation with administrative or civil penalties. If the DOJ considers the matter worth pursuing, the case typically appears before a grand jury. Subpoenaed witnesses and documents will determine if the required probable cause standard is met. If the grand jury finds probable cause to believe that a crime was committed, it will return an indictment and the case will go to trial or other disposition.

Each Inspector General is authorized to request all information necessary to correct or prevent fraud, waste, abuse, and mismanagement in federal programs. With few exceptions, the Inspector General Act solely authorizes subpoenas duces tecum or documentary requests. This authority is mainly used in criminal cases. Courts have held that the Act gives Inspectors General both civil and criminal investigative authority.

OIG subpoenas are enforced by United States district courts and prosecuted by the DOJ at request of the relevant Inspector General. This is part of the Department’s obligation to conduct litigation of interest to the United States.

While allowing for objections, courts firmly uphold the general enforcement of administrative subpoenas. Some very narrow exceptions exist. Examples include constitutional concerns (vagueness, breadth, Fifth Amendment) and standards governing judicial enforcement of subpoenas (relevance of information, unreasonable burden, and issuance in bad faith).

Our experience shows that without proper legal advice, subpoenaed companies tend to commit one of two mistakes. They attempt to fight the subpoena or handing over their most confidential and privileged information.

Both mistakes are fatal. If the company fights the subpoena, it will face broad enforcement of applicable laws. Criminal fact finding against individuals behind the company will almost certainly ensue. Without careful review by experienced attorneys, companies can be overly compliant and give information forming the basis of future criminal proceedings. Responding to an administrative subpoena is a delicate balancing act. Being compliant and protecting the client’s interest are essential. It is a skillful bargaining game that is not won by amateur attorneys. You need diplomatic, respectful, and experienced legal advisers on your side.

Our strategic advantage is twofold. First, we have experience and a reputation from appearing before governmental agencies. Our firm brings a well-respected and trustworthy climate to proceedings. Second, we work hand in hand with FBI special agents, fraud examiners, former government lawyers, and compliance officers who have been on both sides of the table.

2. Subpoenas under 18 U.S.C. § 3486

Application of 18 U.S.C. § 3486 is the criminal investigation of federal healthcare offenses. The statute allows those served a reasonable period of time to respond. In addition to a judicial enforcement provision, 18 U.S.C. § 3486 specifically authorizes motions to quash and ex parte nondisclosure court orders. Under this section, the overseer of subpoenaed records or documents may be compelled to testify. However, there is no indication that the section allows for other orders to testify.

Administrative subpoenas under 18 U.S.C. § 3486 need not satisfy a probable cause standard. The Fourth Amendment only demands that the subpoena be reasonable. The standard requires that (i) the subpoena complies with the terms of its authorizing statute, (ii) the documents requested are relevant to the case, (iii) the information is not already available, and (iv) enforcing the subpoena will not constitute an abuse of process.