Take Heed: Strike Force Takedowns Signal Aggressive, Coordinated Fraud Enforcement

Gina L. Simms, Esq. Principal, Ober Kaler	Robert E. Mazer, Esq. Principal, Ober Kaler

Earlier this year, the U.S. Department of Justice, the Department of Health and Human Services- Office of Inspector General (HHS-OIG), the Federal Bureau of Investigation, and other state and local law enforcement agencies collaborated to carry out the largest criminal “takedown” in Strike Force history, involving 243 individuals in connection with alleged Medicare fraud schemes involving more than $700 million in alleged false billings. This isn’t the first and won’t be the last such coordinated, aggressive enforcement initiative, and laboratories remain a top target for investigative and enforcement efforts according to the FY 2015 HHS-OIG Work Plan and other government enforcement agencies’ statements. So laboratories need to be on alert, spot and address potential compliance issues before they become targets, and understand what to do if they do find themselves the subject of investigation. G2 Compliance Advisor has consulted two health care attorneys, Gina L. Simms and Robert E. Mazer of Ober Kaler, for their Perspective on the issues raised by this takedown. For more in-depth discussion of these government enforcement initiatives and tips for dealing with internal and external investigations, you can also join Gina and Robert on a G2 Intelligence webinar on Oct. 22, 2015. To register for the webinar, click here or contact customer service at 1-888-729-2315.

Q: While the Strike Force takedown earlier this year was the largest to date in the number of individuals prosecuted, it’s not the first large scale “takedown.” Is this large scale takedown enforcement strategy new? What’s behind this focus on large, coordinated and even nation-wide investigations?

Answer by Gina L. Simms (GLS):
No, it is not new. The June 2015 nationwide “takedown” marks, I believe, the seventh or eighth such takedown led by the Medicare Fraud Strike Force during the past several years. Since the late 2000s, the U.S. Department of Justice (DOJ) and the U.S. Department of Health and Human Services-Office of Inspector General (HHS-OIG) have formally collaborated to prosecute individuals and entities whom the government believes have engaged in Medicare and/or Medicaid fraud. This collaboration has been under an initiative called “HEAT,” and these Strike Forces are one component of the initiative. While the number of cities that have Strike Forces present investigating fraud has grown over the years, this recent takedown represents a continuation of a now fairly long-standing DOJ and HHS-OIG approach.

I believe that the “takedowns” are designed to put health care providers everywhere on notice that the federal government has the resources to aggressively investigate and pursue fraud. I also believe that it is also about pooling resources (federal, state and local law) under these interagency task forces to catch those who commit fraud.

Q: These large takedowns return millions of dollars back to federal programs. Does this mean that the government won’t be looking at smaller providers who may not yield such large return on investment for their investigative dollar?

GLS: I’m not sure that I would say that there has been a shift in focus towards prosecuting more individuals, rather than companies. For quite some time, DOJ and various U.S. Attorney’s Offices have been pursuing individuals for violations of both civil and criminal statutes. As Rob mentioned, there are the Biodiagnostic Labs criminal prosecutions. On the civil enforcement side, one cannot forget about the $26.1 million settlement with Dr. Steven J. Wasserman, in 2013, which may still be one of the largest False Claims Act settlements with an individual. However, during the past several years, there have also been so many significant False Claims Act settlements with companies, like the settlements with Health Diagnostic Laboratory and Singulex, Inc.

With regard to the recent DOJ policy memorandum related to holding individuals accountable for corporate wrongdoing (“Yates memorandum”), I surmise that the DOJ would say that the memo builds upon existing DOJ policies and mostly repeats what it has been saying to corporations and individuals for a long time. What is different is that federal investigations of corporate wrongdoing will now focus at the outset on individuals.

Following the issuance of the Yates memo, it would be a mistake for corporate executives and individuals to assume that a DOJ resolution with a company means that individuals will escape prosecution.

Q: When the latest takedown was announced HHS Secretary Burwell said in a statement: “With increased resources that have allowed the Strike Force to expand and new tools, like enhanced screening and enrollment requirements, tough new rules and sentences for criminals, and advanced predictive modeling technology, we have managed to better find and fight fraud as well as stop it before it starts.” Could you explain what is meant by these new tools such as enhanced screening and predictive modeling technology? What are some other ways government investigations have changed given sophisticated technology available today?

REM: My experience thus far has been that details on the specifics of these tools has been sparse for obvious reasons—the government does not want the public to know exactly how these tools work because the less scrupulous individuals will look for ways to thwart these analytics tools. My general understanding is that the Centers for Medicare and Medicaid Services uses an analytics system called the Fraud Prevention System (FPS), which employs different technologies to find so-called problematic billing patterns and outliers in claims. In addition, the Strike Forces that Gina mentioned earlier also use sophisticated tools to do “real time” tracking of claims submitted as well as the identification of suspected fraud trends.

Don’t forget various DOJ officials have started speaking publicly about how DOJ will use in white collar fraud the “old school” technology and investigative techniques that were more widely used on the criminal side for mob prosecutions and drug prosecutions: undercover agents, body wires, surveillance, and wiretaps.

Q: How does an entity or individual usually learn they are the subject of a government investigation? What are the first things a pathology practice or laboratory should do if it finds itself the subject of a government investigation?

REM: Some of the more traditional ways that an entity or individual learns that he or it is the subject of a government investigation are via a subpoena, a request for documents or via the execution of a search warrant. A laboratory may also learn that physicians or other clients have been contacted by government investigators asking questions about the laboratory or its sales representatives.

One of the first things that a health care provider should do if it finds itself the subject of a government investigation, is to contact competent counsel to assist in marshalling a response and building a defense. At the outset of a government investigation, a provider wants to take as many steps as possible to preserve all possible legal privileges. In addition, the provider should institute a litigation hold. The provider must produce all relevant and responsive documents, and not exacerbate an already-invasive and significant situation by inadvertently destroying or failing to produce documents called for by a subpoena.

Q: We recently reported in GCA that the Department of Justice’s Assistant Attorney General for the Criminal Division, Leslie R. Caldwell, commented earlier this year on the importance of cooperation. How far must a laboratory or other provider go to be considered cooperative in an investigation? In other words, what types of activity gain “points” as cooperation?

GLS: The Yates memo makes clear that corporations will not receive any “cooperation credit” without providing to DOJ all relevant facts about individuals involved in alleged corporate wrongdoing.

Speaking at a conference on September 22, 2015, AAG Leslie Caldwell cited to a few recent prosecutions of corporations and individuals that predate the Yates memo as examples of what some companies have done to receive cooperation credit. What you see in those cases is companies who voluntarily disclose wrongdoing, or made witnesses available for interviews, or gathered and analyzed evidence, or fired the wrongdoers, ostensibly get “cooperation credit” in the form of lesser penalties. I note that some of the companies who decided not to be as cooperative often paid heavier fines. At that September 22 conference, AAG Caldwell also said that the Yates memo calls for companies to conduct independent and thorough investigations to identify culpable individuals, and that investigations that reveal only general corporate misconduct will not suffice. She also invites companies who are unclear about what all of this means to just call DOJ and ask what this all means. I do believe that we will have to watch the post-Yates corporate and individual prosecutions to help us identify if there are more specific steps that a company should take.

Q: What do you find most providers don’t know about government fraud investigations or are surprised to encounter when they are the subject of an investigation?

GLS: One thing that immediately springs to mind is that some providers are surprised about the amount of information and claims data that the government has amassed about them before the government decides to contact them.

Q: As Rob mentioned earlier, the government has to investigate every qui tam or whistleblower complaint it receives, which means whistleblowers are often a trigger for an investigation. Are there ways that laboratories can find out potential compliance risks before a whistleblower draws government attention to the laboratory?

REM: The traditional ways that we commonly talk about in the compliance arena that most providers already have in place for employees to report possible wrongdoing: hotlines, open door policies, anonymous reporting. In addition, laboratories should periodically conduct internal audits—analytics are available to help labs to spot potentially aberrant arrangements, like a substantial increase in the number of tests ordered by certain clients without any obvious explanation as to why that occurred. A good corporate compliance plan, that is being properly implemented, should provide substantial protection.

Gina L. Simms is a Principal at Ober Kaler, 1401 H Street, NW, Washington, D.C. 20005, and is available at: (202)326-5030; glsimms@ober.com. Robert E. Mazer is a Principal at Ober Kaler, 100 Light Street, Baltimore, MD 21202, and is available at: (410)347-7359; remazer@ober.com.