navigating government investigations of health care fraud
TRANSCRIPT
Navigating Government Investigations of Healthcare Fraud
June 15, 2016
Brian Bewley
Kelly Schulz
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Agenda
Overview of Healthcare Fraud Enforcement Landscape
How Things Get Started – Understanding how investigations begin, interested parties, and conduct
that attracts attention
Responding to an Investigation – Providing information in response to subpoenas and other requests for
documents and information
– When and how to conduct an internal investigation
Aftermath of a healthcare fraud investigation
Recent Developments and Trends
Enhanced Enforcement Authorities
Civil Criminal Administrative
Funds criminal investigations
Biggest settlements with large
companies
Physicians & individuals
increasingly targeted
Strike Force
Actively involved in reviewing what
historically were simply civil cases
OIG’s CMP Authority
Penalties – Exclusion
More aggressive than in the past
Focus on providers that employ
excluded individuals
2015 – $3.5 billion
Over life of program- $27.8 billion
ROI = $7.70
HealthCare Fraud Recoveries
OIG reported $2.77 billion in recoveries through the first half of fiscal year 2016
Enforcement resulted in recoveries of $7.70 for every dollar spent investigating healthcare related fraud and abuse in 2012-2014
Targets: Hospitals, nursing facilities, long-term care facilities, residential treatment facilities, intermediate care facilities, institutes for mental disease, hospices, institutional healthcare providers, home health agencies (HHAs)
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False Claims Act ("FCA"): Whistleblowers Driving Enforcement
FCA establishes liability for any person who KNOWINGLY presents false or fraudulent claims to the US government for payment – Actual knowledge – Acts in deliberate ignorance of truth or falsity – Acts in reckless disregard of trust of falsity
Includes "Qui Tam" provisions that allow private citizens (relators) to sue violators on behalf of the government
Penalties: – Monetary penalties of not less than $5,500 and not more than
$11,000 per claim – Plus damages of not more than 3 times the total amount of
remuneration offered, paid, solicited or received – Potential Exclusion From Federal/State Programs
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Enforcement Trends
Types of allegations:
– Quality of care
– Billing practices
– Provision of medically unnecessary services
– Arrangements and relationships for AKS and Stark law compliance
• Sales and marketing practices
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They’re ALL Watching You . . . .
RACs/
ZPICs
State
Legislatures
State AGs
Congress Medicaid
HHS
FTC
FDA
DOJ Plaintiff
Lawyers
Whistle-
blowers
Commercial
Payors
Personal
Injury
Litigants
Competitors
OIG
PRESS
Medicare/CMS
YOU
De
par
tme
nt
of
Just
ice
Main DOJ
FBI
USAO
Lead on False Claims Act cases
Can prosecute criminal conduct
Slightly different view between Main
Justice – USAO
National vs. Local
Office of Counsel to the Inspector General
Office of Investigations
Office of Audit Services
Office of Evaluation & Inspections
CMS
Department of Health & Human Services
Delegated Authority to bind HHS on FCA matters
“Client Agency”
Civil Monetary Penalty Authority
Exclusion Authority
OI has 600 Special Agents & Analysts
OAS projects $65 Billion in Overpayments
Program Agency for
Medicare & Medicaid
Responsible for Stark
Law
Payment Suspensions
& Pre-Pay Reviews
Recovery Auditors &
ZPIC Audits
State Agencies
Attorney Generals
Medicaid Fraud Control Units
Focus on Medicaid Fraud
Civil & Criminal
OIG-OEI has oversight
authority on MFCUs
Ability to suspend payments
pending an investigation
RECOGNIZING WHEN AND HOW THE HEALTHCARE FRAUD INVESTIGATION STARTS
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How Cases Originate
Qui Tams
Hot Line Complaints
Referrals
Data-Mining
Self-Disclosures
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Grand Jury Subpoena
What is a grand jury subpoena?
– Order of the court for a witness to appear at a particular time and place to testify and/or produce documents in the control of the witness
– Will require you to provide the requested materials and/or testimony
– Deadline to respond varies
Will you know it when you see it?
– What does it look like?
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Civil Investigative Demand
What is a CID?
– Production of documents
– Interrogatories
– Sworn testimony
– Usually 20 days to respond on face
– Time frame negotiated in actuality
– Becoming much more common /onerous
What does it look like?
– Will you know it when you see it?
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OIG Subpoena
Could be from Assistant Inspector General for Legal Affairs (AIG) or Special Agent in Charge (SAC).
May seek documents (example at right) or be a testimonial subpoena (see 42 C.F.R. §§ 1006.1 – 1006.5).
Response usually due in 30 days but often negotiated.
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RESPONDING TO THE GOVERNMENT
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Responding to Subpoenas and CIDs
The subpoena/CID makes its way to you . . What do you do?
– Who is the subpoena/CID addressed to?
– Do you have a process / procedure for who will handle them / who should receive? (Legal or compliance)
– Make sure employees know who to send the document to so that it can be reviewed and response provided within required timeframes
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Reviewing the Subpoena / CID
Quickly determine the nature of the allegations
Identify potential sources of documents and data
Document preservation and retention – Understand when a document hold is necessary
– Determine who needs to receive the document hold–including IT staff
Develop effective document collection, review, and production strategies – What is the volume of information? Who will be reviewing it?
– Document production requirements specified by requesting authority
Conduct thorough and objective internal investigation – Preserve privilege and work with and consult internal and outside
counsel
Results of investigations compliance enhancements
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Key Considerations for Government Investigations
Government investigation requires Company to respond to government agency’s inquiries
Communicating with Government prior to response to:
– Determine potential areas of concern
– Developing production schedule
– Obtain clarification of requests
– Set the proper tone
– Obtain control of the process
Maintain open dialogue
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Preparing a Subpoena Response
• Scope and focus - prepare a work plan • Consider costs, needs of business to continue v. need to adequately
conduct investigation
• Identify the right investigator • Outside counsel, in-house counsel, compliance department, or some
combination of the above
• Do your in-house resources have the capacity to respond?
• Will your investigator be able to defend the company’s response to an allegation or problem if it came to the attention of criminal prosecutors, regulatory agencies, shareholders, or the public?
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Get the Word Out – Balanced Approach
Determine who within the organization needs to know – Who can answer questions or issues relating to the allegations?
– Who needs to know of financial and/or legal implications?
– Who needs to assist Organization in responding to the allegations (e.g., collecting data)?
Usual Suspects tend to be: – Executives
– Board
– Audit Committee/Compliance Department (if not already involved)
– Investor Relations (for public company)
– IT Department
– Key Employees (all those with or likely to have knowledge)
– Human Resources
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Document Preservation and Retention
Preservation Notice/Document Hold Memorandum – Notice/memo circulated to all employees to preserve relevant information upon
learning of pending or threatened litigation or investigation, or receipt of a subpoena or CID
– Retain all relevant documents – don’t delete or alter anything that would be considered responsive to the notice/memo
– If you are responsible for identifying recipients, think of “record custodians” - employees who may be in the possession, custody or control of documents related to the investigation
– A defensible preservation and collection methodology and protocol
Those who refuse to cooperate can be charged with obstruction of justice
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Identifying Document Custodians
Cast a wide net - think of where ALL the relevant information could possibly be located – Employees’ hard drives – Employees’ personnel files, submissions to third parties, – Company’s databases – Company’s shared drives – Company’s archived files – Paper files forgotten in drawers, cabinets, etc. – At home? – Off-site locations (storage?)
Once sources are identified, work with counsel to determine best method of collection, review, and production
Often negotiable what types of documents government wants produced or produced first
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Develop Effective Document Collection, Review, and Production Strategy
Effective Document Collection – What are internal capabilities?
– If collecting documents from foreign countries, be mindful of privacy laws
Effective Document Review – Goals: Review of documents to determine responsiveness to requests
and to identify and protect privileged documents
– Develop review protocol for consistent review
– Volume may be determinative of need for outside assistance
Effective Production Strategy – Ensure docs are produced in appropriate/requested format
– Keep record of what was produced and when (e.g., production letters and logs)
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WHEN AND HOW TO CONDUCT AN INTERNAL INVESTIGATION
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Thorough and Objective Internal Investigation Is Necessary
In parallel with response to Government, conduct your own internal investigation into the concerns raised
Why is an internal investigation necessary?
– Helps to accurately assess potential liability
– Helps to develop a strategy for responding to allegations
– Identifies other areas of potential concern
– Demonstrates cooperation and that the company is taking the allegations seriously
– Is critical to developing successful defenses
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Internal Investigation v. Government Investigation
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Internal Government
Start •Initiated by Company • Perceived discrepancy in routine monitoring •Receipt of internal/external complaint
•Initiated by Government Agency •Subpoena, CID, search warrant, whistleblower, etc.
Goal/Strategy
• Assess whether any wrongdoing has occurred, and determine appropriate action if any •Company must be convinced whether wrongdoing has/has not occurred • Playing offense and sometimes defense
• Identify basis and evidence behind government's allegations • Identify basis and evidence of any potential defenses (cooperation v. defense) • Playing defense
Investigator
• Compliance/audit department • Counsel (in-house and outside counsel)
•Government agency but with cooperation from Company’s Counsel
Investigation
• Collect and review documents •Interview relevant employees •No production of documents
• Collect, review, and produce documents to Government • Interview relevant employees, • Outside Counsel (likely) will communicate with Government • Make presentations to Government
Results/ Consequences
•Disclosure to Management • Potential disclosure to Government • Revised policies/compliance • Disciplinary actions
• Penalties (e.g., exclusion, CIA, etc.) • Disclosure in SEC filings • Revised policies/compliance • Disciplinary actions
Protecting the Attorney Client Privilege
Internal investigations performed by counsel are protected by attorney client privilege
– Summaries of issues identified in document review
– Employee interviews (Upjohn)
– Development of defenses
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Steps in an Investigation
Preservation of relevant documents and electronic records – Receipt of a preservation notice/document hold memorandum
asking you not to delete any relevant emails, electronic or hard copy documents, etc.
– When company has already received subpoena, document hold likely already issued
Interviews of relevant individuals
Investigative steps should be documented in detail
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Conducting the Investigation
Document Collection – Identify relevant custodians – Do not make copies of notes or reports – Deliver all originals and work papers to the lawyers
Interviews – Provide general outline of the investigation/litigation (including details
as to the divisions or products of the company that are at issue) – Interviewees are requested to assist in the investigation by being
forthcoming and providing relevant information
Treat all information as privileged and confidential – Remind all custodians and interviewees not to discuss investigative
work or findings with others – Mark all investigative notes, reports or other documents or
communications, including e-mail correspondence, “Privileged and Confidential”
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Reminders to Employees
Provide instruction and reminder to:
– Adhere to preservation notice/document hold memorandum
– Honestly answer questions presented during all interviews
– Respond to all follow up requests
– Maintain all communications with attorneys confidential – do not share with anyone
Failure to be truthful or destruction of documents is serious AND could result in prosecution for obstruction of justice
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Determining Investigation Results
Potential criminal, regulatory or civil liability
Reporting requirements to either the government, the board of directors or the company’s outside auditors
Notification requirements to insurance carriers, state licensing boards?
Need for employee disciplinary actions?
Extent and content of any communication with employees or the public
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ARE WE THERE YET?
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OIG and DOJ Focusing Intensely on Compliance Programs
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FOOTNOTE: DOJ has hired official dedicated 100%
of time to assessing compliance programs
DOJ Yates Memo
To be eligible for cooperation credit—in civil or criminal investigations—a company must provide “all relevant facts about the individuals identified in the corporate misconduct.”
Both criminal and civil corporate investigations should focus on individuals from the inception of the investigation.
Criminal and civil attorneys handling corporate investigations should be in routine communication with one another.
In criminal investigations, “absent extraordinary circumstances, . . . Department lawyers should not agree to a corporate resolution that includes an agreement to dismiss charges against, or provide immunity for, individual officers or employees.”
Corporate cases should not be resolved without a clear plan to resolve related individual cases.
Civil attorneys should consistently focus on individuals as well as the company and evaluate whether to bring suit against an individual based on considerations beyond that individual’s ability to pay.
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Key Takeaways from Yates Memo
Not really new, but maybe formalizing existing policy
DOJ is serious about individual liability – both criminal and civil
– Look for more civil FCA actions and settlements against individuals (examples: Columbus Regional settlement and pending LifeCare FCA case)
Parties should ensure appropriate releases when settling FCA cases (current and former officers, directors . . . .)
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Recognizing the End of the Investigation
Internal/External Conclusion is communicated – In-house attorney/compliance person might communicate conclusion of
investigation
– Press Release might be issued as to fines, penalties resulting from investigation.
Resulting policies (e.g., compliance programs) are introduced – Consistent and comprehensive training
– Oversight, monitoring and reporting system (e.g., hotline)
Improvements or modifications to existing compliance programs and practices – Ensure all practices adhere to applicable regulations
– When in doubt, contact legal for their advice
Disciplinary procedures to address violations
Call to request or confirm results
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Questions
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Brian D. Bewley, Shareholder
Health Care Regulatory
816.360.4372 | [email protected]
Kelly E. Schulz, Associate
Health Care Regulatory
816.572.4464 | [email protected]
Kelly Schulz believes in a practical approach to addressing each client’s business outcomes and objectives in a timely and efficient manner. She assists a broad range of health care organizations in criminal and civil investigations and regulatory compliance matters, and draws from this experience to assist clients with: • Conducting investigations regarding potential violations of various
civil, criminal, and administrative laws, including the False Claims Act and the Foreign Corrupt Practices Act
• Responding to government inquiries and subpoenas • Assessing whistleblower allegations • Performing due diligence in connection with corporate transactions
Prior to joining Polsinelli, Kelly practiced laws for over three years abroad, and she is easily attuned to the importance of understanding the nuances of each unique client's needs.
Brian focuses his practice on healthcare fraud and abuse and compliance issues, and routinely represents entities under investigation based on alleged violations of various civil, criminal, and administrative laws, including the False Claims Act (FCA) and OIG’s Civil Monetary Penalties (CMP). Prior to joining Polsinelli, Brian served as Senior Counsel at OIG-HHS and acted as the Team Leader for the Boston, Miami, Dallas, and San Francisco regions. Brian was also appointed by a former United States Attorney, now a federal court judge, to act as a Special Assistant U.S. Attorney to handle civil health care fraud matters. Brian frequently presents on various health care regulatory fraud and abuse issues, acts as Program Chair for the Health Care Compliance Association’s Midwest Region Conference, and serves as a member of the American Health Lawyers Association Advisory Opinion Task Force for the Fraud and Abuse Practice Group.
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