Historically, the federal government has fought corporate health care fraud in two ways. First, the U.S. Department of Justice routinely intervenes in civil False Claims Act cases filed by qui tam relators. Second, the federal government typically has relied on individual U.S. Attorney’s Offices to initiate and prosecute criminal health care fraud cases.
Although the DOJ relied on tools such as the Medicare Fraud Strike Force to prosecute health care crimes in geographic areas that exhibited greater systemic abuse of the health care system, the focus of these efforts lay largely in individual prosecutions of Medicare fraud and abuse rather than corporate prosecutions.
According to the report by Law360, this approach changed late last year when DOJ formed a separate Corporate Health Care Fraud Unit (“CHCFU”) within the Criminal Division’s Fraud Section. Staffed by experienced health care fraud prosecutors, the unit brings increased resources and a new, nationwide focus on the investigation and prosecution of health care fraud against corporations.
The unit’s prosecutors review all FCA cases filed across the country and evaluate whether the allegations support the initiation of criminal investigation and prosecution. Indeed, earlier this year, Assistant Attorney General Leslie R. Caldwell indicated in a speech that, as a result of the unit’s efforts, there were over a dozen active corporate investigations. AAG Caldwell also stated that the DOJ was steering additional prosecutorial resources to this area to support fighting health care fraud through parallel civil and criminal investigations in order to “maximize the department’s ability to secure the appropriate outcome in each matter – whether it be financial penalties, restitution, federal program exclusion or criminal prosecution of both corporations and individuals.”
The DOJ’s efforts are already bearing fruit. Last month, the DOJ announced a settlement with Tenet Healthcare Corporation that signaled a shift in policy for health care fraud enforcement. The settlement represents one of the first returns on the DOJ’s investment of prosecutorial resources to combat health care fraud against corporations on a national level.
No longer satisfied to focus on fraud, even large-scale fraud, perpetuated by individual physicians, home health care providers, pharmacy owners, and medical supply company executives that were the traditional targets of the DOJ’s criminal task force efforts, the Tenet settlement makes clear that the DOJ is now bringing nationwide resources and expertise to the kind of corporate investigations and prosecutions historically left to regional U.S. Attorney’s Offices.
The Tenet settlement is an important development for health care companies because it demonstrates the impact of the DOJ’s expanded resources and nationwide focus on combating corporate health care fraud. In particular, the Tenet settlement offers four key takeaways:
1. The DOJ is no longer satisfied to prosecute individuals alone and is now, more than ever before, actively scrutinizing corporations for both civil and criminal health care fraud.
2. Health care companies operating in multiple jurisdictions are especially susceptible to the coordinated focus that comes with the DOJ’s involvement in the prosecution of corporate health care fraud.
3. The DOJ’s involvement opens the door to prosecutions in jurisdictions that do not have health care fraud expertise.
4. Corporations and individual executives alike should beware.
Well before Tenet resolved the corporate allegations, the DOJ secured pleas from two executives – Tracey Cota and Gary Lang – for their involvement in the kickback scheme. Cota and Lang each pled guilty to conspiracy to violate the Anti-Kickback Act by paying and receiving bribes in exchange for Medicaid patient referrals.