Ileana Hernandez of Manatt, Phelps & Phillips Law Firm is a member of the firm’s healthcare litigation practice. Hernandez has extensive experience in healthcare-related investigations and litigation, including criminal antitrust/price-fixing claims, civil FCA matters, Medicare Fraud Strike Force cases, False Claims Act whistleblower actions, and compliance counseling.
Hernandez recently sat down with us to talk about healthcare fraud prosecutions.
How have government enforcement efforts in healthcare fraud changed in the past few years?
Hernandez: Enforcement is a priority for both the Department of Justice and HHS/OIG through their respective Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiatives. The criminal strategies are varied, but the common theme is to target both healthcare providers and entities that contribute to physician referrals. For example, this past year, DOJ indicted 303 individuals connected to a long-running scheme involving kickbacks paid by Biodiagnostic Laboratory Services LLC (BLS) to physicians for patient referrals. This case involved over $100 million in false claims for Medicare and Medicaid tests billed to the programs.
To influence provider referrals, BLS is alleged to have paid physicians kickbacks ranging from $50 to thousands of dollars per month per patient referred in exchange for patient blood specimen referrals and medically unnecessary lab tests. BLS also allegedly paid “straw” claims to pharmacies to funnel prescriptions for unnecessary BLS blood tests.
The HHS/OIG has also focused on entities that provide remuneration to obtain or retain business with a federal health care program, sometimes referred to as “pay-to-play.” For example, the OIG has brought multiple cases against pharmaceutical companies for paying kickbacks to influence providers’ type of prescriptions.
What are some of the most significant fraud cases prosecuted by HHS/OIG?
Hernandez: The OIG has had several significant settlements, including two recent $519 million resolutions with drug manufacturers Cephalon Inc. and Abbott Laboratories. In addition, in April, the OIG announced a nationwide sweep that resulted in charges against 243 defendants across 41 federal districts.
How are FCA settlements generally structured?
Hernandez: The terms of any settlement will be tailored to fit the unique circumstances surrounding the case. However, there are general guidelines for healthcare fraud cases. For example, settlements tend to include provisions that prohibit the wrongdoer from participating in federal healthcare programs such as Medicare and Medicaid for some time. In addition, the government will typically take steps to ensure that providers who were victims of fraud get reimbursed for any monies lost through over-payments.
How should healthcare companies start preparing if they’re worried about being the target of a government investigation?
Hernandez: Companies should be proactive and implement a compliance program, which includes providing training to employees. The OIG encourages healthcare companies to voluntarily disclose conduct that might give rise to an investigation so as not to face criminal or civil penalties for failing to self-report. A company’s compliance program should include the development of written policies and procedures to guard against violations and mechanisms for identifying potential issues before they turn into costly investigations.
The DOJ should be contacted immediately if questions arise about the conduct of a company’s employees or business partners that may implicate criminal liability. However, this should be done before conducting an internal investigation, which could hamper the government’s efforts to determine whether a violation occurred.
Meanwhile, healthcare companies should take great care when considering reaching an agreement with law enforcement authorities to avoid potential violations of a company’s constitutional rights. That is why a company needs to have legal counsel who understands the impact these agreements can have on future actions by law enforcement authorities.