Originally published in Healthcare Michigan, Volume 41, No. 2
The United States Department of Justice (“DOJ”) and state law enforcement agencies have robust teams investigating and prosecuting health care fraud. Law enforcement often uses advanced data analytics and algorithmic methods to identify newly emerging health care fraud schemes. DOJ also employs nine regional strike forces located throughout the country to bring together groups of prosecutors, FBI agents, and key administrative agencies to combat health care fraud. Critical time will be lost, and important steps may be missed if an organization waits until an investigation is underway to decide how to respond to a government investigation.
This article provides six basic steps that health care companies should take when law enforcement agents arrive at a health care facility to execute a search warrant. That discussion is followed by an analysis of: (1) the primary laws relied upon to combat health care fraud; (2) the legal tools law enforcement uses to extract information from health care companies; and (3) the steps a health care company should take when producing documents to law enforcement.
6 Steps for Responding to a Search Warrant
1. Company policy
Health care companies should implement a written policy on how to handle government investigations. Attempting to put together a response on the fly is fraught with danger and will likely put the company at risk. For search warrants, the policy should include designating a lead person within the company such as an experienced attorney or trained manager to oversee the company’s response. There should also be a designated manager at each health care facility who is responsible for initially engaging with law enforcement and notifying the lead corporate official (these corporate leaders and managers are collectively referred to as the “Response Team”).
2. Initial response
The first person to encounter law enforcement is often a receptionist or security guard. That person should request a copy of the search warrant and inform the designated health care facility manager that law enforcement is present. The manager should then notify the Response Team. In addition, an alternative manager should also be named in the event the primary manager is not available. An experienced attorney or corporate leader should arrive on site as soon as possible to interact with the lead agent.
The leader of the Response Team should attempt to obtain as much information as possible from the lead agent. Questions should include: What is being investigated? Who are the investigators conducting the search? What agency do they represent? Who is the prosecutor leading the investigation?
The agent may decline to answer these questions, but there is no harm in asking. If not already obtained, the Response Team leader should request a copy of the search warrant, which the agent is legally required to provide.
3. Review the search warrant
The Response Team should only provide law enforcement access to the areas designated in the search warrant. If the agents want to search multiple buildings, then those buildings must be listed in the search warrant. The Response Team should not consent to any search beyond the areas listed in the search warrant. Similarly, the Response Team should not consent to the seizure of any items not authorized by the warrant.
If law enforcement takes action that is contrary to the express language of the search warrant, the Response Team should voice an objection and note the circumstances surrounding the objection such as the time the objection was made and the name or badge number of the law enforcement officers that were present when the objection was lodged. However, company employees should never attempt to block any part of the search or otherwise interfere with the search, even if law enforcement exceeds the authority set forth in the search warrant. The time to challenge the scope of the search warrant will be at a later date in court.
4. Handling employees during the search
The corporate policy should make clear that employees are not required to speak to law enforcement, and they should refer all questions to the Response Team. Notwithstanding, employees sometimes speak to law enforcement out of fear or because they are nervous. Employees also sometimes believe that if they are not read their Fifth Amendment Miranda rights, then their statements cannot be used against them or the company. That is most likely not true. Corporate employees are typically not placed in legal “custody” when questioned, which means their Fifth Amendment Miranda rights are not triggered.
The best practice is for the company to send the employees home during the search while the Response Team remains on the scene to observe the search. Employees should also be informed that if they elect to speak to law enforcement – in violation of the corporate policy – then they must be truthful at all times to avoid obstruction of justice allegations.
5. Observe the search
The Response Team should observe the search and listen to the conversations that are taking place between the agents, assuming law enforcement permits them to be present in the areas where the search is taking place. To the extent possible, the Response Team should take detailed notes of what they observe and hear. If the agents attempt to seize privileged or classified information, then the Response Team should inform the agents that the information is privileged or classified and make note of what is being seized. If the agents nonetheless continue to seize the privileged or classified information, then the Response Team should ask to speak to the prosecutor on the phone to attempt to persuade the prosecutor to stop that part of the search. In the alternative, the Response Team should attempt to have the agents mark the materials or boxes as “privileged” or “classified.”
If the search warrant authorizes law enforcement to seize samples, then the Response Team should request that a split sample be seized, allowing a portion of the sample to remain at the office to allow for future testing by the company. If the agents refuse, then the company should attempt to take its own sample from the same item after the search is complete.
The agents are required to provide the company an inventory of what was seized. After the search is complete, the Response Team should supplement the inventory list with their own notes to provide as much detail about the items that were seized.
6. Post-Search Warrant
As soon as possible after the search is complete, corporate counsel (or retained outside counsel) should debrief the Response Team and other employees who either spoke to law enforcement or have relevant information. Employees’ notes should be collected and a plan should be put in place regarding next steps, including whether court action should be taken to challenge the search. In most cases, it is critical for the company to retain outside counsel who has the requisite experience with law enforcement to properly address the many issues that will arise as the government investigation proceeds.
Health Care Laws
DOJ and state law enforcement agencies have powerful laws to combat health care fraud and abuse. This section focuses on the primary federal laws that govern health care fraud.
1. False Claims Act (civil)
The government’s main civil enforcement tool is the False Claims Act (“FCA”), 31 U.S.C. § 3729-3733. The FCA allows government attorneys to file lawsuits seeking civil damages when a person or company makes a false statement to the government or engages in a fraudulent course of conduct. Each false submission allows the government to recover three times the actual damages suffered. For example, if a health care provider submits a $1,000 false Medicaid claim, the government can obtain $3,000 in damages (i.e., treble damages). Every year, a health care company may submit hundreds, or thousands, of Medicaid claims, meaning a final damages award for systemic fraudulent conduct can be massive.
Similarly important is the fact that the FCA gives whistleblowers (called “relators”) significant financial incentives to file civil law suits (called “qui tam” actions) against health care providers, which can result in whistleblowers receiving 15 to 30 percent of the money recovered by the government. These whistleblower actions have played an ever-increasing role in health care fraud investigations.
2. Anti-Kickback and the Health Care Fraud Statute (criminal)
The Anti-Kickback Statute (“AKS”), 42 U.S.C. § 1320a-7b, is a federal criminal statute prohibiting any person from intentionally offering, paying, soliciting or receiving anything of value (called “remuneration”) to induce or reward health care referrals. AKS carries with it a maximum 10 year term of imprisonment and fines.
The more general health care fraud statute, 18 U.S.C. § 1347, criminalizes any scheme to defraud the government or a private health care payer, and carries with it a maximum 10 year term of imprisonment and fines.
Law Enforcement Tools to Collect Information and Documents
The government uses the following 7 tools to extract documents and information from health care providers:
• Requests for Voluntary Cooperation/Letter Requests: These are informal inquires that allow for a broad scope of information to be collected.
• Licensing Agency Audit/Inspection: State authorities can conduct periodic audits or inspections pursuant to state law, which can include on-site inspections and requests for documents.
• Administrative Subpoena: Federal and State Inspector General (OIG) subpoenas can be issued in both criminal and civil investigations for the production of documents.
• Civil Investigative Demand (CIDs): The false claims act authorizes the government to issue CIDs, which have become a more prominent tool in recent years because the demands are broad in nature and do not require a Judge’s authorization. CIDs are broader than the standard administrative subpoenas described above because CIDs can require answers to questions in the form of interrogatories and can compel individuals or organizations to give answers under oath at a deposition.
• Health Insurance Portability and Accountability Act (“HIPAA”) Subpoena: A HIPAA subpoena is another form of administrative subpoena used by DOJ pursuant to 18 U.S.C. § 3486, but is unique because it is only available when there is an open criminal investigation.
• Grand Jury Subpoena: Grand jury subpoenas are issued by a grand jury and can only be used as part of criminal investigations that have been opened by prosecutors.
• Search Warrant: Search warrants are issued by Judges in criminal investigations and must be supported by evidence establishing probable cause of criminal activity.
Producing Information or Documents to the Government
When a health care company receives a law enforcement request or demand for documents, the following steps should be followed.
1. Issue Preservation Notice: Notify all those within the organization who may have custody, control or access to the requested documents that the documents and information must be preserved and not destroyed, manipulated or otherwise secreted. Any policy governing the company’s standard document destruction or deletion (including the standard email destruction policy) should be suspended for the relevant employees and documents. Employees should also be notified that the preservation notice covers text messages, social media posts, and any other written statement relating to the document request or demand.
2. Assess Investigation: Evaluate the time and expense of production, any unique or difficult production issues, and attempt to determine the focus of the investigation.
3. Negotiation: Engage in a dialogue with government attorneys to attempt to narrow and limit the production by date, subject matter, or other reasonable restrictions. Oftentimes, law enforcement will accept an initial production focusing on the most critical documents with the understanding that follow-up requests can be submitted by the government. This type of accommodation will not relieve the company of its broader production responsibilities, but on occasion, the government will be satisfied with the initial production and forego further productions.
4. Collection: One of the most important aspects of document collection is noting and separately preserving privileged information and documents. This effort will oftentimes require complex legal analysis and procedures that experienced counsel will need to oversee. A privilege log will need to be created, noting all documents and information that are being withheld based upon privilege claims.
5. Production: When documents and information are produced, safeguards need to be put in place to ensure that privileged information is not mistakenly produced.
Conclusion
Responding to health care fraud investigations is oftentimes a complex, time-consuming, and expensive endeavor. An initial investigation by one agency can lead to multiple investigations at the state and federal level, and can involve both civil and criminal authorities. Having a written policy in place with appropriate employee training is a critical first step to ensuring a proper response. It is also a best practice to have experienced outside counsel available should a government investigation arise. The last thing a health care company will want to do in the midst of an active government investigation is be forced to work to find and retain qualified outside counsel.
The New Year is the perfect time to improve organizational policies and procedures. A well-thought-out plan developed in conjunction with legal counsel can minimize an organization’s risks and best position the company as the government investigation proceeds.
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