Healthcare Fraud: Aggressive Enforcement Strategies

by Michael Volkov

fraud3This week I am focusing on the persistent problem of healthcare fraud. For healthcare providers, the challenge of compliance and avoiding enforcement risks is particularly difficult.  

The Justice Department and Health and Human Services had another record year in their battle against healthcare fraud. DOJ recovered over $2.3 billion in False Claims Act cases involving the healthcare industry.  Since 2009, DOJ has exceeded $2 billion in False Claims Act recoveries in the healthcare industry.

This continuing trend of aggressive civil enforcement, however, is being supplemented with new criminal prosecution schemes and tactics typically reserved for organized crime and narcotics trafficking organizations. Federal prosecutors are using an array of charging schemes and evidence gathering techniques to charge healthcare fraud “enterprises” with an array of serious federal crimes.

To bring even more pressure, DOJ recently announced it is screening all false claim act submissions by relators to determine if a criminal probe is warranted. This is a smart move, considering that many false claims act cases involve potential fraud crimes.  By making criminal prosecution a priority, DOJ is sending a strong message to the healthcare industry.

DOJ relies on aggressive criminal prosecutions developed by HEAT investigators in high-risk jurisdictions like Miami, Detroit, New Orleans and Houston.  Outside these jurisdictions, DOJ relies on Medicare Fraud Strike Forces to prosecute fraud cases.  

The Medicare Strike Force schedules an annual nationwide takedown to highlight the issue of healthcare fraud.  This year, in May 2014,  DOJ and HHS-OIG announced charges against 90 individuals in six cities for Medicare fraud schemes involving  approximately $260 million in false billings.  Twenty-seven of the 90 individuals charged were doctors, nurses, and other medical professionals.fraud

Some of the more important trends in DOJ’s civil and criminal enforcement strategy over the last year are outlined below:

  1. Focus on Providers – DOJ and HHS have targeted hospitals, clinics, home healthcare and skilled nursing facilities for enforcement actions. That makes sense since they are the largest users of Medicare funds. Hospitals, in particular, are targeted for enforcement actions. Community Health Systems paid $98 million, and Amedisys (home healthcare) paid $150 million, respectively, in civil settlements.
  2. Following the Money – DOJ has signaled its intention to follow the proceeds of healthcare fraud and prosecute those who launder proceeds. In one case, DOJ prosecuted a check cashing business for its role in a wide-ranging healthcare fraud scheme.
  3. Using All the Tools – DOJ extended its healthcare fraud mandate and prosecuted individuals for wire fraud and securities violations. Beyond these tools, DOJ has used false statements, obstruction and other criminal offenses to rack up charges against defendants involved in healthcare fraud.
  4. Charging Professionals – DOJ has prioritized prosecution of professionals for healthcare fraud, including doctors, physician assistants, nurses and others who may be involved in fraud schemes.
  5. Quality of Care – DOJ is pushing the envelope when it comes to criminal cases for quality of care issues. In most criminal cases involving this theory, DOJ is able to show that the fraudsters provided worthless services.  DOJ will push the criminal prosecution of cases where fraudsters provide substandard care – the line drawing issues in these cases will be interesting and courts will inevitably be drawn into these cases to define appropriate cases for criminal prosecution.

Judges have little tolerance for Medicare fraudsters and have imposed significant sentences on criminals. They are more than happy to send these fraudsters to jail for significant terms of incarceration.

fraud4For example, a Louisiana psychiatrist was sentenced to approximately seven years in prison and $43.5 million in restitution, as well as forfeiture of proceeds, for his role in a Medicare fraud scheme involving mental health centers. Also, in October 2014, a physician’s assistant in a Medicare fraud scheme was sentenced to 15 years in prison following his conviction after trial for health care fraud.

As healthcare fraud becomes more criminalized, professionals and other providers will be regular targets of enforcement actions.


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Michael Volkov, The Volkov Law Group | Attorney Advertising

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Michael Volkov

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