HEALTH CARE FRAUD CRIMES
Top rated attorney Joe Griffith has a wealth of
experience in the legal areas of health care fraud and white collar
criminal law. Located in Charleston County and Mt.
Pleasant, South Carolina, he devotes 100% of his practice to
litigation. White collar criminal defense and health care fraud
litigation are a major focus of his practice. Joseph P. Griffith, Jr. is
designated as an AV rated lawyer by the prestigious
Martindale-Hubbell® attorney rating company, signifying the highest
possible ranking for legal ability and ethics as judged by peers in
the legal profession. The firm is dedicated to
providing outstanding legal service to each of its clients and will
fight to protect them to the fullest extent allowable under the law.
Client satisfaction is JGLF's number one goal.
A white collar crime is a serious offense in South Carolina and
throughout the United States (“US”). A white collar federal health
care fraud criminal conviction can have life altering consequences.
If you or your company are being investigated for, or have been
indicted or otherwise charged with, the crime of health care fraud,
you should immediately contact the
Joe Griffith Law Firm for a free consultation.
Health care fraud has become a major focus of federal and state
government prosecution efforts. The renewed emphasis on health care
fraud prosecutions coincided with the passage of the Health
Insurance Portability and Accountability Act of 1996 (“HIPAA”),
which created a separate federal health care fraud offense and
specifically funded the Department of Health and Human Services (“HHS”)
and the Federal Bureau of Investigations (“FBI”) to target health
care fraud crimes.
It has been estimated that approximately two trillion dollars are
now spent on health care in the United States annually, and as much
as 10% of this amount has been attributed to fraudulent activities.
According to the South Carolina Attorney General’s office, the state
spends about $2.7 billion on Medicaid each year, and annually loses
approximately $270 million to fraud.
The variety of fraudulent reimbursement and billing practices in
the health care area is potentially infinite. The most common
fraudulent acts include, but are not limited to:
- Billing for services, procedures and/or supplies that were
never provided or performed, sometimes referred to as “phantom
billing.”
- The deliberate performance of medically unnecessary services
for the purpose of financial gain.
- Intentionally misrepresenting any of the following, for
purposes of obtaining a payment — or a greater payment — to which
one is not entitled:
- The nature of services, procedures and/or supplies provided
or performed
- The dates on which services and/or treatments were rendered
- The medical record of service and/or treatment provided
- The condition treated or the diagnosis made
- The charges for services, procedures and/or supplies
provided or performed
- The identity of the provider or the recipient of services,
procedures and/or supplies
Health care fraud violations may be prosecuted as a criminal
case, civil case, and/or an administrative case. The government has
the discretion to determine which option to pursue. The criminal,
civil and administrative remedies available to the government are
not mutually exclusive. It is not unusual to see the government try
to convict an individual to put him in prison, bring a civil suit
for treble damages and forfeiture of the defendant’s assets, and
pursue exclusion or debarment proceedings to preclude the
defendant’s future participation in government sponsored health care
programs.
Some of the more prominent federal health care-related criminal
and civil statutes include:
- 42 USC 1320a-7b Medicare/Medicaid Fraud & Antikickback
- 42 USC 1395nn Stark Self Referrals
- 42 USC 1320a-7a Civil Monetary Penalties
- 21 USC 353, 333 Prescription Drug Marketing Act
- 18 USC 1347 Health Care Fraud
- 18 USC 669 Theft or Embezzlement in Connection with Health
Care
- 18 USC 1035 False statements relating to Health Care
Other federal statutory offenses which are often involved in a
health care fraud prosecution include:
- 18 USC 2 Aiding and Abetting
- 18 USC 3 Accessory after the Fact
- 18 USC 4 Misprision of a Felony
- 18 USC 286 Conspiracy to defraud the Government with respect
to Claims
- 18 USC 287 False, Fictitious or Fraudulent Claims
- 18 USC 371 Conspiracy
- 18 USC 1001 False Statements
- 18 USC 1341 Mail Fraud
- 18 USC 1343 Wire Fraud
- 18 USC 1956 Money Laundering
- 18 USC 1957 Money Laundering
- 18 USC 1964 Racketeer Influenced and Corrupt Organizations
(“RICO”)
- 31 USC 3729 False Claims Act
South Carolina has two specific health care fraud statutes, as
well as several other general criminal statutes which are often used
in conjunction with a health care fraud prosecution, as follows:
- S.C. Code 43-7-70 Medical Assistance Recipient Fraud
- S.C. Code 43-7-60 Medical Assistance Provider Fraud
- S.C. Code 43-35-85 Patient Abuse and Neglect
- S.C. Code 38-55-540 Insurance Fraud
- S.C. Code 16-16-20 Computer Fraud
- S.C. Code 16-17-410 Conspiracy
The United States DOJ's Justice Manual, beginning at Section
9-27, entitled “Principles of Federal Prosecution,” sets forth
guidelines for prosecutors considering a federal prosecution. These
guidelines are an attempt by the government to establish a uniform
approach to federal prosecutions, with the aim of providing fair and
equal treatment, while maintaining a degree of flexibility in
assessing factors which influence the decision to prosecute or not.
In general, if a prosecutor believes a federal crime has been
committed and there is sufficient evidence to support a conviction,
a prosecution should be pursued unless “no substantial federal
interest” would be served by pursuing a prosecution, the person is
subject to effective prosecution in another jurisdiction, or an
adequate non-criminal alternative to prosecution exists. The factors
to be considered in determining whether a potential prosecution
should be pursued or declined include:
- Federal law enforcement priorities
- The nature and seriousness of the offense
- The deterrent effect of prosecution
- The person’s culpability
- The person’s criminal history
- The person’s willingness to cooperate
- The person’s personal circumstances
- The probable sentence or punishment
- Other considerations
The above Principles of Federal Prosecution are primarily focused
upon an individual target as opposed to a putative corporate
defendant. On December 12, 2006, Deputy Attorney General Paul J.
McNulty issued a Department of Justice (“DOJ”) memorandum entitled
“Principles of Federal Prosecution of Business Organizations” (the
“McNulty Memo”) as a supplement to those principles of federal
prosecution set forth in the DOJ's Justice Manual. The McNulty
Memo supersedes two prior memorandums addressing the subject of
corporate prosecutions. Deputy Attorney General Larry D. Thompson’s
memorandum, dated January 20, 2003, was also entitled “Principles of
Federal Prosecution of Business Organizations” (the “Thompson
Memo”). Associate Attorney General Robert D. McCallum, Jr.’s
memorandum, dated October 21, 2005, was entitled “Waiver of
Corporate Attorney-Client and Work Product Protections” (the
McCallum Memo”).
The McNulty Memo generally provides that prosecutors should apply
the same factors in determining whether to charge a corporation as
they do with respect to individuals, and should weigh all of the
factors normally considered in the sound exercise of prosecutorial
judgment regarding the same. However, because of the nature of the
corporate “person,” additional factors should be considered when
conducting an investigation, determining whether to bring charges,
and negotiating plea agreements. The McNulty Memo provides that
prosecutors should consider the following factors in reaching a
decision as to the proper treatment of a corporate target:
- the nature and seriousness of the offense, including the
risk of harm to the public, and applicable policies and
priorities, if any, governing the prosecution of corporations
for particular categories of crime;
- the pervasiveness of wrongdoing within the corporation,
including the complicity in, or condonation of, the wrongdoing
by corporate management;
- the corporation’s history of similar conduct, including
prior criminal, civil, and regulatory enforcement actions
against it;
- the corporation’s timely and voluntary disclosure of
wrongdoing and its willingness to cooperate in the investigation
of its agents;
- the existence and adequacy of the corporation’s pre-existing
compliance program;
- the corporation’s remedial actions, including any efforts to
implement an effective corporate compliance program or to
improve an existing one, to replace responsible management, to
discipline or terminate wrongdoers, to pay restitution, and to
cooperate with the relevant government agencies;
- collateral consequences, including disproportionate harm to
shareholders, pension holders and employees not proven
personally culpable and impact on the public arising from the
prosecution;
- the adequacy of the prosecution of individuals responsible
for the corporation’s malfeasance; and,
- the adequacy of remedies such as civil or regulatory
enforcement actions.
DOJ policy shifts announced in the McNulty Memo were significant
in two respects. First, federal prosecutors must now obtain written
approval before seeking a waiver of the attorney-client privilege
and work product protection. Prosecutors must first establish a
legitimate need for privileged information, and then must seek
approval before they can request it. When federal prosecutors seek
privileged attorney-client communications or legal advice from a
company, the U.S. Attorney must obtain written approval from the
Deputy Attorney General. When prosecutors seek privileged factual
information from a company, such as facts uncovered in a company’s
internal investigation of corporate misconduct, prosecutors must
seek the approval of their U.S. Attorney. The U.S. Attorney must
then consult with the Assistant Attorney General of the Criminal
Division before approving these requests. Attorney-client
communications should be sought by prosecutors only in rare
circumstances, and if a corporation chooses not to provide
attorney-client communications after the government makes the
request, prosecutors have been directed not to consider that
declination against the corporation in their charging decisions.
Second, prosecutors generally may not consider a corporation’s
payment of legal fees to employees in determining a company’s
cooperation, except in rare circumstances when it can be shown that
such fees, combined with other significant facts, were part of a
deliberate design to impede the government’s investigation.
Thus, given the principles of federal prosecution set forth in
the U.S. DOJ's Justice Manual and the McNulty Memo, great care must be
taken in defending the corporate client which becomes subjected to a
health care fraud investigation or criminal charge. The timing for
hiring a criminal defense attorney or law firm is unpredictable. An
employee may report being questioned by a federal investigator, a
CEO or other officer may be present when a search warrant is about
to be executed, or in-house counsel may be served with a grand jury
subpoena requesting the production of company documents.
Many tactical decisions must be made which may affect the final
outcome of the case. Employees must be advised of their rights in
responding to government investigators with care to avoid
obstruction of justice, tampering or destroying evidence, or similar
types of charges. Oftentimes, companies get in criminal harm’s way due
to the actions taken in response to an investigation rather than the
alleged wrongdoing which jump-started the investigation.
Once criminal defense counsel is retained for the corporation, an
assessment will have to be made regarding the need for the company
to hire additional, separate counsel for individuals employed by the
company who have been, or are likely to be, identified by the
government as subjects or targets of the investigation. Ethical
conflicts of interest inevitably preclude joint representation of
the corporation and such employees by one attorney. Such conflicts
quickly become apparent. Employers are likely to shun or “give up” a
rogue employee to the government, whereas employees are often
approached by the government and asked to testify against, or “dime
out,” the corporate employer.
Corporate counsel must also determine whether or not to execute a
joint defense agreement (“JDA”) with individual counsel, conduct an
internal investigation, voluntarily disclose information to the
government, and waive attorney-client and attorney work product
privileges. A written JDA is preferable because it can clearly
delineate expectations between the parties, and, in the event of a
dispute, provides the court a clear means to resolve any such
dispute. However, the courts have recognized the existence of a
joint defense privilege even without the existence of a written JDA.
The voluntary disclosure decision is complicated by the mandatory
disclosures required by federal statute. 42 USC 1320a-7b(a)(3)
makes it a felony if anyone “having knowledge of the occurrence of
any event affecting (A) his initial or continued right to any such
benefit or payment, or (B) the initial or continued right to any
such benefit or payment of any other individual in whose behalf he
has applied for or is receiving such benefit or payment, conceals or
fails to disclose such event with an intent
fraudulently to secure such benefit or payment either in a greater
amount or quantity than is due or when no such benefit or payment is
authorized[.]” Corporate counsel must be cognizant of obtaining
information which is subject to mandatory disclosure provisions, and
should be aware of the benefits of timely voluntary disclosures
which may mitigate the penalties under the Sentencing Guidelines in
the event of a conviction.
Once a potential corporate health care fraud case has been
discovered, an internal investigation should begin immediately. In
publicly traded corporations, the oversight for such investigations will
usually be
assigned to a special committee. It is highly recommended that the
corporation obtain separate defense counsel to conduct the
investigation. Defense counsel can conduct its investigation under
the cloak of attorney-client and work product privileges, as well as
any self-evaluation privilege that may be available. All relevant
employees should be interviewed, and all pertinent documents
gathered and reviewed, with a keen eye for documents,
particularly e-mails, which may be subject to attorney client
privilege. If corporate privileges are not going to be waived, a
log of privileged documents must be created. Care should be taken
to inform the corporation and its employees to not destroy any
evidence which is the subject of the investigation. Employees must
be told that corporate defense counsel is the corporation’s
attorney and not the employees’ attorney, and that the corporation
holds the attorney-client privilege. Employees should be advised of
their right to not talk to the corporate or government attorney, and
of their right to obtain separate counsel. Counsel should not
mislead the employees in any way in order to avoid any obstruction
of justice allegations. A second person, such as an investigator or
another lawyer, should always attend employees’ interviews, and the
interviews should only be memorialized in a memorandum by the
investigating attorney in order to preserve the privileged status of
same. In many cases, the corporate client determines to waive any
privileges and fully cooperate with the government in its parallel
investigation. Sometimes, the government will agree to limit the
scope of any waivers by the corporation. However, counsel should be
aware that such partial or limited waivers are not universally
recognized by the courts, and may constitute a complete waiver of
all such privileged materials.
In defending health care fraud cases, the practitioner should be
aware of statutory exemptions to prosecution which may be available.
The Antikickback statute provides four statutory exemptions to
prosecutions, i.e., referrals from employees, certain discounts,
certain group purchasing arrangements, and certain waivers of
co-insurance payments. Likewise, there are a number of regulatory
safe harbors to avoid Antikickback criminal prosecutions or civil
Stark violations as well.
HHS and the DOJ publish an annual report of the Health Care Fraud
and Abuse Control Program established by HIPAA. The annual report
for fiscal year 2005 notes that U.S. Attorney’s offices across the
nation had 1,689 health care fraud criminal matters pending in 2005,
involving 2,670 defendants. Criminal charges were filed in 382 cases
involving 652 defendants, and 523 convictions were obtained. In Fiscal Year 2021, the Department of Justice opened 831 new criminal health care fraud investigations. Federal prosecutors filed criminal charges in 462 cases involving 741 defendants. A total of 312 defendants were convicted of health care fraud related crimes during the year. Also, in Fiscal Year 2021, DOJ opened 805 new civil health care fraud investigations and had 1,432 civil health care fraud matters pending at the end of the fiscal year. Federal Bureau of Investigation investigative efforts resulted in over 559 operational disruptions of criminal fraud organizations and the dismantlement of the criminal hierarchy of more than 107 health care fraud criminal enterprises. In Fiscal Year 2021, investigations conducted by HHS's Office of Inspector General ("OIG") resulted in 504 criminal actions against individuals or entities that engaged in crimes related to Medicare and Medicaid, and 669 civil actions, which include false claims and unjust-enrichment lawsuits filed in federal district court, and civil monetary penalty settlements. The OIG also excluded 1,689 individuals and entities from participation in Medicare, Medicaid, TRICARE and other federal health care programs. Among these were exclusions based on criminal convictions for crimes related to Medicare and Medicaid (569) or to other health care programs (267), for beneficiary abuse or neglect (145), and as a result of state health care licensure revocations (536).
Some of the more prominent cases resolved in 2005 and 2006 can be
found here: Health Care
Fraud Cases in 2005 and 2006.
The Joe Griffith Law Firm is a Charleston, SC law firm that
concentrates in white collar criminal litigation and health care
fraud.
JGLF represents those accused of criminal misdemeanors and/or
felonies in a variety of state and federal proceedings including,
but not limited to, initial appearances, preliminary hearings, bond
hearings, trials, sentencing hearings, parole hearings, probation
hearings, and appeals. JGLF represents those designated “witnesses,”
“subjects” or “targets” of grand jury criminal investigations, and
have the experience to know when to assert 5th Amendment rights,
make effective “proffer” statements, or demand immunity from
government prosecutors. Attorney Joe Griffith is extremely effective in conducting
pre-indictment investigations to gather and analyze evidence in
order to make factual and legal presentations to prosecutors in an
effort to persuade them to issue a declination whereby they agree to
not indict a person or company under criminal investigation. Joe Griffith has
been successful in having investigations declined pre-indictment. In
the event of an indictment or other criminal charge, JGLF stands ready to fight for its client and protect his or her
legal rights to the fullest extent of the law.
If you or your company have received a subject letter or target
letter naming you as a subject or target of an alleged health care
fraud crime, have been served with a search warrant or grand jury
subpoena, or have been charged in a criminal complaint or an
indictment with the white collar crime of health care fraud,
contact the Joe Griffith Law Firm
immediately to discuss your legal rights.< Back to Practice Areas
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