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Healthcare Fraud Takeaways from the Southeastern White Collar Crime Institute

Last week over 130 of the “who’s who” among attorneys focused on white collar crime from across the Southeast convened for the annual Southeastern White Collar Crime Institute, hosted by the American Bar Institute. While the conference addressed white collar criminal developments, enforcements and strategies from the perspectives of federal prosecutors and judges, defense counsel, the SEC and the Department of Justice (DOJ), a recurring topic was healthcare fraud. Key takeaways were abundantly offered from one panel discussion to another. 

It was made very clear that while the number of federal prosecutions related to healthcare fraud in 2016 is trending down from 2015, the DOJ and the Office of the Inspector General of the Department of Health and Human Services (OIG) are still very focused on vetting out fraudulent activity across the healthcare sector.  In fact, United States Attorneys are actively conducting outreach to encourage cases being filed. 

The submission of false claims to Medicare, Medicaid and other federally reimbursed programs continue to be the primary targets of governmental investigations and audits.  These include (a) billing for services not rendered, (b) the provision of medically unnecessary services, (c) upcoding services, (d) illegal billing, sale, and off-label marketing of prescription drugs, and (e) Stark Law and Anti-Kickback Statute schemes related to referral arrangements between physicians and medical companies and even payments back to patients for their participation in fraud schemes. 

Corporate Integrity Agreements (CIA), which serve as a stipulation of settlement for many healthcare organizations alleged of false claims or other fraud schemes, continue to be regularly executed and enforced by the OIG.  CIAs are intended to ensure enhanced corporate compliance, monitoring, auditing, and improvement occurs within the organization in the years following the settlement. 

Recent trends and requirements in CIAs indicate an expanded and intensified level of accountability expectation for board members and management teams.  Some boards of directors, for instance, are now required to include independent, non-executive members and to engage an external individual or entity with expertise in federal healthcare program compliance to perform a review of the effectiveness of the organization’s compliance program, referred to as a Compliance Expert.  Meanwhile, individual officers and certain department heads within the organization are required to certify in writing that their departments or areas of authority are in compliance with applicable federal health program requirements.  Some CIAs take this accountability an additional step by requiring organizations to establish a financial recoupment program that allows for claw back of executives’ compensation if the executive is found to have been involved in fraud or misconduct that requires financial statements to be restated.  

As for mitigating susceptibility to whistleblowers and prosecutions in the future, it is commonly agreed upon that organizations must be proactive in implementing effective compliance programs.  This requires a paradigm shift from sitting back and hoping that an issue does not arise, to taking OIG published guidance regarding what an effective compliance program entails and addressing those areas now.  Part of this program includes fully vetting issues or allegations as they are reported to the organization through the conduct of investigations, documentation, and action steps to discipline, correct, and improve upon the identified matter.  Absent an effective compliance program and an ability to demonstrate that appropriate attention is given when issues arise, organizations will experience great difficulty in demonstrating their adherence to federal healthcare program requirements and likely will face significant monetary penalties and be subject to forced corrective actions, such as CIAs, if and when an allegation is presented in the future.  

For more information on healthcare fraud investigations, please contact Patrick Braley by calling 770.396.2200.