Medicare and Medicaid insure more than 100 million people and account for 23 percent of all federal spending. In 2009, the cost of these two programs combined grew to $876.2 billion and it is estimated that it will continue to grow, despite financial pressure to reduce costs.
So how has the government responded to concerns regarding costs? It has greatly increased the number of Medicare/Medicaid fraud investigations it conducts.
- In 2009, the FBI opened investigations into more than 2,400 cases and the Department of Justice has filed more than 800 indictments and obtained more than 600 convictions. These efforts have resulted in more than $3 billion in fines and penalties.
- In 2010, the Office of Inspector General of the Department of Health and Human Services collected civil penalties totaling $19 million in 23 fraud and 14 kickback cases.
- In April 2010, AstraZeneca agreed to pay $520 million in civil penalties for off-label marketing of the drug Seroquel.
- In July 2010, the government concluded the largest health care fraud sting in history, charging 94 people in five states with providing medically unnecessary services, billing for services not performed and giving kickbacks to Medicare beneficiaries.
It's not just large institutions and hospitals that face legal scrutiny for medical decisions when Medicare and Medicaid funding is involved. Dr. Mark Medei, one of Maryland's top cardiologists, has been investigated for conducting hundreds of "medically unnecessary" heart stent surgeries.
But is the medical care he provides actually outside the norm for a cardiologist? And more importantly, does this actually constitute medical fraud? One might expect a heart specialist to be aggressive in the treatment of a heart ailment. Is this simply a case of medical experts disagreeing with one another?
And when the person or company being charged with providing an "unnecessary" service or product is not him/herself the expert, but is simply fulfilling a medical order, where does responsibility lie? The government may be holding companies to an unreasonable standard.
The Legal Underpinnings of Fraud Cases
How are these cases moving forward in criminal court? Prosecutors use a variety of laws and legal statutes to bring Medicare and Medicaid fraud cases to court.
- The False Claims Act makes it a federal crime to "knowingly present, or cause to be presented, a false or fraudulent claim for payment or approval" (31 U.S.C. Section 3729(a)(1)(A)).
- The Fraud Enforcement and Recovery Act of 2009 expanded liability for making a fraudulent claim, allowed the federal government to seek reimbursement for the costs of bringing a civil action to recover damages and expanded the government's ability to intervene (31 U.S.C. Section 3729).
- The Stark Law prohibits doctors from referring Medicare patients to a health care provider or medical goods and services supplier with which the doctor or the doctor's family has a financial relationship, or from filing a Medicare claim for reimbursement arising from such a referral (42 U.S.C. Section 1395nn). Violation of the Stark Law is not a criminal offense so only civil penalties apply, but those penalties can be severe, up to $15,000 for each wrongful claim and up to $100,000 for each arrangement that violated the law, as well as lifelong exclusion from participation in government health programs.
- The federal Anti-Kickback Law prohibits a wide range of activities that could be interpreted as "offer, solicitation, payment or receipt of any remuneration, directly or indirectly, overtly or covertly, in cash or in kind ..." for referral to a service or for purchase or lease of a product or service that can be covered by a government health program (42 U.S.C. Section 1320a-7(b)(b)). This legislation is extremely far-reaching and violations can result in felony criminal charges and up to five years in prison.
Federal prosecutors often add charges onto the main criminal cases, particularly ancillary charges that are easier to prove such as mail fraud and wire fraud (using the telephone or post office when engaging in illegal activity), money laundering, conspiracy and obstruction of justice.
Defense Options in Medical Fraud Cases
A criminal investigation for Medicare or Medicaid fraud may begin with government investigators reviewing financial and medical documents of the company or medical practice. Or an investigation may begin with the company itself conducting an internal investigation to identify potentially illegal behavior by its own employees.
One key issue to resolve is the materiality of any misrepresentations made by the company or an employee. Would the company have been entitled to reimbursement from Medicare/Medicaid even if a false statement had not been made? Was there a reliance on false information?
The second key issue—the lynchpin issue that separates civil charges and fines from criminal liability and prison time—is intent. Did the company or its employee intend to defraud the government?
Hiding or destroying business records will create suspicion of fraudulent intent and can result in additional criminal charges for obstruction of justice. Conversely, the willingness of the company to engage in an investigative process and, if fraud is discovered, to identify and repay losses makes it difficult for the government to build a case for fraudulent intent. This places the company in a good position for plea bargaining for noncriminal consequences if illegal activity is found to have occurred.
The Role of the Defense Attorney in Medicare/Medicaid Fraud Cases
Whether the company is conducting its own internal investigation or the government is conducting an investigation, it is valuable to have a criminal defense attorney overseeing the process or reviewing the government's process. A certified fraud examiner hired by the company should review the same records federal or state investigators are reviewing to determine the facts from a financial, accounting and process standpoint.
The government may not know all the facts or may be mistaken in its assessment of losses, putting the company in a worse position. If discrepancies are found, the work of the independent fraud examiner can form the basis for a counter-assessment of the value of financial losses. The government's calculation—which may be inflated—need not be the only number on the table in negotiations.
A fraud defense attorney can advise the company on how best to proceed and what corrective measures, if any, should be taken. If potentially illegal activity has occurred, he or she can then open negotiations with the government regarding reimbursements, business changes and possible penalties.
Should the government choose to bring criminal charges, the information the company has compiled through the involvement of its own fraud examiner may shed a better light on the company's actions, calling into question the potentially overarching claims the government is making. It can also be used as a mitigating factor in sentencing if the examiner's report shows fewer losses to the government, less sophistication on the part of the defendant or great damage to a viable business because of the actions of rogue employees.
Each case is different and will be highly dependent upon a unique set of facts. The involvement of an attorney at every step in the investigation, however, will allow the company or employee to build the most effective defense strategy.
