DOJ Expands Health-Care Fraud Probe, Offers Firms Leniency

The Department of Justice is expanding corporate investigations while giving health care companies one route to report potential crimes and possibly limit financial damages. The Trump administration says it is fighting Medicare and Medicaid fraud. Under the new policy, companies that disclose potential misconduct can seek benefits from both the DOJ and the Department of Health and Human Services.

A One-Stop Shop for Companies

Companies once had to navigate a separate Department of Health and Human Services process to make voluntary self-disclosures. The DOJ health care fraud section will now handle that process. Jacob Foster, deputy assistant attorney general in the National Fraud Enforcement division, announced the change Thursday at the STAT Summit in Boston. Foster oversees the unit investigating health care fraud.

“When a compliance failure occurs, there’s nothing more we want to know than about the great efforts to remediate it, and reward that,” Foster said. Companies seeking to make voluntary disclosures will have a one-stop shop at the DOJ, he said. “What do you do? Who do you call? That’s a question industry shouldn’t have to ask,” he said.

Companies reporting potential criminal misconduct can seek benefits from both agencies at once, including a limited cap on financial damages. The arrangement puts the DOJ health care fraud section at the center of disclosures. The department is expanding corporate investigations and giving companies a more direct path to prosecutors.

More Surveillance, More Prosecutorial Weight

The department will use data analytics and artificial intelligence algorithms to identify possible corporate wrongdoing, Foster said. Investigators will look for providers billing for unneeded services, companies fabricating patient records and health tech companies adding redundant diagnoses. Health care investigators also examine social media, news reports and other sources for information about companies that may be breaking the law, he said.

An Oct. 1 memo from Assistant Attorney General Colin M. McDonald directs prosecutors to place extra emphasis on schemes involving health care, controlled substances and violations of the federal Food, Drug, and Cosmetic Act. It says prosecutors should give “great weight” to whether corporate executives knew about or tried to conceal fraud, whether a scheme lasted over three years or extended across various states, and whether it affected taxpayer-funded programs.

The memo also says the department will design new programs that “appropriately incentivize” whistleblowers to report fraud. The account describes whistleblower incentives and a disclosure process for companies; it identifies no grassroots, community-run response or mutual-aid effort. It doesn’t describe a legislative or electoral remedy, either. The response it details runs through federal prosecutors and the agencies handling corporate disclosures.

Taxpayer Funds, Executive Decisions

Foster framed the investigations around public money and Medicare. “No one, irrespective of party, likes the government being ripped off by wrongdoers,” he said Thursday. “These cases not only involve the theft of all of our tax dollars, [but] involve the theft from a program, a trust fund — Medicare — that could run out.”

The guidance tells prosecutors to consider executive knowledge, concealment, a scheme’s duration and reach, and effects on taxpayer-funded programs. The DOJ’s warning to health care executives was blunt: “Don’t be another Theranos.”