Health Firms Get DOJ Benefits for Fraud Disclosures

Health care companies that report potential criminal misconduct may receive a cap on financial damages from the Department of Justice and the Department of Health and Human Services, as the DOJ expands corporate fraud investigations involving Medicare and Medicaid. The policy offers companies one route to disclose wrongdoing while federal prosecutors sharpen scrutiny of fraud affecting taxpayer-funded programs.

Corporate Disclosures, Federal Benefits

Jacob Foster, deputy assistant attorney general in the National Fraud Enforcement division, described the policy Thursday at the STAT Summit in Boston. Foster oversees the unit that investigates health care fraud. Companies seeking to make voluntary self-disclosures will have a one-stop shop at the DOJ, he said, rather than having to navigate a separate process at the Department of Health and Human Services.

“There's nothing more that we want to know when a compliance failure occurs than to hear about the great efforts to remediate it, and reward that,” Foster said. He said the consolidated process will let companies report potential criminal activity to both agencies at once and may bring benefits, including a limited cap on financial damages.

“What do you do? Who do you call? That is a question that industry should not have to ask,” Foster said. The policy pairs expanded investigations with a formal incentive for companies to report misconduct and remediate compliance failures. The article provides no dollar amount for the damages cap or for any company’s financial gain.

The DOJ health care fraud section is also bringing expertise together to address issues including digital health technology, Foster said. The department plans to use data analytics and artificial intelligence algorithms to identify possible corporate wrongdoing. Investigators may look at providers billing for services that weren’t needed, companies fabricating patient records, and health technology companies adding redundant diagnoses.

Prosecutors Target Taxpayer-Funded Programs

An Oct. 1 memo from Assistant Attorney General Colin M. McDonald directs prosecutors to give extra emphasis to schemes involving health care, controlled substances and violations of the federal Food, Drug, and Cosmetic Act. 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 department is also designing programs that “appropriately incentivize” whistleblowers to report fraud, according to the memo. Foster said investigators examine social media, news reports and other sources for information about companies possibly breaking the law. The guidance lists executives’ knowledge and alleged concealment among the factors prosecutors are told to weigh.

Foster said the administration’s enforcement effort concerns public funds and Medicare’s trust fund. “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 article opened with the DOJ’s warning to health care executives: “Don't be another Theranos.” It describes investigations into companies and providers, along with a disclosure process that can limit financial damages. It does not identify a union, worker organization, strike or labor response to the guidance.