DOJ Centralizes Fraud Reports and Expands Scrutiny

The Department of Justice is consolidating health-care fraud reporting under its own fraud section and expanding investigations into corporate wrongdoing tied to Medicare and Medicaid. Companies that disclose potential criminal misconduct may receive benefits from both the DOJ and the Department of Health and Human Services, including a limited cap on financial damages.

A single reporting channel

Jacob Foster, deputy assistant attorney general in the National Fraud Enforcement division, described the changes Thursday at the STAT Summit in Boston. Foster oversees the unit investigating health-care fraud. Previously, companies seeking to make voluntary self-disclosures had to navigate a separate process at the Department of Health and Human Services. The DOJ health-care fraud section is now consolidating that process.

“What do you do? Who do you call? That is a question that industry should not have to ask,” Foster said. He said companies will have a one-stop shop at the DOJ. Under the policy, companies reporting potential criminal misconduct can receive benefits from both agencies at once, including a limited cap on financial damages.

The department wants to hear how companies address compliance failures, Foster said. “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,” he said.

The DOJ health-care fraud section brings expertise together to address issues such as digital health technology. The department also plans to use data analytics and artificial intelligence algorithms to spot possible corporate wrongdoing. Foster cited providers billing for services that weren't needed, companies fabricating patient records and health-tech companies adding redundant diagnoses as examples investigators may pursue.

What prosecutors will weigh

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. The memo says the department will design programs that “appropriately incentivize” whistleblowers to report fraud.

The guidance tells prosecutors to give “great weight” to whether corporate executives knew about fraud or tried to conceal it, whether a scheme lasted over three years or reached various states, and whether it affected taxpayer-funded programs. Prosecutors are directed to consider executives’ knowledge, the reach and duration of alleged schemes, and the use of public funds.

Investigators also look at social media, news reports and other sources for information about companies possibly breaking the law, Foster said. The department's expanded use of data analysis and AI aims to identify potential wrongdoing, while the memo lays out factors prosecutors should weigh when deciding how to handle cases.

Medicare and taxpayer funds

The administration's effort targets Medicare and Medicaid fraud, and Foster framed enforcement as protecting taxpayer-funded programs. “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.” Foster's remarks and McDonald's memo describe a policy that pairs incentives for voluntary disclosures with scrutiny of suspected fraud, including corporate conduct involving taxpayer-funded health programs.