Medicine-7

Health Care Fraud and Abuse Medicare Fraud Strike Force

The Medicare Fraud Strike Force shattered its record last year with 300 arrests in 2 days. Whether you are a doctor receiving a target letter, a compounding pharmacy receiving a grand jury subpoena, or a laboratory receiving a civil investigative demand, the Firm will strive to mitigate the damage from any investigation, and where necessary, will battle in court.

It is now an annual summer tradition that the Department of Justice (DOJ), through its Medicare Fraud Strike Force, which was established in 2007 and is composed of various federal, state, and local law enforcement agencies (e.g., OIG-HHS, DEA, FBI, Medicaid Fraud Control Units) will arrest various persons for alleged health care fraud and abuse. The Strike Force currently operates in 9 locations: Miami, Tampa, Brooklyn, Detroit, Los Angeles, Dallas, Southern Texas, Southern Louisiana, and Chicago.

DOJ appears to be focused on drug rehabilitation and substance abuse centers, laboratories, hospice providers, assisted living facilities (ALFs), home health agencies, and compounding pharmacies.

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Medicine-3

Medicare Fraud Strike Force 2017

The Medicare Fraud Strike Force annual take down seems imminent. I devote a large portion of my practice to assisting health care providers, pharmacies, and sales and marketing professionals in civil and criminal investigations relating to health care fraud and abuse, violations of the federal Anti-Kickback Statute, and drug diversion.

 

Since 2007 it has been an annual summer tradition that the Department of Justice, through its Strike Force, which is composed of various federal, state, and local law enforcement agencies (e.g., OIG-HHS, DEA, FBI, Medicaid Fraud Control Units) will arrest various persons for alleged health care fraud and abuse in HEAT cities (Miami, Tampa, Brooklyn, Detroit, Los Angeles, Dallas, Southern Texas, Southern Louisiana, and Chicago). DOJ appears to be focused on drug rehabilitation centers and sober homes, laboratories, hospice providers, assisted living facilities (ALFs), home health agencies, and compounding and/or specialty pharmacies. Based on the timing of previous take-downs, it is anticipated that this annual summer “take-down” might happen soon. During this time, if government agents arrest, detain, or seek to question a specific individual, it is absolutely critical that the person retain adequate and competent counsel.

 

In the past, Medicare Fraud Strike Force has arrested dozens, if not hundreds of persons, in the span of a few days in the HEAT cities mentioned above. The Medicare Fraud Strike Force is an essential component of the Department of Justice’s efforts to combat Medicare fraud.  Last year in 2016 many of the arrests were targeted at home health agencies, pharmacies, and individual physicians. This year it would not be surprising to see additional arrests by the Medicare Fraud Strike Force involving those same entities. Yet, it appears that the Medicare Fraud Strike Force is also seriously considering laboratories, drug rehabilitation and substance abuse treatment centers, compounding pharmacies, hospice providers, assisted living facilities, and others.

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Supreme

Another Close Call in A False Claims Act Case

This appears to be another close call — submitting claims for controlled substances that were never dispensed. I wonder if this had been in another district whether it would have landed comfortably in civil False Claims Act land.

https://www.justice.gov/usao-sdga/pr/dodge-county-pharmacy-and-pharmacist-agree-pay-over-2-million-resolve-false-claims-act

The harsh reality is that geography matters. DOJ does not appear to have any real criterion for determining when a criminal AUSA must be assigned to a case involving suspected health care fraud and abuse. Sure, there are guidelines – like cash kickbacks and patient harm normally fall into the purview of criminal versus civil. Yet, even those guidelines are, yes, guidelines. Cases in point: the dozens of worthless services fraud cases that are non-criminal cases involving graphic allegations of patient harm (sometimes even patient deaths) which are not assigned to any criminal AUSA. Normally, supervision and questionable AKS safe harbor cases fall into the civil bucket. Not always. There are criminal cases where lack of supervision is the core theory of the criminal prosecution. Similarly, there are criminal cases where the theory is, in part, based on conduct which purportedly violates AKS and falls outside of any applicable statutory exception or safe harbor. There should be greater uniformity and an ongoing dialogue on how such uniformity might be achieved from the top down.

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8(a) contract

The Importance of Referring a Client to an Attorney To Protect the Client Against a Future IRS investigation

Preserving privilege is essential. Client walks into CPA office for initial consultation during which client (a US person) informs CPA that she has undeclared bank accounts and/or income and it is determined that the accounts have been controlled and maintained by the client for several years.

At this point the accountant is in a bit of a conundrum. Yet he has several options. One often overlooked issue here is that without the benefit of an attorney and a Kovel letter the Government very well may be in a position to issue an IRS summons, or worse yet, a grand jury subpoena, to the CPA to obtain the CPA work papers and communications with the client. State law privileges between accountants and clients are broad. For example Florida Rule of Evidence 90.5055(c) states that:

A communication between an accountant and the accountant’s client is “confidential” if it is not intended to be disclosed to third persons other than:
1. Those to whom disclosure is in furtherance of the rendition of accounting services to the client.
2. Those reasonably necessary for the transmission of the communication.
(2) A client has a privilege to refuse to disclose, and to prevent any other person from disclosing, the contents of confidential communications with an accountant when such other person learned of the communications because they were made in the rendition of accounting services to the client. This privilege includes other confidential information obtained by the accountant from the client for the purpose of rendering accounting advice.

But in the context of an investigation which may contemplate criminal liability at some point in time and which involves the IRS – as opposed to a state tax regulator or agency — a broad state law privilege may become virtually meaningless. This is because  there is no confidential accountant-client privilege under federal law, and no state-created privilege has been recognized in federal cases,” United States v. Arthur Young & Co., 465 U.S. 805, 817 (1984) (quoting Couch v. United States, 409 U.S. 322, 335 n.1 (1973)). And, even though there is a federal statute recognizing such a privilege (26 U.S.C. Section 7525) between clients and accountants, that statute  has significant limitations. It does not extend to criminal matters before the IRS or federal criminal proceedings; does not protect work product; does not apply to “written communications” related to a “tax shelter” and is waived if the communication is shared with any person outside the practitioner-client relationship.

In practice what this means is:

  1. A CPA should refer a prospective client to a competent criminal tax attorney if and when he suspects that the client may, at any point in time in the universe, have some criminal exposure.
  2. A CPA desiring to remain involved in representation of the client should enter into a Kovel letter arrangement with the law firm representing the client to ensure that communications and work papers are protected by the attorney client privilege. In this scenario, the services of the CPA should be sufficiently related to the legal services that will be provided to the client and it should be made crystal clear that the accountant will be an agent of the attorney and will be retained to enable the attorney to provide legal advice to the client.
  3. The CPA should not adopt a “go it alone” approach unless the CPA is willing to risk the possibility of receiving a court order to produce the clients work papers and communications which has occurred in more than a few reported federal decisions.
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