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.

Share this post
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.

Share this post






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.
Share this post
Medicine-5

Sober Home Fraud on the Rise in South Florida

Drug treatment center and sober home fraud (also known as recovery home residences) are on the rise in South Florida. One telling example is the Reflections Point prosecution. In that case, the president of Reflections, (a convicted felon), Kenny Chatman was handed a sentence of nearly 30 years. The federal prosecutor had asked for 35 years even though the Government reinforced that Mr. Chatman was the “most dangerous” sober home owner in Florida. Yet, equally as important, the federal prosecutor noted at sentencing that the reason for the 35 year sentence recommendation (and not a higher sentencing recommendation) was because, according to the Government, with the number of other corrupt treatment center operators the FBI is investigating, she’ll need to convince them to take plea deals, and giving Chatman a life sentence after taking a plea deal could discourage them to confess.

Without diving into the details of Mr. Chatman’s health care fraud and kickback scheme, let’s just say that you do not see a health care fraud indictment every day which also includes a charge of sex trafficking. Mr. Chatman’s case was certainly ground-breaking with respect to the inclusion of that charge. In a nutshell though, the Indictment (which includes 6 defendants whom have already pled guilty), accused Mr. Chatman and his wife of concealing Mr. Chatman’s felony conviction (and making Mrs. Chatman the straw owner) in order to operate a sober home in Palm Beach. According to the Indictment and the subsequent guilty pleas, once opened, the homes paid kickbacks to induce patients to live in the homes free of charge in order to bill insurance programs, provided substandard services, converted patients into prostitutes, failed to report overdoses or other adverse incidents occurring in the homes, provided urine samples to be billed to insurers which were not patient samples.

So while not all drug treatment center and sober home prosecutions will contain the same gory details as the Chatman prosecution did, it is clear from the Government’s statement at Chatman’s sentencing, that the Government will continue to crack down on drug treatment center fraud and sober home fraud in South Florida.  In South Florida, for example, there is a Sober Homes Task Force which is largely managed by Department of Children and Families (DCF) which is understaffed and underfunded. Florida has 931 licensed substance abuse treatment providers, but DCF only employs 25 licensing specialists — an inadequate number to ensure the industry is following the rules, according to a report by a grand jury in December.

In 2016, the Florida legislature also heightened the requirements for commencing operations as a sober home – which are distinct from drug treatment or drug rehabilitation centers which provide in-patient and direct, and often, intensive every day treatment. Florida has selected a “voluntary” credentialing entity responsible for approving certification of a sober home/recovery home residence, denying certification, establishing requirements for sober homes, and disciplining sober homes. The credentialing entity is also responsible for monitoring and approving certification of a recovery residence home administrator. The Florida Association of Recovery Residences (FARR) is the current entity ( a non profit watchdog) tasked with this responsibility.

As of July of last year, no licensed substance abuse treatment center could refer a current or discharged patient to a sober home unless the sober home holds a valid certificate of compliance as provided in s. 397.487 and is actively managed by a certified recovery residence administrator as provided in s. 397.4871 or the sober home is owned and operated by a licensed service provider or a licensed service provider’s wholly owned subsidiary. The term “refer” means to inform a patient by any means about the name, address, or other details of the recovery residence.  

Yet, according to Florida legislators,  these baby steps were not enough to combat the growing fraud in South Florida in the drug treatment and sober home space.

Accordingly, while Florida has attempted to increase the barriers for entrants into the sober home market through legislation and the formation of local task forces, the Government has made it crystal clear that they intend to investigate and prosecute more drug treatment centers and sober homes in South Florida.

Share this post
GavelScale

Andrew S Feldman Honored as Moderator at ABA National Institute on Health Care Fraud

The ABA National Institute for health care fraud was another great event this year. Andrew S. Feldman of the Feldman Firm was honored to moderate a panel on compounding pharmacy fraud which included an all-star line-up of panelists (Department of Justice, defense attorneys, and regulatory attorneys). The conference continues to attract some of the premier defense attorneys, relators’ attorneys, and government attorneys from across the United States and is one of the few national conferences which high level government regulators attend annually.

Our panel, Enforcement Actions and Compounding Pharmacies, was the third year that the conference has included a live panel with the simultaneous webinar of the panel. The panelists focused on, among other things, the recent fraud schemes and prosecutions involving compounding pharmacies and how the TriCare program was essentially shut down due to the level and severity of the fraud related to compounded pain, scar, and wrinkle cream medications. Panelists also addressed the use of data mining in compounding prosecutions, the use of the advice of counsel defense in compounding investigations and prosecutions, the criterion used by different US Attorneys’ offices in deciding whether or not, or if, a compounding pharmacy case implicating violations of health care fraud and abuse laws, including the Anti-Kickback statute, may convert into a criminal, health care fraud or Anti-Kickback indictment. This is an open question. At times, the answer to why the Government pursues a False Claims Act as opposed to a health care fraud indictment can seem unpersuasive. Although there is no “one size fits all” approach, a recurring theme (except in worthless services fraud cases) is that where there is patient harm there may be an indictment. To the contrary, in most cases, where the violation or purported fraud amounts to a violation that DOJ might pursue via an “adequate non-criminal alternative” such as a civil monetary penalty or even exclusion, a criminal prosecution would appear heavy handed and inconsistent with DOJ’s Federal Principles of Prosecution. Further, in the compounding pharmacy context, if the government and defense find themselves reviewing HHS OIG advisory opinions, absent additional more egregious facts, a criminal prosecution, again, for health care fraud may seem unwarranted. 

Importantly, the panelists also focused on the devastating consequences of any compounding pharmacy investigation which leads to a civil or criminal prosecution, including prison, treble damages, loss of licensure, exclusion from federal, state and private plans, loss of hospital privileges and/or termination of employment, reputational damage, and other severe consequences of government action in compounding pharmacy cases.

Panelists also predicted that fraud with respect to compounding pharmacies will not end anytime soon and may possibly migrate into other government programs and/or impact other government payers. There are, for example, several compounding pharmacy prosecutions pending trial throughout the United States. It is anticipated that those prosecutions will be closely monitored, especially any cases which proceed to trial.

Share this post