Earlier this week, Deputy Attorney General (AG) Sally Quillian Yates issued a memorandum to Department of Justice (DOJ) attorneys discussing the need to hold individuals accountable for corporate wrongdoing in both civil and criminal enforcement actions. Deputy AG Yates further discussed the memo in a speech yesterday at the New York University School of Law, emphasizing that “it is our obligation at the Justice Department to ensure that we are holding lawbreakers accountable regardless of whether they commit their crimes on the street corner or in the boardroom.”
The memo outlines 6 key steps for pursuing individual enforcement actions:
- To be eligible for anv cooperation credit, corporations must provide to the DOJ all relevant facts about the individuals involved in corporate misconduct. The memo makes it clear that companies seeking credit for cooperation will not be eligible until they satisfy the “threshold requirement” of “identify[ing] all individuals involved in or responsible for the misconduct at issue, regardless of their position, status or seniority”, and provide all facts related to that misconduct.
- Both criminal and civil corporate investigations should focus on individuals from the inception of the investigation. In doing so, the DOJ “maximize[s] the chances that the final resolution of an investigation uncovering the misconduct will include civil or criminal charges against” both the corporation and culpable individuals.
- Criminal and civil attorneys handling corporate investigations should be in routine communication with one another. The memo highlights the importance of regular communication between criminal and civil DOJ attorneys to ensure that parallel civil and criminal proceedings are pursued, when appropriate, against both corporations and individuals.
- Absent extraordinary circumstances, no corporate resolution will provide protection from criminal or civil liability for any individuals. Any such release of individual liability must be personally approved in writing by the relevant Assistant Attorney General or United States Attorney.
- Corporate cases should not be resolved without a clear plan to resolve related individual cases before the statute of limitations expires and declinations as to individuals in such cases must be memorialized. Any such declination must be approved by the United States Attorney or Assistant Attorney General whose office handled the investigation, or their designees.
- Civil attorneys should consistently focus on individuals as well as the company and evaluate whether to bring suit against an individual based on considerations beyond that individual’s ability to pay. Acknowledging the dual interest in returning funds to the public fisc and deterring future misconduct, the memo emphasizes that individuals suits should be considered regardless of the individual’s ability to pay any settlement amounts because such actions “will result in significant long-term deterrence” and “minimize losses to the public fisc through fraud” over time.
The memo states that these process changes apply to all future civil and criminal investigations, as well as any current investigations to the extent practicable.
Public statements regarding the need for increased individual enforcement are not new. By way of example, see statements by DOJ officials here, here, and here. However, health care and life sciences companies need to recognize that the Yates memo represents a key shift in the DOJ by putting into place a specific framework for ensuring that DOJ civil and criminal investigators actively pursue individual enforcement actions in parallel with investigations of corporate misconduct.
As we discussed here, the government continues to improve its use of data analytics to identify and prevent fraud, waste, and abuse in the health care industry. This week, the Centers for Medicare & Medicaid Services (CMS) announced that its Fraud Prevention System (FPS) has identified and prevented $820 million in improper Medicare payments in its first three years of operation. CMS stated that the FPS “helps to identify questionable billing patterns in real time and can review past patterns that may indicate fraud”, which allows CMS to, among other things, revoke provider payments, withdraw provider enrollment in Medicare, and/or refer appropriate matters to law enforcement for further investigation.
The Office of Inspector General (OIG) recently certified the “positive return on investment” from the FPS and recommended its continued operation, although the OIG determined that it was not feasible at this time to expand the FPS program to Medicaid and the Children’s Health Insurance Program (CHIP). Also last month, several members of Congress asked the Government Accountability Office (GAO) to provide additional information regarding the GAO’s review of the FPS, including expansion of the program to Medicaid and CHIP.
The Office of Inspector General (OIG) announced this week that it will launch a special litigation team devoted solely to Civil Money Penalty (CMP) and Exclusion cases. The announcement was made by representatives of the Administrative and Civil Remedies Branch of the OIG in a presentation at the American Health Lawyer’s Association (AHLA) Conference. OIG officials gave the presentation in a session titled, “Leveling the Playing Field: OIG-Initiated Administrative Litigation.” The launch was announced in the context of a discussion regarding the need to hold individuals accountable, filling enforcement gaps, amplifying OIG work, and the OIG’s future. Tuesday’s announcement demonstates the OIG’s continued interest in pursuing enforcement actions against those involved in health care fraud, waste and abuse. The announcement was not accompanied by an official OIG press release, but more information about the launch is expected in the coming weeks.
This blog post was co-authored by Amy Westergren, a 2015 summer associate in Cooley’s New York office.
The Health and Human Services (HHS) Office of Inspector General (OIG) released two reports yesterday related to Medicare Part D fraud. The OIG report, Ensuring the Integrity of Medicare Part D, “synthesizes numerous OIG reports that have identified weaknesses in Part D program integrity, and provides updates on Departmental efforts to address these weaknesses.” The report also identifies a number of recommendations made in previous reports that the Centers for Medicare & Medicaid Services (CMS) has not yet implemented, and encourages CMS to do so in order to protect the Part D program from fraud, waste and abuse.
The second OIG report, Questionable Billing and Geographic Hotspots Point to Potential Fraud and Abuse in Medicare Part D, summarizes OIG reviews that have revealed questionable billing associated with pharmacies, prescribers, and beneficiaries involving controlled and noncontrolled substances. These reviews were conducted because of the OIG’s ongoing concerns regarding abuse and diversion of Part D drugs. Notably, the report concluded that more than 1,400 pharmacies had questionable billing for Part D drugs in 2014 that “warrant further scrutiny.” Additionally, “geographic hot spots” for certain drugs in Los Angeles, CA; McAllen, TX; Miami, FL; New York, NY; and San Juan, PR suggest potential fraud and abuse.
On May 19, 2015, Vermont’s governor signed into law a state false claims act that largely mirrors the federal False Claims Act, including the ability of a qui tam relator to bring an action on behalf of the state. Vermont joins the 33 states and the District of Columbia that have enacted false claims acts to date. Additionally, on May 12, 2015, Maryland’s governor approved a bill that expanded the state’s false claims act, which was enacted in 2010 to combat health care fraud.
This trend is being driven, in part, by the significant recoveries that the federal government is obtaining in fraud cases related to the health care industry and other sectors. According to the Department of Justice (DOJ), it recovered nearly $6 billion in civil false claims cases in FY2014, nearly half of which was a result of whistleblower suits. A state false claims act is critical for the state to maximize its recoveries in these fraud cases. This is because a state with a false claims act that meets the requirements of the Deficit Reduction Act of 2005, as determined by the Health and Human Services Office of Inspector General (OIG), receives a 10% increase in its share of any amounts recovered under these laws.
Senator Grassley issued letters this week to the Centers for Medicare and Medicaid Services (CMS) and Department of Justice (DOJ) related to potential fraud in the Medicare Advantage program. Citing news articles, DOJ investigations and a recent Government Accountability Office report, Grassley states: “Some insurance companies that offer Medicare Advantage are allegedly engaging in billing abuse by altering patient records in order to claim patients are sicker than they actually are” because reimbursement is higher for sicker patients.
Grassley requested that CMS provide responses to the following questions:
- What steps has CMS taken, and is currently taking, to ensure that insurance companies are not fraudulently altering risk scores? Please provide a detailed explanation.
- Is CMS working in conjunction with DOJ to investigate risk score fraud? Please explain the relationship. If not, why not?
- Since the inception of Medicare Advantage, how many risk score audits has CMS conducted each year? For each year and each audit, what was the value of the overcharge? How much was recovered via settlement or other measures?
- How much money per year is allocated by CMS for auditing Medicare Advantage fraud, waste and abuse?
Data analytics is not a new concept within the health care industry. However, as data analytics tools become more accessible, government interest in using data analytics to detect health care fraud continues to increase. Government investigators also have been vocal in informing the health care industry that this powerful tool will continue to be used.
For example, the House Ways and Means Subcommittee on Oversight recently held a hearing on the government’s use of data analytics to combat health care fraud. Testifying witnesses included a representative from the Centers for Medicare and Medicaid Services (CMS), who discussed the use of data analytics to identify excluded individuals. A representative from the U.S. Department of Health and Human Services Office of Inspector General (OIG) discussed the use of data analytics by the agency and the Medicare Fraud Strike Force for prospective and investigative purposes.