Considering Pleading Guilty to Healthcare Fraud or Drug Trafficking? Read this Before You Sign a Rule 11 Plea Agreement

Pleading Guilty to Health Care Fraud

Your attorney lets out a hefty sigh as he takes off his glasses, sets them on the conference table, and gives you a serious look. “I recommend that you plead guilty” he tells you. “With all of these counts, they just need to prove one to put you in jail for a long time.”

You’re now facing a dozen healthcare fraud charges and unlawful drug distribution charges, and your attorney wants you to stand up before a judge and say you’re a healthcare fraudster and a drug dealer — something you know you are not.

Still, you are fearful of a prolonged prison sentence and fines in the hundreds of thousands if you don’t plead guilty.

If you or someone you know is facing this situation, take a few minutes to read this and ensure you have exhausted your options before making a decision that’s as life-changing as pleading guilty to healthcare fraud.

1. Do Not Plead Guilty If You Are Not Guilty

It seems obvious, but federal jails are filled with doctors who were pressured into taking federal plea agreements (also known as Rule 11 plea agreement) that they did not fully comprehend and now regret.

The thing is, violating government regulations, CDC guidelines, state prescribing rules, and even administrative regulations of the Controlled Substances Act do not make you guilty of healthcare fraud or drug trafficking. Many defense attorneys fail to realize this and may inform a healthcare provider they are guilty simply for violating a Local Coverage Determination, Medicare rule, or state prescribing statute.

Healthcare fraud — such as Medicare fraudMedicaid fraud and TriCare fraud — and unlawful drug distribution are offenses that require the government to prove knowledge and intent. For healthcare fraud, the government must demonstrate that a healthcare provider “knowingly” and “intentionally” executed or attempted to execute a scheme or artifice to defraud a federal healthcare program. With unlawful drug distribution, a healthcare provider must be proven to have “knowingly” and “intentionally” prescribed or dispensed a controlled substance “outside the usual course of professional practice and for no legitimate medical purpose.” The government must convince a jury of 12, unanimously, that you are guilty of these offenses, and this is not an easy task.

If you are not guilty, you cannot plead guilty simply because you are pressured by the process or you feel that the judge will give you a harsher sentence. There is nothing wrong with exerting your constitutional right to trial.

2. Thoroughly Review the Specific Patient Interactions at Issue

Healthcare fraud and unlawful drug distribution are patient-specific offenses, meaning that guilt or innocence is dependent upon the government’s proving specific instances of conduct. The government must show that a prescriber distributed a medication that lacked a medical purpose to a specific patient, or that he/she executed a scheme to defraud an insurance company during a specific claim or patient encounter.

Too often, defense counsel fail to analyze the specific claims and medications at issue, and end up getting bogged down in reviewing volumes of discovery (which his costly) not related to specific patient interactions. You must question your attorney to understand their knowledge of each specific patient interaction charged. This is to ensure that before recommending a Rule 11 plea, they have considered each patient interaction to determine wrongfulness.

3. Obtain Expert Review from an Expert Who Knows the Standard

An attorney recommending a Rule 11 plea without consulting an expert is like a physical therapist diagnosing you with cancer. In some cases, criminal culpability is obvious: billing for services that were clearly not rendered, prescribing medications to patients when the provider knows they were being used for a non-medical purpose. However, where medical decision-making and judgment are in question, an expert must be consulted. And not just any expert — your expert must understand the standard at issue in the case.

For unlawful prescribing, the expert must analyze prescriptions and determine whether the evidence shows that the prescription lacked any legitimate medical purpose. For healthcare fraud charges, the expert must determine that a claim was clearly inappropriate or not rendered.

Violations of administrative rules, Medicare regulations, and CDC guidelines are not sufficient to render conduct unlawful. An expert who does not know the applicable standard is about as useless as an attorney who does not know the law.

4. Obtain a Second Opinion

If you are considering a Rule 11 plea of guilty, you must get a second opinion. This is common in the healthcare industry when medical decisions carry significant consequences; there is no shame in seeking one for the most important decision of your life.

Many defendants believe that their attorney may get upset or withdraw from the case if you seek a second opinion. If you believe that, ask yourself whether you should continue with an attorney who is so insecure about his/her decision decision-making that the suggestion of a new way of looking at things is insulting. The only reason your attorney may be upset with the offer of a second opinion is that he/she is self-conscious about his/her judgment being analyzed.

A second opinion should be based on a review of the evidence and written in a report so that you can review the information and make an informed decision about the facts and the law.

5. Understand the Collateral Consequences

The punishment for a healthcare offense such as unlawful distribution is not simply jail time and fines or forfeitures. Some physicians, nurses, and mid-level providers have been able to claw their way back to practice. Don’t cling to that rare hope to your detriment.

If you plead guilty under Rule 11 to a federal felony related to healthcare, you will not practice medicine or own a healthcare entity again. Before you plead guilty, you must take this as a truth. It is certainly true that you may submit a glowing reinstatement application after your mandatory Medicare exclusion expires and you may be reinstated, but you must face reality. Hospital boards will not credential you. It takes years to reinstate a DEA registration. And state medical boards are becoming more strict with re-application.

Among the collateral consequences you and your attorney should consider before accepting a plea of guilty:

6. Don’t Fall for Common Misconceptions

Challenge common misconceptions about the criminal trial process and ensure that your counsel is prepared to answer all of your questions.

Misconception 1: ‘If you don’t plead guilty, the judge will give you a harsher sentence.’

This statement is repeated by many defense counsel, but it lacks actual empirical evidence in support. This is especially true where federal sentencing guidelines rely on drug weight (drug distribution charges) or amount of healthcare fraud (healthcare fraud charges) to determine the prison sentence a defendant will receive.

Often, government plea agreements require a defendant to plead to very high fraud amounts and drug weight. A trial strategy that seeks acquittal but also offers evidence that will lower the fraud amount and drug quantity at sentencing will lessen a defendant’s sentence.

Misconception 2: ‘Your co-defendants will seek a plea deal first and will roll over on you.’

This may be true, and it may be a good reason to plead guilty in a non-healthcare case, but it has limited applicability to a healthcare case such as healthcare fraud or unlawful distribution. Moreover, this is not a reason to cling to a plea deal if you have doubts about your guilt or feel that you are not guilty.

When a federal prosecutor offers a plea in a healthcare fraud or drug distribution case, they must include the amount of fraud (loss amount) and amount of pills unlawfully distributed in the plea agreement (drug weight). Federal prosecutors are sensitive to offering a first offer that minimizes the drug quantity or the fraud loss amount, because the defendant who accepts such an offer will be subject to cross-examination by co-defendants who proceed to trial. This cross-examination will reveal that the government had a different view of the “loss amount” or “drug weight” when making a deal with cooperators.

In order to avoid the appearance of inconsistent positions, federal prosecutors keep the “loss amount” high and the “drug weight” high, but they will offer a sentence reduction pursuant to USSG 5K1.1 (Substantial Assistance to Authorities). The problem with an offer of a sentence reduction instead of a “drug weight” or “loss amount” reduction is that USSG 5K1.1 is only a recommendation to the court that the defendant receive a lighter sentence. It is not a guarantee.

Misconception 3: ‘This offer will go away if you don’t accept it.’

Be wary of attempts to get you to accept an offer without fully reviewing the evidence in your case. Many attorneys in a rush to resolve a case with a potentially favorable sentence will inform their clients that an offer will expire if it’s not accepted early in the case, before discovery and evidence has been reviewed. However, ethical rules require attorneys to make knowledgeable recommendations to their clients and not simply recommend a plea of guilty prior to some sort of investigation.

If you have doubts about your guilt, it is imperative that you review the evidence against you before entering a plea of guilty. Often, prosecutors accept the same offer after the “expiration date” and in some cases even provide better offers after it. Moreover, if evidence exists that tends to limit culpability, presenting such evidence to a prosecutor may actually sweeten the deal.

The Healthcare Defense Attorneys at Chapman Law Group Are National Leaders in Healthcare-Based Criminal Litigation

At Chapman Law Group, our healthcare fraud defense attorneys and criminal defense lawyers will aggressively defend all healthcare-related criminal matters. 

We handle multistate federal criminal matters investigated by the DOJ; state felony matters; and, where criminal sanctions are possible, investigations commenced by the HHS, FBI, DEA, FDA, and DOJ.

Our healthcare fraud defense lawyers are experts in defending providers against healthcare fraud charges by obtaining pretrial dismissals, not-guilty verdicts, and beneficial plea agreements in federal courts across the U.S.

We have 35 years of extensive experience in defending health professionals faced with criminal charges, including:

Our healthcare fraud defense lawyers represent licensed medical professionals, including:

Chapman Law Group understands that criminal proceedings will likely result in professional licensing or administrative actions. That is why we provide comprehensive and aggressive legal representation for physicians, nurses and others who face criminal prosecution.

Our goal is to not only streamline the process, but also to ensure that the criminal conviction is handled in such a way so as to limit the impact on your professional license.

Our offices are in Detroit (where we serve Dearborn, Troy, Ann Arbor and Grand Rapids, and the rest of Michigan); Miami and Sarasota, Florida (for Jacksonville, Tampa, Orlando, West Palm Beach, and all of Florida); Los Angeles/Southern California; and Chicago. Contact us today for more information.

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Ronald W. Chapman II, LL.M.
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Chairperson of White Collar Defense & Government Investigations

Michigan Office
1441 W. Long Lake Road, Suite 310
Troy, MI 48098
Phone: (248) 644-6326

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