Healthcare Fraud Internal Investigations

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Putting Off a Healthcare Fraud Internal Investigation Could Lead to Criminal/Civil Penalties and Medicaid Exclusion. Here’s How to Avoid That

When it comes to healthcare compliance, employees at your healthcare practice, or any other healthcare-based business you run, have an obligation to report anything that could put that practice in legal jeopardy. Once this information is relayed to the right channels — whether an HR department, a supervisor, a practice’s compliance officer, or perhaps yourself — it’s now up to you to look into it. You need to conduct an internal investigation.

Why? Because now you have knowledge of something happening within your practice that is, potentially, illegal. And if any government entity — such as the U.S. Department of Justice (“DOJ”), the Office of Inspector General for the U.S. Department of Health and Human Services (“HHS-OIG”), the Drug Enforcement Administration (“DEA”) or the Health Care Fraud Prevention and Enforcement Action Team (“HEAT”) — comes knocking with orders for an investigation before you’ve had a chance to look into the issue yourself, you could be at serious risk.

How serious? Try hundreds of thousands of dollars in civil penalties. Exclusion from Medicare and Medicaid. Loss of license. Even criminal charges.

When Should I Conduct an Internal Investigation?

If there’s credible reason and enough reliable information to show that one of your employees, independent contractors, business partners, or vendors is engaging in illegal conduct or improper acts, you should start an internal investigation immediately. The longer you put off an internal investigation, the more civil and criminal penalties you could face for willfully letting things go on.

Further, if you are aware that your practice is already being investigated by the state or federal government, it is imperative that you contact outside counsel to conduct a thorough parallel investigation. Failure to do so will leave you powerless to defend the eventual government allegations. In many cases, swift corrective action following an investigation will resolve disputes with the HHS-OIG, DEA, DOJ, HEAT, or other agencies.

What Do I Need to Conduct an Internal Investigation?

First, your practice needs outside legal counsel who specializes in healthcare compliance, white-collar criminal defense, and regulatory/governmental matters. A lawyer who practices in each of these three sectors will have deep understanding of healthcare-specific legal statutes (Stark Laws, Anti-Kickback, False Claims Act), and will:

    • ask the right compliance-related questions to your witnesses;
    • examine possible legal liabilities and provide legal advice regarding potential defenses and corrective actions; and
    • know what the governmental agencies will be looking at once your investigation concludes and you opt to self-report.

Your practice then needs to gather and review all documents related to the issue being investigated, and track where they came from. These include medical records, billing practices, claims filed with Medicare, emails, and, when necessary, witnesses’ personnel files.

If you have a written policy regarding internal investigations, review it to make sure the guidelines and parameters are clearly stated, and that it sets forth what is expected and required during the process. Make sure your employees are aware of it.

How Will the Investigation Proceed?

At this point, any employee who may provide relevant information to the matter at hand will be called into a meeting space for an investigative interview. This will serve several functions: 

    • to identify other documents and witnesses that are relevant to the investigation; 
    • to collect information to advise the corporation on its culpability;
    • to preserve witness testimony for later use during government negotiations or court proceedings;
    • to allow management to fulfill its duty to conduct a thorough investigation; and
    • if possible, to make the first contact with witnesses prior to the conduct of government interviews.

When determining who to interview, the investigator will begin with the individuals who have the closest proximity to the subject of the misconduct. This will ensure that other individuals who may possess knowledge can be quickly discovered and added to the interview plan. Counsel can always re-interview important witnesses after additional facts are gained from further interviews or to clear up conflicting testimony.

Your investigative counsel (who may be your legal counsel or an outside counsel) will tell each employee who he/she represents, the purpose of the investigation, and alert your employee that he/she:

    • must be truthful;
    • should keep the interview confidential;
    • has the right to talk or not to talk to government investigators;
    • has the right to have his/her own counsel; and
    • will be notified by the practice if it is determined he/she is personally at risk.

Your counsel will make legal assessments as to whether each person is a witness, subject, or target of the investigation:

    • A Witness is someone who has direct and/or indirect knowledge of the actions that led to the investigation, but he/she was not involved in the possible fraud and/or illegal conduct being investigated.
    • A Subject is someone who may be involved in the fraud and/or illegal conduct being investigated, but at the time of the interview there is still not enough evidence for him/her to be labeled a target of the investigation.
    • A Target is self-explanatory; the investigators determined there is substantial evidence linking him/her to the commission of the illegal conduct.

What Rights Do My Employees Have?

Your employee witnesses must be aware of an attorney/client privilege called the Upjohn warning, or the “corporate Miranda warning.” This stems from Upjohn Co. v. United States, 449 U.S. 383 (1981), a U.S. Supreme Court ruling stating that internal investigations, and the responses given by employees during internal investigations, are protected by privilege.

Whenever general counsel or independent counsel investigates and interviews employees, the employees should be advised that their statements may be considered privileged, but the company may reveal the statements at a later date, and that the company does not represent the employees’ interests.

Moreover, if a conflict between the employee’s and the company’s interests is evident, that employee may retain his/her own counsel, and that counsel may be present at the interview. This advice should be given before the substance of the interview is revealed.

But when someone is determined to be the target of the investigation, there are several questions you and your counsel will need to answer prior to his/her interview:

  • Does this employee need their own counsel?
  • Does the practice have an obligation to pay attorney fees or indemnify this employee for attorney fees?
  • Should the practice pay attorney fees absent obligations to do so?

These questions can only be answered by your attorney, and the answers will vary depending on the circumstances surrounding the investigation.

What Do We Do Now That the Internal Investigation is Completed?

Once the investigation is complete, you and/or your compliance officer, along with your counsel, need to discuss what to do based on the outcome. Should you self-disclose everything to the government? Or will doing so lead to self-incrimination?

These are serious questions, and the best advice for how to handle them should come from experienced healthcare compliance, healthcare fraud, and and healthcare-based federal criminal defense attorneys — the ones from Chapman Law Group

Our national healthcare law firm is devoted to representing healthcare professionals and entities during internal investigations as well as in civil, criminal, and administrative proceedings. Our attorneys include former state and federal healthcare fraud prosecutors who know what government entities seek in their fraud investigations and how they do it.

We are a national healthcare-based criminal law firm with four offices:

Contact us to learn more about our healthcare legal services.
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