Industry Trends In Criminal Health Care Fraud Enforcement - Part III In A Continuing Series On Health Care Enforcement

This third, and final, installment in the "Year in Review" series examines how criminal health care fraud enforcement has changed in the past year, including the use of non-health-care-related statutes, the focus on specific industries, and the increased number of alleged violators targeted in takedowns. This piece discusses specific cases illustrating recent trends in criminal investigation and enforcement, and provides our perspective on what new tactics and strategies employed by the federal government in these cases might mean for the future. Finally, it also considers how recent health care reform measures, such as new regulations, enhanced sentencing guidelines, and data analysis technology, will contribute to strengthening enforcement and enforcement strategies in 2012.

Criminal Health Care Fraud Enforcement Statistics Show "Bigger, Stronger, and Faster" Fraud Investigations

The government's successes in prosecuting and winning health care fraud cases result from continued interagency collaboration such as Medicare Strike Force (Strike Force) and Health Care Fraud Prevention Enforcement and Action Team (HEAT) investigations. In press releases, the government has touted the ties between the Department of Justice (DOJ), the Federal Bureau of Investigation (FBI), the Department of Health and Human Services' Office of the Inspector General (HHS-OIG), and local United States Attorneys' Offices (USAOs) and Medicaid Fraud Control Units (MFCUs) in health care fraud investigations. Coordination among the agencies has increased in recent years. These established ties make it easier for the agencies to detect, investigate, and prosecute large-scale fraud schemes. As advanced data-mining techniques further strengthen the links between investigatory and enforcement agencies, large-scale investigations and prosecutions will become even easier for the government to pursue in the coming years.

According to the latest Health Care Fraud and Abuse Control Program (HCFAC) report, "[c]onvictions under the [HCFAC] increased by over 27 percent (from 583 to 743) between 2009 and 2011, and the number of defendants facing criminal charges filed by federal prosecutors in 2011 increased by 74 percent (from 821 to 1430) compared with 2008."1

The HCFAC Report, released in February 2012,2 highlights the following statistics from criminal enforcement efforts by health care, and other, agencies in FY 2011:

The DOJ opened 1,110 new criminal health care fraud investigations involving 2,561 potential defendants. Federal prosecutors: investigated 1,873 pending health care fraud criminal cases involving 3,118 potential defendants; filed 489 criminal cases in the courts against 1,430 defendants; and obtained convictions of 743 defendants charged with health-care-fraud-related crimes. HHS-OIG excluded 2,662 individuals and entities: 1,015 (38%) based on criminal convictions for crimes related to Medicare and Medicaid and 233 (8.7%) for crimes related to other health care programs. Medicare Strike Forces Continue to be a Model for Interagency Collaboration

Interagency collaborations were especially effective in criminal health care fraud prosecutions. Since the first Strike Force team was formed in 2007, federal criminal enforcement agencies have become more sophisticated and more efficient in uncovering alleged fraud schemes. In FY 2011, Strike Force teams located in each of the nine Strike Force cities produced the following overall results:

132 indictments, informations, and complaints involving charges against 323 defendants; 172 negotiated guilty pleas; 17 jury trials with guilty verdicts won against 26 defendants; and 175 defendants sentenced to terms of imprisonment averaging more than 47 months.3 Additionally, in a January 2012 presentation, DOJ Trial Attorney Joseph Beemsterboer, of the Health Care Fraud Unit of the Criminal Division, observed that, from the start of the Strike Force in 2007 until September 2011, only 12 Strike Force defendants were acquitted and only 31 cases against individual defendants were dismissed.4 Strike Force efforts, through their advanced data analysis techniques and identification of suspicious billing patterns to find fraud "hot spots," are credited with accelerating "the Government's response to criminal fraud, decreasing by roughly half the average time from an investigation's start to the case's prosecution [emphasis added]."5

Most, if not all, of the DOJ's press releases in 2011 mentioned statistics related to HEAT or the Strike Force. Two such press releases highlighted the biggest takedowns in criminal health care enforcement history. On February 17, 2011, the same day that HHS and DOJ announced the expansion of the Strike Force model to Dallas and Chicago, DOJ issued a press release reporting that it had filed charges against 111 defendants in nine cities "for their alleged participation in Medicare fraud schemes involving more than $225 million in false billing."6 On September 7, 2011, the interagency team announced another nationwide takedown by Strike Force operations in eight cities resulting in charges against 91 defendants "for their alleged participation in Medicare fraud schemes involving approximately $295 million in false billing."7 Although neither takedown related to only one single fraud scheme, it is clear that the federal government is using this coordinated "shock and awe" approach to show that it can handle alleged nationwide criminal fraud enterprises and is seeking such cases.

New Criminal Investigation and Enforcement Tactics

The large takedowns described above involve not only numerous defendants, but also the use of an expanded set of statutes under which to charge the individuals and corporate entities involved, reflecting another of the salient trends that characterized health-care-related criminal prosecutions in FY 2011.

Charging Conduct Under Broadly Worded Criminal Statutes

Another strategy that the federal government is employing with growing success is filing charges under broadly worded criminal statutes that are not specific to health care fraud and that, perhaps more importantly, do not require proof of specific intent. By bringing charges under such statutes, the government is able to capture a wider range of conduct than that covered by health-care-specific statutes, and reduce the evidence of criminal intent or activity necessary to secure a plea, conviction, or settlement agreement. Such a strategy shifts the balance of power heavily in the government's favor with respect to both investigation and enforcement efforts. With broad discretion to file charges that require less proof of intent, the government can use the threat of conviction to secure more favorable pleas and settlements.

Consider the statutes themselves. Although criminal cases involving a lead charge under the federal health care fraud statute, 18 U.S.C. § 1347, historically have been and continue to be high, FY 2011 saw a staggering increase in prosecutors filing charges under the mail fraud and wire fraud statutes, among others. Specifically, in FY 2011 there was a 60.2% increase in the number of cases filed under the mail fraud statute and a 1550% increase in charges filed under the wire fraud statute. A detailed examination of the proof required for conviction under each statute sheds some light on the possible reasons for this trend.

The health care fraud statute, 18 U.S.C. § 1347, targets defendants who "...knowingly and willfully...