ATLANTA – The upcoming Medtrade (Oct 20-23, 2014 in Atlanta) has an excellent line-up of speakers who will present programs addressing the most important topics faced by DME suppliers today. Every issue of Medtrade Monday, leading up to Medtrade, will highlight a Medtrade program.

What Business Practices Will Get You Investigated: Hot Button Issues for the Department of Justice
The DME industry is being hit with a “perfect storm” of challenges: (i) competitive bidding; (ii) stringent documentation requirements; (iii) post-payment audits; and (iv) prepayment reviews. In addition, the U.S. Department of Justice and the Office of Inspector General are becoming much more aggressive in bringing investigations against DME suppliers.

Many investigations are a result of a qui tam (whistleblower) lawsuit. This is when a disgruntled ex-employee, or disgruntled current employee, files a federal lawsuit against the DME supplier. The lawsuit will be in the name of the current/ex employee (“relator”) and in the name of the United States. The qui tam lawsuit will be based on the federal False Claims Act (“FCA”). It is the position of the DOJ that if the DME supplier commits an act that violates any law (civil or criminal), and if the supplier eventually submits a claim to a government health care program (in which the claim directly or indirectly is related to the acts), then the claim is a “false claim.”

Under the FCA the DME supplier (and its individual owner) can be liable for actual damages, treble damages, and between $5500 to $11,000 per claim. The qui tam lawsuit will go “under seal,” meaning that nobody (except for the DOJ) will know about it. An Assistant U.S. Attorney (in the jurisdiction in which the qui tam is filed) will review the lawsuit and will ask investigative agents (FBI, OIG) to investigate the allegations set out in the qui tam suit. After the DOJ completes its investigation, then the AUSA will decide whether or not to “intervene.” By “intervening,” the AUSA will take the lawsuit over and the relator’s attorney can sit on the sidelines.

Federal anti-fraud laws are broad and somewhat vague. An Assistant United States Attorney (“AUSA”) can compare acts of a DME supplier to a law and conclude that the law has been violated. Conversely, a defense attorney can look at the same set of facts, and the same law, and conclude otherwise. Unfortunately, the AUSA has unlimited resources and time and can make life miserable for a DME supplier if the AUSA chooses to do so. The take-away is that the AUSA has a great deal of “prosecutorial discretion.” Even if a target of a federal investigation (civil or criminal) believes that it has done nothing wrong, then it will nevertheless likely choose to reach a settlement (civil case) or plea (criminal case) because the risk of going to trial is too high.

Note that the DOJ will normally not let the supplier know that it is a target until the investigation is substantially completed. The DOJ will likely have obtained records (e.g., claims submissions) from DME MACs and other CMS contractors. The investigative agents (FBI, OIG) will interview ex-employees, current employees, patients and physicians. Normally, one of these interviewees will tell the DME supplier of the interview.

Assume that the AUSA proceeds against the DME supplier civilly. In other words, the AUSA does not want to put anybody in jail. The damages, fines and penalties under the FCA far exceed what the supplier can pay. And so the supplier’s attorney and the AUSA will usually enter into an “ability to pay” settlement in which the supplier will pay as much money as it can without forcing it to close its doors. Payment of the money will be made to the DOJ. Separate from that, the supplier will likely be required to enter into a Corporate Integrity Agreement with the OIG. This is normally a five year contract between the supplier and the OIG. The CIA will impose a number of requirements on the supplier, including annual reports to the OIG, training employees, and having an Independent Review Organization audit the supplier’s operations on an annual basis.

Assume that the facts support the AUSA’s allegation that a crime has been committed. The case can go in a number of directions. The wisest course of action is for the supplier to work out a plea. In other words, it is normally not wise to go to trial. The supplier should attempt to work out a plea before there is an indictment. An indictment is a public statement by the government of the “bad things” that the supplier has done. It is hard for the government to be lenient after an indictment is issued. If a resolution is worked out before an indictment is issued, then it is worked out “pursuant to a criminal Complaint.” This allows the AUSA to have off-the-record discussions with the supplier’s attorney. This, in turn, gives the AUSA substantial flexibility in working out a resolution. A resolution can take a number of paths: (i) plea by the corporation, with no plea by the owner of the corporation; (ii) deferred prosecution plea by the owner (no felony conviction); (iii) felony conviction of the owner with probation; (iv) felony conviction of the owner with home detention; (v) felony conviction of the owner with half-way house; and (vi) felony conviction of the owner in which the federal sentencing guidelines suggest a relatively short prison term (e.g., 11 to 18 months).

Bradley W. Howard, JD, defends DME suppliers who have criminal and civil cases brought against them by the DOJ. As such, he works closely with federal investigators and prosecutors. Howard will share his observations regarding how the DOJ is attacking the problem, and what the DME supplier can do if it is the target of an investigation.

Nationwide, there are nine Medicare Fraud Strike Forces using data analysis techniques to uncover fraud. This program will discuss the types of activities by DME suppliers who the DOJ is focusing on. The program will set out “nuts and bolts” steps that the DME supplier can take to reduce the risk of being targeted by the DOJ. Lastly, the program will discuss the steps that a supplier should take in the event that it finds that is the target of a DOJ investigation.

Those attending this Medtrade program will:
1) Learn about the activities of DME suppliers that the DOJ is focusing on.
2) Learn about the techniques used by the DOJ in uncovering fraud.
3) Learn about the steps that a DME supplier can take in response to a DOJ investigation.

On Wednesday, October 22, 2014, Bradley W. Howard, Esq. (Chairman of Litigation Group, Brown & Fortunato, P.C.) will present an in-depth program entitled “What Business Practices Will Get You Investigated: Hot-Button Issues for the Department of Justice.”