AMARILLO, TX – The federal government’s efforts to combat health care fraud are led primarily by two agencies: the Department of Justice (“DOJ”) and the Department of Health and Human Services Office of Inspector General (“HHS-OIG”). Although these agencies work closely together, they serve distinct functions. In general, HHS-OIG acts as the principal investigative and oversight agency within HHS, while DOJ serves as the federal government’s prosecutorial arm. Together, they form the backbone of federal health care fraud enforcement.
In recent years, the announcement of multiple DOJ and HHS-OIG “Operations” has hit the news cycle. Starting with Operation “Brace Yourself” in 2019, followed by Operations “Rubber Stamp” and “Happy Clickers”—in 2020 and 2021 respectively, the Government continued to scrutinize and crack down on problematic practices in the HME space. That enforcement trend has only continued with major developments in further investigations announced in 2022, 2024, and 2025, with the value of claims at issue reaching into the tens of billions of dollars.
While the specific focus area(s) have shifted some—from orthotic braces to continuous glucose monitoring and others—the areas of regulatory concern in all of these have remained largely consistent around the following issues: lead-generation arrangements; telehealth order requirements; contractor and support services compensation structures; medical necessity; and prescriber independence, involvement, and oversight.
While the “Operations” make headlines and cause waves, the Government’s ongoing oversight and investigations of healthcare providers and suppliers is not limited to those cases. Often, HME providers for months and years after an operation are still brought under investigation for similar issues as the Government follows threads of connection between various HME companies, prescribers, and other service providers and referral sources. So, while the FBI and OIG raids and arrests make the news, the most common type of interaction starts with a civil investigative demand (“CID”).
This CID is issued by civil Assistant United States Attorneys (“AUSAs”) to notify health care providers, including HME suppliers, that they are the target of a civil fraud investigation. Such notification can be in the form of a letter that says something like the following:
I write on behalf of the United States Department of Justice with regard to [name of HME supplier], hereafter referred to as “you.” The Department of Justice and the Office of Inspector General have been actively investigating [description of the HME supplier’s activities]. We would like to speak with you concerning the conditions under which you completed orders for [name of product] that Medicare and Medicaid ultimately covered and reimbursed. The United States Department of Justice is investigating these issues pursuant to the federal False Claims Act. The False Claims Act permits the United States to recover treble damages for false claims made to Medicare and/or Medicaid. In addition, the United States may recover penalties of between $14,308 and $28,619 per claim. At this point, we are requesting your voluntary participation in this investigation. Please contact me at the phone number or email above or have your attorney do so.
Should a HME supplier receive such a CID or other notice, time is of the essence. These notices are expansive in scope, require substantial background work, and have very quick deadlines. So, it is imperative that the supplier acts on them promptly, first by contacting a health care attorney who has experience in working with the DOJ. The supplier’s health care attorney needs to immediately open communications with the DOJ to establish an ongoing dialogue. The attorney needs to determine what information/documents the AUSA is asking for and the deadline by which the AUSA expects to receive the information and documents. The goal of the HME supplier’s attorney will be to establish that no criminal intent was present. The HME supplier and its attorney want the investigation to stay on the civil side of the equation; they do not want the investigation to cross the line to the criminal side.
However, responding to such a notice is not a task that can simply be handed off to the attorney to handle. The attorney needs to work with the supplier to organize and submit the information/documents in the format required by the AUSA, respond to any written questions, and prepare and present any employees the Government wants to interview. While experienced counsel is vital, the counsel does not know the company’s records, systems, personnel, or business in the same intimate way as the HME supplier itself. So, failure to provide personnel and resources to support the attorney in working with the Government and responding to requests effectively hamstrings your counsel’s efforts to move the investigation forward towards an acceptable outcome. Governmental resources are not unlimited, so the less time the Government needs to spend investigating your company, the better. But the longer you take to respond to questions or requests, or the more unnecessary impediments you throw up, the more the Government can become frustrated, and the greater the scrutiny might become.
Obviously, the best case is that the supplier’s response answers the Government’s questions, alleviates all the concerns, and the investigation is closed without any action. But in cases in which this is not the result, then the supplier and the attorney’s goal is to keep the investigation on the civil side and resolve it through some settlement that is acceptable to the DOJ…and that the HME supplier can live with. Such a settlement sometimes entails the supplier (i) paying money to the United States and (ii) entering into a Corporate Integrity Agreement with the OIG.
Jeffrey S. Baird, Esq., is chairman of the Health Care Group at Brown & Fortunato, a law firm with a national health care practice based in Texas. He represents pharmacies, infusion companies, HME companies, manufacturers, and other health care providers throughout the United States. Baird is Board Certified in Health Law by the Texas Board of Legal Specialization and can be reached at (806) 345-6320 or [email protected].
Michael R. Alexander, Esq., is an attorney with the Health Care Group of Brown & Fortunato, a law firm with a national health care practice based in Texas. Alexander represents pharmacies, hospitals, HME companies, and other health care providers throughout the United States regarding health law regulatory issues, related audits, and State and Federal Government investigations. Mr. Alexander is licensed in Texas and Minnesota and is admitted to the Federal Court for the Northern District of Texas. Mr. Alexander earned his B.A. from West Texas A&M University and his law degree from the Baylor University School of Law.