AMARILLO, TX – Several weeks ago, I wrote an article for Medtrade Monday entitled “Indictments and Arrests: Lead Generation, Telehealth, and Orthotics.” The article discussed the Department of Justice (“DOJ”) criminal takedown of DME suppliers, lead generation companies (“LGCs”), telehealth companies, and individual telehealth physicians. As stated in the DOJ’s April 9, 2019 Press Release:

One of the largest health care fraud schemes investigated by the FBI and the U.S. Department of Health and Human Services Office of the Inspector General (HHS-OIG) and prosecuted by the Department of Justice resulted in charges against 24 defendants, including the CEOs, COOs and others associated with five telemedicine companies, the owners of dozens of durable medical equipment (DME) companies and three licensed medical professionals, for their alleged participation in health care fraud schemes involving more than $1.2 billion in loss, as well as the execution of over 80 search warrants in 17 federal districts. In addition, the Center for Medicare Services, Center for Program Integrity (CMS/CPI) announced today that it took adverse administrative action against 130 DME companies that had submitted over $1.7 billion in claims and were paid over $900 million.

The charges announced today target an alleged scheme involving the payment of illegal kickbacks and bribes by DME companies in exchange for the referral of Medicare beneficiaries by medical professionals working with fraudulent telemedicine companies for back, shoulder, wrist and knee braces that are medically unnecessary. Some of the defendants allegedly controlled an international telemarketing network that lured over hundreds of thousands of elderly and/or disabled patients into a criminal scheme that crossed borders, involving call centers in the Philippines and throughout Latin America. The defendants allegedly paid doctors to prescribe DME either without any patient interaction or with only a brief telephonic conversation with patients they had never met or seen. The proceeds of the fraudulent scheme were allegedly laundered through international shell corporations and used to purchase exotic automobiles, yachts and luxury real estate in the United States and abroad.

Subsequently, I wrote an article entitled “Braces and Telehealth: Payment Suspensions.” This article discussed the fact that CMS was sending suspension letters to 130 DME suppliers that were involved in the alleged fraudulent orthotics/telehealth practice. The article quoted from a suspension letter and then set out language that can be included in a “rebuttal” to the suspension letter.

This article will discuss the “third leg of this three-legged stool.” While the first article discussed the arrests that took place and the second article discussed payment suspensions, this article discusses DOJ investigations of DME suppliers, telehealth companies, and others that were not caught up in the initial round of arrests.

When the DOJ institutes an investigation, the “target” can be made aware of the investigation through different means. The target can be arrested; this is what is described in the DOJ Press Release. The target can learn that government investigators are interviewing current and/or former employees of the target. The target can receive an Administrative Subpoena that requires the target to produce documents. An Administrative Subpoena indicates that, at least for now, the investigation is civil…not criminal. The target can receive a Grand Jury Subpoena. This is more serious than an Administrative Subpoena. Grand Juries are convened to determine if a person has committed a crime. Or…a target can receive what is known as a “target letter” from the DOJ. The following is an excerpt from a target letter that an Assistant United States Attorney (“AUSA”) sent to a company that got caught up in the orthotics/telehealth web:

This letter is to notify you that you are a target of an investigation into possible violations of 18 U.S.C. § 1347 (Health Care Fraud), 18 U.S.C. § 1349 (Conspiracy to Commit Health Care Fraud), and 42 U.S.C. § 1320a-7b(b) (Violation of the Anti-Kickback Statute), among other possible violations. What this means is that information presently exists which indicates you could be named as a defendant in an indictment. This does not mean you necessarily will be indicted. No decision of who, if anyone, will be indicted will be made by the Grand Jury until the conclusion of the investigation.

Should you knowingly make any materially false statement, answer, or declaration, or make use of any information, document, or record, knowing it to contain false material declarations, you could be prosecuted for perjury, a crime separate and additional to those offenses being investigated. Under the Fifth Amendment to the Constitution, you have the right to refuse to answer any question the truthful answer to which would tend to incriminate you.

Please have an attorney contact me as soon as possible. If you would like to consult with an attorney about this matter, but cannot afford to hire one, you may apply to the United States Magistrate to appoint an attorney for you.

In addition to receiving the letter, the target received a DOJ subpoena requesting the following:

• All medical records for any “telemedicine” patients related to treatment provided under a contract with a physician.
• All contracts with any physician for “telemedicine.”
• All documents relating to remuneration provided to physicians.
• All documents from DME suppliers involving “telemedicine” or related patient care.
• All communications, including emails and text messages, with any physician.
• All documents relating to or describing the Anti-Kickback Statute.
• All documents sent to or from Medicare, a Medicare Advantage Plan, or a Medicaid Managed Care Plan.

Obviously, a target letter is serious. It puts the target on notice that he/she may face a criminal indictment some time in the future. At the same time, by virtue of receiving the letter, the target’s attorney is afforded the opportunity to reach out to the AUSA and begin a dialogue. The goal of the target’s attorney is to show the AUSA that no crime was committed by the target…that if the target was at fault, then the target is subject to potential civil, not criminal, exposure. Steps that the target and its attorney can take include the following:

• Transparency is Important – The target needs to produce the information/documents requested by the AUSA. The target should not attempt to “hide anything.” Doing so can lead to (i) a loss of credibility and (ii) a potential obstruction of justice charge.
• Credibility is Equally Important – Even if the AUSA concludes that the target’s past activities potentially lead to civil and/or criminal exposure, if the AUSA believes that the target is being transparent and honest in responding to the investigation, then the odds of a more lenient outcome increase.
• Information About Others – If the target has information about others in the marketplace that are engaging in the same types of activities that the target is allegedly engaging in, and if the target provides such information to the AUSA, then the odds of a more lenient outcome increase.

The bottom line is that the target and its attorney need to be proactive, engage in productive communications with the AUSA, and work towards a resolution that the government…and the target…can live with.

Jeffrey S. Baird, JD, is chairman of the Health Care Group at Brown & Fortunato, PC, a law firm based in Amarillo, Tex. He represents pharmacies, infusion companies, HME companies 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].