DOJ wants no breaks for voluntary disclosure

White House plan also would give DOJ the power to level subpoenas in civil lawsuits

New legislation backed by the Clinton administration may further undermine the government’s failed efforts to make voluntary disclosure of wrongdoing an attractive option for health care providers, experts say.

Federal sentencing guidelines would be changed so that providers would not get a break for admitting liability in criminal cases, according to a health fraud provision that will be included in a crime bill announced by Vice President Al Gore. "Currently, penalties for health care fraud allow for significant leniency if the offending provider or corporation admits responsibility for the fraudulent act, making it possible for individuals and entities convicted of defrauding Federal health care programs out of millions of dollars to receive a sentence of probation with limited financial culpability," said Vice-President Gore.

"It seems the Clinton administration is undermining its own effort to get providers to voluntarily disclose," says Ankur Goel, a former Justice Department health fraud prosecutor. Providers will be much more cautious about stepping forward in any potential criminal case, such as one involving kickbacks, if admitting liability doesn’t gain them any leniency. For that matter, a hospital might be more reluctant to do a retrospective audit that could uncover violations it would be obligated to report if the hospital wouldn’t get a break for voluntarily reporting.

Goel says he believes this is the next step in a government campaign to impose a legal obligation upon providers to report misconduct. He points to OIG’s model compliance plans, which typically give providers 60 days to report improper conduct. The government reasons that if self-disclosure is mandatory, then there’s no need to reward companies for merely obeying the law, according to Goel.

Another ominous element of the White House plan would give the Justice Department the power to levy subpoenas in civil cases. Currently, U.S. Attorneys are essentially restricted to levying subpoenas in criminal cases. That means federal prosecutors either have to ask OIG to send out an administrative subpoena, or ask Attorney General Janet Reno to personally sign a special DOJ civil subpoena. "DOJ doesn’t want to rely on OIG," and has long chafed at its lack of civil subpoena powers, adds Goel, now at McDermott Will Emery in Washington, DC. He expects that if prosecutors are given more freedom to demand documents, they will take full advantage of that authority.

DOJ spokeswoman Chris Watney says the plan probably will go before Congress around May. But while some parts of the plan suggest a tougher enforcement environment is coming, other aspects of it seem to be more for show than effect. Indeed, it may not be coincidence that the plan was unveiled a few weeks after an OIG audit estimated that Medicare paid $12.6 billion in overpayments last year. The proposed legislation aims to cut that figure by:

  • Giving the Justice Department the power to halt alleged kickback schemes while they are still under investigation. Goel notes that this isn’t as draconian as it sounds, because DOJ already has the power to seek an injunction for ongoing schemes such as mail fraud. If they want to, it’s not that hard for prosecutors to characterize an arrangement as some kind of crime that is subject to injunction.

  • Allowing DOJ to impose civil monetary penalties (CMPs) of $25,000 to $50,000, plus triple damages, for kickback violations. CMPs are currently OIG’s prerogative, while the Justice Department uses False Claims Act lawsuits to impose fines. Federal prosecutors are "often forced to abandon in cases that, although they merit government action, often do not rise to the level of criminal charges," according to Vice President Gore. Goel says CMPs will be somewhat easier for DOJ to use than false claims suits, but providers probably won’t see a huge jump in their use. As with the subpoenas, it’s more of a turf issue in which DOJ wants its own authority, he adds.

  • Allowing criminal investigators and civil prosecutors to share information in health fraud cases. "Currently, the prosecution of health care fraud is often conducted in an inefficient manner because criminal investigators and civil prosecutors are prohibited from exchanging information about cases that may be related," says Vice President Gore.

  • Closing bankruptcy loopholes that allow providers to escape paying Medicare. Individuals or corporations who declare bankruptcy would be barred from discharging those debts associated with their health care fraud conviction.

  • iving the Federal Employee Health Benefits Program the same anti-fraud defenses as Medicare. The FEHBP would get the same protections Medicare received in the 1996 Health Insurance Portability and Accountability Act, such as more severe false claims penalties and mandatory exclusion for those convicted of fraud.

  • Creating a special health fraud task force composed of DOJ, FBI, OIG, the National Association of Attorneys General, the National District Attorneys Association, and the National Association of Medicaid Fraud Control Units. Beyond training law enforcement in health fraud, the task force also will look at "abuse and neglect of individual patients in health care settings." That last point is particularly interesting in light of a recent slew of reports and accusations that HCFA and the states have not properly supervised nursing home care.