Jus­tice Depart­ment scru­ti­niz­ing in­di­vid­ual ex­ecs’ role in fraud

Modern Healthcare - - NEWS - By Lisa Schencker

Health Di­ag­nos­tic Lab­o­ra­tory, along with another lab, paid nearly $50 mil­lion to the gov­ern­ment this year to set­tle al­le­ga­tions that it im­prop­erly paid doc­tors for re­fer­rals.

But for the com­pany’s for­mer leader, the story was just be­gin­ning.

Af­ter the set­tle­ment, the gov­ern­ment ac­cused for­mer Health Di­ag­nos­tic Lab­o­ra­to­ries CEO Latonya Mal­lory and oth­ers of vi­o­lat­ing the False Claims Act and anti-kick­back statute.

A memo dis­trib­uted Sept. 9 shows the gov­ern­ment may be get­ting se­ri­ous about pur­su­ing healthcare ex­ec­u­tives tan­gled in fraud al­le­ga­tions.

U.S. Deputy At­tor­ney Gen­eral Sally Quil­lian Yates said com­pa­nies must now dis­close “all rel­e­vant facts re­lat­ing to the in­di­vid­u­als re­spon­si­ble for the mis­con­duct” in or­der to qual­ify for “co­op­er­a­tion credit”—less se­vere penal­ties in ex­change for co­op­er­at­ing with the Jus­tice Depart­ment.

Yates called the new re­quire­ment “a sub­stan­tial shift from our prior prac­tice,” in a speech.

Ex­perts say the move could help the gov­ern­ment in its per­pet­ual fight against healthcare fraud.

“If they do fol­low the new guide­lines, it could very well be a sea change in the way healthcare com­pa­nies con­duct their busi­ness, and how healthcare com­pa­nies ramp up their in­ter­nal com­pli­ance,” said Marc Ras­panti, a part­ner at Pi­etra­gallo Gor­don Al­fano Bosick & Ras­panti, who rep­re­sents whis­tle-blow­ers and is a for­mer gov­ern­ment pros­e­cu­tor. He noted, how­ever, that this isn’t the first time the gov­ern­ment has said it would go af­ter in­di­vid­u­als.

Ras­panti said Congress has chided the Jus­tice Depart­ment for years, say­ing that the bil­lions of dol­lars in set­tle­ments haven’t de­terred healthcare fraud. In­di­vid­ual li­a­bil­ity, he said, has been the miss­ing piece.

“Now, if there’s a chance you may be on the hook per­son­ally for li­a­bil­ity, whether it be civil or crim­i­nal or both ... if I were an ex­ec­u­tive in a com­pany, I’d be more con­sci­en­tious,” Ras­panti said.

Sev­eral ob­sta­cles pre­vi­ously have blocked the gov­ern­ment from pur­su­ing more in­di­vid- uals in healthcare fraud cases, said Pa­trick Burns, co-di­rec­tor of the Taxpayers Against Fraud Ed­u­ca­tion Fund, a not-for-profit partly funded by whis­tle-blow­ers, and the law firms that rep­re­sent them.

For ex­am­ple, to prove a civil case,

the gov­ern­ment must show that a pre­pon­der­ance of the ev­i­dence points to­ward guilt. In a crim­i­nal case, it must prove its al­le­ga­tions be­yond a rea­son­able doubt.

Burns added that there’s also a cul­tural bias in the jus­tice sys­tem against send­ing wealthy, highly ed­u­cated in­di­vid­u­als, such as those run­ning healthcare com­pa­nies, to prison. “Well-to-do folks who went to great schools, those peo­ple don’t go to jail,” Burns said. “They go to coun­try clubs. Peo­ple who lis­ten to coun­try mu­sic, peo­ple who work for hourly wages, we send those peo­ple to jail.”

Only a few cor­po­rate heads have faced pun­ish­ment over healthcare

“Well-to-do-folks went who to great schools, those peo­ple don’t go to jail. They go to coun­try clubs. Peo­ple who lis­ten to coun­try mu­sic, peo­ple who work for hourly wages, we send those peo­ple to jail.” Pa­trick Burns Co-di­rec­tor Taxpayers Against Fraud Ed­u­ca­tion Fund

“When the en­force­ment com­mu­nity comes into healthcare, they’re go­ing to see a more ro­bust ef­fort” than in other in­dus­tries. Roy Snell, CEO Health Care Com­pli­ance As­so­ci­a­tion

fraud, Burns said, de­spite thou­sands of such cases.

In 2012, a fed­eral ap­peals court ruled that three ex­ec­u­tives at Pharma Pur­due, for­merly known as Pur­due Fred­er­ick, could be ex­cluded from do­ing busi­ness with the fed­eral gov­ern­ment af­ter they pleaded guilty to fail­ing to pre­vent the com­pany’s fraud­u­lent mar­ket­ing of the pain med­i­ca­tion OxyCon­tin.

But Roy Snell, CEO of the Health Care Com­pli­ance As­so­ci­a­tion, says the healthcare in­dus­try has al­ready been work­ing at com­pli­ance.

He said healthcare com­pa­nies have em­ployed com­pli­ance of­fi­cers and di­rec­tors for years to fo­cus on ed­u­ca­tion, au­dit­ing and in­ves­ti­ga­tions.

The Health Care Com­pli­ance As­so­ci­a­tion has about 10,000 mem­bers, while its sis­ter So­ci­ety of Cor­po­rate Com­pli­ance and Ethics, which serves other in­dus­tries, has about 5,000 mem­bers, Snell said.

“When the en­force­ment com­mu­nity comes into healthcare, they’re go­ing to see a more ro­bust ef­fort,” Snell said.

Oth­ers, such as Gabriel Im­per­ato, a man­ag­ing part­ner at Broad and Cas­sel who rep­re­sents healthcare com­pa­nies, say the DOJ’s warn­ing may cause healthcare com­pa­nies to fur­ther em­pha­size com­pli­ance.

“It’s go­ing to make the abil­ity of (a com­pany) to get credit for co­op­er­a­tion a lit­tle bit more ex­act­ing, and it’s go­ing to cause com­pa­nies a lit­tle more angst and tur­moil in try­ing to work their way through some of these in­ves­ti­ga­tions,” Im­per­ato said.

Burns called the DOJ’s memo an im­por­tant con­ver­sa­tion starter, but added that he would like to see those found guilty of healthcare fraud banned from work­ing with fed­eral healthcare pro­grams.

“From the sales force all the way up to the CEO of the com­pany, they’re in­cen­tivized to do the fraud, be­cause the pain when they’re caught is shoul­dered by the peo­ple who own the stock,” Burns said.

More ex­clu­sions would get in­dus­try lead­ers’ at­ten­tion, Burns said.

“If you bring the pain, you bring the change,” Burns said. “But the pain has to be per­sonal.”

Sources:Tax­pay­er­sA­gain­stFraudE­d­u­ca­tion Fund,U.S.Depart­mentofJus­tice

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