Executive Summary

A spokesperson for the Criminal Division of the U.S. Department of Justice ("DOJ") announced on September 17, 2014 at the Taxpayers Against Fraud Education Fund conference that all new qui tam (i.e., whistleblower) complaints filed under the False Claims Act ("FCA") will be reviewed by the Criminal Division of the DOJ.  While concurrent review of FCA cases by the Criminal and Civil divisions is not unprecedented, review of all new cases by both divisions is new. 

New Qui Tam Procedure

Under the new qui tam review procedure, the Civil Division of the DOJ will share qui tam cases with the Criminal Division as soon as they are filed.  Experienced prosecutors in the Fraud Section will review the cases immediately to decide whether to open a parallel criminal investigation.  The prosecutors then will collaborate with the DOJ Civil Division and with U.S. Attorneys' Offices to decide how best to proceed in the parallel investigations.  If a case raises potential criminal issues and needs investigative support, the DOJ says it can call on seasoned fraud investigators from the FBI, HHS-OIG, the Postal Inspection Service and many other law enforcement agencies.  The DOJ Criminal Division spokesperson reiterated that the DOJ is very experienced when it comes to parallel investigations.  With respect to the Medicare Fraud Strike Force, the spokesperson stated that cases involving fraud by executives at health care providers such as hospitals are a high priority and a growing part of the strike force docket.1

The DOJ encourages potential whistleblowers and their attorneys to contact criminal authorities in appropriate cases, even when they are discussing the case with civil authorities.  That way, the DOJ can begin its investigation expeditiously, which is advantageous for the criminal division to the extent an early investigation ensures the availability of as many legal and investigative tools as possible.   The DOJ Criminal Division intends to "redouble [its] efforts to work alongside [qui tam relators] as it views qui tam cases as a vital part of its future efforts."2 

What Does This Mean for Providers and Health Care Organizations?

The new procedure means that DOJ Criminal Division review will apply to all new whistleblower  cases and not just to the most egregious cases of health care fraud (e.g., billing for high-cost DME equipment never supplied or for services never rendered).  The DOJ Criminal Division's decision to focus on and devote more of its resources to qui tam cases is not only concerning, but the dual review process could pose challenges to timely resolution of cases traditionally deemed to be only civil in nature.  The uncertainty of the direction of the review process, as well as the potential breadth and scope of that review process, will most certainly cause providers even more anxiety since they may not learn for some time whether the Criminal Division's review will indeed result in a parallel criminal investigation.  

Practical Takeaways

The implementation of the Criminal Division's new procedure is consistent with the DOJ's prevailing view that civil monetary penalties under the civil provisions of the FCA are not enough in many cases to deter the wrongful conduct of provider entities and other organizations.  The DOJ believes that targeting key individuals within provider organizations whom the DOJ believes are responsible for illegal conduct is a very effective adjunctive enforcement strategy.

Whether the DOJ pursues criminal prosecution or civil action, key decision-makers and others in responsible positions in an organization must understand the risks they take if they do not insist on strict compliance with a myriad of health care laws including the FCA.

Health care organizations must be vigilant in their coding and billing practices, cautious with their organization-physician relationships and must operate vigorous compliance programs that are responsive to hotline complaints and employee issues of concern.