Healthcare providers in New Jersey and elsewhere should take notice of the recently appointed New Jersey U.S. Attorney’s priority on healthcare fraud enforcement. In heeding this storm warning, healthcare providers should be vigilant in ensuring that their compliance mechanisms are properly functioning and that they are dealing proactively with whistleblower complaints.

New Jersey is now at the forefront of the federal government’s efforts to intensify its investigation and prosecution of healthcare fraud. In October 2010, Paul Fishman, the new U.S. Attorney for the District of New Jersey, declared at a healthcare summit at Seton Hall Law School that healthcare fraud was a top priority for the New Jersey U.S. Attorney’s Office because of the opportunities for fraud in the supply chain. Accordingly, Mr. Fishman reformed his Office by adding a separate Securities and Healthcare Fraud Unit and naming a new chief as head of that unit who will oversee nine federal prosecutors who are dedicated exclusively to the investigation and prosecution of healthcare fraud.

Mr. Fishman declared that his Office would focus not only on traditional phony services and staged accident cases, but also on non-medical necessity cases, upcoding cases, and kickback cases. He stated that his Office was attempting to create seamless investigations where both the civil and criminal divisions work “hand in glove.”

Moreover, Mr. Fishman noted that his Office was considering utilizing the doctrine established in United States v. Park, 421 U.S. 658, (1975), which imposes strict liability on responsible corporate officers for certain healthcare offenses. Mr. Fishman also emphasized that his Office would no longer solely utilize deferred prosecution agreements, but would attempt to hold all responsible individual corporate officers accountable for corporate misconduct. He noted that in many corporate prosecutions there were too many instances where just corporations, and not the responsible corporate officers, were held accountable.

One of the incentives to prosecute healthcare fraud cases lies in the successful recovery rate. Mr. Fishman stated that his Office restores four dollars for every dollar spent combating healthcare fraud.

The government should expect to recover a significant amount of money from its most recent and “largest-ever” healthcare enforcement action. On February 17, 2011, the Medicare Fraud Strike Force announced a massive enforcement action, which led to charges against 111 defendants for participation in Medicare fraud schemes totaling more than $225 million. Defendants include doctors, nurses, and healthcare company owners and executives. In addition to the arrests, 16 search warrants were executed. Officials stated that this operation is the “largest-ever health care fraud takedown,” involving more than 700 law enforcement agents from various federal, state, and local law enforcement agencies (click here to read this article).

Given the new prosecutive initiatives by the U.S. Attorney’s Office, all providers should reinvigorate their compliance efforts to protect themselves from strict scrutiny. These efforts should include:

  1. Reevaluating the entire compliance program to ensure consistency with current standards in the sentencing guidelines and HHS/OIG recommendations;
  2. Auditing to ensure that the written compliance program is regularly being followed;
  3. Scrutinizing all financial relationships with potential referral sources;
  4. Proactively investigating employee whistle-blower complaints; and
  5. Ensuring that the HR department coordinates exit interviews for employees with the compliance office.

The benefits of avoiding becoming the next target of a government healthcare fraud investigation will certainly outweigh the costs providers will incur by revamping their compliance programs.