US Attorney Discusses Factors in Determining Potency of Prosecution

At the recent CBI Pharmaceutical Compliance Congress, U.S. Attorney for the District of New Jersey, Paul Fishman, discussed several recent healthcare and pharmaceutical prosecutions, as well as his office’s overall approach to fighting healthcare fraud. He noted that given the high concentration in his state of pharmaceutical manufacturers, hospitals and academic medical centers, along with the 9^th most populated state of seniors, his office will continue to focus on healthcare fraud and abuse. In bringing these cases, Fishman referenced the DOJ “Principles of Prosecution of Business Organization,” and noted that these guidelines are designed to get the same result: how does the government get corporations or institutions to behave better for society, the public, and shareholders. Fishman stated that his job is to find ways to make corporations “behave” and make efforts in compliance more effective.

Fishman noted that while the Principles of Prosecution are important, he emphasized the two most important factors: (1) what steps did the corporation take to prevent the crime; and (2) how did the corporation behave after it determined that its prevention efforts or compliance policies were unsuccessful. In other words, “how did it happen and what did you do about it?” He emphasized that “this is what it all boils down to,” and what tells prosecutors “whether and to what extent a corporation should be prosecuted.”

Fishman went on to give several examples of prosecutions his office has handled. First, Fishman discussed the 2011 settlement with Maxim Healthcare, one of the largest home health agencies in the country. His office alleged that managers, employees and senior executives at Maxim were billing for procedures for individuals without proper credentialing or licensing, or billing for services not performed. Fishman filed a criminal complaint against Maxim, which led to a DPA that suspended prosecution for 2 years, and also required $150 million payment of fines to resolve criminal and civil liability. The DPA also required that Maxim adopt and maintain strict controls and an independent monitor to ensure that Maxim engaged in appropriate conduct. The DPA also required cooperation with the government and implementation of new systems and procedures.

This case also resulted in felony please of 9 employees, including three senior managers. Fishman emphasized the seriousness of this case:

                     1. the conduct was not incidental;
                     2. the wrong was substantial; and
3. high ranking executives were involved.

However, he noted that Maxim

1. cooperated with the government;
2. implemented strong remedial measures; and
3. took serious steps to prevent the misconduct from happening again. For example, Fishman noted that Maxim replaced virtually its entire C-level suite (e.g., CCO, CEO, COO, etc.); hired dozens of compliance officers; revamped its compensation structure; terminated employees; and disclosed behavior of former employees, which eventually led to convictions. These factors ultimately were why his office determined that a DPA was appropriate; to give Maxim time to fix these problems.

The DPA concluded in September 2013 and Fishman moved to dismiss the complaint. He noted that the company’s transformation had a “major impact on industry,” in which he heard from other home health providers that had made analogous changes to their protocol’s using Maxim’s example.

Fishman emphasized that his goal is to reform corporate culture that is bad by expressing to corporations the expectations government agencies have for their behavior. He emphasized that DPA’s are not “toothless agreements.”

Fishman also discussed a DPA for Wright Medical Technology entered into almost three years ago to resolve allegations that Wright provided improper consulting agreements to orthopedic surgeons that violated the AKS. One year after entering the DPA, Wright informed the public through an SEC filing that Fishman’s office was investigating Wright again for knowingly breaching the DPA. Fishman explained that he gave Wright the chance to come in and explain the breach and make changes. In that meeting, Wright explained that the CEO, general counsel, and two vice preseidents had all resigned. Ultimately, his office extended the DPA for one more year as a result of the breaches, taking into account that Wright had come forward to rectify the situation.

Here, Fishman emphasized that the steps taken after misconduct is identified are the “primary considerations” of whether his office will prosecute and how severe the prosecution will be.

Fishman also noted that while corporate accountability is critical, there is also “real value” in focusing on individual HCPs. For example, he noted how almost 30 individuals have been convicted in connection with BLS labs, and several other individuals have been convicted in connection with bringing doctors to refer people for certain diagnostic imaging services. Fishman noted that more individual prosecutions will come, particularly those HCPs who put “money ahead of patients.”

With respect to individual prosecutions, he noted that doctors who are providing medically unnecessary services are particularly problematic because not only are they billing for an unnecessary procedure, they are also tainting the patient’s medical record with a diagnosis they do not actually have. In other words, he noted that it’s not just the CPT code that may be false, it is also the diagnostic code, for which HCPs may be lying about. This could affect certain insurance claims or warrant different medical treatment based on those inappropriate diagnoses. Fishman explained that this “betrayal of trust” is very central to the way his office thinks about prosecuting individuals. He noted that anytime money is being used to interfere with HCP judgment, his office will consider this conduct as corruption. He also emphasized that his office will do whatever it can to help exclude providers.

In closing, Fishman noted that his office has merged civil and criminal attorneys together on one floor in his office, where they basically “run parallel” when it comes to investigating healthcare fraud cases. In other words, the criminal and civil divisions of his office are intertwined when it comes to healthcare, which enables them to make sure the case “fits the facts” to be prosecuted, e.g., whether criminal, civil, DPA, administrative penalties, etc.