Mark L. Bennett, Jr.
1605 SW 37th Street
Topeka, KS 66611
(913-267-2652 - Fax)

Having served as a prosecutor for several years during my early practice, I acquired some ability in the field of criminal law that I did not care to just discard upon leaving the prosecutor's office, so although the majority of my practice now consists of a civil practice, I also maintain some criminal practice, which consists mainly of the defense of "white collar crimes." In the course of that criminal practice, I have observed a trend with regard to the filing of criminal cases, particularly cases filed by the United States Attorney's Office. It seems that with each administration, there are prosecutions of choice, that is, prosecutions of particular types of crimes that are near and dear to the hearts of Congress and the particular administration in office. At one point in time, drugs and drug offenders got the most attention from the authorities, then it was banking and savings and loan violations. Now, some of my friends in the various U.S. Attorney's offices tell me that one of the prosecutions of choice is fraud relating to the provision of medical services. This trend has also been noticed by others. One authority in the field, David S. Nalveen, has observed that "The federal government is aggressively prosecuting fraud and abuse by health care providers for the same reason that Willie Sutton robbed banks: That's where the money is."

Recent legislation enacted both in Congress and in the Kansas legislature bear out this prosecutorial trend. Not only has Congress created new crimes specifically concerning health care fraud in the new Kennedy-Kassebaum sponsored legislation, but the State of Kansas has recently enacted the Kansas Medicaid Fraud Control Act. These acts increase the already numerous avenues for criminal actions against health care providers.

A variety of both federal and state statutes address Medicare and Medicaid fraud. They provide prosecutors with many options, and correspondingly subject health care providers to many different types of liability. The following list attempts to provide an overview of the possible avenues of criminal prosecution relating to health care fraud.

A. Federal Criminal Statutes
1. False Claims Act, 18 U.S.C. � 287.
Under this statute, any health care provider who presents a false or fictitious claim or demand to the government seeking reimbursement for medical goods or services can be liable. The prosecutor need only prove that the provider intentionally submitted the claim knowing that it was false, fictitious or fraudulent. This can be shown by showing that the claim was for goods or services that were not provided, were not provided as stated, or were provided but not medically necessary.

The punishment for a conviction under the False Claims Act is up to five years imprisonment and a fine of $250,000.00 for an individual and $500,000.00 for a corporation for a felony conviction; or $100,000.00 for an individual and $200,000.00 for a misdemeanor conviction. It should be noted that this penalty is per occurrence. Thus, liability for numerous false claims is very heavy. In light of the new specific provisions concerning false statements in connection with health care fraud found in the recently enacted Health Insurance Portability Act, it is questionable whether this section is applicable to actions that would be covered by the new legislation.

2. False Statements Act, 18 U.S.C. �1001
This act imposes liability on a health care provider that in a communication submitted to the government, makes false or fraudulent statements or representations, false writings or documents, or that falsifies or covers up a material fact. Like the false claims act, the health care provider need not necessarily have made the statement directly to the federal government; it is enough that the false statement was made to a state agency or insurance company and submitted to the government. See United States v. Huber, 603 F.2d 387 (2nd Cir. 1987) (hospital supply company violated act where it marked up supplies to hospitals, who then submitted the marked up costs to the insurance companies acting as fiscal intermediaries for the Medicare and Medicaid programs.)

In order to show a violation of this act, the government must prove that the health care provider willfully submitted the false statement or representation to the government, knowing it to be false, and that the statement was material i.e. that the statement was of the type that has the natural tendency to influence the agency's action. See United States V. Greber, 760 F.2d 68, 72-73 (3rd Cir. 1985).

The penalty for a conviction under the False Statement Act is a fine of not more than $10,000.00 or imprisonment of more than 5 years, or both. As with the False Claims Act, this penalty can be assessed for every violation.

3. Social Security Act
In addition to the general federal crimes listed above, the Social Security Act itself contains several provisions that could apply to health care providers. These provisions criminalize a variety of conduct.

a. Social Security Act: 42 U.S.C. � 132Oa-7b(a)
The first of the provisions, 42 U.S.C. S1320a-7b(a), concerns false statements in connection with services which are paid for in whole or in part by a "Federal Health Care Program", which definition includes a state health care program receiving some federal funds.

42 U.S.C. �1320a-7b(a)(1) states that whoever knowingly and willfully makes or causes to be made any false statement or representation of material fact in any application for any benefit or payment under a Federal Health Care Program shall be guilty of a felony. In order to convict a health care provider under this section, the Government must prove that the statement or representation was knowingly made, that the statement or representation was false, and that the provider knew the statement or representation to be false when made.

42 U.S.C. 1320a-7b(a)(2) concerns false statements or representations made in determining rights to a benefit or payment under the Medicaid Act. The elements that the government must prove are the same as those in (a)(1) discussed above.

42 U.S.C. 1320a-7b(a)(3) concerns the covering up of an event which affects the providers right to a benefit or payment or the person on whose behalf the provider has applied for or is receiving payment. In order to obtain a conviction under this section, the Government must show that the provider concealed or failed to disclose the information with the intent of securing payment or benefit when none was authorized, or of securing payment in an amount greater than authorized.

42 U.S.C. S1320a-7b(a)(4) proscribes presenting a claim for a physician's service under the Medicaid Act or a State Health Care Program knowing that the person furnishing the service was not licensed as a physician. Hopefully, this will not be a big problem in Kansas.

The penalty for any violation of 42 U.S.C. ��1320a-7b(a) through (h) is a fine of not more than $25,000.00 or imprisonment of not more than 5 years, or both.

b. Social Security Act: 42 U.S.C. 132Oa-7b(b)
This provision is otherwise known as the "anti-kickback" provision. It prohibits anyone from knowingly and willfully soliciting or receiving any renumeration such as kickbacks, bribes or rebates, directly or indirectly in return for referring an individual to a person for the furnishing or arranging of furnishing any item or service for which payment is made under the Medicaid Act or a State health care program, or in return for purchasing, leasing, ordering, or arranging for or recommending any good, facility, service or item for which payment may be made, in whole or in part under the Medicaid Act or a State health care program. Any such violation is a felony. Further, this provision makes it a misdemeanor to knowingly and willfully offer to pay or to pay such renumeration in connection with these activities.

However, the provision exempts some legitimate business transactions from its application. The anti-kickback provision states that it does not apply to: 1) Discounts or other price reductions obtained by health care providers if the reduction is properly disclosed and reflected in costs claimed or charges made; 2) an amount paid by an employer to an employee in a bona fide employment relationship; 3) an amount paid by a vendor of goods or services to a person authorized to act as a purchasing agent for entities furnishing services reimbursed under the Medicaid Act, so long as the amount is established by written contract and fully disclosed; waivers of coinsurance payments under Medicare Part B; and any arrangement covered by the so-called "safe harbor" regulations promulgated by the Secretary pursuant to section 14(a) of the Medicare and Medicaid Patient and Program Protection Act of 1987.

The "safe harbor" regulations are provisions of federal law which protect physicians from criminal prosecutions or civil liability for practices that would otherwise be covered by the anti-kickback laws. These practices include certain investments in health care entities; space and equipment rental; personal services and management contracts; the sale of a practice; legitimate referral services; warranties; discounts; bona fide payments made to employees; payments to a group purchasing organizations; waiver of beneficiary coinsurance and deductible amount; formation of health plans which offer nondiscriminatory incentives to enrollees; providers who offer reduced prices to health plans in compliance with certain specified standards, and some risk sharing arrangements.

Violations of the anti-kickback provision can result in a fine of not more than $25,000.00 or imprisonment for not more than 5 years, or both.

c. Social Security Act: 42 U.S.C. 132Oa-7b(c)
This provision covers false statements or representations with respect to the condition or operation of health care facilities. It provides that whoever makes or induces a false statement or representation of material fact of the conditions or operations of an institution so that the institution may qualify as a hospital, rural primary care hospital, skilled nursing facility, nursing facility, intermediate care facility for the mentally retarded, home health agency, or any other agency for which certification is required under a Federal Health Care Program, or who makes false statements with respect to information required under Part B Medicare disclosure requirements shall be guilty of a felony. Any such violation is punishable by a fine of not more than $25,000.00 or imprisonment for not more than five years, or both.

d. Social Security Act: 42 U.S.C. �l32Oa-7b(d)
This provision covers illegal patient admittance and retention practices. It provides that anyone who willfully charges a greater amount than allowed under a State plan approved by the Medicaid Act or who solicits a gift or donation as a precondition of admitting a patient to a health care facility or as a requirement for continued stay in the facility shall be guilty of a felony. As with the other violations of 42 U.S.C. �1320a-7b, each violation is punishable by a fine of not more than $25,000.00, imprisonment for five years, or both.

4. Federal Mail and Wire Fraud: 18 U.S.C. ��1341, 1343
In addition to the charges above, prosecutors can also make use of the Federal Mail Fraud and Federal Wire Fraud statutes. These statutes proscribe the use of the mail, interstate television, radio and wire communications in furtherance of fraudulent schemes. Because many alleged fraudulent acts in connection with Medicare and Medicaid make use of the mail or other forms of communication, these statutes are particularly important.

In order to obtain a conviction under these statutes, it must be shown that the health care provider was involved in a scheme to defraud with the intent to defraud, and that the provider used the mail or other form of communication in furtherance of that scheme. It is important to remember that each use of the mails or other communication constitutes a separate offense, and that these offenses are in addition to any charges that may be brought in connection with the fraudulent scheme itself under any of the statutes addressed above. Each conviction for mail or wire fraud is punishable by a fine of up to $1,000.00, a prison term of up to five years, or both.

5. The New Frontier: Recent changes to Federal Criminal Law
Concerning Health Care Fraud.
Recent legislation has provided a new avenue for prosecution of Medicare and Medicaid fraud. In the last session, as a part of the new Kennedy-Kassebaum sponsored Health Insurance Portability Act, Congress established a number of new federal crimes concerning the Health Care industry. The first of these is Health Care Fraud, 42 U.S.C. �1347. Under this statute, anyone knowingly and willfully executing or attempting to execute a scheme to defraud any health care benefit program or to obtain by fraudulent pretenses, representations or promises any money or property owned by or under the control of, any health care benefit program faces a fine or imprisonment for not more than 10 years, or both.

An interesting provision of this statute covers schemes which result in the bodily injury or death of another. In the case of bodily injury, imprisonment of up to 20 years is allowed, while in the case of death, imprisonment for any term of years, or for life, is authorized.

Another new crime created by Congress in connection with the health care field is Theft Or Embezzlement in connection with health care, 18 U.S.C. �669. Under this section, anyone knowingly and willfully converting or intentionally misapplying the assets of a health care benefit program is liable for a fine or imprisonment of not more than 10 years, or both.

42 U.S.C. �1035 is another new statute governing False Statements relating to health care matters. Under this provision, whoever knowingly and willfully falsifies, conceals or covers up by any trick scheme or device a material fact or makes any materially false, fictitious or fraudulent statements or representations, or uses any materially false writing or document with knowledge of the falsity, in connection with the delivery of or payment for health care benefits, items or services is liable for a fine, imprisonment of not more than 5 years, or both. It is arguable that the existence of this more specific section prohibits prosecution under the False Statements Act, 18 U.S.C. �1001 for the same conduct.

B. State Law: Kansas Medicaid Fraud Control Act
In addition to and in cooperation with federal laws regulating health care, Kansas has recently enacted the Kansas Medicaid Fraud Control Act. This act prohibits knowingly making a false claim, statement or representation to the Medicaid program or its fiscal agent with the intent to defraud. The definition of a false claim, statement or representation is expansive, and includes any false or fraudulent claim for payment for goods or services, false information for use in determining payments or rate of payments, or fraudulent entries in records that are required to be kept as part of participation in the medic aid program. The making of a false statement where the aggregate amount of payments illegally claimed is $25,000.00 or greater is a severity level 7 nonperson felony, while the making of a false statement where the aggregate amount of payments illegally claimed is between $500.00 and $25,000.00 is a severity level 9 nonperson felony. Where the aggregate amount of payments is less than $500.00, the making of a false statement is a class A misdemeanor.

The Kansas Medicaid Fraud Control Act also prohibits the making or presenting any wholly or partially false or fraudulent book, record, document, data or instrument to a law enforcement officer, employee or representative of the attorney general, or employee or agent of SRS in connection with any audit or investigation regarding claims for payment under the Medicaid program; and any false or fraudulent statement made with intent to influence any acts or decision of any federal or state employee of an agency having regulatory or administrative authority over the Kansas medicaid program. This activity is a severity level 9, nonperson felony.

Another section of the Kansas Medicaid Fraud Control Act covers the same activity prohibited by the federal anti-kickback legislation, 42 U.S.C. �1320a-7b(b). It incorporates the same exemptions as those in the federal statute, as well as many of the safe harbor provisions found in 42 C.F.R. �1001.952. Any safe harbor provisions in 42 C.F.R. �1001.952 that are not expressly included in the Kansas Medicaid Fraud Control Act are also probably exempted.

An interesting provision in the Act is a section which provides that the negligent failure to maintain adequate records which disclose fully the nature of the goods, services, items, facilities or accommodations for which a claim is submitted or payment received, or the income or expenditures upon which rates of payment were based is a class A nonperson misdemeanor. This section also requires that, upon submitting a claim or receiving payment under the Medicaid Act, the provider must maintain adequate records of the transaction for five years after payment was received, or five years after the claim was submitted if payment was not received.

Yet another section of the new Act governs the intentional destruction or concealment of records. It provides that any destruction or concealment of records necessary to document a transaction under the Medicaid Act within the five year period previously described is a severity level 9 nonperson felony.

The Act specifically provides that offers of repayment or repayment itself, if occurring after the filing of criminal charges do not constitute a defense against such charges. In addition to the criminal penalties specified, the Act also provides for payment of full restitution, with interest, and payment of reasonable expenses in the enforcement of the action, including reasonable attorney fees.

To provide enforcement, the Act creates a medicaid fraud and abuse division within the Attorney General's office. The Act further provides that the Attorney General shall be allowed access to all records in the hands of the provider relating to the transaction under investigation, and that no provider may refuse to provide access to the records on the grounds that such access would violate any recipient's right of privacy or privilege against disclosure or any other privilege or right. The Act does absolve the provider from liability for any breach of confidential relationship between provider and patient as the result of the production of those records.

In addition to possible criminal liability, providers are also exposed to substantial civil liability for health care fraud under the Civil False Claims Act and the Civil Monetary Penalties Law. As previously stated, the government in many cases will pursue both civil and criminal liability for the same action in hoping to force a settlement.

A. Civil False Claims Act
31 U.S.C. �3729(a), the Civil False Claims Act, provides that anyone who presents to a government employee a false or fraudulent claim is liable for a civil penalty of not less than $5,000.00 and not more than $10,000.00 plus three times the amount of damages that the government sustains because of the action. This liability is per occurrence.

An often cited recent example of the huge potential liability exposure under the Federal Civil False Claims Act is United States V. Krizek, 859 F. Supp. 5 (D.C. 1994). In that case, the government filed suit against a psychiatrist and his wife for submitting and conspiring to submit false claims to Medicare and Medicaid. The government alleged that Dr. Krizek billed for 45-50 minute psychotherapy sessions when, based on the time spent, he should have billed for 20-30 minute sessions. Because this alleged billing practice took place over a six year period and involved 8,000 claims, the potential liability for Dr. Krizek under the Federal Civil False Claims Act was in excess of 80 million dollars. Although the court eventually found that the alleged damages were unreasonable and submitted the case to a master for calculation of damages, this case is a good example of the lengths to which the government may be allowed to go under the statute, and the lengths to which the government may in fact go to force a plea.

B. Civil Monetary Penalties Law
42 U.S.C. �1320a-7a, the Civil Monetary Penalties Law, establishes an administrative action that may be pursued in lieu of a criminal or civil action. The law provides that any person presenting or causing the presentation of, a claim for Medicaid or Medicare benefits for medical items or services that the provider knows or should know is false is subject to a penalty of $10,000.00 per item or service. In addition, the provider is subject to an assessment of not more than three times the amount claimed for each item. The provider is also subject to being excluded from the Medicaid and Medicare programs.

Because a proceeding under the CMPL is administrative in nature, the provider does not have the right to a jury trial. Instead, the determination of liability is made by an administrative law judge. Because the penalties under the CMPL are per occurrence, the total amount can be quite large. It should be noted, however, that the recent Kennedy-Kassebaum bill changes the burden of proof under this section. Where before a health care provider could be subject to liability where the provider simply should have known that the information submitted was false, now the government is required to prove at least deliberate indifference.

In addition to all the other penalties mentioned above, the health care provider is subject to expulsion from the Medicare and Medicaid programs. 42 U.S.C. 1320a-7(a)(3) now provides for mandatory exclusion upon a felony conviction of fraud in connection with the delivery of health care item or service, or with respect to any act or omission in a government health care program. Such exclusion from participation is for a period of not less than five years. Also, 42 U.S.C. �1320a-7(b) provides for the permissive exclusion of a provider for a conviction relating to the obstruction of an investigation; submitting claims for excessive charges that do not rise to the level of fraud, failure to disclose statutorily required information and failure to provide required access to records. Such exclusion is for a minimum of three years.

One of the most potent weapons in the prosecutor's arsenal, however, is the power to suspend and withhold a provider's payments under Medicare upon indictment or other reliable evidence of fraud. Under 42 C.F.R. �405.370 and 42 C.F.R. �405.370 such payments can be suspended without a hearing once the prosecutor has obtained an indictment. As a result, the government is able to exert tremendous pressure on health providers it has targeted.

Enforcement of Medicaid and Medicare Fraud is a coordinated effort of three federal agencies: The Office of the Inspector General, the Department of Justice and the Federal Bureau of Investigation. Also involved are state-based federally funded Medicaid Fraud Control Units.

Investigations into Medicare and Medicaid Fraud begin with the Office of the Inspector General. OIG investigators have the power to execute search warrants and serve subpoenas in connection with their investigation. In cases involving suspected Medicaid Fraud, the OIG has delegated most of its investigative activities to Medicaid Fraud Control Units established by individual states with federal funding. Kansas's new Medicaid Fraud Control Act establishes a MFCU through the state Attorney General's Office. This agency has the power to issue subpoenas, serve and execute search warrants, and take sworn statements.

Once the investigators have determined that there is reason to believe a law has been broken, the situation is reported to the United States Attorney General and the FBI. The Attorney General's Office coordinates further investigation and determines whether to submit the case to a grand jury. If the investigation is conducted by a Medicaid Fraud Control Unit, the MFCU has the authority to prosecute criminally, or refer the matter to the applicable district or county attorney for prosecution. The MFCU may also coordinate its activities with federal investigators.

With the foregoing in mind, I then get to the "nuts and bolts" of this presentation. What should you do as a health care provider if someone appears at your office or home, with a search warrant or a subpoena to appear before a grand jury.

A. Search Warrants
The Fourth Amendment, as applied to the states through the Fourteenth Amendment governs the law of search and seizure. In order to claim protection under the Fourth Amendment, a party must have a legitimate expectation of privacy in the property searched. Rokas V. Illinois, 439 U.S. 128, 143 (1978). The amendment only forbids unreasonable searches and seizures. The reasonableness or unreasonableness of a particular search depends on the particular facts and circumstances surrounding the conduct of the search.

The Fourth Amendment's search warrant provisions require

  1. that the warrant be issued by a neutral disinterested magistrate. Steagold V. United States, 451 U.S. 204, 216 (1981);
  2. that those requesting the warrant establish to the magistrate's satisfaction that there is probable cause to believe that the evidence being sought will aid in apprehending an individual for a particular crime. Illinois v. Gates, 462 U.S. 213 (1983); and
  3. that the warrant describes with particularity the place to be searched and the items to be seized . Dalia V. United

Under the provisions of Rule 41 of the Federal Rules of Criminal Procedure, a warrant may be issued to search for and/or seize:

  1. property that constitutes evidence of the commission of a crime;
  2. contraband or the fruits of a crime;
  3. property designated or intended for use, or which is, or has been, used as the means of committing a crime or;
  4. for a person for whose arrest there is probable cause, or whose is unlawfully restrained.

The term "property" as used in the rule includes documents, books, papers, and any other tangible objects that a business may have on its premises. United States V. New York Telephone Co., 434 U.S. 159 (1977).

In the event that you are confronted with a "surprise" federal or state search there are a number of procedures or steps that can be taken in order to minimize the disruption to your practice and to protect the interests of the provider and its employees. Once the law enforcement officers have presented themselves on the property to be searched the following should be adhered to:

  1. CALL YOUR ATTORNEY. You should immediately request of the officers conducting the search permission to call your attorney before the officers proceed with the search. If your attorney feels that he or she does not have the necessary criminal law expertise to advise you how to proceed, you should contact an attorney with that expertise. It is absolutely imperative that this be done immediately, even if the officers conducting the search refuse to delay the search or attempt to persuade you to delay contacting an attorney.
  2. ASK THE OFFICERS TO PROVIDE YOU WITH A COPY OF THE SEARCH WARRANT AND ANY AFFIDAVIT FILED IN SUPPORT OF THE WARRANT PRIOR TO THEIR CONDUCTING THE SEARCH. Federal Rules of Criminal Procedure require that the officers provide you with a copy of the search warrant which must specifically describe the premises to be searched and the documents or items to be seized. They are not authorized to search any premises or property not specifically described in the warrant. You should always ask for and obtain a copy of the affidavit filed in support of the warrant as well, particularly if the warrant is very broad in its description of the premises to be searched or the items to be searched for.
  3. FIND OUT WHAT CRIME AND WHAT CONDUCT IS UNDER INVESTIGATION. As the person whose property is being searched, you have a right to know what crime or offense is being investigated and what items are being searched for. If any items are seized and removed from the property as a result of the search, the Federal Rules of Criminal Procedure require that the searching officers make a written inventory of any property that they seize. That list is to be prepared in the presence of the person from whom the property is to be seized and a copy of the inventory should be provided to you.
  4. REQUEST THAT THE OFFICERS EXECUTING THE SEARCH WARRANT REFRAIN FROM INTERVIEWING EMPLOYEES UNTIL YOUR ATTORNEY ARRIVES AND CAN BE PRESENT DURING SAID INTERVIEW. Officers often use the shock of a surprise search to interview unsuspecting and unprepared employees. You have a right to have counsel present when any interviews take place. If the officers refuse to wait until counsel arrives, the employee has the right to refuse to be questioned and the right to set conditions before being interviewed.
  5. DESIGNATE ONE PERSON TO SPEAK ON BEHALF OF YOURSELF AND/ OR THE ENTITY BEING SEARCHED. It is the better practice to designate one individual to be the person speaking for you and/or the entity being searched and to deal with the officers conducting the search. If more than one person is speaking on behalf of you and/or the entity being searched, it inevitably results in contradictory or conflicting statements, confusion and misstatements. If a prosecution ensues, such contradictions and misstatements may well be used by the prosecution in such a way as to imply deliberate falsification.

    (a) That a search warrant is being executed by whatever law enforcement agency is conducting the same;

    (b) Your understanding of what crime or alleged crime is being investigated;

    (c) That the health care provider will furnish attorneys to advise all employees with regard to statements and how to conduct themselves; (d) That all employees have a right to decline to be interviewed without an attorney being present;

    (e) That the supervisors should advise each employee under their supervision of the information set out in (a) - (d) above.

  7. SEND HOME ALL NON-ESSENTIAL PERSONNEL, PARTICULARLY THOSE PERSONS WORKING IN THE AREAS WHICH ARE TO BE SEARCHED. The more individuals that remain at the place of business during the course of the search, the better the opportunity for the searching officers to take employees aside and attempt to obtain damaging statements or admissions with regard to you or the entity being searched. Additionally, the more persons present, the greater the confusion that ensues and the greater the opportunity for the officers to locate particular documents that are being searched for by asking questions of employees.
  8. ASSIGN AN INDIVIDUAL IN EACH SEARCH AREA TO INVENTORY AND LIST WITH SPECIFICITY ANY AND ALL DOCUMENTS OR ITEMS BEING REMOVED. Although the Federal Rules require that the officers conducting the search prepare and provide a written inventory, the inventories prepared by searching officers are always sketchy, uninformative, nonspecific and never clearly identify what items have been seized. You, or someone on your behalf, should make your own inventory in sufficient detail to enable you and your attorney to know exactly what has been taken.
  9. REQUEST THAT YOU, OR SOMEONE ON YOUR BEHALF, BE ALLOWED TO COPY ALL DOCUMENTS AND ITEMS THAT ARE BEING SEIZED. Once items have been seized by law enforcement pursuant to a search, it will in all likelihood be many months before those documents are returned, if ever. In the meantime, you will want to proceed operating your practice and you will find that many of the documents seized are essential in order to do so. If your request to make copies of the documents is refused, immediately make a written record of the time and date of the refusal, the name of the officer making the refusal, and an itemization of the documents that you were not allowed to copy. This information will be crucial to any defense effort to obtain the return of the seized documents or copies of those documents.
  10. COOPERATE WITH THE OFFICERS IN THE DOCUMENT PRODUCTION. Under no circumstances should you try to conceal or destroy documents. If you have established a policy whereby documents are regularly destroyed in the course of your business, cease that practice. Do not erase anything from the company's computers. Do not make any changes by interlineation or otherwise in documents. Your failure to follow this practice could result in the filing of felony charges against you for obstruction of justice.
  11. DEBRIEF ANY AND ALL EMPLOYEES WHO HAVE BEEN INTERVIEWED OR QUESTIONED AS SOON AS POSSIBLE. Immediately following the conclusion of the search, you and/or your attorney should debrief any employees who were interviewed by the searching officers and a written record should be made, even if your attorney attended the interview. The longer the delay between the time of the interview and the debriefing, the less accurate and complete will be the information obtained, and it needs to be as accurate and complete as possible as it will be invaluable to the preparation of a defense should charges result from the search.
  12. MAKE A RECORD OF EVERYTHING SAID BY ANY OFFICER INVOLVED IN THE INVESTIGATION AND SEARCH. If possible, use a tape recorder or make written notes of each and every statement made by any of the investigating officers. Be sure when making the notes that you have properly identified which officer made which statement. These notes will be invaluable to your attorney as he attempts to head off the filing of charges or to prepare to defend against charges.
  13. VIDEO TAPE OR PHOTOGRAPH THE SEARCH AND THE OFFICERS CONDUCTING THE SEARCH. Photos or video tape of items and documents seized are an extremely helpful addition to any written inventory that you have made with regard to the items seized. Additionally, video or photographic evidence of the conduct of the officers conducting the search may well be helpful at a suppression hearing should your attorney be attempting to suppress the search for the reason that it violated your privacy rights or the warrant's limited scope.
  14. MAKE A LIST OF DOCUMENTS OR EQUIPMENT WHICH IS ESSENTIAL FOR YOUR TO HAVE IN ORDER TO CONDUCT AN ONGOING BUSINESS. This list should be compiled as soon as possible following the conclusion of the search and you should give a copy to your attorney so that he can make application to the court for return of items such as computers, computer tapes, computer disks, and other items which are not readily copied or duplicated.
  15. LIST ITEMS AND DOCUMENTS SEIZED BY THE OFFICERS WHICH WERE NOT PARTICULARLY DESCRIBED IN THE WARRANT OR AFFIDAVIT. It is a common occurrence for searches which are limited in scope as to the items that are to be searched for and seized to become broader in scope in the course of the search with the officers seizing items outside the scope of the validly issued warrant. If items that are not identified in the search warrant itself are seized, those items should be documented with as much detail and specificity as possible so that your attorney can seek to quash the seizure of such items.
  16. MAKE OR OBTAIN A BACKUP DISK FOR ALL COMPUTER SOFTWARE. Request that the officers conducting the search allow you to make a copy of any computer software that is to be seized before it is removed from the premises. If the request is refused, you should document the refusal noting the time and date of the refusal, the name of the officer making the refusal, and what items you were not allowed to make a copy of.
  17. BE POLITE. REMAIN CALM AND COOPERATIVE. Do not verbally or physically make any attempt to prevent or hinder the officers in the conduct of the search. At the same time, do not volunteer information. Do not make any statements or allow yourself or your employees to be questioned without your attorney being present. Indicate to the officers that you do wish to cooperate with them in the search. If you are polite, calm and cooperative, the officers are more likely to honor any requests that you make of them with regard to inventories of the property, the making or nonmaking of statements, etc. Be courteous and professional at all times.
  18. DO NOT MAKE STATEMENTS TO THE PRESS. If you receive calls or contacts from members of the press regarding the search, you should refuse to make any comment whatsoever. Do not try and explain what is happening or the reason that it is happening, and do not attempt to refute any allegations of wrongdoing. You should direct all requests for comments to your attorney. You should also advise all supervisors and employees to do the same. If a press release is going to be made, it should be done after you and your attorney have had time to discuss the matter and carefully craft whatever response is to be made.

Being confronted with a "surprise" federal investigation can be a very disturbing and frightening experience, yet the fact remains that these type of medical fraud investigations are increasing. Anticipatory training and education of employees and management can neutralize the element of surprise and enhance the provider's ability to safeguard its rights and the rights of its employees while at the same time enabling it to better defend against whatever criminal charges are brought against it.

B. Grand Jury Appearance
The Fifth Amendment to the United States Constitution provides in part that:

"No person shall be held to answer for a capital, or otherwise infamous crime, unless on a presentment or indictment of a grand jury. . "

and Rule 6 of the Federal Rules of Criminal Procedure sets forth the method by which the requirements of the Fifth Amendment are to be implemented. Paragraph (d) of Rule 6 deals with who may be present in the grand jury room and provides:

"Who May Be Present. Attorneys for the government, the witness under examination, interpreters when needed and, for the purpose of taking the evidence, a stenographer or operator of a recording device may be present while the grand jury is in session, but no person other than the jurors may be present while the grand jury is deliberating or voting."

It is the grand jury, which, after considering evidence offered by the government, determines what individual or company should be charged with a criminal offense and further, what crime should be charged. The evidence upon which the grand jury makes its ultimate decision is only that evidence which the prosecutor chooses to share with the grand jury. The defendant or potential defendant is not allowed to be present nor to have his attorney present during the proceedings, is not allowed to cross examine the government's witnesses, is not allowed to present evidence on his or her own behalf and is not allowed to address the members of the grand jury or argue the case.

Furthermore, although an individual or corporation may be the target of the investigation and may be subpoenaed to testify before the grand jury, that individual or corporation is not entitled to have an attorney present in the grand jury room during questioning.

Some people harbor romantic notions of the grand jury as a fair, independent tribunal. The sad fact is, however, that the modern grand jury is firmly under the government's control. The prosecutor decides what casesto present, who to call as witnesses, who should receive immunity and who should be targeted for prosecution. The prosecutor draws up the charge and presents it to the grand jury, which routinely votes to return an indictment. If the prosecutor wants an indictment of a particular individual or corporation for a particular charge, he can generally manipulate the evidence and the grand jury to reach his goal.

In such a world, every person subpoenaed to appear before a grand jury - without exception - needs competent representation. That representation has two aspects:

  1. protecting the witness against later prosecution on the basis of his or her testimony; and
  2. ensuring that the witness's rights and privileges are respected throughout the grand jury experience.

When an officer or employee of a health care provider receives a grand jury subpoena, it should first be determined what the government wants. A grand jury subpoena may only call for testimony, or it may require the production of specified documents.

Documentary subpoenas fall into two categories: those that require testimony from the witness and those that do not. Where the government only wants the documents, the subpoena will call for their production before the grand jury on a particular date and will further state that furnishing them to a particular government agency will make an actual appearance unnecessary. When the government also has questions for the witness about the documents, the subpoena will require the witness to testify and to bring the documents with him.

While documentary subpoenas can be important in the overall scheme of a potential prosecution, the more troublesome event in most grand jury representations is dealing with the testimonial subpoena. When you are confronted with a testimonial subpoena, the first step is a thorough interview of the witness/provider by the attorney. The attorney must learn as much as possible about the provider's view and knowledge of the matter being investigated as soon as possible. The provider should have exercised his rights and decline to make any statement whatsoever. If the provider or any of his or her associates or employees have made statements that information should be immediately provided to your counsel in as much detail as possible. If a written or recorded statement has been given, you should request that you be provided with a copy and you should provide your attorney with a copy.

Furthermore, one interview area merits special emphasis. The government may attempt to interview the provider long before any charges are considered or filed, such as at the time they served a search warrant, seized records or served a grand jury subpoena. The agents that normally serve grand jury subpoenas are often the same agents (FBI or otherwise) who are conducting the criminal investigation itself and when they serve the subpoena they have a habit and practice of being very pleasant while they have a nice chat with the provider or its employees about that person's knowledge of the event that is under investigation while that individual is unwary, unsettled, frightened and unrepresented. This is not 3ust civility; it is a calculated attempt by the investigator to obtain useful statements and damaging admissions. While the witness may think the discussions were insignificant, they are not. Your attorney must know everything that was said. Statements made to government representatives in a criminal case never lack significance.

Once you have provided all the information that you can to your attorney, it is then time for your attorney to talk to the prosecutor to see what he can find out regarding the focus of the investigation and what the government's interest is in the provider that you represent. Only after it is determined what the government's interest is in the provider can the attorney intelligently determine how to proceed and what to advise the provider. Is the provider a "target" of the investigation, a "subject" of the investigation, or just a "witness." These terms pretty much mean just what they seem to mean. A "target" is someone the government intends to indict using its influence over the grand jury to do so. A prosecutor knows that a person identified as a target, if actually required to appear before the grand jury, will in most, if not all cases, invoke his or her privilege against self-incrimination. Since the government knows it will not get testimony from such a witness, his or her grand jury appearance will most likely be excused if requested. "Targets" do not talk their way out of indictments and they should not testify under any circumstances.

What if the prosecutor says the provider is not a target but is a "subject" of the investigation? The U.S. Attorney's Manual and other Justice Department statements draw a distinction which is mostly technical, between "targets" and "subjects." Whereas a "target" is someone the government expects to indict, a "subject" is a person the prosecutor thinks may be indicted, but against whom sufficient evidence may not exist at that time.

Since the decision to indict a "subject" has not been finally made, there is a greater chance that a "subject" will actually be called before the grand jury. In these situations where the provider is deemed to be a "subject", that provider must consider himself as if he is a "target" and conduct himself accordingly. If the only thing between the provider and an indictment is more evidence, the last thing the provider wants to do is to provide that evidence. A "subject" who testifies can rarely, if ever, do anything but harm himself, by creating a trail of testimony that may return to haunt him or her, possibly in the form of a perjury or obstruction of justice indictment.

The normal practice for an attorney representing a "target" or a "subject" is to advise the prosecutor that the witness does not wish to appear and if an appearance is required it is his or her intention to invoke the Fifth Amendment privilege against self-incrimination. If the appearance is not excused, then the witness, with his attorney's guidance, should assert the privilege.

One practical consideration for an attorney to keep in mind here, is that if his client is the health care provider who may also be a "target" of the investigation and at the same time he is requested by that same provider to represent one or more of the provider's officers who have been subpoenaed to testify before the grand jury the attorney may be in an irreconcilable conflict since the government may offer one immunity in return for testimony against the other. Thus, if it is anticipated that the provider is or may be a criminal target or defendant, the attorney for that provider should decline to also represent a potential witness, e.g., the chief financial officer for the provider.

In representing a provider, the most important way for an attorney to protect that client is to insist on immunity as a price for his or her testimony. For me, the rule is absolute - Before allowing a witness/provider to testify, I insist that he or she be granted immunity or a letter of non-prosecution. If the government is unwilling to do that, then I advise the witness/ provider to invoke the Fifth Amendment. While law abiding people believe that their innocence will protect them, this confidence is unjustified. Even innocent people often appear guilty to the government. Prosecutors also make mistakes, and most witnesses aren't sufficiently detached or informed to decide whether particular conduct on their part has crossed the line into criminality.

If you get immunity, what form should it take? The federal immunity statute, 18 U.S.C. S 6002, confers only "use plus fruits" immunity and not the broader "transactional" immunity recognized by many of the states. See Hastiqar V. United States, 406 U.S. 441 (1972). Use immunity, which leaves a witness subject to prosecution for the matter under investigation - may seem inadequate. In practice, however, the government rarely prosecutes those to whom it extends use immunity. This is because, where it does, the prosecution bears the substantial burden of showing that the case is untainted by prior immunized testimony.

Should such immunity be formal, or will informal letter immunity suffice? Formal immunity has the advantage of clarity; its protection is exactly that defined in the immunity statute. However, if it tracks the statute, informal letter immunity is usually satisfactory. An undertaking by letter not to use the testimony or its fruits will bind the prosecution. However, if the client/provider is exposed to prosecution in other federal districts or jurisdictions - which would not be bound by letter immunity - the prudent course is to insist on formal statutory immunity.

Once a decision has been made that a client/provider will appear and testify before the grand jury, he or she must be thoroughly prepared and that preparation will differ from preparing a witness for deposition or trial. The reason for the difference is that the provider/witness' attorney, will not be able to attend the grand jury proceeding. This places a greater burden on the witness, and thus, a more careful and detailed preparation is required. Areas of known inquiry and anticipated questions should be fully discussed. The witness should be repeatedly and forcefully reminded to:

  1. answer simply and directly;
  2. answer only the question asked without any embellishment or speculation;
  3. make sure the question is fully and completely understood before answering;
  4. if he or she doesn't know the answer don't guess;
  5. don't volunteer information.

Since the witness/provider's attorney cannot be in the grand jury room during the testimony, it is absolutely crucial that each of these caveats is drilled into and understood by the witness/ provider before his or her grand jury appearance.

While the attorney may not be in the grand jury room during the testimony, he or she may be present just outside the room and the client should be aware of this. If, during the testimony, the provider/witness is uncertain about the meaning or propriety of a question, what the answer should be, whether or not it should be answered or whether or not the Fifth Amendment privilege should be asserted, the witness has the right to request that he or she be excused to consult with counsel, and should do so. Prosecutors don't like this, but it must be done if the provider/witness is to be properly represented, such a request is almost always granted.

Additionally, in preparation of the witness for the grand jury appearance, the need to be absolutely 100% truthful must be emphasized. Immunity does not protect against a prosecution for perjury.

Despite all the preappearance work, there may well be instances where the Fifth Amendment privilege must be asserted before the grand jury. A witness who might face this necessity should be instructed on and understand when and how to assert the privilege. As a general rule, absent immunity, the privilege should be claimed in response to all questions other than those relating to the witness' name, age and address. The witness should not attempt to pick and choose among the questions. This is a disastrous approach that inevitably leads to waiver problems and can result in the complete loss of the privilege with no compensating immunity. If any doubt exists, the witness should request an opportunity to consult with counsel about invoking the privilege and do so after every question if need be.

Recent legislation has given both federal and state agencies a tremendous amount of power in dealing with fraud in the health care industry. The potential liability for a health care provider under these statutes is staggering. Further, the ability of the government to exclude a provider from federal programs based simply on an indictment or other evidence means that the provider need not even be found guilty to face ruinous damages.

Because of the new federal focus on Health Care fraud, it is imperative that health care providers, their officers and employees and counsel representing health care providers be aware of the potential exposure to a variety of criminal charges and be prepared to respond or react carefully and appropriately when that exposure is manifested through either the service of a search warrant or a grand jury subpoena. I hope that this presentation has aided you to some degree in this regard.


Mark L. Bennett, Jr.
1605 SW 37th Street
Topeka, KS 66611
(913-267-2652 - Fax)