Health Care Lawyers & Attorneys : Schottenstein Zox & Dunn Law Firm : Strategic Planning, Managed Care, Insurance : Columbus, Cleveland, Cincinnati, Central Ohio

The Department of Justice announced changes to its corporate charging guidelines for federal prosecutors.  The new guidance revises the Department's Principles of Federal Prosecution of Business Organizations, which governs how federal prosecutors investigate, charge, and prosecute corporate crime.  The changes address issues concerning the attorney-client privilege and cooperation credit. 

First, the revised guidelines state that credit for cooperation will not depend on the corporation's waiver of the attorney-client privilege or attorney work product protection.  Rather, credit will depend on a corporation's timely disclosure of relevant facts.  Corporations that timely disclose relevant facts may receive due credit for cooperation, regardless of whether they waive attorney-client privilege or work product protection in the process.

Second, prosecutors are instructed not to consider a corporation's advancement of attorneys' fees to employees when evaluating cooperativeness.  In addition, the mere participation in a joint defense agreement will not render a corporation ineligible for cooperation credit. 

The revised guidelines are located here.

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The 2008 report to the President from the Corporate Fraud Task Force is now available.

The Report says DOJ has obtained nearly 1,300 corporate fraud convictions since July 2002.  This includes convictions of more than 200 chief executive officers and corporate presidents, more than 120 corporate vice-presidents, and more than 50 chief financial officers.  Some of the significant criminal cases are described in detail in the Report, including the National Century Financial Enterprises, Inc. case.  This case was prosecuted in Columbus, Ohio by the U.S. Attorney for the Southern District of Ohio and the DOJ's Criminal Division.  The Report describes the case as "one of the largest fraud investigations involving a privately held corporation ever conducted by the FBI."

Of course, the Corporate Fraud Task Force prosecutes "significant financial crimes," not  health care fraud offenses.  Thus, the Report's statistics do not include all the convictions of individuals and entities for health care fraud.  Because prosecuting fraud - health care, financial or otherwise -is never unpopular with the voters, expect more of the same in the future.

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Medicaid providers who learn their employees, agents or owners are under investigation for health care fraud can't afford to wait for the criminal process to take its course before mounting a defense.  The indictment  alone of an employee, agent, or owner could be a financial death sentence for the provider.

The Ohio Department of Job and Family Services  ("ODJFS") has always been required to terminate a Medicaid provider agreement if the provider is convicted of certain criminal offenses.  As of September 27, 2007, ODJFS is now required to suspend a provider agreement based only on an indictment for certain offenses.  The statute applies to "noninstitutional providers," which means any person or entity with a Medicaid provider agreement other than a hospital, nursing facility, or intermediate care facility for the mentally retarded.  The indictment can be against the provider, as well as an owner, officer, authorized agent, associate, manager, or even employee of the provider. The suspension continues until the proceedings in the criminal case are completed through conviction, dismissal of the indictment, plea, or finding of not guilty.  In addition to suspending the provider agreement, ODJFS must terminate Medicaid reimbursement to the provider for services rendered.

The statute permits the provider to request a reconsideration of the suspension.  The grounds for requesting reconsideration are limited.  The important ground is whether the provider, owner, or owners can demonstrate that they did not directly or indirectly sanction the action of the authorized agent, associate, manager, or employee that resulted in the indictment.

The statute is particularly troublesome for providers because the indictment of an employee or agent  triggers the suspension.  The provider is then forced to demonstrate to ODJFS that it did not directly or indirectly sanction the illegal conduct. All the while, Medicaid reimbursement has stopped.  In addition, the Medicaid suspension may result in the suspension or termination of other third-party payer agreements.  Unless the suspension is lifted, the provider may be out of business by the time the criminal case concludes.

The statute is Ohio Revised Code Section 5111.031 and the corresponding regulation is Ohio Administrative Code Section 5101:3-1-17.5. 

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DOJ Press Release -  On May 29, 2008, the U.S. Attorney for the Northern District of Ohio announced the indictment of seven individuals on various offenses in connection with the transportation of Medicaid beneficiaries in vehicles called ambulettes.  The charges include mail fraud, wire fraud, health care fraud, and conspiracy.  According to the press releases, ambulette services contract with the Ohio Medicaid program to transport patients in vehicles known as ambulettes.  An ambulette is a specially equipped van designed for wheelchair passengers.  Medicaid pays ambulette operators for driving Medicaid beneficiaries to and from Medicaid-covered appointments, so long as:  (1) the patient rides in a wheelchair; (2) a medical doctor certifies the need for the wheelchair and ambulette; and (3) the ambulette itself otherwise meets safety specifications.  The defendants are charged with scheming to defraud Medicaid by charging Medicaid for rides of patients who did not use wheelchairs or require the need for wheelchairs.

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