Fraud prosecution: The impact of big-time busts and the Yates memo [Q&A]

Gejaa Gobena: It was part of the department’s overall efforts to leverage its criminal and civil healthcare prosecutorial resources as much as possible. One of the things the department has done over the years is to really engage in an effort to have U.S. Attorney’s Offices and the DOJ working together on these takedowns or even in training where they can exchange information about investigative techniques, trends or ways to efficiently investigate cases.

The department is really trying to marshal all resources and leverage them for a couple of reasons. One, to be able to effectuate those large takedowns, but also those takedowns have a strong deterrent effect nationwide. Years ago, the takedowns would be limited to a few districts where the Medicare Strike Force Teams would operate. By taking it nationally, it sort of broadens that message.

One of the other things they focused on as part of the HEAT initiative was pushing hard on strict sentences. It was a multi-pronged approach. You had a push to have data available to agents and prosecutors on a real-time basis, you had national takedowns to get the publicity and message out there about the department’s enforcement efforts, and third, you had a strong push to really work on bigger cases and seek larger sentences. After HEAT you had some of the biggest healthcare sentences we’ve ever seen. If you look at HCFAC [Health Care Fraud and Abuse Control Program] reports, the average sentences from the criminal division have been going up every year.

(Ed. Note: According to HCFAC reports released by the Office of Inspector General (OIG), in fiscal year 2015, the average criminal fraud sentence was 56 months, up from just over 40 months in FY 2008. That average has fluctuated over the last seven years in which HEAT has been in place, reaching 66 months in FY 2009 and 62 months in FY 2013.)

FHAF: Is there evidence that those national busts are an effective deterrent?

Gobena: There is. If you look at reimbursement levels of certain types of fraud that were targeted, there have been significant reductions. In Miami and Detroit, through a combination of prosecutions and really effective administrative measures taken by CMS, there were significant reductions in the amount spent on home health. Same with mental health services in community mental health centers that operate partial hospitalization programs. That was another area of focus for the DOJ, and there were significant reductions in billings for those services. That’s something the department is watching when it is making decisions about where to allocate their investigative resources, and where it can get the best bang for its buck in terms of deterrence and actual reductions in reimbursement in hot fraud areas.

FHAF: What impact does the Yates memo have on investigating and prosecuting fraud cases, and is that focus on individuals a feasible mandate?

Gobena: The Yates memo definitely emphasizes the need to focus on senior-level individual culpability, and it it’s not that it wasn’t happening before, but there were a couple aspects about it that made it stand out. The message to companies or cooperators that they had to be proactive, not reactive--that was a big change and certainly a change in the dynamic in terms of what is considered cooperation by the DOJ.

The other factor was a series of measures that were put into the U.S. Attorney’s manual to make sure prosecutors kept their eye on individual culpability in civil and criminal cases.

When I was on the government side, I heard a lot of the criticisms about the pressure that is created by the Yates memo. The one big challenge I see for companies is when I was prosecuting individuals and someone started to cooperate, you used to have this rule that it's 100 percent cooperation or you don’t get any credit. I think the deputy attorney general alluded to that in her speech back in September where she said that same rule applies to companies.

The challenge is corporations are fictitious entities. They are made up of hundreds upon thousands of people. Trying to get the same level of cooperation with an entity is a challenge for companies and corporate counsel. They are trying to provide as much cooperation as possible, but individuals control what they know. If the company and corporate counsel are trying to provide as much information as possible, it’s a little challenging when there are tens or maybe hundreds of people who have knowledge about the particular scheme.

That’s a significant challenge corporations face in responding and keeping with the mandate, but I think prosecutors get that and they are cognizant of it and what they are really looking for is an effort on the part of companies and outside counsel to be as aggressive as possible in making the decision to cooperate.

FHAF: We kind of saw this play out when Warner Chillcot CEO W. Carl Reichel was recently acquitted of criminal fraud charges. Was that case emblematic of the challenges that prosecutors face in going after individuals?

Gobena: I think one of the challenges in that case is they had some cooperators that testified, but the documentary evidence was not overwhelming. Having people say that a senior-level official was there for meetings where improper conduct and kickbacks were discussed is not as powerful as having a recording or document where there is direct connection with that senior executive.

You can build a case off of circumstantial evidence, but juries are going expect some unassailable piece of evidence. Going back to the point I made about data, you can’t challenge data, but cooperators can be challenged and the defense counsel in that case did a really good job of challenging cooperators.

Editor's Note: This interview has been edited for length and clarity.