What to do if your office is subject to a fraud investigation

Guest post by Merle DeLancey, Steve Roman and Phil Beshara, attorneys in Dickstein Shapiro LLP's Government Contracts Practice, which routinely defends healthcare organizations during investigations.

This is the scenario: you are an owner or office manager of a small physician practice. It's Friday morning. You are hoping to leave early and get a jump on the weekend. Then, the receptionist buzzes you and says, "There are men and women out here wearing FBI windbreakers, and they want to execute a search warrant."

You wonder, "Can I tell the agents they cannot come in?" Your office is not large enough to have in-house counsel. You can call your attorney, but his or her office is across town and the FBI agents say they are not going to wait. "What should I do?"

This may sound like an unlikely scenario, but it is happening all of the time around the country and is rarely expected. Since the 2009 formation of a partnership between the Department of Justice and the Department of Health and Human Services dubbed "HEAT"--the Health Care Fraud Prevention and Enforcement Action Team--raids like this are a regular occurrence, and several large-scale "nationwide takedowns" have resulted in coordinated, simultaneous office raids from coast to coast.

These federal raids are only likely to increase in number. In the first three-years of HEAT's existence, its actions, often in conjunction with various state and federal agencies, resulted in a 75 percent increase in the number of individuals charged with healthcare fraud crimes. The Team's Medicare Fraud Strike Force has charged 1,400 individuals with fraudulent Medicare billing, and in one day, alone, raided offices in seven cities across the country.

While few people plan for this situation, many healthcare practitioners still find themselves staring at a fresh warrant in a scenario much like the one described above. Keep in mind that not all professionals on the receiving end of that search warrant are criminals. An investigation may be misguided, a warrant wrongfully issued, or any number of innocent acts, such as billing mistakes, may be mischaracterized as illegal conduct. To obtain a search warrant, law enforcement authorities often need only to convince a single magistrate or judge that "probable cause" of criminal wrongdoing exists, and it may not even be your wrongdoing.

Therefore, it is imperative to understand your legal rights and have answers to some of the basic but important questions that often arise during law enforcement searches and inquiries.

The windbreakers are here--now what? The first and often most important rule of thumb in this situation is to remain calm, cool and collected. Dealing with the authorities in a respectful and professional manner and asserting your rights are not mutually exclusive. Though your respectful demeanor may or may not be reciprocated, the ramifications of proceeding otherwise could be construed as interfering with the warrant, or worse, result in the filing of obstruction of justice charges.

Do I have to let them in if they have a search warrant? Yes, if authorities have a search warrant, you do have to let them execute the warrant. However, a search warrant in and of itself does not give authorities carte blanche access to your office. The warrant will lay out boundaries, and you have the right to read them yourself or ask the officer in charge to explain the scope of the warrant to you. If you then learn, for instance, that the warrant is limited to your hard copy Medicare reimbursement files, you would know that the agents are not permitted to access your computers or remove other unrelated materials from your office. Determining this scope is critical to ensuring that the authorities do not exceed their boundaries.

If I've done nothing wrong, won't calling an attorney make me look guilty? Absolutely not. Calling your attorney should be one of the very first steps you take, either before or immediately after inspecting the warrant--even if you are confident that you have done nothing wrong. The agents understand this, even if they are reluctant to say so. Even if your attorney cannot get to your office, he or she could still provide invaluable guidance. For instance, you may want to have your attorney on the phone to read over the warrant. Attorneys can also speak directly to the officers, in language they will understand, to make it clear that you will cooperate, while insisting on your lawful rights under the circumstances.

Even if your attorney does not speak to the agents during the search, he or she will want to contact the agents as soon as possible to learn more about the investigation and help you plan the best course of response. Agents normally carry business cards, which they will either offer or share freely if you ask for them. If you cannot obtain business cards, ask for their names, agencies and phone numbers, and make a record of this information.

What about my office full of patients and employees? Depending on the situation, you or a designated staff member may need to clear your office of patients or customers. You may need to politely offer them your apologies and inform them that their appointments require rescheduling. As for your employees, it may be advisable to send any non-critical staff members home, telling them that you will contact them later to provide an update and to answer questions.

However, it may be wise to ask that your office manager or other key personnel stay to assist you in dealing with the search. During the search, you or any such employees should, to the fullest extent practicable, monitor and document the agents' actions. If feasible, you may want to assign a staff member as a point-person for the lead agent, or provide an empty office or other room from which the agents can work. In addition, in our smartphone era, a search could also easily be documented with photos or video. However, do so only after advising the agents of such recording and in a way that does not interfere with the search. Any recording should not be done in a "gotcha" fashion, but rather as an observer monitoring the search and thereby developing a record for the days to come and any challenge to the execution of the warrant itself.

Are the agents allowed to interview my employees? The agents may want to interview employees. However, your employees are generally not required to consent to an interview or otherwise answer questions. The decision to participate in an interview is neither the agent's nor your choice, but resides in your employees' discretion. As such, while you should not order or intimidate your employees to refuse interviews, you certainly should inform them that they are under no obligation to speak with the agents. Similarly, though they are under no obligation to inform you, you are free to ask your employees what the agents said to or asked of them, or ask that they keep you informed of any contact made outside of work. The early intervention of an attorney can be crucial to the question of interviews, as an attorney can discuss the issue with the agents and, where appropriate, negotiate an interview schedule for a later date that best suits the interests of you, your business and your employees.

They're finishing the search, but want to take records and hard drives with them. What should I do? This turns back to the all-important determination of the scope of the warrant. Most search warrants will allow agents to remove such documents or hard drives if they contain information within the warrant's scope. In addition, the agents should document the items seized and provide an inventory of what they take before leaving the office. However, you may ask to make copies or back up files before they are seized. In addition, you or your attorney may inquire into working with the government to develop a workable agreement to return the files or to make copies while in the government's possession.

They're gone--now what? The days after the search are just as crucial. You may have to deal with business disruptions, media inquiries or internal investigation--all while defending your rights and minimizing the harm to your practice. Therefore, it is important to develop procedures and train employees to handle these ripple effects before an incident catches you off guard.

For more information about how your office can prepare for these and other unexpected events, contact the authors at 
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[email protected] or via www.dicksteinshapiro.com