The Department of Justice and the Department of Health and Human Services Office of Inspector General have unveiled new policy directing healthcare organizations to voluntarily self-disclose any potential criminal fraud to the former agency alone.
The change aims to remove obstacles that could keep organizations from disclosing fraud, the DOJ said in its Thursday announcement. Both agencies have had policies in place that reduce repercussions for organizations that voluntarily self-disclose a fraud arrangement that was previously unknown to the government.
For DOJ, that could result in declined prosecution of corporate criminal conduct (referred to as a declination), while HHS-OIG could reduce civil monetary damages, expedite its resolution of the matter and forego the need for a corporate integrity agreement.
Because a single fraud arrangement could involve criminal, civil or administrative repercussions (such as program exclusions) for an organization, forcing organizations to decide where and how to self-report any fraud arrangements. Streamlining the process to a single criminal disclosure with the DOJ, while still receiving the benefits of HHS-OIG’s process, removes a barrier that could keep a healthcare organization from disclosing, DOJ said.
“Companies that discover fraud within their own operations should not have to navigate a maze of agencies before reporting it,” Assistant Attorney General Colin M. McDonald, of the Justice Department’s National Fraud Enforcement Division, said in the announcement. “Today, together with our partners at HHS-OIG, we are eliminating unnecessary bureaucratic barriers that have caused confusion about whether companies must make multiple disclosures of potentially criminal conduct.
“There is now one clear point of contact: DOJ’s Fraud Division,” he continued. “If a company comes forward, cooperates fully, and remedies the misconduct, the benefits are clear and predictable. If a company conceals what it knows, it should expect a very different conversation.”
HHS-OIG’s own update to its Health Care Fraud Self-Disclosure Protocol similarly outlines the directive, and specifies that a disclosure to HHS-OIG alone will generally not qualify for declination from the DOJ.
Law firm Womble Bond Dickinson, in an online post outlining insights from its White Collar Defense and Criminal Investigations Team, emphasized that the “one-way street” directing disclosures to DOJ alone still warrants careful determination among organizations. Conduct that is initially reported to HHS-OIG could later be determined to be potentially criminal, meaning that the company “may have forfeited the opportunity for a declination” from DOJ.
Additionally, the firm wrote, a declination doesn’t exclude a company from having to conduct “a thorough internal investigation” in line with the agencies’ unchanged expectations.
“Companies should scope the investigation from the outset to address the requirements of both regimes, including full cooperation, identification of responsible individuals, appropriate remediation and quantification of damages,” the firm wrote.
Womble Bond Dickinson as well as Sidley, another firm, both noted that the policy update stands apart from the False Claims Act’s liabilities and potential protections. Sidley’s takeaways described exclusion of both the Act and its enforcement team, within the DOJ’s Civil Fraud Section, from the policy as “a significant gap for the Department to address if it wants to encourage self-disclosures by healthcare companies.”
The DOJ and other enforcement agencies have signaled healthcare fraud as a key focus, with administration officials often highlighting key investigations and actions in press events during the run-up to Congressional midterms. DOJ launched its National Fraud Enforcement Division in April, which includes a Health Care Fraud Section currently comprised of nine strike forces.