Most healthcare entrepreneurs have every intent of running their businesses by the book — following legal statutes, staying compliant and meeting requirements. But sometimes things fall through the cracks. And sometimes there are just blatant criminal acts underway.
It's the job of the U.S. Department of Justice (DOJ) to investigate issues such as false claims, cybersecurity concerns, telehealth fraud, illegal kickbacks and other nefarious behavior in the healthcare industry. Examples include doctors billing for medical services they did not perform, an electronic healthcare record software manufacturer violating anti-kickback statutes, fraudulent COVID-19 cures and violations of the Food, Drug, and Cosmetic Act.
Entrepreneurs can take important steps to protect their companies and to work with the DOJ if it launches an investigation. Matthew Feeley, JD, MA, Deputy Chief and Healthcare Fraud Coordinator in the U.S. Attorney's Office Civil Division, South District of Florida, DOJ, spoke at a Cure Tuesday Talk in June 2024 to explain what he and his colleagues do and provided advice to entrepreneurs. Here's five things he recommends.
1. Understand How the False Claims Act Works
The False Claims Act "provides that any person who knowingly submits, or causes to submit, false claims to the government is liable for three times the government's damages plus a penalty that is linked to inflation." The statute has a long history: it was originally enacted in 1863 in response to defense contractor fraud during the American Civil War.
Feeley recommended getting familiar with the False Claims Act, especially if you are applying for federal grant funding. "Anytime you're seeking federal dollars, you have a risk that you may be violating the False Claims Act. If you're receiving federal money and you're making some type of representation or attestation on a form, you may be subjecting yourself to a false claims risk," he stated.
If you make a simple mistake or unintentional error, you'll likely be able to correct it and not be prosecuted. But there have been some fairly prominent cases in recent years related to universities that didn't make the proper disclosures about their researchers' affiliations with foreign institutions, which can have political ramifications.
2. Create a Compliance Program
Feeley noted that the higher up you are in a company, the more you are at risk. He recommended analyzing your risk and then creating a compliance program to address that risk.
"It has to be a real compliance program that is crafted to directly address the risk that your company or your endeavor faces," said Feeley. "Spend a little bit of money on a lawyer to educate you about what might be expected of a compliance program and what pitfalls you might fall into. Taking those steps and making that investment at the outset is money well spent.
"Then if the DOJ comes knocking on your door, you can say 'these are the steps we took in good faith to try to be on the right side of this.' That really goes a long way with people at the Department of Justice," he continued.
3. Watch for Technology Fraud
DOJ Investigators look to see how technology can be used to promote fraud. This may be more common in the era of artificial intelligence.
"Technology can make fraud more efficient. There may be blind spots created by technology that allow companies to miss when things aren't being done properly, which can lead to the creation of a false claim," said Feeley.
He admits that the government is "a little behind" on technology, and that DOJ investigators often have to take significant time learning about technologies that are new to them to decipher the nuances of a case.
"We're not experts in healthcare," Feeley contended. "So, when a case comes in, particularly one that is on the cutting-edge of technology, we have to spend a lot of time getting up to speed and understanding it."
4. Know About the Value of Whistleblowers
In the false claims world, the DOJ relies heavily on information relayed to it by whistleblowers. The False Claims Act has a provision where a whistleblower can file a case and receive up to 30 percent of what the government reaps from a settlement or litigation victory.
"It's a very powerful tool. We really rely on insiders to come to us," noted Feeley. Cases are filed under seal, meaning they are kept secret. In 2023, 1,200 whistleblower cases filed in federal courts recovered $2.7 billion, 68 percent of which was healthcare-related.
Whistleblowers can file a complaint directly with the U.S. Department of Health and Human Services, which has a fraud hotline, or they can speak with a False Claims Act lawyer who can work with them to file a complaint in a district court. Feeley encourages companies to have a system in place to allow whistleblowers to feel heard internally.
"They're less likely to go to the government and make a complaint. Their message will be consumed and analyzed by the company and action will be taken, preventing a government enforcement action from being necessary," he said.
5. Be Cooperative, Not Combative
If the DOJ does contact your company regarding an investigation, Feeley encourages working with the investigators as partners rather than adversaries. "We have very strong incentives to encourage companies to cooperate with the Department of Justice. Nine times out of 10, the investigations are declined. We do what we need to do to investigate properly and if we are convinced there's not a claim there, we shut down the investigation and move on," he explained.
"I encourage people who get a knock on the door to work with their lawyers and with their internal people to come up with a strategy," he concluded. "And when I talk about incentives, there are very strong incentives — up to the point of declination of a case that might otherwise be brought if there is robust cooperation in the investigation."