The Collateral Enforcement Risks of DOJ Civil Investigative Demands (CIDs) Issued in False Claims Act Matters and Cases

(October 21, 2021): The False Claims Act1 remains the primary civil enforcement tool utilized by the U.S. Department of Justice (DOJ). While the results of Fiscal Year (FY) 2021 have not yet been published, settlements and judgements in FY 2020 exceeded $2.2 billion. Of this total, $1.8 billion were related to the health care industry. Notably, $1.6 billion of these recoveries were associated with the 672 whistleblower cases filed during FY 2020.2 As you will recall, under the False Claims Act, violations may result in treble damages and in penalties from $11,803 to $23,331 per False Claim.
 
Federal prosecutors are increasingly relying on Civil Investigative Demands to assess both government-initiated False Claims Act matters and whistleblower-filed False Claims Act cases.1 Although we have written extensively on various aspects of Civil Investigative Demands, we have not published an article on the various risks that should be considered when responding to this administrative subpoena. This article focuses on the collateral enforcement risks that may flow from your written responses, sworn testimony and / or documents produced in connection with the government’s Civil Investigative Demand.

I. Can My Responses to a Civil Investigative Demand be Used in a Parallel Criminal Prosecution?

Simply put, “Yes.” The U.S. Supreme Court has held that it is permissible for the government to conduct parallel civil and criminal investigations, as long as it does not act in bad faith.1  What constitutes bad faith? Great question. In United States v. Kordel, The Court suggested that if the government brings a civil action solely for the purpose of obtaining evidence in a criminal prosecution and does not advise the defendant of the planned use of evidence in a criminal proceeding, such conduct could constitute bad faith.

While a Civil Investigation Demand may not be used as a stalking horse solely for the purpose of obtaining evidence to be used in a criminal case, information, documents and oral testimony obtained through the use of a Civil Investigative Demand in a False Claims Act case may be shared with an office’s criminal prosecutor. As 31 U.S.C. Section 3733(i)(3) provides:

"(3) Use of material, answers, or transcripts in other proceedings--
Whenever any attorney of the Department of Justice has been designated to appear before any court, grand jury, or Federal agency in any case or proceeding, the custodian of any documentary material answers to interrogatories, or transcripts of oral testimony received under this section may deliver to such attorney such material, answers, or transcripts for official use in connection with any such case or proceeding as such attorney determines to be required.”
From a practical standpoint, you should assume that any information you produce in connection with a Civil Investigation Demand, will be shared with criminal prosecutors for the purpose of evaluating whether or not criminal conduct has occurred. It is worth noting that the policy of the U.S. Department of Justice (DOJ) is that:
“. . . criminal prosecutors and civil trial counsel should timely communicate, coordinate, and cooperate with one another and agency attorneys to the fullest extent appropriate to the case and permissible by law, whenever an alleged offense or violation of federal law gives rise to the potential for criminal, civil, regulatory, and/or agency administrative parallel (simultaneous or successive) proceedings.”
Therefore, a civil qui tam filed under the False Claims Act will likely result in the filing being shared with an Assistant U.S. Attorney in the office’s Criminal Division. Alternatively, if the case is being handled by a Trial Attorney in DOJ’s Civil Division (in Washington, DC), the current practice at the DOJ is to share the case with a Trial Attorney in DOJ’s Criminal Division.
"We in the Criminal Division have recently implemented a procedure so that all new qui tam complaints are shared by the Civil Division with the Criminal Division as soon as the cases are filed. Experienced prosecutors in the Fraud Section are immediately reviewing the qui tam cases when we receive them to determine whether to open a parallel criminal investigation.”

II. Can I be Compelled to Provide Oral Testimony in Connection with a Civil Investigative Demand?

In light of the government’s practice of sharing information whenever legally permissible to do so, it is essential that your health law attorney work with you to assess whether you have any criminal exposure before oral testimony is given under 31 U.S. Code § 3733(h). Although the government may demand that you provide oral testimony, you cannot be compelled to provide self-incriminating information that could be used against you in a criminal prosecution. Depending on the specific facts in your case, you made decide (after conferring with your legal counsel), to assert your rights under the 5th Amendment, and therefore refuse to provide oral testimony that may implicate you in the commission of a crime. The decision to exercise your rights and assert the 5th Amendment is not a decision that can be taken lightly. It is important to keep in mind that should you assert the 5th, the government could seek to have the court issue an adverse inference instruction if the case were ever to proceed to litigation.

III. What are Some of the Risks Faced When Providing Oral Testimony?

A Civil Investigative Demand cannot be issued to investigate allegations that are solely criminal in nature (for example, the fraudulent billing of health care services to a non-Federal health care benefit plan). However, if a bona fide investigation of possible civil false claims is present, this tool can be used to investigation potential False Claims Act violations and other conduct that may constitute a violation of criminal law. In light of the nature of parallel proceedings, there are a number of risks that you should take into account when responding to a Civil Investigative Demand.  Several of these risks include:

Kickbacks and Improper Inducements

The Federal Anti-Kickback Statute1 makes it a crime to knowingly and willfully offer, pay, solicit, or receive remuneration, directly or indirectly, overtly or covertly, in cash or in kind, to purposefully induce or reward referrals of items or services payable by a Federal health care program. Simply put, it is against the law to pay or provide anything of value in an effort to induce referrals or business related to a Federal health care program.

It is important to keep in mind that the Anti-Kickback Statute is first and foremost a criminal statute. Criminal penalties for a violation under the Anti-Kickback Statute include: (1) Felony; (2) Up to 10 years in prison; (3) Up to a $100,000 fine; and (4) Exclusion from Federal health benefits programs.

Notably, under the Affordable Care Act, violations of the criminal Anti-Kickback Statute can also be pursued as a violation of the civil False Claims Act. Although the Anti-Kickback Statute continues to require that a person "knowingly" and "willfully" commit the crime, the Affordable Care Act modified the Anti-Kickback Statute so that parties are no longer required to have actual knowledge that they were violating the Anti-Kickback Statute in order for a violation to be shown.  Nor are they required to have specific intent to violate the statute. Health care providers and suppliers need to keep in mind that even though a violation of the Anti-Kickback Statute may also be pursued under the False Claims Act, that does not preclude the government from criminally prosecuting individuals and entities for violations of the Anti-Kickback Statute. To the extent that kickback allegations are involved in a False Claims Act case, providing oral testimony under a Civil Investigative Demand can expose a defendant to criminal sanctions.

Misrepresentation of the Provider of a Service

Unfortunately, the credentialing process used by both private and government payors is both complicated and can take an extended period of time. During 2021, we have handled multiple cases where the government alleged that a health care practice misrepresented the provider of a medical service on the CMS 1500 Claims Form. The reasons for this conduct can vary from a mere mistake to outright fraud. For example:

  • Billing Under the Wrong Physician’s Number Where Both Physicians are Properly
    Credentialed. We have handled cases where both of the physicians at issue were properly credentialed with Medicare, but the biller erroneously listed the wrong physician as the rendering and billing physician. Such an error would not result in an overpayment and would likely not be pursued as a false claim by the government.
  • Billing Under the Number of a Credentialed Physician When the Actual Rendering Physician is Not Credentialed by Medicare or Medicaid
    While such a situation may be pursued as a mere overpayment, we have seen multiple instances where this type of conduct has been pursued under the False Claims Act. If the government seeks to obtain oral testimony under a Civil Investigative Demand and a physician or biller admits to knowingly billing under the number of a non-rendering credentialed physician, such conduct could conceivably be pursued criminally as a False Statement (18 USC Section 1001). Under this statute, it is a felony to make a “false statement” to an agent or agency of the Federal government in connection with a Federal matter. A false statement can be spoken or written and does not have to be made under oath.
  • Billing Under the Number of Credentialed Physician When the Actual Rendering Physician is Either not Licensed or Excluded from Participation in Federal Health Care.
    One of the quickest ways to get into trouble with both law enforcement and your State Medical Board is to allow non-licensed individuals to provide care that may only be administered by qualified, licensed personnel. Similarly, if you improperly bill for the services of an excluded physician under the number of a credentialed, non-excluded physician, both Federal and State prosecutors are likely to file criminal charges against you for such conduct.

Misrepresentation of a Non-Coverage Service

This type of improper billing practices occurs when a medical professional knowingly mischaracterizes a non-covered service on a CMS 1500 Claim Form as a covered service. Such conduct can be pursued civilly and / or criminally by the government. On the criminal side, such conduct may constitute a False Statement Involving a Health Care Program (18 U.S.C. § 1035). As you can imagine, any statements you may make in connection with a request for oral testimony under a Civil Investigative Demand can expose the deponent to criminal exposure.

IV. Final Considerations When Responding to a Civil Investigative Demand

These are only a few of the risks that you face when responding to a Civil Investigative Demand. It isn’t merely sufficient to produce the information requested. A careful analysis of your practices needs to be conducted on the front end so that any problematic conduct can be identified and assessed. Experienced health care legal counsel can then more effectively represent you and your practice. Have you received a Civil Investigation Demand? Give us a call for a free consultation.
[2] If the government prevails in a qui tam action, the Whistleblower (also known as a Relator) typically receives a portion of the recovery (typically 15% to 30%).
[3] The new minimum penalty under the False Claims Act is $11,803 (the 2020 minimum penalty of $11,665 multiplied by 1.01182, rounded to the nearest dollar), and the new maximum penalty is $23,607 (the 2020 maximum penalty of $23,331 multiplied by 1.01182).
[4] As you will recall, the government may only issue a Civil Investigative Demand in cases where: (1) the government is assessing whether or not to intervene in a case brought by a qui tam relator (or whistleblower) in a False Claims Act case, OR (2) the government has initiated its own investigation of possible violations of the False Claims Act but has not yet filed a case.
[5] United States v. Kordel, 397 U.S. 1 (1970).
[6] For examples of bad faith where criminal prosecutors gave direction to civil investigators, see U.S. v. Scrushy, 366 F. Supp. 2d 1134 (N.D. Ala. 2005); SEC v. HealthSouth Corp., 261 F. Supp. 2d 1298 (N.D. Ala. 2003); 18-CR-887 (JMF) (S.D.N.Y. June 18, 2019).
[7] This internal practice was reiterated by Attorney General for the Criminal Division, Leslie R. Caldwell at a Taxpayers Against Fraud conference on September 17, 2014.
[8] See 42 U.S.C. § 1320a-7b.

Nationwide Health care Provider Presentation

If you or your health care organization receives a Civil Investigative Demand, it is imperative that you take steps to affirmatively assess the case against you so that you may properly respond to the government’s subpoena. We strongly recommend that you engage an experienced health law attorney to represent you in the process. A number of our attorneys served as civil and / or criminal Assistant U.S. Attorneys before entering private practice.  If you have received a Civil Investigative Demand, give Robert W. Liles a call for a complimentary consultation. He can be reached at:  1 (800) 475-1906.