Acting Assistant Attorney General Nicole M. Argentieri Delivers Keynote Address at the 40th International Conference on the Foreign Corrupt Practices Act
New Orleans, LA
Let me first thank the ABA and its Health Law and Criminal Justice Sections for inviting me to deliver this year’s keynote address on behalf of the Department of Justice. The ABA’s National Institute on Health Care Fraud is a tremendous forum, bringing together attorneys from government and the private bar, civil and criminal practitioners, and the best subject matter experts on health care fraud detection and prevention, the current opioid epidemic, and health care regulatory compliance. There truly isn’t a better audience for the Department to be speaking with to promote what we are doing, both in terms of practice and policy.
First, let me speak to priorities. The investigation and prosecution of health care fraud remains a top priority of the Department of Justice and the Criminal Division. Every week or so, I see an article suggesting that white collar prosecutions are down, citing various things about the bar not being as busy. The white collar numbers in the Criminal Division certainly don’t support these opinions, and the Department’s overall white collar prosecution numbers from last year showed an increase, as well. The Department is fully committed to white collar enforcement, and any fraudster who seeks quarter behind a perception or false rumor of decreased enforcement will be sorely disappointed.
Specifically with regard to criminal health care enforcement, the actions of the Department speak volumes about our commitment to robust enforcement. For the past few years, the Department has had an annual takedown event focused on the prosecution of health care fraud. The 2017 takedown was historic, resulting in 400 defendants – including 56 doctors – being charged with more than $1.3 billion in health care fraud. Last year’s takedown, coordinated by the Criminal Division’s Health Care Fraud Unit Chief, Joe Beemsterboer, was even larger. The 2018 takedown resulted in over 600 defendants charged – including 76 doctors, 23 pharmacists, and 19 nurses – with a total of more than $2 billion in medical fraud.
On the heels of that event, our Assistant Attorney General, Brian Benczkowski, was confirmed by the Senate and took the reins of the Criminal Division. Given the numbers achieved in health care enforcement, he could have decided to leave a good thing alone and focus elsewhere. But he wasn’t satisfied that we were doing all that we could be doing in the arena of health care enforcement – both in terms of fraud prosecutions and in dealing with the epidemic of prescription opioid abuse.
Last August, he expanded the Medicare Strike Force program with a new Strike Force with two office locations – Newark and Philadelphia. The new Strike Force targets health care fraud and prescription opioid abuse in two of America’s largest population centers and health care fraud markets, and experienced health care fraud prosecutors were transferred into the region immediately to get to work. And this initiative is already yielding results. In March, a Philadelphia physician pleaded guilty to federal charges for illegally selling prescriptions for opioids to patients who had no medical need for the drugs.
In the fall of 2018, the Criminal Division partnered with nine U.S. Attorney’s Offices across the region hardest hit by the opioid epidemic to launch the Appalachian Regional Prescription Opioid (“ARPO”) Strike Force. The ARPO initiative brought experienced health care prosecutors and law enforcement agents – together with the resources and advanced data analytics of the Medicare Strike Forces – into partnerships with districts across Kentucky, Tennessee, West Virginia, Southern Ohio, and Northern Alabama. The ARPO Strike Force, which first deployed resources this past December and January – amid the government shutdown – focused on the medically unnecessary prescription and dispensing of opioid-based controlled substances by licensed medical professionals across the region.
Our data told us there was a problem, and very quickly we were able to see results. Just last month, we announced the largest prescription opioid law enforcement takedown in history. In just over four months from the deployment of trial attorneys, the Department charged 60 defendants – including 53 medical professionals – with alleged crimes involving an aggregate of 350,000 opioid prescriptions and more than 32 million pills. To put those numbers into perspective, that is a dose of opioids for every man, woman, and child in the five states across the ARPO region.
In addition to these Strike Force initiatives, we have been hiring to strengthen our capabilities across the board. We have hired new data analysts and trial attorneys, and there are additional hires in the pipeline.
Even with these efforts, we are not anywhere near finished. The Criminal Division’s use of advanced data analytics is, in many ways, a game-changer, not just in identifying overprescribing physicians and fraud targets in established Strike Force locations, but also in looking to where there are unaddressed needs. We can see trends in markets as problems develop and evolve. And you can rest assured that we are developing and evolving our resources to address those problems.
One evolving area where we were able to achieve a quick and durable impact is telemedicine fraud. Just last month, the Criminal Division and a number of our U.S. Attorney partners announced a coordinated takedown involving charges against 24 defendants, including executives of five telemedicine companies, the owners of dozens of durable medical equipment (DME) companies and three licensed medical professionals, for their alleged participation in health care fraud schemes involving more than $1.2 billion in losses. In parallel with the Department’s criminal actions, the Center for Medicare Services, Center for Program Integrity (CMS/CPI) simultaneously took adverse administrative action against 130 DME companies that had submitted over $1.7 billion in claims and were paid over $900 million.
In talking about initiatives and accomplishments, I would be remiss if I didn’t also mention the Department’s hard won trial victory in Miami last month against Phillip Esformes, who perpetrated a massive fraud and kickback scheme through his network of skilled nursing and assisted living facilities in South Florida. The case involved the single largest health care fraud scheme ever charged by the Department, with over $1.3 billion in fraudulent claims to Medicare and Medicaid for services that were either not provided, were not medically necessary, or were procured through the payment of kickbacks.
While our prosecutors are using all the tools at their disposal to fight health care fraud and illegal prescription opioid schemes, we are also taking a close look at the policies that guide our approach to white collar and corporate enforcement. After all, effective law enforcement goes beyond indictment statistics and individual case results. For institutional actors, like the businesses and non-profits that operate in the health care arena, clear enforcement policies can help influence decision-making.
The Department has strived in recent years to be increasingly transparent about our enforcement policies. This has manifested itself in changes to the Justice Manual, outlining corporate cooperation expectations and guidance as to voluntary self-disclosure credit. The Department’s policy changes haven’t been limited to the criminal arena or the civil arena, but have sought to give the bar and the responsible corporate community a sense of the full field of credit available for those who timely and voluntarily self-disclose misconduct, cooperate with the government, and take prompt and effective remedial action.
Just this week, our colleagues in the Civil Division announced new Guidelines for Taking Disclosure, Cooperation, and Remediation into Account in False Claims Act Matters. The new Guidelines, which are now part of the Justice Manual, set forth the factors Department lawyers will consider, as well as the credit that is available, when a company or individual voluntarily self-discloses misconduct that could serve as the basis for False Claims Act liability or an administrative remedy. Like other self-disclosure incentive policies the Department has announced, the new Guidelines also factor in cooperation and remedial measures. To earn maximum credit, which at most would result in recompensing the government for its full losses attributable to the misconduct (including interest, cost of the government’s investigation, and any relator’s share), a company or individual would need to voluntarily self-disclose, fully cooperate, and take appropriate remedial action to prevent similar instances of misconduct in the future.
The new Guidelines dovetail with the approach the Criminal Division has taken over the past year to voluntary self-disclosures of suspected criminal misconduct that are made to our prosecutors. In March of last year, then-Acting Assistant Attorney General John Cronan announced that the Criminal Division would consider the FCPA Corporate Enforcement Policy as “nonbinding guidance” in all Criminal Division corporate criminal cases, meaning that the Division will apply the incentives in appropriate cases to those companies that timely and voluntarily disclose health care fraud violations, fully cooperate with the government’s investigation, and take effective remedial actions. Companies that qualify under this approach can receive a declination of prosecution, subject to disgorgement of all ill-gotten gains.
For those tracking the Department’s approach to voluntary self-disclosure in the civil and criminal health care fraud arenas, there is a remarkable degree of symmetry. And that is no accident. Although our criminal and civil enforcement tools are separate and often run along different tracks with different investigative teams, the reality is that a company facing a self-disclosure dilemma does not have multiple tracks. It must factor different risks, legal considerations, and potential outcomes into its analysis and reach a decision in the best interests of the company and its shareholders. At the Department, we understand that we need to be as clear as reasonably possible about our approach to those who voluntarily self-disclose, if we hope to influence the rational decision-makers when they face self-disclosure dilemmas.
We have also aimed to create greater clarity around our expectations for corporate compliance programs and how our attorneys will assess the adequacy and effectiveness of such programs. And it only makes sense for us to incentivize and, where possible, reward companies that invest in compliance. After all, companies with well-designed and fully-resourced compliance programs are able to detect misconduct early on and, in some cases, prevent the misconduct altogether.
To that end, the Criminal Division issued new guidance last October on the selection of compliance monitors in corporate resolutions. Rather than just setting forth the process for monitor selection, the guidance for the first time explained what Criminal Division lawyers would assess and what standard would be applied in determining whether a monitor is needed. Not surprisingly, the state of a company’s compliance program plays a significant role in that guidance. I won’t read through the guidance here – it is available online – but I will highlight the bottom line standard that our trial attorneys follow when assessing whether a monitor is called for:
In general, the Criminal Division should favor the imposition of a monitor only where there is a demonstrated need for, and clear benefit to be derived from, a monitorship relative to the projected costs and burdens. Where a corporation’s compliance program and controls are demonstrated to be effective and appropriately resourced at the time of resolution, a monitor will usually not be necessary.
Given the important role of assessing compliance programs in connection with corporate enforcement, we are also strengthening our tools and collective ability to assess the adequacy of the compliance programs. Just this month, we announced a new Evaluation of Corporate Compliance Programs guidance document that provides a framework for our prosecutors to use to evaluate whether a corporation’s compliance program was adequate and effective at the time of suspected misconduct, as well as at the time of a resolution or charging decision. In concert with the rollout of the new guidance, we also conducted a full day training event for all Criminal Division prosecutors who handle corporate enforcement matters. The training event, which included presentations from both government and outside experts, had broad participation from outside the Criminal Division, as well, with attendees from the Civil Division, numerous U.S. Attorney’s Offices, the SEC, the CFTC, and even from a foreign law enforcement partner.
Importantly, although we have tried to harmonize our approach to evaluating corporate compliance programs, our prosecutors understand that compliance is not and cannot be one-size-fits-all. We recognize that health care compliance is specialized and influenced by different regulatory requirements in the same way that compliance in the banking industry is specialized and influenced by a completely different set of regulatory requirements. Our prosecutors understand that, and the Criminal Division will be undertaking further training in the future to help build that specialized knowledge, including in our Health Care Fraud Unit and across our Strike Force locations.
Health care fraud is a form of white collar crime that impacts everyone, including all of us here today. It saps resources and increases costs for taxpayer funded and private programs alike; and can result in patients failing to receive the care they need and deserve. Worse yet, when corrupt medical professional engage in illegal prescription opioid schemes, it can devastate families and entire communities. Through robust enforcement and sensible policies, the Department is tackling the issue head on – holding offenders to account and encouraging companies to take steps to prevent, detect, report, and remediate wrongdoing.
With that said, I want to wish everyone in attendance a wonderful stay here in New Orleans. The conference has a fantastic agenda, and I look forward to sitting in on a number of the sessions.