Medicare Fraud — Total Loss Guideline Calculations

One of my recent blogs discussed a new federal court ruling addressing a federal sentencing guideline comment that increases offense level calculations based upon total versus net loss to the government. This decision has enormous implications in the health care fraud field.

Many of my clients are the second and third tier employees of a variety of health care providers. Whether pharmaceutical, small medical practice, hospital, or large medical practice, my clients are typically not the organizers or orchestrators of the fraud scheme into which they are either hired or become a component. Rather, after hire, they eventually become accomplices and/or co-conspirators to the fraud when they engage in the entity’s fraudulent business practices.

For honest employees, unaware of the fraud scheme into which they are hired, they assist in their employer’s fraud simply by performing their particular job task; thus, each person truly becomes part of the larger fraud scheme to which all are then jointly and/or severally liable for the full amount of loss to the federal government.

Translated into medical office terms, the receptionist that knows the doctor or nurse can not and is not seeing 80 patients a day, but nonetheless completes the office visitor slips indicating such, is responsible for every illegal dollar paid to that doctor or nurse for those 80 patients a day for as long as the fraud was perpetrated. The same applies to the singular nurse who complies with the office manager’s request to submit medical billing charges under regulations that are either incorrect or inapplicable to the treatment provided.

Some medical offices have 10-20 off-site nurses providing home health care services. Here, billing is centrally performed. While each nurse is unaware of the other’s fraud, they could become responsible for the total fraud (the government loss) of the entire company, perpetrated by office administrators and other nurses.

The total loss calculation of federal funds received by “otherwise ineligible” beneficiaries (any person or entity not allowed to receive the federal money) is intended to act as a deterrent to criminal conduct. Prosecutors use this potential calculation as a fulcrum to compel lower level employees into cooperating and educating the investigators of the internal mechanics of the fraud scheme. Obviously if an entity is accused of millions of dollars in fraud, for which every employee is a minor player compared to the orchestrators, wholly unaware of the extent of the gross fraud perpetrated, and who do not receive any benefit of the fraud (salary but not commission based upon gross billings and payments), cooperation to avoid financial ruin becomes a primary consideration.

However, prior to cooperation, counsel’s role is to insure you, the new client, is in-fact a target based upon compelling evidence. Rushing in to proffer or cooperate, just to avoid the possibility of a gross loss claim without conducting any due diligence, is a huge mistake. As well, significant plea negotiation must occur to limit the gross loss claim per lower level defendant. Sometimes, prosecutors allow a cooperating co-conspirator to reduce the total value of the loss to which they are pleading if it is clear that the employee was not involved in orchestrating the fraud scheme. Trying to limit total loss claim to only those billings of the professional client is a prime goal. Also eliminating any criminal forfeiture should be sought.

Nonetheless, proffering is tantamount to pleading guilty. Proffering includes admission to criminal conduct along with acceptance of responsibility for your specific role in scheme. Here is where counsel must work to limit the fraud claim against a client so as to limit the total loss guideline level calculation.

Admitting to knowingly participating in fraud of a federal insurance program may result in preclusion letters from Medicare, Medicaid, and any other federal insurance programs. One’s inability to participate in a federal insurance program necessarily trickles down to insurance companies dropping you as a professional participant in their network because they find out why you do not have a Medicare or Medicare billing number. Also their contracts inquire into the presence of any preclusion letters.

At this juncture, being under any government criminal investigation also creates professional license consequences. Either upon license renewal, or after conviction, there are mandatory disclosure requirements to any state licensing board. Whether your are the subject of a criminal investigation, or convicted of any felony offense, your license will also now be implicated.

Please call me to discuss 1) any inquiry to you by any state or federal investigatory body or 2) your license reporting issues as a result of criminal investigation or conviction.

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