Posted On Wednesday, August 27, 2014
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As discussed previously on White-Collared (for example – here, here, and here), the federal government is hot on the trail of alleged health care fraudsters. A recent New York Times article by Reed Abelson and Eric Lichtblau provides interesting insight into the expensive efforts – over $600 million annually – by the government to identify and stop fraudulent Medicare billing. While DOJ and HHS often laud their successes in health care fraud investigations and prosecutions, the article pointed out the apparent irony in the government’s use of inefficient or ineffective contractors to investigate overbilling and health care fraud.
Rarely advertised by the government, much of health care fraud investigations are outsourced to private contractors to augment government agents and prosecutors. The price tag on the war on health care fraud is over $600 million each year, which seems reasonable compared to the $60 billion in losses believed to be associated with fraud and systematic overcharging each year. However, the Obama administration recovers only $4.3 billion of that $60 billion annually as the fruit of their labors.
The limited success of the fight against Medicare fraud is reportedly attributable to “recovery audit contractors” hired to identify hospital overbilling. These contractors are credited with the return of $8 billion to government coffers since 2009. The Times article concludes that contractors’ success is hampered by hospitals’ refusal cooperate with the contractors and a Medicare appeals process that’s stretched to its limit, a perspective not likely shared by many hospitals and healthcare systems.
The article also cites to an example of HHS taking action that adversely impacted the level of its contractors’ success by pointing out that HHS shut down a successful tipster hotline in South Florida, claiming that it was no longer needed. However, the hotline resulted in over 1,000 fraud investigations and identified tens of millions of dollars in questionable billing over the last five years. Operated by an outside contractor, tips were received via the hotline and passed to investigators within 48 hours. Now, calls are reportedly routed to a general Medicare number where it can take months for a complaint to be addressed.
An interesting read, the New York Times article provides a unique perspective on the often unreported limitations of the government’s efforts to address health care fraud. While it can be expected that HHS and DOJ continue efforts to remedy some of these problems, this uneven approach to addressing the multitude of conduct that falls under the umbrella of “health care fraud” is likely to continue to frustrate the principals on all sides of this issue.
Link: http://www.nytimes.com/2014/08/16/business/uncovering-health-care-fraud-proves-elusive.html?_r=0
Posted On Tuesday, August 19, 2014
Corporate officers must be cautious about seeking legal advice from the company’s lawyers because those communications might not be protected by the attorney-client privilege. A recent decision issued by the United States District Court for the Western District of Pennsylvania in Gary Miller Imports, Inc. v. Doolittle, No. 11-178 Erie (W.D. Pa. August 7, 2014) is a case in point.
Carter and Brent Doolittle were directors of and minority shareholders in Gary Miller Imports, Inc. The Doolittles obtained legal advice from lawyers in the same firm that represented Gary Miller Imports in corporate matters. Gary Miller Imports subsequently sued the Doolittles claiming that they had stolen from the business and sought the production of communications between the law firm and the corporation’s directors or officers. The law firm objected to producing certain documents relating to its dealings with the Doolittes on the grounds that they were protected by the attorney-client privilege. Gary Miller Imports responded that it, not individual corporate officers like the Doolittles, controlled the attorney-client privilege.
In addressing this question, the court noted that any privilege that exists as to a corporate officer’s role and function within a corporation belongs to the corporation, not the officer. Therefore, a corporate official cannot prevent the corporation from waiving the privilege with respect to the individual’s discussions with corporate counsel about corporate matters. However, a corporate officer will be permitted to assert the attorney-client privilege if certain conditions are met. Specifically, the individual must be able to show that: a) he or she approached the lawyer for the purpose of seeking legal advice; b) he or she made it clear that he or she was seeking legal advice in his or her individual, rather than corporate capacity; c) the attorney decided to communicate with the person in his or her individual capacity, knowing that a conflict could arise between the individual and the corporation; d) the communications were confidential and e) the substance of the conversations with counsel did not concern matters within the company or the general affairs of the company. After reviewing the evidence that was placed before it, the court stated that it was inclined to find that all of these factors had been satisfied and that the documents were protected by the attorney-client privilege. A final decision was postponed, though, until after the court conducted an in camera review of the materials in question.
Corporate officers who decide to seek advice from the same lawyers or law firm that represent the company must keep in mind that the discussions might not be protected by the attorney-client privilege if a dispute arises between the official and the company. Great care must be taken to ensure that the individual can demonstrate that the conversations revolved around personal, rather than company-related issues, and that the attorney realized that he or she was communicating with the officer in his or her individual capacity. Given the risks involved, if a legal matter might have any relationship to issues taking place within the corporation, serious consideration should be given to the use of an attorney who has no connection with the company or its legal affairs.
