Making a Very Bad Situation Worse: Obstruction of Justice for False Statements in OSHA Worker Fatality Investigation

Posted On Monday, March 15, 2021
By: James W. Kraus

Takeaway:

Deviating from a disciplined approach to mitigate the impact of government enforcement, whether by shading the truth or outright lies, can have grave consequences. 


For any company or individual responding to a government investigation, it is critical that the response be well-organized and disciplined.  The core of any effective response is the commitment that all information shared with the government be accurate and truthful.  The recent case involving the investigation of a worksite fatality in North Dakota provides a poignant illustration of the consequences when individuals misrepresent facts to investigators.  

On March 8, 2021, Stephan Reisinger, a former maintenance manager at an oil services facility in Williston, ND, entered a plea of guilty in federal court to the charge of obstruction of justice.  The plea and resulting conviction are based on misstatements made by Reisinger to OSHA investigators regarding a worksite fatality in October of 2014. 

Reisinger was a manager at Nabors Completion and Production Services Company (NCPS) at the NCPS Williston facility in 2014.  Among the 40 employees he supervised at the facility was 28 year old U.S. Marine Corps veteran, Dustin Payne.  On October 3, 2014, Payne was killed when the uncleaned tanker trailer that he was welding exploded.  The explosion was the result of the welding flame coming in contact with flammable chemicals contained in the “produced water” that had been transported in the tanker trailer. 

Federal law makes it illegal to weld on containers that have not been thoroughly cleaned.  The tanker trailer that Payne had been welding had not been cleaned prior to Payne beginning welding. 

When OSHA investigated Mr. Payne’s death, Reisinger was one of the company representatives interviewed by investigators.  He told them that he did not know of the hazards and composition of produced water.  Instead, he stated that he thought “just water” was in the tanks.  Both of those statements were false.   In the plea agreement entered into with the government, Reisinger admitted that he knew the tanker trailers hauled produced water, and that his prior statement that he did not know of the hazards and composition of produced water was false. 

In 2019, C&J Well Services, the corporate successor to NCPS pleaded guilty to charges related to Payne’s death, and was sentenced to $2.1 million in fines and restitution.  As part of that plea, it was admitted that NCPS, in direct violation of its own policies, failed to provide welding-specific training to Payne or other welders at the Williston facility.  As a result, Payne and other welders repeatedly welded on unclean tanks.

Investigations like the one underlying this case can cause high levels of stress to companies and their personnel.  NCPS, its employee, and his family had already suffered an unspeakable tragedy.  By the time OSHA began its investigation, there was nothing anyone at the company could have done to reverse the tragic event or change the facts leading up to it.  Given the high level of stress in such circumstances, great care should be taken, whenever possible, to prepare personnel for interviews.  As illustrated by Reisinger’s actions in this case, deviating from a disciplined approach in an attempt to mitigate the impact of government enforcement, whether by shading the truth or outright lies, can have grave consequences. 

DOJ Healthcare Fraud Section 2020 Review: Action on Opioid Epidemic, Telemedicine, and COVID-19

Posted On Wednesday, March 10, 2021
By: James W. Kraus

In a narrative that seems likely to be repeated in the coming year, the DOJ Healthcare Fraud Unit’s (HCF Unit) contribution to the Fraud Section’s 2020 Year in Review emphasized its enforcement action in three areas:

  1. Opioid epidemic
  2. Telemedicine
  3. COVID-19

With an entire year of healthcare delivery during a pandemic now behind us, and a new administration assessing its priorities, it is likely that the focus on each of these subjects will be broader and deeper in the coming year. 

Two Focuses of the Take-Down Were Telemedicine and Substance Abuse Treatment Facilities

By the overall numbers, the HCF Unit touted 167 individuals charged, with $3.77 billion in alleged loss, along with 144 individuals convicted, including 10 at trial.  Not surprisingly, the report put a spotlight on the September 2020 Healthcare Fraud and Opioid Take-Down, where 345 defendants were charged across 51 federal districts, including 100 doctors, nurses and other licensed medical professionals.  

Two of the focuses of the Take-Down were telemedicine and substance abuse treatment facilities.  Of the $6 billion in false and fraudulent claims alleged as part of that take-down, $4 billion were alleged to be connected to telemedicine, and $845 million were connected to substance abuse treatment facilities.  Given the rapid expansion of telemedicine during the COVID-19 pandemic, and the continued opioid epidemic, it is very likely that providers in both areas will be increasingly targeted.

Established the National Rapid Response Strike Force

The Fraud Section also established the National Rapid Response Strike Force (NRRSF) in 2020, with the purpose of having an organization to quickly respond to emerging multi-jurisdictional healthcare fraud cases and priorities, without diverting attorneys from direct specific strike forces.  The NRRSF was critical in coordinating DOJ’s efforts to combat telemedicine fraud in 2020 as part of the national Healthcare Fraud and Opioid Take-Down.  Since 2019, the Fraud Section has charged 73 defendants involving more than $3.7 billion in alleged fraud loss across 16 districts in matters relating to schemes that exploited telemedicine. 

The DOJ also credited the NRRSF’s role in the prosecution of a nationwide $1.4 billion rural hospital billing fraud scheme relating to alleged medically unnecessary laboratory testing in United States v. Jorge Perez.  In that case, several defendants obtained control over four separate rural hospitals that typically received high reimbursements from insurers due to their location and patient base.  They then billed insurers through the rural hospitals for medically unnecessary lab tests, performed for non-hospital patients, at outside laboratories owned by other defendants. 

Established the COVID-19 Fraud Working Group

The HCF Unit also established the COVID-19 Fraud Working Group and expects that it will continue to generate criminal prosecutions in several areas, including COVID-19 test bundling schemes, securities fraud cases involving healthcare technology companies, and Health Resources and Services Administration (HRSA) fraud cases.  Prosecutions during 2020 included prosecution of an individual for her role in a laboratory testing scheme in which she caused Respiratory Pathogen Panel (RPP) tests to be ordered, referred and performed ostensibly for COVID-19, despite the fact that RPP tests did not and could not test for the virus.  The defendant admitted that she caused those tests to be ordered, referred, and performed for the sole purpose of increasing the reimbursement rate for patient samples.

First Coordinated Enforcement Action in DOJ History on Fraud Schemes in Substance Abuse Treatment Industry

Finally, the HCF Unit highlighted the “Sober Homes Initiative” as the first coordinated enforcement action in DOJ history focused on fraud schemes in the substance abuse treatment industry.  To date, the Sober Homes Initiative has resulted in 13 individuals charged for roles in various schemes to defraud healthcare programs of more than $940 million.  These schemes involve substance abuse treatment facilities paying illegal kickbacks and bribes to patient recruiters in exchange for their recruitment of addicted patients whose care can be billed to private insurance for treatment.  The recruiters in turn arrange for transportation of the patients to the geographic area, and pay kickbacks to the patients in exchange for entering treatment at a specific facility.  Once there, the operators bill for excessive tests and services.  In some cases, recruiters provided opioids, benzodiazepines, and other drugs to the addicted patients before admission to the facility to make sure the patients qualified for a higher-reimbursing level of treatment.

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