Health care companies that uncover possible crimes in their own operations can now report them once to the Justice Department and earn credit under two separate federal self-disclosure programs, the result of a policy the department issued Thursday with the Health and Human Services inspector general's office.
The arrangement runs through the Health Care Fraud Section of the department's National Fraud Enforcement Division, known as the Fraud Division. A company that voluntarily reports criminal conduct affecting a federal health care program to that section will receive the benefits of the inspector general's Health Care Fraud Self-Disclosure Protocol without making a second submission through the inspector general's online portal, the Justice Department said. The same report also counts under the department's Corporate Enforcement Policy.
That department-wide policy, released on March 10 and covering nearly all criminal cases other than antitrust, commits prosecutors to declining charges when a company voluntarily discloses misconduct to an appropriate criminal component, cooperates fully, remediates in a timely way and has no aggravating factors or history of corporate recidivism, subject to approval by senior officials, according to a client alert from the law firm McDermott Will & Schulte. Even a company that earns a declination still owes disgorgement, forfeiture or restitution where they apply, the firm noted.
The inspector general's office made a matching change on its side. Its protocol covers conduct that may violate civil or administrative law, and the office revised it Thursday to make clear that criminal conduct should go to the Justice Department. A company that reports only to the inspector general generally will not be treated as having made a voluntary self-disclosure to the department and generally will not qualify for a declination on that basis, according to the announcement, which told companies seeking both sets of benefits to take potentially criminal conduct to the Fraud Division first.
The department presented the change as a fix for a common dilemma. One arrangement, whether an illegal kickback, Medicare billing for medically unnecessary services or a scheme to conceal an excluded provider, can lead to criminal, civil or administrative consequences, and companies facing that overlap have had to decide not only whether to come forward but where, the department said. Writing in June, the McDermott lawyers called self-disclosure a thorny challenge for health companies that were eligible for both the department's policy and the inspector general's protocol, a program created in 1998 and last amended in 2021 with its own criteria and benefits.
"Companies that discover fraud within their own operations should not have to navigate a maze of agencies before reporting it," said Assistant Attorney General Colin M. McDonald of the National Fraud Enforcement Division. "There is now one clear point of contact: DOJ's Fraud Division," McDonald added. "If a company comes forward, cooperates fully, and remedies the misconduct, the benefits are clear and predictable. If a company conceals what it knows, it should expect a very different conversation."
T. March Bell, the HHS inspector general, said the office encourages companies "to come forward and disclose criminal conduct to the Justice Department" and is "committed to extending the benefits of the HHS-OIG Self-Disclosure Protocol to those who do."
Jacob Foster, the deputy assistant attorney general who oversees the division's health care fraud unit, described the change Thursday at the STAT Summit in Boston. Companies that want to report misconduct will now deal with a single office at the department instead of also working through a separate HHS process, Foster said, according to STAT. "What do you do? Who do you call? That is a question that industry should not have to ask." The department wants to reward companies that fix what went wrong, in Foster's account: "There's nothing more that we want to know when a compliance failure occurs than to hear about the great efforts to remediate it, and reward that."
The policy is part of a wider enforcement push. An Oct. 1 directive from McDonald told the division's prosecutors to prioritize corporate fraud in the health care industry, including health care fraud, controlled substance distribution and violations of the federal Food, Drug, and Cosmetic Act, and called for programs that "appropriately incentivize" whistleblowers, STAT reported. In deciding whether to bring charges or negotiating plea or other agreements, prosecutors must give "great weight" to factors that include management's knowledge of or involvement in a scheme, efforts to conceal fraud from government agencies or auditors, misconduct lasting three years or more and losses of $25 million or more, according to an analysis of the directive by lawyers at Sidley. The department will also use data analytics to look for wrongdoing such as billing for unneeded services or fabricated patient records, STAT reported, and Foster said investigators look at social media, news reports and other sources for signs that a company may be breaking the law.
The department announced the Fraud Division's creation on April 7 and says its work supports President Trump's Task Force to Eliminate Fraud, which a March 16 executive order set up inside the Executive Office of the President with the vice president as its chairman. The department describes the task force, led by Vice President JD Vance, as a government-wide effort to eliminate fraud, waste and abuse in federal benefit programs. The division's Health Care Fraud Section now has nine strike forces in federal districts around the country. Since 2007, it has charged more than 6,200 defendants who together billed federal health care programs and private insurers more than $45 billion, according to the department.
"No one, irrespective of party, likes the government being ripped off by wrongdoers," Foster said in Boston.