This week, the federal government charged John Holland, a former senior vice president for Tenet Healthcare, with involvement in an alleged $400 million Medicaid kickback scheme.
Though many of the allegations surrounding the scheme were made public last year when Tenet settled False Claims Act allegations, paid monetary penalties to the tune of $513 million, and admitted guilt concerning certain charges, the government now has attached a name to the conduct.
Holland pleaded not guilty, but could face as much as 50 years in prison if found guilty on all charges. (United States v. Holland, S.D. Fla., No. 17-cr-20054, indictment 1/24/17).
Holland’s indictment could be forming the leading edge of a wave of Department of Justice prosecutions of individuals (rather than just corporations) for their roles in health-care fraud schemes. The DOJ publicly stated its renewed focus on pursuing individuals culpable in fraud against the government rather than stopping at monetary settlements with their employers in 2015 with the publication of the “Yates” memo named after former Deputy Attorney General Sally Q. Yates.
Holland allegedly facilitated the payment of $12 million in kickbacks in the form of bogus service contracts entered into with a medical clinic in exchange for referrals of the clinic’s maternity patients to Tenet hospitals for delivery services. The government said Holland altered Tenet accounting controls and records to cover up the kickbacks and falsely certified that the company was complying with Medicare and Medicaid laws as required under a corporate integrity agreement in force at the time.
Linda Baumann, a partner with Arent Fox in Washington, who regularly counsels clients involved in health-care fraud investigations, told Bloomberg BNA Feb. 2 she's seen “a ramp-up of health-care fraud prosecutions against individuals over the past six to eight months.”
Baumann said the initial lull in individual prosecutions after the Yates memo was likely due to the lead time necessary to develop cases against individuals involved in health-care fraud. She also said the recent ramp-up could be the result of a push by the government to wrap up investigations, as much as possible, before the administration changed.
Regardless of the government’s motivations in stepping up individual fraud prosecutions in the health-care arena, the DOJ will increasingly be tasked with not only leaning on corporations to induce a settlement, but also persuading a jury to send a person allegedly involved in the scheme to jail. This is an altogether different legal animal, said Jesse A. Witten, a partner at Drinker Biddle & Reath in Washington who specializes in health-care fraud defense, as it is “much more difficult to get a jury to convict an individual than it is to press a corporation to settle or even plead guilty.”
Read more about the case in my story here.
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