When you look at the numbers associated with health care fraud in the US, it’s easy to see why the federal government puts such a high priority on detecting, investigating and prosecuting it. In the fiscal year ending September 30th, 2012, the Justice Department secured $4.9 billion in settlements and judgments in civil cases involving fraud against the government. And the sad fact is that the numbers are growing. The 2012 result was a record recovery for a single year, bringing the total recoveries under the False Claims Act since January 2009 to $13.3 billion – the largest four-year total in the Justice Department’s history.

To make matters worse, health care fraud investigations can be among the most complicated investigations due to the highly technical nature of federal and state healthcare laws, says attorney Mark Schnapp, a principal shareholder and co-chair of the white collar criminal defense practice group in Greenberg Traurig LLP's Miami office. I had the opportunity to interview Schnapp at the American Bar Association's National Insititute on Health Care Fraud earlier this month and he provided some great insight into some of the challenges that go along with investigating in such a complicated environment.

Multiple Proceedings

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Further, there may be parallel proceedings, adding complexity to any  internal corporate investigation and the formulaton of a defense strategy. It’s not uncommon for the Department of Justice (DOJ) – civil and criminal divisions – and the Attorney General’s office to be conducting investigations at the same time, says Schnapp. With multiple proceedings ongoing, the logistics around securing evidence and interviewing subjects and witnesses can be complicated, which is one reason to ensure the team has experience in complex health care fraud.

Another challenge encountered in health care fraud cases involves gathering electronic evidence and understanding a company’s data collection policies. “Every internal investigation needs to have somebody who understands where the information might be, and how to get it preserved,” he says. Email, electronic documents, billing records, even text messages could potentially become evidence in a health care fraud case, so it’s critical that someone knows where the electronic files are and how they can be safely preserved.

Qui Tam Issues

Healthcare fraud investigations can also be time-sensitive, which creates another layer of pressure for the investigators and attorneys involved. Because self-disclosure can buy a company more lenient treatment in the event it is found guilty of violating the False Claims Act, quick and efficient internal investigations are beneficial, before a whistleblower gets the chance to report the violation to the government in hopes of collecting a reward.

“You’re always concerned that there’s a Qui Tam action out there,” says Schnapp. A strategy should be developed regarding when and how to approach the government to cut off Qui Tam issues. “You want to be the one bringing the issue to the government.”

If a Qui Tam lawsuit is already under way, it also becomes more complicated to reach a settlement. “You have to deal with relator’s counsel in addition to the government agencies. This is another example of why it’s important to have outside counsel with extensive experience in the defense of health care fraud cases,” he says.

Compliance is the Best Defence

“Of course a lot of these issues can be avoided by taking proactive steps and developing a good compliance program,” says Schnapp.

The best defense is always a good offense, so it’s a good idea for healthcare companies to take steps to enhance their compliance programs today so that they don’t become the big fraud case in tomorrow’s news.