Breaking Compliance News Blog

Key Compliance Component: Lying in Investigations Leads to Lock-up

Posted by admin on 2/20/14 4:26 PM

A St. Louis doctor is facing sentencing in a federal court case involving his purchase of a misbranded drug. Though the doctor admitted buying the drug, his sentence is not for the purchase, but for lying to federal agents. The doctor told the agents he bought the drug three times, but the government claims he bought it over 50 times. The doctor pled guilty to a single charge of making a false statement to federal agents for which he is now facing a maximum five years in prison and $250,000 in fines.

In matters involving health care programs, the false statements law imposes fines and/or imprisonment of up to five years when a person makes or used false written or verbal statements, or conceals information. In some cases, the government will proceed on the underlying breach or violation plus the false statement charge; while in other cases, as with the St. Louis doctor, they prosecute only the false statement. The OIG’s enforcement reports do not explain legal strategies, but analyses of high-profile obstruction cases can provide insight.

In the highly publicized case against Martha Stewart, the prosecutor opted not to even charge her on his novel insider-trading theory which legal analysts call a stretch at best. But in the course of the inside-trading investigation, Martha told investigators that her IMClone stock was sold because of a standing order for her broker to sell when the stock fell to $60. Prosecutors prevailed at trial with evidence that this statement was false. So Martha, who likely would have walked away from an insider trading charge, went to prison for the crime of obstruction of justice.

Sprinkled throughout OIG enforcement reports are false statement charges and convictions. Recent examples include an Englewood, N.J, ophthalmologist who pled guilty to making false statements to federal agents during a health care fraud probe into his reuse of single-use vials of medication for multiple patients. In another case, a federal jury found a Charlotte, NC, man guilty of conspiring to defraud Medicaid of at least $700,000, committing health care fraud, and making false statement in connection with a health care program to investigators. In another example, a New York hospital CEO was sentenced to 18 months in prison for making false statements to an agent and wire fraud in a kickbacks case.

Dishonesty can tarnish a provider’s image even more than the matter being investigated. The St. Louis doctor’s purchase of mislabeled drugs might draw negligible negative reaction from the public who might think he made a mistake, or who might side with the doctor against U.S. drug manufacturers and their pricing policies. But dishonesty of providers on whom we rely for the wellbeing of ourselves and our families could generate a considerable negative reaction.

Prevention of dishonesty in our healthcare facilities is part of effective compliance. Annual and new employee compliance training provides a good venue for introduction or emphasis of the false statement rule. Training on policies that include prompts to consult with legal counsel, especially where an investigation is involved, is another good opportunity to present and stress the law. Placing weight on honesty, transparency and self-reporting as part of building and enhancing an ethical culture creates good infrastructure to help prevent lying and falsification in the course of an investigation and elsewhere. Even employee handbooks with strong admonitions against fraud and abuse can impart a focus on honesty and help prevent violation of false statement laws.

Topics: Breaking Compliance News Blog, Penalties and Enforcement

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