The Criminal Defense Firm is a health care fraud defense law firm that consists of former Department of Justice health care fraud prosecutors and experienced federal defense attorneys. We represent clients that find themselves in the middle of a sober living home and toxicology laboratory investigation. Purpose of this article is to explain the scope and nature of the investigation and the potential exposure for individuals that do not obtain sound advice from experienced health care fraud defense attorneys.
About The Criminal Defense Firm
The Criminal Defense Firm is a team of former Department of Justice prosecutors and experienced health care fraud defense attorneys. If you suspect you are under investigation, contact one of our senior attorneys today for a free and confidential consultation. Our attorneys include the former chief for health care fraud at the U.S. Attorney’s Office, former Assistant United States Attorneys (AUSA), former Special Assistant United States Attorneys (SAUSA), former Department of Justice Trial Attorneys, the former Deputy Chief of the Trial Section at the U.S. Attorney’s Office, and other distinguished lawyers with the professional backgrounds needed to fight potential charges.
We recognize the importance of each matter and we dedicate our fullest attention to each client. We are available to discuss your concerns in a free and confidential consultation, including on weekends.
Who Is Investigating Whom in Sober Living Home Cases?
Few sober living home patients have federal health insurance. Nonetheless, the Federal Bureau of Investigation and the Department of Justice, two federal law enforcement agencies, have taken the lead of investigating the owners of both sober living homes and toxicology laboratories. How can that be?
Well, the federal government alleges a fraud scheme by which owners of sober living homes entered into a kickback arrangement with operators of urine drug testing laboratories. Because, by definition, sober living home patients need to be monitored for their compliance and abstinence, urine drug tests are performed, typically 2-3 times per week in the beginning of the treatment protocol. These specimen samples are then analyzed by toxicology laboratories and a report is returned to the sober living home medical personnel. While this process in itself may not be problematic, the Federal Bureau of Investigation has taken the position that sober living home owners use specific laboratories to benefit from the samples they sent to these labs.
The government further argues that because these samples are sent via mail and claims are being submitted either electronically or via mail, each claim submission potentially constitutes mail or wire fraud, two federal offenses. Doing so allows the government to build federal health care fraud indictments against all individuals accused of participating in the alleged kickback scheme.
In fact, abusing private health insurance companies can be particularly risky, as private insurers often hire their own investigators to look into suspicious billing activity. Once the insurance investigators build a case against the sober living facility, they may share the information they gather with state and federal law enforcement officials, who can then use the information to open a government investigation into the kickback scheme.
The attorneys of The Criminal Defense Firm are available seven days a week to discuss your case. There is no time to waste if the government is building a case against it. We can help.
The Anti-Kickback Statute Applies to Sober Living Home Investigations
Central to the current sober living home and urine toxicology laboratory investigations is the federal Anti-Kickback Statute (42 U.S.C. 1320a-7b(b)). Pursuant to the Anti-Kickback Statute, it is a federal crime for anyone, that is not just for physicians, but literally, anyone, to knowingly pay or receive any form of compensation (e.g. cash, discounts, gifts, meals, etc.) in exchange for referrals. Notably, the Anti-Kickback Statute prohibits both direct and indirect remuneration and it is reciprocal, meaning that both the payer and the receiver of kickbacks are liable under the statute.
For purposes of the Anti-Kickback Statute, the Department of Health and Human Services’ Office of the Inspector General (OIG) broadly defines “remuneration” as “the transfer of anything of value, directly or indirectly, overtly or covertly, in cash or kind.” OIG Advisory Opinion No. 12-21 (OIG AO 12-21) (emphasis added). Gifts, gift cards, waiver of fees, discounts, complimentary equipment, prizes, free meals, and other forms of compensation fall within the definition of remuneration.
Any remuneration given to a provider or patient to incentivize that individual to utilize a particular company, prescription, or medical service is a violation of the Anti-Kickback Statute. See OIG Special Fraud Alert regarding the Anti-Kickback Statute (Dec. 19, 1994) (“OIG SFA 1994”). The OIG has adopted the “One Purpose Rule,” which interprets the Anti-Kickback Statute “to cover any arrangement where one purpose of the remuneration was to obtain money for the referral of services or to induce further referrals.” OIG AO No. 12-21.
Penalties: Violating the Anti-Kickback statute results in a federal felony offense which could result in any combination of the following punishments: 1) up to five years in prison per each offense; 2) fines of up to $25,000 per violation; and 3) mandatory exclusion from federal health care programs. Additionally, under the terms of the Affordable Care Act, any violation of the Anti-Kickback Statute is also an automatic violation of the False Claims Act.
Sober Living Investigations Include Charges of Mail and Wire Fraud
The focus of mail and wire fraud charges in sober living and toxicology laboratory investigations is not on the scheme to defraud itself but on the defendants’ use of interstate mail or wire communication networks to further the scheme to defraud. Thus, prosecutors may charge each use of the mail and wire communications as separate counts of mail or wire fraud, thereby subjecting the defendant to the full range of punishment for each individual count, which can amount to a potential sentence of decades in prison. See e.g., United States v. Pazos, 24 F.3d 660, 665 (5th Cir. 1994) (mail fraud); United States v. Castillo, 829 F.2d 1194, 1199 (1st Cir. 1987) (wire fraud).
What Is Mail Fraud?
It is a federal felony to use the United States Postal Service (USPS) or a private commercial carrier for perpetuating any scheme to defraud. A “scheme to defraud” describes an attempt to deprive someone of money or property through the use of false or fraudulent promises. The United States Postal Inspection Service (USPIS), the enforcement branch of the USPS, is the federal agency primarily charged with investigating mail fraud? The USPIS often collaborates with the Federal Bureau of Investigation (FBI) and other federal agencies to investigate mail fraud. According to 18 U.S.C. 1341, the crime of mail fraud consists of the following elements:
- Uses the mail (United States Postal Service or a commercial carrier) in the foreseeable furtherance of
- A scheme to defraud
- Involving material deception
- With the intent to deprive another of
- Either money or property.
What Is Wire Fraud?
Any use of interstate wire communications facilities, including telephone calls and emails, with the intent to carrying out a type of scheme to defraud, is a federal felony? The United States Secret Service is the agency with the primary responsibility for investigating wire fraud, and it works with other federal agencies, especially the FBI, to conduct fraud investigations. Under 18 U.S.C. 1343, the crime of wire fraud consists of the following elements:
- Uses interstate wire communications in the foreseeable furtherance of
- A scheme to defraud
- Involving material deception (false pretenses)
- With the intent (knowing and willful participation) to deprive another of
- Either money or property.
How to Prove Mail and Wire Fraud?
In order to prove the crimes of mail or wire fraud, the government must establish that a scheme to defraud existed, but it does not need to prove all of the details involved in the criminal scheme? See e.g., United States v. Jordan, 626 F.2d 928, 930 (D.C. Cir. 1980) (“The Government is not required to prove the details of a scheme; it is, however, required to prove beyond a reasonable doubt . . . that the defendant . . . willfully and knowingly devised a scheme or artifice to defraud . . .”). Notably, the scheme to defraud, here the underlying kickback arrangement, need neither be completed nor successful for this element to be established, nor must the government demonstrate that anyone was actually damaged or injured by the scheme. The government does, however, need to prove that “some actual harm or injury was contemplated by the schemer.
Fraudulent intent is typically the most difficult element of mail and wire fraud charges for the government to prove. The prosecution must establish beyond a reasonable doubt that the defendant had the specific intent to defraud another. See e.g., United States v. Diggs, 613 F.2d 988, 997 (D.C. Cir. 1979) (“Because only a scheme to defraud’ and not actual fraud is required, proof of fraudulent intent is critical.”), cert. denied, 446 U.S. 982 (1980).
Circumstantial evidence may be used to demonstrate fraudulent intent. “The requisite intent under the federal mail and wire fraud statutes may be inferred from the totality of the circumstances and need not be proven by direct evidence.” United States v. Alston, 609 F.2d 531, 538 (D.C. Cir. 1979), cert. denied, 445 U.S. 918 (1980). The government may prove fraudulent intent by showing that injury to another was the “necessary result” of the actor’s scheme is to injure others. See e.g., United States v. Reid, 533 F.2d 1255, 1264 n.34 (D.C. Cir. 1976). Under circumstances where the scheme itself does not infer an injury to another as its necessary result, independent evidence must demonstrate the defendant’s fraudulent intent. United States v. D’Amato, 39 F.3d 1249, 1257 (2d Cir. 1994) (holding that the government failed to produce legally sufficient evidence of criminal intent). On the other hand, where the scheme to defraud causes actual detriment to the victim, such harm may provide proof of fraudulent intent. Reid, 533 F.2d at 1264 n.34.
What Are the Penalties for Mail and Wire Fraud in Sober Living Investigations?
Without proper representation by experienced health care fraud defense attorneys, the penalties for mail or wire fraud in sober living investigations can be astronomical. Under federal law, each violation of mail and wire fraud carries a criminal punishment range of up to 20 years in federal prison, not to mention criminal fines and asset forfeiture.
Call Today for a Free Case Assessment From Former DOJ-Prosecutors
On numerous occasions, our attorneys have successfully intervened on our clients’ behalf and transformed criminal investigations to civil ones. We have even convinced federal agents to close investigations by demonstrating that our clients have addressed and corrected their alleged misconduct by following the advice and guidance of our attorneys. In this way, our attorneys convert daunting criminal charges with large potential sentences into acquittals, probation, and or light sentences. We rely on our experience working as government attorneys to anticipate and productively respond to the government’s motivations. We understand that our clients’ livelihood, reputation, and freedom are on the line, and pride ourselves on protecting their interests. Contact The Criminal Defense Firm today for a free and confidential consultation.
Compliance Litigation – Defense
Brian Kuester offers his extensive experience to counsel companies and individuals under civil or criminal government investigation. When resolution requires litigation, clients choose Mr. Kuester’s proven court and litigation experience.