By Jerri Lynn Ward, J.D. 

(Jerri Lynn Ward, J.D., is the principal of the firm Garlo Ward PC located in Austin, Texas.) 

In his informative book, “Three Felonies a Day; How The Feds Target the Innocent,”¹ attorney and civil libertarian Harvey Silverglate shines a light on the federal criminal system, often focusing on prosecutions of physicians and other health providers.  His thesis is that the laws and regulations have become so numerous, vague and impossible to understand that in the hands of ambitious prosecutors, every businessman unknowingly commits at least three felonies a day.

Silverglate’s book is most applicable to the predicament in which physicians and other health providers find themselves today.  During the twelve months of fiscal year 2011, the government reported 1,235 new health care fraud prosecutions – the largest number reported in twenty years.  This number is up 68.9 percent over fiscal year 2010, and up 134 percent from five years ago.² 

Exploding costs to Medicare and Medicaid has galvanized the federal bureaucracy to clamp down on what it perceives to be fraud and abuse of the federal programs by providers.  This has been manifested in the proliferation of various new audit entities and through multi-agency groups like Health Care Fraud Prevention and Enforcement Action Team and the Medicare Strike Force.  Both groups may include state and federal agencies and law enforcement, licensing boards, and health insurance plans, among others.   

Given the increased scrutiny by the regulators, it is important for physicians and their licensed staff to understand the long-term impact that negotiating with prosecutors and agreeing to plea deals can have upon their livelihoods and careers.   

Although “Three Felonies a Day” focuses on felonies and this article is about misdemeanors, it remains informative.  Federal prosecutors coerce pleas, in part, by piling on multiple counts, burying the defendant in a mountain of charges to fight.  Fighting the charges often seems so impossible and expensive that even innocent defendants will agree to a plea deal to some of the counts in order to escape the risk of even more serious charges and jail time.   

The same is true in state prosecutions. In light of the possibility that such a deal may involve pleading to misdemeanor count(s) in return for dropping felony counts, it is important to consider the lasting impact of such pleas.  Despite the relief that may occur at escaping a felony conviction, a misdemeanor conviction may have a substantial effect on a provider, as explained further below.

LICENSURE IMPLICATIONS

The first consideration of plea negotiations should be how the physician or other provider’s state licensing agency views misdemeanor convictions.  Some states take a punitive view of such convictions and consider them to be violations of regulations concerning “moral turpitude.”  Other states have passed laws and promulgated regulations directly dealing with misdemeanor convictions as licensure violations subject to sanctions.

Furthermore, convictions and plea deals must be reported to the licensing agency and sometimes to the National Practitioner Data Bank.  Moreover, though a plea deal may involve deferred adjudication or a plea of “no contest,” a provider should check with his state licensing requirements to determine whether or not that is considered a guilty plea in his state.

REIMBURSEMENT IMPLICATIONS

It is important to consider that what seems like a very good deal to a practitioner facing multiple felony counts is that a plea deal for a misdemeanor conviction can have severe implications for the financial viability of his practice. Section 1128 of the federal Social Security Act (the “Act”) requires that the Office of the Inspector General exclude practitioners from the program for a minimum of five years for a misdemeanor plea or conviction for program-related offenses or patient neglect or abuse.

Given the vagueness and elasticity of the laws, the deference given regulatory agencies, and the broad swath of activity for which a provider might be charged, a misdemeanor plea can very likely trigger exclusion from federal program reimbursement under the mandatory provisions of the Act.

MANAGING THE RISKS

First, it is imperative that practitioners caught up in such prosecutions retain defense counsel who understands the unique risks attendant to a health care prosecution.  At the very least, a practitioner’s criminal defense attorney should be willing to associate a health care attorney who can provide counsel on the full impact of accepting a plea deal for such a practitioner.   

Second, providers should realize that being caught up in a criminal prosecution, especially by the federal government, is a David versus Goliath proposition.  It is difficult for even a financially thriving practitioner to marshal the financial resources necessary to mount an effective defense, especially considering the government’s power to seize assets upon the filing of charges under asset forfeiture laws.

In deciding whether to fight or plea—in light of the financially ruinous risks of fighting—a provider should seek competent advice about whether his or her practice should continue or be sold, before assets are seized or patients leave as a result of prosecution.

Finally, the best protection against ruinous prosecutions is a robust compliance program that includes good policies and procedures, as well as scrupulous implementation and continuous monitoring.  Investing in such a program can save a practitioner from financial and professional ruin in the future.   

Notes

1          Harvey Silverglate, THREE FELONIES A DAY; HOW THE FEDS TARGET THE INNOCENT (2011).

2          Transactional Records Access Clearinghouse, Record Number of Federal Criminal Health Care Fraud Prosecutions Filed in FY 2011, Dec. 14, 2011.