We Ask Ileana Hernandez of Manatt if Healthcare Fraud Prosecutions are Effective

Ileana Hernandez of Manatt and a member of the firm’s healthcare litigation practice. She focuses her practice on representing hospitals, health systems, and other health care providers in complex civil litigation matters.

Interview with Ileana Hernandez

Q: How effective have recent prosecutions been in stopping healthcare fraud? Do you think these prosecutions will be effective going forward?

A: Recent prosecutions have been very effective. For example, after several high-profile prosecutions and settlements of major pharmaceutical companies for off-label promotion and kickbacks to physicians, we saw a significant decrease in this type of conduct within the industry. Going forward, continued prosecution will be essential to ensuring that health care fraud continues to decline.

Q: As it stands, do you think the law is effective? What would you change about it, if anything?

A: The law is very effective. It provides for significant criminal and civil penalties, which have been a strong deterrent. That said, there has been some criticism of these laws with respect to how they apply to “healthcare companies” who conduct business across state lines or even outside the US.

Q: Has the law been effective in prosecuting fraud, specifically in Medicare and Medicaid?

A: Yes, these prosecutions have been very effective. In addition to significant monetary penalties, such as forfeiture of assets or reimbursements, the prosecution also can lead to exclusion from participation in federal health care programs for up to 10 years. Therefore, such cases can be more severe than criminal cases.

Q: Do you believe the law should change to make prosecutions easier?

A: The law should not change because it has successfully made health care fraud much more difficult and costly for those who perpetrate it. However, there is always room for improvement, and we should anticipate that future laws and regulations will be crafted to address new theories of fraud.

Q: What do businesses need to know about the law to avoid getting in trouble?

A: Businesses must be aware of their obligations under anti-kickback statutes and so-called “self-referral” laws (also known as Stark Laws). They should ensure that their business arrangements comply with both federal and state laws. If there is any concern about compliance with these laws, businesses should consult with experts in this area of the law.

Q: Any advice for businesses on what to do if they think they might be under investigation?

A: If a business is contacted by the government and has any reason to believe that it or one of its employees might be targeted in an investigation, then that business should consult with counsel. At a minimum, it should review its business arrangements to ensure compliance with all applicable laws.

Q: What steps should businesses, specifically healthcare providers, take to avoid prosecutions?

A: One of the most important things any business can do to avoid prosecution is maintaining strong compliance programs. Providers should have in place effective systems that monitor and detect potential criminal conduct. The best way to ensure compliance with these laws is through a proactive approach that focuses on preventing violations rather than reacting to allegations after they occur. This requires significant resources and must be the responsibility of the Board of Directors.

In addition, businesses should ensure that they are complying with federal and state law when establishing business arrangements with other entities. They also should implement effective training programs for employees who interface with customers or suppliers. Employees need to understand how to steer clear of criminal activity while still conducting business in an advantageous way to the company.

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