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Health Care Fraud Self Disclosure Protocol: You Discovered Misconduct… Now What?

When a company decides to self-disclose misconduct (or conduct that may be construed as such) to the government, that decision triggers a stream of additional questions. In the weighty deliberations about whether and what to disclose, entities often overlook another important decision: where to disclose.

On November 8, 2021, OIG-HHS updated its Provider Self Disclosure Protocol, including a name change to Health Care Fraud Self Disclosure Protocol (OIG-SDP or Protocol). The majority of the updates were technical in nature and did not change the substance of the Protocol. Foley’s top observations from the updated OIG-SDP can be found here.

The decision whether to self-disclose misconduct through the OIG-SDP is not to be taken lightly. Indeed, many providers, entities, suppliers, etc. are unaware there is another option: voluntarily self-disclosure to the Department of Justice (DOJ). There are benefits and downsides to each self-disclosure avenue that should be considered when making this decision.

Benefits of voluntarily self-disclosing health care fraud matters directly to DOJ include:

  • Release from False Claims Act (FCA) Liability. An FCA liability release for disclosed conduct means the government will not sue the discloser for the conduct in scope, including for treble damages and penalties. DOJ routinely releases FCA liability. On the other hand, OIG does not provide the same comfort; the OIG-SDP instructions indicate a disclosing party may request a release under FCA, but it not a standard settlement term. To obtain the release, OIG must coordinate with DOJ, which may then decline the request. DOJ, on the other hand, obtains OIG concurrence and signature at the time the matter is resolved.

  • Potentially Lower Settlement Amount. While it is OIG’s general practice and preference to require a minimum multiplier of 1.5 times the single damages for settlement, DOJ does not settle self-disclosed cases for a defined multiplier. See e.g., DOJ Commercial Litigation Manual, Section 4-4.112 (“The maximum credit that a defendant may earn may not exceed an amount that would result in the government receiving less than full compensation for the losses caused by the defendant’s misconduct (including the government’s damages, lost interest, costs of investigation, and relator share”)). DOJ has published factors it considers when evaluating resolution, including cooperation and acceptance of responsibility worthy of a multiplier less than 1.5 times loss, and DOJ indeed has settled cases for less than a 1.5 multiplier. See Elberg, Jacob T., 5 Utah Law Review 2, “A Path to Data-Driven Health Care Enforcement” (2021).

Disclosers to DOJ may pay less (lower multiplier) and get more (FCA release). However, voluntarily self-disclosing health care fraud matters directly to DOJ (rather than to OIG-HHS) also carries certain risks and uncertainties, including:

  • The 60-day Report and Return Obligation is Not Automatically Tolled. Unlike the OIG-SDP, which automatically suspends the obligation to report and return an overpayment within 60 days after an overpayment is identified, voluntarily self-disclosing a matter to DOJ does not toll the obligation. See 81 Fed. Reg. 7653, 7678 (“We decline to extend this treatment to self-disclosure to entities outside of the SRDP and SDP in this final rule. The SRDP and SDP are both formal processes managed by agencies within the Department, CMS and OIG respectively. As such, we believe it is appropriate to include those processes in this rule. However, DOJ is a separate department and we are not aware of any formal self-disclosure process by DOJ that is analogous to the SRDP or SDP. Also, we are not aware of a similar MFCU process and, more importantly, Medicaid is not covered in this rulemaking.”). Instead, DOJ needs to seek approval from CMS/OIG to suspend the 60-day report and return obligation.

  • The OIG-SDP is a Formal Process Specific to Health Care Fraud.The OIG-SDP is a formal process uniquely tailored to the health care industry. Submissions to OIG-SDP are reviewed by individuals who understand the complexity and challenges faced by health care entities.

Under either consideration, where to disclose also should involve a consideration of where the conduct occurred and to whom the disclosure will be submitted. Some DOJ components themselves are more cooperative than others and will more readily work with a discloser on the scope of releases, the amount of loss, and any multiplier. Others are more rigid. Selecting a receiving agency more interested in negotiating will improve outcomes for the discloser.

Legal counsel—especially those familiar with OIG and DOJ—can play a pivotal role in advising a discloser on which disclosure route best fits individual circumstances and overall goals. Experienced and capable lawyers also can improve outcomes through familiarity with relevant government agencies and their components and also knowing how to strategically interact with and respond to government follow-up requests in the wake of a self-disclosure.  All these special considerations inform whether identified conduct should be self-disclosed in the first instance, and of course, to whom.

© 2022 Foley & Lardner LLPNational Law Review, Volume XI, Number 335

About this Author

Lisa Noller, Trial Lawyer, Foley Lardner Law Firm

Lisa Noller is a trial lawyer and investigator with Foley & Lardner LLP, where she is chair of the Government Enforcement, Compliance & White Collar Defense Practice. She has spent almost 20 years investigating, litigating and trying complex criminal and civil cases, including responding to government investigations, conducting corporate internal investigations, and persuading the government not to pursue clients. When cases proceed to trial, Ms. Noller also has significant experience successfully trying a wide variety of over 30 civil and criminal matters in...

Lori A. Rubin, litigation lawyer, false claims act, attorney, Foley law firm

Lori Rubin is a partner at Foley & Lardner LLP and member of the firm’s Government Enforcement Defense & Investigations and Health Care Practice Groups.  Her practice focuses on False Claims Act investigations and litigation, particularly on behalf of clients in the health care industry.

Lauren P. Carboni Health Care Regulatory Attorney and Litigator Foley and Lardner

Lauren P. Carboni is an associate with Foley & Lardner LLP. She is based in the firm’s Denver office. Lauren is a member of the Foley Health Care Industry Team and the Foley Cannabis Industry Team, focusing on health care and cannabis regulatory and litigation matters.

As both a health care regulatory attorney and litigator, Lauren brings a unique perspective to counseling clients with respect to business strategy, fraud and abuse protection, regulatory compliance matters, and investigation defense. Lauren’s experience includes advising clients on a variety of complex federal...

Kara Schoonover Associate DC Health Care Cannabis

Kara Schoonover is an associate in the business law department of Foley & Lardner LLP. *Kara is admitted only in Maryland. She is practicing under the supervision of a member of the D.C. Bar.

Previously, Kara served as a summer associate in the firm’s Washington, D.C., office where she worked directly with partners in business, litigation, FDA, government contracting, and health care groups. In this role, she conducted legal research on compliance issues, including accidental and intentional adulteration for food companies, poison packing prevention for drug companies,...