>> well, thank you everyone. my name is john pease andi'm the assistant us attorney from the us attorney's office in philadelphia. i'm gonna ask everyone to just bear with mefor a second because asking a lawyer to talk about any topic for 12 minutes is kindof like telling a food critic he can go to the restaurant, barelyallowed to read the menu. so i'm gonna-- i'm gonna do the best i canbut in all seriousness it's a real pleasure and honor actually for me to be invitedtoday to talk to you about health care fraud, a subject that is of intense interest to meand really a great national interest as well.
and really there are three sort oftakeaways i wanna try to get across to you in my 12 minutes before i get yanked. first that heath care fraud is a toppriority of the department of justice and us attorney's offices around the country. second, we are getting better at it everyday and using better and more technology and getting more resources to identify,detect and prevent health care fraud. and then lastly, the last point iwanna get across with all of you is that we are very interested in workingmore collaboratively with our counterparts in private industry, especiallyin the compliance function.
i'm gonna give you two real world examples ofhow having an effective compliance program along with making self disclosure resulted in tangiblebenefits to certain health care providers. so let me-- let me start offalso with just one more caveat. the views i'm gonna express are not intended torepresent those of the department of justice. they're my own views. i've been a federal prosecutor for 14 years,prosecuted every type of fraud case there is with a special focus in the lastcouple of years on health care fraud. health care fraud is likeany other type of fraud that i've seen except there'sreally one thing about it i think
that makes it special, that makes it unique. everyone in this room has a stake in healthcare fraud and our health care fraud benefits. every one of us pays medicare, wage taxes. every one of us knows somebodyenrolled in the medicare program. those who would steal from medicare steal fromour own pockets and put at risk the trust fund that we hope some day willbe there when we need it. and so while there's many types of fraudcases, there really isn't one type of fraud that i've seen that has a broaderimpact on our society, a bigger impact, and that's a point i try to get acrossto federal judges at sentencing hearings
where we're dealing withsomebody who commits fraud. they're not just stealingfrom a nameless victim. they're really stealing from all of us. and in recognition to this,really in philadelphia, our us attorney's office has reallybeen at the forefront nationally in prosecting this war in healthcare fraud. our office has about 130 prosecutors and we havea special team, about 9 assistant us attorneys who i supervise whose job it is toinvestigate, prosecute health care fraud. but we don't do it alone.
if any of you ever watched law & order you'llsee the police go out and catch these bad guys. they turn them over to theprosecutor at the da's office and it's their job to prosecuteand win the case. it doesn't work that way atthe us attorney's offices and it doesn't work thatway in health care fraud. it takes a team of people to beable to bring these cases together. now we're here today at the usdepartment of health and human services and nick digiulio was a valued partner and he and i worked together inthe philadelphia region.
but there really is a tremendous interestamong other federal law enforcement agencies in prosecuting health care fraud. the fbi in our region has a dedicated team of15 agents who do nothing but health care fraud. food and drug administration has a team of 6agents who work with us on health care fraud. the us postal service, the defensecriminal investigative service, the office of personnel management and a hostof other federal agencies all are involved with us working together investigatingand prosecuting health care fraud. we simply can't do it without those typesof resources and we work these cases from the ground up at the beginning ofthe case and we don't wait until the end
to decide whether or not a casehas value or whether it has merit. now in philadelphia, we'vereally been very fortunate. we've, in the last year, received additionalfunding from the department of justice to hire what's called a special focus team. so with additional funds, we've been ableto hire more criminal and civil prosecutors. we've been able to hire two healthcare fraud auditors with more than 30 or 40 years experience in health care industry. we recently brought on boardan investigative analyst who has 20 plus years ofhealth care fraud experience.
we have a biostatistician,we have more support staff. we've got a real strong commitmentin philadelphia and not just in that office but really across the country. our office working collaborativelywith the department of justice here in washington has made a real effort todo outreach to other us attorney's offices across the country to combine ourknowledge and share resources. so i want you to know that in the departmentof justice, we are really working hard to make the most and benefit from theexperience and the knowledge we've gained in these various health care fraud cases andwe're communicating not just with each other
but with our partners at health andhuman services and other agencies. now there's been some talk todayabout the use of data and i mentioned in my initial remarks we'regetting much better at using it. and so in these cases, we're not just sittingback and waiting to get a tip on the tip line or waiting for a whistleblower tofile false claims act complaint. we're trying to be a lot more proactive,and this is really where in part our efforts to be more outreach withprivate industry come into place. our office, we don't just prosecute medicarefraud, we prosecute all healthcare fraud. so for example, independence blue cross whichis a major health insurer in philadelphia,
has become a real partner of ours and they'vebeen employing real sophisticated data mining techniques and have made anumber of referrals to our office and we've taken those cases and ran with them. in the last year alone, we prosecutedabout off the top of my head i can think of at least four chiropractors and a number ofother health care practitioners whose billings and claims histories and theninternal audits that were done by this health care insurer resultedin anomalies being identified and resulted in fraudulent claims. and we've taken those casesand we've run with them.
and doctors and other health care providerswho defraud, some of the companies you work for who defraud private insurers also are likely to be defrauding the medicareprogram and vice versa. so i think all of us really have a stake intrying to root out, identify and prosecute some of these unscrupulous individualswho engage in this health care fraud. now we've had really in the last year or twoalone, there's a long list of physicians, nurses, chiropractors, durable medicalequipment company operators in our region and really nationally who have been prosecuted. and i could go through statistics and longlist and, you know, your eyes might glaze over.
the real point i think i wannareally get to though is-- and i think maybe of real interest tosome of you is how does a prosecutor at the us attorney's office lookinto and try to make decisions about what kinds of casesought to be prosecuted. you know, i think it's been mentioned in some of the remarks this morning,we don't prosecute mistakes. what we're looking for is knowing an intentionalfraud, knowing intentional efforts to engage in fraudulent practices thatresult in the payment of funds that you wouldn't otherwise be entitled to.
but that's not the only factor. we're also looking to things likethe amount of the fraud loss. is this a case in which thereis gonna be a deterrent effect. we can't prosecute every casethat comes into our office. we look for cases where the conduct is serious. we look for cases where the fraud lossis substantial enough that it's likely to result in a potential prison term. we wanna know how pervasive it was. is it a one time problem or is it conductthat occurred over a longer period of time?
we're interested in knowing in every casewhether there had been any prior regulatory actions against this healthcare provider or individual. has this person been counseled, for example, bya cms contractor who went out and did an audit and found problems sort of the examplethat nick talked about a few minutes ago. all these are sort of efforts along theway and most of today's discussion talks about the administrative sanctions that mayexist and regulatory compliance efforts. i'm here today as sort of as an example ofwhat happens to you if all those things fail because at some point you have to go to jail. some of these individuals are not gonnabe deterred by the threat of sanctions,
by the threat of having paymentsor monetary penalties imposed. there are some individuals and we all knowthat it's true and who have to be prosecuted. and the only real deterrent inthese cases is gonna be prison. and so, we're looking in prosecuting individualcases and asking ourselves is this a kind of case that other physicians, otherhealth care providers are gonna look at and essentially put on the brakes. you know, we'll never know and asprosecutors we always talk about this and judges always ask questions about this. if i impose a sentence you are asking for, mr.pease, if i give more time to any individual,
you know, how am i to know that'sgonna have an effect on someone else? and the answer is we'll never know how manyindividuals out there did not commit fraud as a result of any one individual prosecution. but what we do know is that there'sno shortage of new cases that come in. and so, we have to be vigorous andwe have to find it and identify and prosecute it and prosecute it vigorously. now, other issues that, you know,we talk about a little bit before, in the case of a criminal matter for example,one of the things that we generally don't get into in prosecuting is adebate over medical judgment.
the use of a-- the administer--administration of any particular service, if there is a reasonable debate among physiciansabout whether it's medically necessary, that ordinarily doesn't lenditself into a criminal case. much of what we see and what's been prosecutedin our office are the traditional sort of bread and butter fraudulent billingschemes, physicians who are billing as if they saw a patient in the officewhen they're actually in california or in las vegas or-- and thatwe have plenty of examples that i'm gonna give you acouple of examples as well. but in terms of sort of every one here in theroom and who's watching the broadcast, you know,
one of the most important factors asprosecutors that we're directed to look at in our prosecution guidelinesespecially for organizations is first of all did the organizationhave a compliance program. >> what type of compliance programwas it and was it a paper program or was it one that had real teeth? was it actually a program where peopleunderstood and knew what the rules were and were expected to follow them? was there accountability in this program? was there an oversight function?
these are very important factors that we look atin deciding whether an organization itself ought to be the target and defendit in a criminal case. it's not the only factor that we look at. there are other issues as well. no company has a perfect compliance program. if that were the case, we probably wouldn'tbe talking to them about what happened or what went wrong in any particular case. but it is very important in understandingand identifying criminal conduct to figure out how it happened, howthey were able to escape
or work through whatevercompliance function existed. and if it was caught or detected, was anythingdone about it or did some compliance person or did someone in management who was alertedto the possibility of some problem follow up on or take action or was the compliance functiontreated sort of as an unwanted interference or sometimes i like to refer to itas the sales prevention department. is this a kind-- is this the kindof organization we're talking about? are we talking about an organizationwith a robust compliance program? i wanted to-- i'm gonna give you just, you know,a couple of examples of some fraudulent cases that we prosecuted and i wanna giveyou two cases that we didn't prosecute
in significant part because of the role that a compliance programplayed in that particular case. one is a case involving a dr. ronald bailey. he was a behavioral specialist consultant. he was recently sentencedto prison in philadelphia. and dr. bailey was an independentcontractor for two nonprofit organizations in southeastern pennsylvaniathat receive medicaid funds. and he's job was to provide counseling servicesprimarily to autistic children and he was paid on a-- 45 dollars an hour was his rate.
and so he was required to submit timecardsand summarizing, you know, the hours. well, unfortunately, dr. bailey submittedto each agency that he worked for timecards that overstated the amount of hours he wasspending counseling children and families. and so this went on for quitesome time and one of the-- and in these agencies, they began toreview his billings and then realized that he was working two separate placesand these two compliance folks communicated with each other and recognized that because hewas working two different places they wanted to take a further look into apossibility there might be some issue. and so the compliance functionexamined and sort of shared information,
cross referenced his billing and whatdo you know, dr. bailey claimed to be at two different places at the exact sametime counseling two different children. so they did a full blown audit, analyzed andassessed what they thought the over payment was and the loss to the medicaid program. they hired outside counsel whocalled me and we-- i called hhs. we did an investigation along with our partners at the state attorney general'smedicaid fraud control unit and quickly brought the case to a resolution. dr. bailey pled guilty.
each of these two agencies made themedicare program whole, repaid the money and neither one of them was prosecuted. in theory, as a technical matter,they could have been prosecuted. they're liable for the falsebillings, the fraudulent conduct. but because they made proactivesteps, they didn't just ignore it. when they came across a problem theymade a referral and a self disclosure. that was an important factor inthat case in deciding what to do. another case, it's an ongoingcase in philadelphia. a physician, an ophthalmologist was charged ina 144-count indictment with health care fraud
and making false statements and medical records. in that case, the compliance department ofthis health system did an internal audit, analyzed his billings, had a team of auditorsworking and discovered that this physician, while claiming to be at the hospital seeingpatients, was actually either on leave or at cme conferences on theother side of the country or in a different office aspart of this health system. they made a referral to hhs andto the us attorney's office. we did a thorough investigation and lookedinto the conduct and made a decision that we would only charge the physicianand would not charge this health system,
this health care providerwith any criminal activity. does that mean you don'thave to pay the money back? of course not, they're gonnahave to repay the money. they're working on a false claims actsettlement with our civil division. but at-- you're in a much betterposition i think dealing with the civil and administrative side, then youwanna be in the criminal side. and with the criminal side, it's just notjust the issue of a financial conviction, you got to be concerned about thereare all these collateral consequences. obviously, we can't put companiesin jail but we do prosecute them
and one of the reasons we prosecutecorporations is to send a message of deterrence. and in certain cases where theconduct rises to a pervasiveness and a level involving a significant manageror operator of one of these organizations, just prosecuting the individuals isn't enough. and another reason we'll do it isbecause of the administrative sanctions. i mean you've heard a lot today aboutthe exclusion authority and companies and entities just like individuals convictedof health care fraud can be excluded and there are times and appropriateplaces when that should happen. and that is a serious, a serious potential riskand consequence for any health care provider
in terms of deciding whether you're gonnahave a compliance program and then secondly, how rigorous and robust it's gonna be. so, you don't wanna wait until you find outor learn about someone in your organization, some provider that you'redealing with engaging in fraud. you wanna think at some of theterrific panels i've talked about today, what does my compliance program look like? what's a federal prosecutor gonna think aboutit 2 years from now after agents show up and do a search warrant and have oneof our doctors and one of our nurses in the crosshairs of a criminal case?
what is-- what are the-- what's the departmentof justice, what's a prosecutor gonna think when they begin talking tomy compliance director, when they begin asking whetherwe have auditors who went out and did on their own audits tolook into billing anomalies? you know, were there red flagsalong the way that were, you know, not going to be followedup on or that were ignored. because in very one of thesecases, those are the kinds of things the prosecutors are gonna look for. they're not just gonna think,alright, we've charged the nurse,
we've charged the doctor, our job is done. in any of these cases withlimited resources that we have, we want to send a sign of deterrence. we want to identify all the wrongful conduct. and not just that, we want to figureout how it happened and why it happened. and so, you know, those are someof the most significant factors. i mentioned the third point andi wanted to talk about briefly, and that is reaching out to all of you. i'm happy to talk with anyof you about what we're doing
and encourage you to reachout to us at any time. i'm getting a threat of exclusionby one of our distinguished guests. so, before i'm excluded i will endmy remarks and thank you very much. [ laughter ]
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