Moving the HME Industry Forward

General Healthcare

How a Federal Prosecutor Thinks – Part 1 of 3

May 19, 2014

AMARILLO, TX – The DME industry, in its present form, has been around for about 35 years. We are a young industry. The DME industry grew up unregulated. Hardly anybody on Capitol Hill, or in Baltimore, knew what the industry did. It is as if Congress and CMS woke up about seven years ago and declared: “What is this industry and why are we paying it money?“ As the government seems to always do, it overreacted.

Now the DME industry is being hit with a “perfect storm” of events: (i) competitive bidding; (ii) stringent documentation requirements; (iii) post-payment audits; and (iv) prepayment reviews. In addition, the U.S. Department of Justice and the Office of Inspector General are becoming much more aggressive in bringing investigations against DME suppliers.

Part 1 of this 3 part series discusses qui tam lawsuits. Part 2 discusses prosecutorial discretion, how to avoid being a target, and signs that you are a target. Part 3 discusses responsive steps, resolution of a civil proceeding, and resolution of a criminal proceeding.

Qui Tam Lawsuits
Many investigations are a result of a qui tam (whistleblower) lawsuit. This is when a disgruntled ex-employee, or disgruntled current employee, files a federal lawsuit against the DME supplier. The lawsuit will be in the name of the current/ex employee (“relator”) and in the name of the U.S. The qui tam lawsuit will be based on the federal False Claims Act. It is the position of the DOJ that if the DME supplier commits an act that violates any law (civil or criminal), and if the supplier eventually submits a claim to a government health care program (in which the claim directly or indirectly is related to the acts), then the claim is a “false claim.”

Under the FCA the DME supplier (and its individual owner) can be liable for actual damages, treble damages, and between $5500 to $11,000 per claim. The qui tam lawsuit will go “under seal,” meaning that nobody (except for the DOJ) will know about it. An Assistant U.S. Attorney (in the jurisdiction in which the qui tam is filed) will review the lawsuit and will ask investigative agents (FBI, OIG) to investigate the allegations set out in the qui tam suit.

The agents may talk to other current or ex-employees. The agents may talk to patients and referring physicians. The agents may talk to others who may have information regarding the allegations set out in the qui tam. After they conduct their investigation (which may take up to a year), then the AUSA will decide whether or not to “intervene.” By “intervening,” the AUSA will take the lawsuit over and the relator’s attorney can sit on the sidelines.

Assume that the AUSA intervenes. When this happens, then the DME supplier will be made aware of the existence of the qui tam. A qui tam is a civil lawsuit. If the DME supplier is found to be liable, then it can be required to pay money and enter into a Corporate Integrity Agreement. An owner or officer of the DME supplier may be “excluded” from participating in a government health care program.

Here is where things can get to be a bit scary. The AUSA may open up a “parallel criminal file.” The purpose of the criminal file is to determine if any of the DME supplier’s acts constitute a crime. This is when a person can end up serving some time in “Club Fed.” In fact, many criminal cases brought against DME suppliers result from qui tam lawsuits. The reason for this is because the DOJ has limited the resources to “look for” fraud.

There are only approximately 93 U.S. Attorney’s Offices throughout the U.S. Each office has a politically-appointed U.S. Attorney and then has multiple AUSAs. Some AUSAs handle drug cases; others handle violent crime; others handle human trafficking; others handle financial institution crime; others handle health care fraud; and so on and so forth. In short, the DOJ does not have limited resources to go “seek out” health care fraud.

And so this is where qui tams come in. Essentially, the DOJ has “outsourced” or “subcontracted out” the “seeking out” of health care fraud to private citizens: disgruntled ex and current employees. The take-away is that the DME supplier lives in a glass house. The DME supplier cannot hide anything. Truth will always bubble to the surface. If the DME supplier is doing something it should not be doing, then an employee knows about it.

If the DME supplier ends up settling with the DOJ, and paying a great deal of money, then the qui tam relator will end up receiving between 15% to 20% of the proceeds. Considering the large amount of money that can be collected under the FCA, this provides a large incentive for disgruntled ex or current employees to bring qui tams.

Todd Moody will be co-presenting a webinar for AAHomecare this week. It focuses on Accountable Care Organizations. See information listed below:

Accountable Care Organizations: What they Mean to DME Suppliers
Todd A. Moody Esq., Brown & Fortunato, P.C.
Alan Morris, HealthCall

Tuesday, May 20, 2014
2:30-4:00 p.m. EASTERN TIME

Sign up now for Accountable Care Organizations: What They Mean to DME Suppliers on Tuesday, May 20, 2014, 2:30-4:00 pm ET, with Todd A. Moody Esq., an attorney with the Health Care Group of Brown & Fortunato, PC and Alan Morris, Director of Business Development with HealthCall.

Please note: we have adopted a new online meeting registration system; please contact Ika Sukh at if you experience any difficulties registering.

FEES: Member: $99
Non-Member: $129

Jeffrey S. Baird, JD, is chairman of the Health Care Group at Brown & Fortunato, P.C., a law firm based in Amarillo, Texas. Bradley W. Howard, JD, is chairman of the Litigation Group at Brown & Fortunato, P.C.  They represent pharmacies, HME companies, and other health care providers throughout the United States. Baird is Board Certified in Health Law by the Texas Board of Legal Specialization. Howard is Board Certified in Labor and Employment law by the Texas Board of Legal Specialization. Baird can be reached at (806) 345-6320 or Howard can be reached at (806) 345-6310 or