A thorough and privileged internal investigation revealed that your company overbilled the government by more than $50 million and that the fraud was directed by senior management. What next? Following his recent resignation from HealthSun, along with other corrective actions, he must self-disclose under the Department of Justice’s Voluntary Self-Disclosure Policy.
The Department of Justice’s (DOJ) decision to decline to prosecute HealthSun Health Plans for Medicare Advantage fraud demonstrates the significant benefits of timely self-disclosure under the new Voluntary Self-Disclosure Policy. The Florida-based health insurance company voluntarily disclosed a long-standing and serious fraud scheme operating within the company, resulting in the Department of Health and Human Services’ Centers for Medicare and Medicaid Services (CMS) indicting HealthSun. This resulted in millions of dollars in overpayments over five years. Despite these serious allegations, on October 25, 2023, The Department of Justice sent a dismissal. In a letter to HealthSun’s attorneys, it specifically noted the company’s timely disclosure and proactive cooperation in this matter. Results like these demonstrate the importance of strong compliance programs and internal investigations, as well as self-disclosure of potential criminal charges, for businesses in every region of the country.
A government investigation conducted with significant assistance from HealthSun revealed that from 2015 to early 2020, HealthSun’s former director of Medicare risk adjustment analysis fraudulently increased payments from CMS to Medicare Advantage enrollees. Evidence has been discovered of a plan to do so. HealthSun received approximately $53 million in overpayments for submitting false medical certificates for chronic conditions to Medicare Advantage plan participants. On October 26, 2023, the Department of Justice separately indicted the former Secretary on one count of conspiracy to commit health care fraud, two counts of wire fraud, and three counts of mass fraud against the United States. Meanwhile, HealthSun received a complete dismissal of the charges and was not required to hire a compliance monitor.
HealthSun avoided criminal liability as an organization by fully complying with the Department of Justice’s Voluntary Self-Disclosure Policy. As of February 2023, this policy set a national standard for all U.S. Attorney’s Offices to incentivize companies to voluntarily self-disclose wrongdoing. All agencies require that 1) in the absence of aggravating factors, the government will not require a guilty plea if a company voluntarily self-discloses criminal conduct, cooperates fully, and remediates in a timely manner; In some cases, governments will not impose compliance oversight if a company demonstrates that it has an effective compliance program in place. Here, the government has put its money where its mouth is and set a good example for future corporate decline.
This national standard, which encourages voluntary disclosure, gives companies a significant incentive to strengthen their compliance and internal investigation programs. That is why all potential criminal charges must be thoroughly investigated. In fact, ignoring signs of criminal activity can expose a company to potentially huge liability, whereas self-disclosure can significantly reduce that liability. Companies across the country can expect similar treatment from their local U.S. attorney’s offices if they disclose potential violations of the law early and cooperate.
HealthSun’s resignation required the company to repay approximately $53 million that it improperly collected as a result of the alleged fraud. However, if the Department of Justice had discovered the wrongdoing without Health Sun’s help (e.g., through whistleblowing), it would undoubtedly have faced criminal charges and millions of dollars in fines. Triple damages for violating the False Claims Act. For many people, this can be the difference between staying in business and going bankrupt.
The importance of self-disclosure goes hand-in-hand with the need for strong compliance programs and active internal investigations. The benefits of voluntary self-disclosure are not realized unless a company first discovers potential criminal activity. Situations like HealthSun highlight the risks companies take when they don’t fully investigate suspicious activity. The risks posed by Department of Justice investigations into unreported corporate misconduct far outweigh the costs of conducting internal investigations and self-reporting findings.
The Justice Department’s decision to decline to prosecute HealthSun is the latest example of the department’s renewed commitment to a nationally standardized voluntary self-disclosure policy for corporate crimes. The Department of Justice specifically emphasized the importance of HealthSun’s timely disclosure, full cooperation with the investigation, and immediate correction of the Medicare Advantage program’s internal controls. Current Department of Justice policy is that it is in every company’s best interest to thoroughly investigate any signs of corporate criminal activity and disclose the findings to the Department as soon as possible. Now that the charges are expected to be completely dismissed, the decision to investigate and self-disclose may save the company.
