The Department of Justice’s National Fraud Enforcement Division recently announced the formation of the West Coast Health Care Fraud Strike Force, an enforcement initiative that spans the District of Arizona, District of Nevada, and Northern District of California.  In addition to the inter-district cooperation with the Fraud Division, the West Coast Strike Force will partner with the Health and Human Services (“HHS”) Office of Inspector General, the Federal Bureau of Investigation (“FBI”), and the Drug Enforcement Administration (“DEA”) to coordinate investigations and enforce federal law.

DOJ emphasized that its decision to create the West Coast Strike Force was driven by data demonstrating a proliferation in health care fraud across the three districts.  The Northern District of California is home to several health care technology hubs, and per DOJ, data demonstrates that potential bad actors are migrating to Arizona and Nevada to target vulnerable populations such as the elderly and those suffering from addiction. 

The announcement follows several recent high-profile prosecutions that illustrate the types of schemes the West Coast Strike Force will target.  These include: 

• The conviction of a digital health technology company’s CEO and Chief Medical Officer in the Northern District of California for an over $100 million health care fraud and controlled substance distribution scheme.
• The sentencing of two wound graft company owners in Arizona for a $1.2 billion Medicare and Medicaid fraud scheme.
• The conviction of a Silicon Valley medical technology company president for the first criminal COVID-19 health care fraud case brought to trial.

Key Takeaways for the Health Care Industry

• Perhaps now more than ever, health care companies should understand where heightened risk exists within their business and ensure that their internal reporting and investigation procedures are current and robust.
• Companies should understand the benefits and risks of voluntary disclosure to law enforcement under DOJ’s first-ever department-wide Corporate Enforcement and Voluntary Self-Disclosure Policy.  The policy offers benefits to companies, including declination, while seeking to hold culpable individuals accountable.
• Technology and digital-health companies, as well as hospice and associated health care providers, face distinct exposure and should expect intensified scrutiny of their billing models, clinical oversight structures, and controlled substance distribution practices.
• Given the inter-agency cooperation with the FBI, HHS, and DEA—in addition to any state or False Claims Act investigations—parallel investigations will be the norm.  Health care companies should ensure they coordinate their strategies in this enforcement environment, as disclosures made in one proceeding can have significant consequences in another.

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Additional Author: Anthony R. Todd