04/23/2025

Department of Justice Continues Recoupments from the Pockets of Executives

Published by Elizabeth Hogue, Esq.

The former Director of Medicare Risk Adjustment Analytics at HealthSun Health Plans, Inc.; a Medicare Advantage Plan; was charged in a six-count indictment with Conspiracy to Commit Health Care Fraud and Wire Fraud, Wire Fraud, and Major Fraud Against the United States. The indictment alleges that she directed a scheme to submit false risk adjustment data to the Centers for Medicare and Medicaid Services (CMS). The Director and coders whom she supervised obtained the login credentials assigned to some physicians. They then accessed electronic medical records and entered false diagnoses directly into patients’ medical records. 

At the same time, the U.S. Department of Justice (DOJ) announced that it had decided not to prosecute the Medicare Advantage Plan. This decision was based on the Plan’s prompt voluntary self-disclosure, cooperation remediation, and agreement to pay CMS approximately $53 million in overpayments. This case makes it clear that the DOJ is determined to go after individuals even when it decides not to pursue the corporations for which they work.

These actions are based on the DOJ’s policy aimed at pushing the costs of corporate non-compliance into the pockets of executives through the recoupment of fines and penalties from individual executives. In addition, the DOJ’s criminal division will give discounts on fines to providers that try to claw back compensation from wrongdoers. According to the DOJ, providers seeking to resolve investigations will also have to implement plans that include compliance goals as part of compensation and bonuses.

A representative of the DOJ said, “Our goal is simple: to shift the burden of corporate wrongdoing away from shareholders, who frequently play no role in misconduct, onto those directly responsible.” In other words, executives of corporations that engage in wrongdoing will no longer remain unscathed.

Providers will receive discounts on penalties tied to the size of claw backs and will be allowed to retain a portion of the money if they make good faith efforts to recoup monies, even if they are unsuccessful. The DOJ says, “If you are going to create a culture that calls out misconduct and promotes compliance, you need people to have skin in the game.” 

The initiative described above expands the reach of the so-called “Yates Memo,” entitled “Individual Accountability for Corporate Wrongdoing.” The memo made it clear that fraud enforcers will act aggressively against individual executives of healthcare companies, even if they did not know about fraudulent conduct. 

According to the DOJ, companies are required to disclose all relevant facts related to individuals responsible for misconduct so that action can be taken against these individuals. No credit for cooperation that may reduce providers’ civil or criminal penalties will be given unless all responsible individuals are identified to enforcers.

The DOJ previously made it clear in the “Holder Memo” that “prosecution of a corporation is not a substitute for the prosecution of criminally culpable individuals within or without the corporation."  The rationale for this policy is that criminal liability of individuals is a strong deterrent against future corporate wrongdoing. 

The Yates Memo establishes six requirements for federal prosecutors regarding individual prosecutions:

1. Providers must give the DOJ all relevant facts related to individuals responsible for misconduct.
2. Criminal and civil corporate investigation must focus on individuals from the inception of investigations.
3. Civil and criminal attorneys handling corporate investigations on behalf of the government should routinely communicate with each other.
4. The DOJ will not ordinarily release culpable individuals from civil or criminal liability when resolving allegations of misconduct with corporations.
5. The DOJ should have clear plans about how to resolve individuals’ cases before they resolve matters with corporations.
6. Civil enforcement attorneys must consistently focus on individuals and evaluate whether to bring suit against them based on considerations other than the ability to pay.

In other words, “Step up and own up!”

©2025 Elizabeth E. Hogue, Esq. All rights reserved.
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