3 Critical Steps to Take Today If You Face a Healthcare Fraud Investigation

Step One: Immediately Freeze Your Records and Identify All Potential Evidence Sources

In my 25 years as a federal prosecutor, I saw countless defendants destroy their own cases before they even understood the charges. The first critical step you must take today is to issue an immediate litigation hold across your entire organization, your home office, and any third-party vendors that handle your billing or clinical documentation. Under the Sarbanes-Oxley Act, specifically 18 U.S.C. § 1519, any person who knowingly alters, destroys, mutilates, conceals, covers up, falsifies, or makes a false entry in any record, document, or tangible object with the intent to impede, obstruct, or influence a federal investigation faces up to 20 years in federal prison. I have personally prosecuted physicians who deleted patient files from their electronic health record systems after receiving a subpoena, and they went from facing a healthcare fraud charge to facing a separate obstruction charge that carried a mandatory minimum sentence.

You need to identify every potential source of evidence that the government will inevitably subpoena or seize. This includes not just patient charts and billing records, but also your email accounts, text messages, Slack channels, practice management software logs, prescribing records from the Prescription Drug Monitoring Program, and any communications with marketing vendors, referral sources, or management service organizations. The government's investigative team, typically composed of FBI agents, Health and Human Services Office of Inspector General special agents, and Assistant United States Attorneys from the Healthcare Fraud Unit, will have already executed subpoenas on your clearinghouse, your billing company, and your major payors before you ever receive a target letter. They are building a timeline of your billing patterns, and they will compare your documentation against the services you billed to Medicare, Medicaid, TRICARE, or private insurers.

You must also preserve metadata and electronic discovery. Under the Federal Rules of Civil Procedure, specifically Rule 37(e), if electronically stored information that should have been preserved in the anticipation or conduct of litigation is lost because you failed to take reasonable steps to preserve it, the court may impose severe sanctions, including an instruction that the jury may presume the lost information was unfavorable to you. In a criminal context, the destruction of metadata—such as timestamps showing when a progress note was actually written versus when it was backdated—can be devastating during cross-examination. I have seen Assistant United States Attorneys use metadata evidence to prove that a physician wrote a visit note six months after the purported date of service, which directly supports an inference of fraudulent intent.

Do not assume that records stored by third parties are safe or that you have no obligation to preserve them. If you use a cloud-based electronic health record system, you must immediately notify the vendor in writing to preserve all data, including deleted files, audit logs, and version histories. The government will serve a preservation letter on that vendor, and if the vendor destroys data because you did not instruct them otherwise, you will bear the consequences. In one case I handled, a medical practice lost its ability to defend itself because the EHR vendor automatically purged records after 90 days, and the practice had not issued a litigation hold. The government's expert witness testified that the missing records were consistent with upcoding, and the jury returned a guilty verdict on 14 counts of healthcare fraud.

Step Two: Retain Counsel with Specific Healthcare Fraud Defense Experience Before You Respond to Anything

The second step is non-negotiable: you must retain federal criminal defense counsel who has specific experience defending healthcare fraud investigations, not just general white-collar crime experience. Healthcare fraud cases are prosecuted under a unique statutory framework that includes the Health Care Fraud Statute, 18 U.S.C. § 1347, the Anti-Kickback Statute, 42 U.S.C. § 1320a-7b(b), the Stark Law, 42 U.S.C. § 1395nn, and the False Claims Act, 31 U.S.C. § 3729. Each of these statutes has its own elements, safe harbors, and exceptions that require specialized knowledge. A general criminal defense attorney will not know the difference between a permissible gain-sharing arrangement and a kickback scheme, and that ignorance could cost you your freedom and your medical license.

When you interview potential counsel, ask specific questions about their experience with the federal sentencing guidelines for healthcare fraud under U.S.S.G. § 2B1.1, which includes a loss table that dramatically increases the offense level based on the intended loss. In healthcare fraud cases, the loss amount is often calculated based on the total amount billed, not the amount actually paid, which can inflate the guidelines range by decades. I have seen defendants who billed $2 million but were only paid $400,000 face a guidelines range of 78 to 97 months because the government argued the intended loss was the billed amount. Your attorney must know how to challenge that calculation under the Supreme Court's decision in United States v. Banks, which held that intended loss must be reasonably probable, not merely possible.

Your attorney must also understand the administrative consequences that run parallel to the criminal investigation. While the criminal case is pending, the Department of Health and Human Services can initiate an exclusion action under 42 U.S.C. § 1320a-7, which bars you from participating in any federal healthcare program. An exclusion is often more devastating than a criminal conviction because it ends your ability to treat Medicare and Medicaid patients, and many private insurers follow the federal exclusion list. Your defense counsel must coordinate with an administrative law attorney who can simultaneously defend you in the exclusion proceeding, because the standard of proof is lower—preponderance of the evidence rather than beyond a reasonable doubt—and the government can exclude you even if you are never criminally charged.

Do not attempt to handle any aspect of this investigation on your own, even if you believe you are innocent. I have represented physicians who were certain that a simple billing mistake would be resolved with a refund, only to discover that the government had already obtained a sealed indictment based on whistleblower complaints filed under the False Claims Act's qui tam provisions, 31 U.S.C. § 3730. The whistleblower, often a former employee or a competitor, may have provided the government with documents, recordings, or testimony that you have never seen. Only an experienced defense attorney can request a proffer session under Federal Rule of Criminal Procedure 11(c)(1)(B) to present your side of the story without waiving your Fifth Amendment privilege against self-incrimination.

Step Three: Do Not Communicate with Anyone About the Investigation, Including Your Staff, Partners, or Insurers

The third critical step is to impose a complete communications lockdown regarding the investigation. Under Federal Rule of Evidence 801(d)(2), any statement made by you or by an employee acting within the scope of their employment is admissible against you as an admission by a party opponent. This means that if you discuss the investigation with your office manager, and she later speaks to FBI agents, her recollection of your conversation can be introduced as evidence against you. I have prosecuted cases where a defendant's casual comment to a billing clerk—"just code it as a higher level visit, they never check"—became the centerpiece of the government's case-in-chief, because the clerk testified under immunity about what she heard.

You must also instruct your staff, partners, and contractors that they are not to speak with investigators, auditors, or anyone from the Office of Inspector General without your attorney present. The government frequently uses "knock and talk" visits where agents show up at your clinic unannounced and ask to speak with your front desk staff. Your employees, who are not trained in criminal procedure, will often believe they are required to answer questions. They are not. Under the Fifth Amendment, no person can be compelled to be a witness against themselves, and this protection extends to corporate employees who may face individual liability. You should provide your staff with a written directive that all inquiries from law enforcement must be directed to your attorney.

Do not contact your Medicare Administrative Contractor, your commercial insurers, or the state Medicaid agency to "explain" the billing patterns that are under investigation. Any communication you make to a payor can be used as substantive evidence of your state of mind under Federal Rule of Evidence 803(3), which allows the admission of statements that show your then-existing intent, motive, or plan. If you call your insurer and say, "I realize we may have made some coding errors, but it was unintentional," that statement can be introduced to show that you knew there was a problem, which directly contradicts a defense of good-faith mistake. I have seen defendants attempt to self-report perceived overpayments under the Affordable Care Act's 60-day repayment rule, only to have those self-disclosures used as admissions of liability in a subsequent criminal prosecution.

Finally, do not discuss the investigation with your personal physician, your therapist, your clergy, or your spouse without understanding the limits of privilege. While attorney-client privilege is absolute, the spousal privilege under Federal Rule of Evidence 501 is limited and does not apply to communications about ongoing or future crimes. If the government can prove that you discussed continuing to submit false claims with your spouse, those communications are admissible. The only safe person to discuss the investigation with is your attorney, and even then, you must be careful about what you put in writing. Email communications with your attorney are protected by the attorney-client privilege, but if you forward that email to a third party, you waive the privilege. In today's digital world, the government will obtain your emails through a search warrant or subpoena, and they will scrutinize every communication for evidence of consciousness of guilt.

Building Your Defense Strategy Before the Indictment Arrives

While the three steps above are critical for immediate action, you must also begin constructing your long-term defense strategy during the pre-indictment phase, which is the most valuable period in any healthcare fraud case. The government typically investigates for 12 to 24 months before seeking an indictment, and during that time, your attorney can engage in what is known as a "pre-indictment presentation" to the United States Attorney's Office. Under Department of Justice policy, as outlined in the Justice Manual Section 9-27.300, prosecutors have the discretion to decline prosecution if the evidence does not support a viable case. Your attorney can present exculpatory evidence, expert declarations, and legal arguments showing that your billing practices fell within recognized safe harbors or that you had a good-faith basis for your coding decisions.

One of the most effective pre-indictment strategies is to conduct an independent internal investigation using a forensic accountant who specializes in healthcare reimbursement. The forensic accountant can analyze your billing data against your clinical documentation to identify any patterns that might appear suspicious to the government, and then help you correct those patterns before the government files charges. Under the U.S. Sentencing Guidelines Section 3E1.1, a defendant who accepts responsibility can receive a two-level reduction in their offense level, and if you voluntarily disclose misconduct before an indictment is filed, you may qualify for the even larger reduction under Section 5K1.1 for substantial assistance. However, this strategy must be carefully managed by your attorney, because voluntary disclosure can also waive your Fifth Amendment rights if not done correctly.

You should also begin identifying expert witnesses who can testify about the complexity of healthcare coding and the frequency of inadvertent errors in medical documentation. The government's case almost always relies on a statistical sampling expert who extrapolates a small number of audited claims to an entire billing universe. Under the Supreme Court's decision in United States v. Daas, the government can use statistical sampling in civil False Claims Act cases, but in criminal cases, the prosecution must still prove each alleged false claim beyond a reasonable doubt. Your expert can challenge the government's sampling methodology, the auditor's qualifications, and the reliability of the extrapolation, which can create reasonable doubt in the minds of jurors who are not familiar with medical coding complexities.

Finally, you must prepare for the possibility of a search warrant execution, often called a "raid." If federal agents execute a search warrant at your home or office, do not interfere, do not destroy anything, and do not attempt to explain anything to the agents. Simply state, "I am exercising my right to remain silent and I request my attorney." Under the Fourth Amendment, you have the right to be present during the search, but you do not have the right to prevent the agents from seizing items listed in the warrant. Your attorney can later file a motion to suppress evidence under Federal Rule of Criminal Procedure 41 if the warrant was overbroad or lacked probable cause. In my experience, the moments during a search warrant execution are when defendants make the most damaging statements, because they are frightened, confused, and believe that cooperating will make the agents go away. It will not. The agents are there to collect evidence, and anything you say will become part of that evidence.

If you are facing a healthcare fraud investigation, the decisions you make in the next 48 hours will determine the trajectory of your case for years to come. I have seen too many healthcare professionals lose their practices, their licenses, and their freedom because they tried to handle the investigation on their own or because they waited too long to retain experienced counsel. The federal government has unlimited resources, a dedicated Healthcare Fraud Unit, and a conviction rate above 90 percent in healthcare fraud cases. You need someone who has stood on both sides of the courtroom and who knows exactly how the government builds its case. Contact our firm today for a confidential consultation. We will review your subpoena or target letter, assess your exposure under the federal sentencing guidelines, and develop a comprehensive defense strategy that protects your liberty, your license, and your livelihood. Do not wait until the agents are at your door.