A Physicians Guide to Surviving an Administrative Investigation

by Robert S. Bennett and David M. Medearis

In recent years many of the federal and state agencies that regulate how physicians must practice have become increasingly vigilant in their investigation and enforcement activities. To many physicians, increased regulatory scrutiny presents new problems, since it invariably means that more competent, honest physicians will find themselves targets of administrative investigations or disciplinary actions. How a physician deals with this problem—particularly in the initial stage of an investigation—can mean the difference between a closed investigation and an extended court battle.    This article provides a brief overview of some of the agencies that regulate physicians and describes recent developments underway by these agencies. The agencies discussed include the Texas State Board of Medical Examiners (TSBME), the Department of Health and Humans Services of Inspector General (OIG), as well as several state agencies under the direction of the Texas Attorney General. This article concludes with some practical suggestions on how the prudent physician should respond if under investigation by one of these agencies. 

The Texas Board of Medical Examiners

The Texas Board of Medical Examiners has made sweeping changes in its approach to regulating physicians. Prompted in part by a series of news articles in the Dallas Morning News, which criticized the TSBME as too soft, the new TSBME director, Dr. Donald Patrick, addressed these criticisms by promising a tougher, more aggressive board. Last year, the TSBME started to make good on that promise. The number of suspensions, license restrictions, and fines against Texas physicians nearly doubled from 142 cases in 2001 to 241 in 2002. Dr. Patrick recently stated that in 2003, the TSBME intends triple its load of malpractice investigations in order to remove from practice those physicians responsible for serious medical errors. In addition, the TSBME recently voted to go forward with a plan to establish periodic competency testing of Texas physicians.

Department of Health and Humans Services Office of Inspector General

The Department of Health and Humans Services Office of Inspector General (OIG) is the federal agency that pursues administrative and civil penalties against violations of health care laws or any other activities that endanger Medicaid or Medicare beneficiaries. The United States Attorney General recently stated that the detection and prevention of health care fraud is one of the federal government’s top priorities.  The OIG has shown a particular interest in recent years in increasing scrutiny of physician billing practices, referral arrangements, and gifts from the pharmaceutical industry.

Administrative and civil remedies through the OIG are often pursued instead of criminal remedies since these case are generally easier for the government to win. Compared with criminal cases, administrative and civil remedies through the OIG offer the government the advantage of more favorable discovery rules and a lower standard of proof. Thus, in many instances, the Department of Justice may refer cases over to the OIG. While it may provide some relief to a provider when this happens, administrative proceedings by the OIG are by no means to be taken lightly—fines can be exorbitant and exclusion from participation in federal health care programs such as Medicare and Medicaid can be the equivalent of a professional death sentence. One of the most potentially devastating powers that the OIG has over providers, who rely on Medicaid and Medicare patients, is its authority to withhold payments to an individual or entity even before an investigation has been concluded. Furthermore, the OIG can refer cases to the Department of Justice for criminal prosecution if the evidence of criminal intent is compelling. 

State Agencies

State and federal law enforcement authorities generally work together to oversee Medicaid compliance. Texas law grants the Texas Attorney General broad authority to impose monetary and administrative sanctions for violations of the Texas Medicaid Fraud Prevention Act (TMFPA), which in many ways mirrors federal health care laws. The Texas Attorney General has established the Medicaid Fraud Control Unit (MFCU), the Texas Health & Human Services Commission's Medicaid Program Integrity (MPI), and the Elder Law and Public Health Division (ELPH) to investigate and prevent health care fraud and abuse.

The MFCU conducts criminal investigations into potential violations of state and federal Medicaid laws and related misconduct of providers. By contrast, the MPI, like the OIG, has the authority to impose civil and administrative sanctions on providers, including 1) exclusion from Medicare and Medicaid programs for a specified period of time; 2) suspension of payments; 3) recoupment of overpayments; 4) recoupment of projected overpayments; 5) restricted reimbursement; and 6) civil monetary penalties. Finally, the ELPH investigates abuse to the elderly and inspects nursing homes. The ELPH also has authority to investigate and prosecute civil Medicaid fraud claims and may also refer cases to MFCU for criminal prosecution.

Surviving The Investigation

A physician’s initial response to an administrative investigation can often make the difference between an investigation being closed and an protracted legal battle. If the investigation is by the Texas State Board of Medical Examiners (TSBME), it usually begins with a notice requesting records or a response to specific allegations. Sometimes an investigation can also begin with a letter from your Medicare carrier requesting information. In either case, it is usually best to contact your attorney immediately and fax him or her the letter. Although most health care providers have done nothing intentionally wrong, the inquiry often throws them off balance or makes them angry. This can result in poor judgment. For instance, many physicians ignore such letters or throw them away. Though this may seem hard to believe, it happens. A reaction like this of course only makes matters worse since the problem is not going to just go away. In instances where agents actually show up at a provider’s office, the pressure is more intense. Providers who are convinced of their own innocence may “spill their guts.” In the other extreme, providers equally convinced they have done nothing wrong may act overly defensive, be uncooperative, or even hostile. This can lead to additional charges and increased suspicion. For instance, providers who do not let agents in or who tell their employees not to speak to agents face potential fines or imprisonment for obstruction of justice. 

They key to getting through an administrative investigation is to remain calm, professional, and polite, but at the same time to act prudently. The first thing a provider should do when dealing with government agents, is to identify the agent in charge and ask to read the documents authorizing the search. These documents will usually be a request for medical records, a subpoena (generally from the OIG), or a search warrant. Your rights, and the rules the agents must follow, are different depending on what type of document authorizes the search. If the authorization is only a request for records or an agency subpoena, the agents are generally not entitled to immediate access or entry. On the other hand, if they present you with a valid search warrant issued by a judge or magistrate, they are entitled to immediate entry and access to your records.  

If the agents do not present a search warrant, or if for some reason you believe the warrant is invalid, you should assure the agents of your willingness to cooperate, but point out that since you do not believe the document authorizes an immediate search, you would like to wait for your attorney to arrive to assist them with gathering the appropriate documents. In these circumstances most agents will generally agree to wait for your attorney. However, if they still insist on immediate access, it is generally unwise to try to stop them. This is true even if they do not have a valid search warrant. In such a case, you should maintain (preferably in front of witnesses) that you are allowing them to search under protest. Then call your attorney. If the agents do present a valid search warrant, it still does not hurt to ask if they would mind waiting for your counsel to arrive. It is unlikely, however, that they will grant such a request without a good reason to do so. Under no circumstances should you try to interfere with or intimidate agents. As mentioned previously, such conduct may led to fines or imprisonment for obstruction of justice.

While you do not want to interfere with agents conducting a search, you do want to monitor their search. If the agents commence the search before your attorney arrives you should nonetheless try to have your attorney there as soon as possible to help monitor the search or at the very least interview everyone who witnessed the search. This should be done as soon as possible while memories are still fresh. If your attorney cannot be present for whatever reason, you should still play an active role in observing how the agents conducted the search. You can start by getting the name of each agent and assigning a staff member to monitor each agent. Your goal should be to document the search as best as possible. If a camera is handy, document the search on film.

While it is very important not to interfere with the search, if certain documents go beyond the scope of the agents’ warrant, or you believe they are privileged documents, you should make a record of your objection and request the questionable documents be boxed separately and marked “privilege claim asserted.” You should also arrange to have copies made of all documents or computer files taken by agents and make a detailed inventory of all items. Although the agent in charge is required to provide you with an inventory, you should not rely on this, since agents typically provide only a general list, which is not very helpful.

Proper monitoring of the search provides several advantages. First, a detailed record of the search provides your counsel with valuable information necessary to provide the best defense or recommend a settlement or plea offer, whichever the case may be. Proper monitoring of the search also helps to prevent agents from taking critical documents without leaving you copies. Furthermore, documents obtained in areas or by means which exceed the scope of the agents’ authorization may be deemed inadmissible evidence if your case goes to trial.

Conclusion

Due to political pressures arising from rising health care expenditures and malpractice lawsuits, physicians should expect greater scrutiny of their practice by governmental agencies. This article provides a brief overview of some of these agencies and how they operate. This article is not intended as legal advice and physicians with particular concerns should consult with a qualified attorney. Because investigations of the kind described in this article usual present unexpectedly, it is always a good idea to have procedures in place in advance. It is also a good idea for the physician to speak with staff about how they should respond. While staff members cannot be prevented from speaking with agents, they should be reminded that they too have a right to have their own attorney present if questioned. Additionally, you might want to keep a copy of this article in a desk drawer where you can review it quickly should you have the misfortune of that uncomfortable experience when government agents show up at your office flashing badges and demanding access to your files.