By Philip H. Hilder
December 11, 2010
Constitutional protections are being hastily overlooked in our government’s zeal to crack down on Medicaid fraud. But even that worthy cause doesn’t merit a denigration of citizens’ rights.
In the case of Medicaid fraud, the Texas Legislature has not only encouraged but required government agencies to mix civil and criminal investigations on such a regular basis that the constitutional rights of the people and businesses being investigated are being trampled routinely.
Any television police drama will tell you that subjects of a government investigation have the right to remain silent and to be told they have the right to remain silent. But the arm of Texas government that conducts criminal Medicaid fraud investigations is gathering information under the guise of the arm that looks at possible civil violations. Both civil and criminal investigators work for the Texas attorney general.
The problem is that the targets lawfully need to know when they are being targeted by the criminal group. But instead they are being asked for documents using a civil process and they aren’t being told the information is being shared with criminal investigators.
You might think it’s just the government either way. If these folks might have done something wrong, why should we care? But these rights are there to protect the innocent and the guilty. They are there to protect someone being investigated now, as well as you and me, who could be investigated for something else another day.
We all must care when a target isn’t given the opportunity to invoke his or her rights in a criminal investigation because the state has purposefully made it appear there is no such investigation. In its zeal to control the state’s annual $17 billion in Medicaid costs, Texas has lost its grip on protecting the rights of its citizenry.
The Texas Legislature has blurred what should be clearly demarcated barriers between civil and criminal investigations of health care providers. Various state agencies investigate Medicaid providers for compliance issues and fraud. The Medicaid Fraud Control Unit oversees relevant state felonies, such as fraud and theft, and its investigations may result in imprisonment, fines and exclusion from the Medicaid program. But this criminal arm has concurrent jurisdiction with the Civil Medicaid Fraud Division, which pursues civil fraud.
That means the civil division can issue a subpoena for documents from a Medicaid provider who doesn’t even know that a parallel criminal investigation is ongoing when the information is shared with criminal investigators.
And the criminal investigators supplement the civil staff by conducting site inspections, usually for providers who meet the profile for criminal fraud. That means criminal investigators are using the guise of an administrative review to start a criminal investigation. This level of cooperation and coordination is statutorily required so the two sides of the legal coin don’t run parallel investigations, but rather attack a case in a coordinated effort.
Parallel civil and criminal proceedings that examine the same conduct are not only permissible but often are labeled as being in the public interest. However, when parallel civil and criminal investigations become too intertwined, they cease to be parallel and create ample opportunities for violations of the Constitution’s Fourth, Fifth and/or Sixth Amendments.
Courts have found that such efforts can cross the line and to determine whether that’s happened, they look at: (1) whether there was notice that evidence could be used in a criminal proceeding; (2) whether a civil investigation was brought in bad faith; and (3) whether the target of the investigation had a lawyer.
In the securities cases against HealthSouth mogul Richard Scrushy, a court reasoned that there was a “danger of prejudice flowing from testimony out of a defendant’s mouth at a civil proceeding [which] is even more acute when he is unaware of the pending criminal charge.”
Texas HB 2292 may appear to have created efficiency but it actually created dangerous legal territory. Until the criminal and civil investigations in Texas are taken out of lock step, judges should toss the evidence gathered under a civil ruse and used in criminal investigations. Our Legislature needs to go back to the drawing board and protect us both against Medicaid fraud and the erosion of civil rights.
Philip H. Hilder, a former federal prosecutor and founder of Hilder & Associates, P.C., focuses on white-collar criminal defense.
