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Updated by Ryan Stumphauzer on Nov 02, 2018
Headline for 7 Potential Triggers for Federal Fraud Investigations
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7 Potential Triggers for Federal Fraud Investigations

Federal agencies routinely conduct fraud investigations targeting businesses and licensed providers in the health care industry. While these investigations have become common, they still present significant risks for those under investigation. Businesses and licensed providers can face civil or criminal charges for Medicare, Medicaid and Tricare fraud, and these charges can lead to fines, incarceration and other penalties. Here are seven potential triggers for federal fraud investigations.



“Fee-for-service” contractors working with the Centers for Medicare and Medicaid Services (CMS) routinely conduct audits targeting health care providers’ program billing practices. While these audits are supposed to identify both underpayments and overpayments, auditors (such as Zone Program Integrity Contractors (ZPICs) and Recovery Audit Contractors (RACs)) are more likely to find overpayments since these result in payment of compensation under the fee-for-service audit program.


Data Analysis

CMS and other agencies are constantly conducting automated reviews of program participants billing data. If this data analysis suggests that a particular provider’s program billings are inappropriate, this can trigger an intensive federal health care fraud investigation.



The False Claims Act is one of the federal government’s most-potent weapons in its fight against Medicare, Medicaid and Tricare fraud. Under the qui tam (or “whistleblower”) provisions of the False Claims Act, private citizens can file claims under the statute on behalf of the government. A whistleblower can be a current or former employee, a patient, a vendor, or any other third party with knowledge about alleged improper program billings; and, similar to CMS’s fee-for-service contractors, whistleblowers have a financial incentive to report suspected instances of fraud.



In many cases, federal law enforcement agencies rely on informants to provide information that may lead to federal charges. One way that agencies such as the DEA, DOJ and FBI secure incriminating information is by leveraging charges (or potential charges) against a related or affiliated company or provider. For example, under the federal conspiracy statute, individuals and organizations can face severe penalties even for playing even a very minor role in an alleged health care fraud conspiracy, and the threat of fines and imprisonment will often be enough to trigger the disclosure of information that can be used in a related investigation.


Past (Alleged) Conduct

Health care providers who have previously been targeted in audits and investigations may be at greater risk for ongoing scrutiny, particularly if the prior inquiry resulted in recoupments, pre-payment review or other penalties.


Subpoena Response

While federal prosecutors use subpoenas to obtain evidence related to ongoing investigations, health care providers who respond to subpoenas as non-party witnesses may also suddenly find themselves at the center of high-stakes fraud investigations.


DEA Registration

Finally, for health care providers who are required to register with the DEA, the simple fact of being a DEA registrant (or registration applicant) ensures that your practice will be subject to federal scrutiny. The DEA conducts initial and ongoing investigations for all registrants; and, while these investigations generally focus on compliance with the Controlled Substances Act and registration requirements, they can trigger broader federal health care fraud investigations as well.

  • Mr. Stumphauzer served as the Deputy Chief of the Health Care Fraud Unit at the U.S. Attorney’s Office, and currently represents clients in government regulatory enforcement matters, white collar criminal litigation, civil litigation and much more.

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