Acting Assistant Attorney General Matthew R. Galeotti Delivers Remarks at 26th Annual Pharmaceutical and Medical Device Ethics and Compliance Congress

Remarks as Prepared for Delivery

Good afternoon and thank you for that kind introduction. I’m pleased to speak with this audience of dedicated professionals coming together to share ideas about improving the health care industry and stamping out fraud and abuse.

As I have made clear since announcing our enforcement priorities in May, combating white-collar crime is a top priority for the Criminal Division. Relevant to this group, we are keenly focused on health care fraud in a range of industries, including, among others, biopharma, medical devices, and health care insurance.

The reason is simple: health care fraud and related misconduct implicate the most significant values of my Division:

1. Protecting victims: These schemes — many involving false diagnoses and unnecessary procedures — often put patients at serious physical risk.
2. Protecting taxpayer funds: Each year, criminals steal billions of dollars from programs that taxpayers fund and patients depend on. Returning money to the fisc helps ensure these vital programs are adequately resourced and gives due respect to the hard work of contributing Americans.
3. Holding bad actors accountable: Criminal enterprises abuse our system, often by stealing the identities of millions of Americans and profiting off our federal health care system at the expense of seniors, disabled Americans, and our most vulnerable citizens. Justice demands that we hold both culpable individuals and organizations to account.
4. Deterring future misconduct: Our enforcement efforts and relevant policies help shape future behavior, helping prevent fraud before it even happens.
5. Promoting respect for the law: This misconduct has become entrenched, and it requires serious and focused attention. We must demonstrate to the American public that we are tackling this threat head on.

Simply put, the Criminal Division’s Health Care Fraud Unit has had a historic year. In June, the Department announced the largest health care fraud takedown in U.S. history in which over 300 individuals were charged, including nearly 100 medical professionals across the country. These schemes involved $14.6 billion in fraudulent claims targeting Medicare, Medicaid, and other health care programs.

Significant results took place, and will continue to take place, throughout the entire year. As just one example, in March of this year, we obtained a 17-year sentence against a pharmacist convicted at trial and also secured forfeiture of $405 million — the largest ever by the Department of Justice in a health care fraud case.

We are committed to full-spectrum accountability. We will pursue health care fraud wherever it is found, from doctors’ offices to corporate suites. For instance, in June, a federal jury convicted the CEO of a software company for his role in operating a platform that generated false doctors’ orders to defraud Medicare and other federal health care benefit programs of more than $1 billion.

We’re not focused only on individuals. The Criminal Division is utilizing our expertise in corporate cases to ensure accountability for culpable organizations that commit health care fraud and associated criminal violations. So far this year, we have announced two significant corporate health care fraud resolutions with penalties totaling over $41 million and over $12 million in victim compensation — the first two enforcement actions by our Health Care Fraud Unit in nearly a decade.

So, how will we build on these efforts? You can expect continued, aggressive health care fraud enforcement across the board, including increased corporate enforcement. Specifically, you will see more corporate cases in a range of industries and markets involving health care fraud by year’s end, as well as a steady pipeline of cases in the medium and long term.

Among the health care fraud schemes we traditionally prosecute, we will continue our systematic approach to stopping drug-trafficking organizations and their pharmaceutical wholesale suppliers that have fueled an epidemic of prescription opioid abuse.

We’re also devoting increased resources and deploying them across the country. In August, we announced jointly with the Northern District of Illinois the expansion of our health care fraud program to Chicago. In September, we announced the expansion of our Health Care Fraud Unit’s New England Strike Force to the District of Massachusetts. This expansion brings enhanced federal enforcement resources to one of the nation’s most significant health care and life sciences hubs. I am pleased to announce that we are doing the same to cover Philadelphia in the Eastern District of Pennsylvania. With our U.S. Attorney partners, we will have increased on-the-ground coverage up and down the East Coast.

You will also see a more proactive and data-driven approach to enforcement. As I announced in June, the Health Care Fraud Data Fusion Center is bringing together experts from the Department and other agencies to leverage cloud computing, artificial intelligence, and advanced analytics to identify emerging health care fraud schemes quickly and efficiently. This work helps the Criminal Division proactively identify the worst actors abusing our system.

Finally, you can expect increased coordination within the Department and with other agencies. We are working closer than ever with our colleagues in the Civil Division, as you saw in this year’s corporate resolution against Kimberly-Clark Corporation, a U.S. consumer-goods and personal-care company that resolved a criminal charge that it introduced adulterated surgical gowns with intent to defraud. And you should expect to see this coordination with the Civil Division extend to violations of the False Claims Act, among other statutes.

Outside of the Department, we are working closely with the Centers for Medicare and Medicaid Services, which seeks to stop fraudulent payments before they go out the door. In one case announced in June, HHS’s Office of the Inspector General and CMS successfully prevented the organizations from receiving all but a small fraction of the approximately $4.45 billion that was scheduled to be paid out by Medicare.

Before I close, let me briefly address our corporate enforcement program. As I have said again and again, now is the time for companies to come forward and self-report to get the full benefits available to those who take responsibility for their actions.

Because in addition to health care fraud, the Criminal Division will continue to pursue corporate offenders across the white-collar landscape. From procurement to securities fraud, we will prosecute the most complex schemes that affect American interests.

That includes violations of the FCPA. As you’ve seen this year, following the Deputy Attorney General’s Guidelines, we’ve entered into a resolution with Liberty Mutual under Part I of our Corporate Enforcement and Voluntary Self-Disclosure Policy; secured a trial conviction against the owner of an Atlanta-based business; and brought charges against individuals. And I expect in the very near term you will see additional activity in this space.

Let me be clear: consistent with the Deputy Attorney General’s guidance, we will continue to enforce the FCPA firmly and fairly. This is not the time to ease up on compliance programs.

So, what should you do if you uncover an issue? Let me answer that by emphasizing the significant benefits available for corporate actors under the CEP, which I updated earlier this year. As you know, the policy strongly encourages self-disclosure of misconduct as soon as it is detected, and provides important benefits to companies that choose to do so.

Liberty Mutual, in particular, exemplifies the benefits of immediate self-reporting: the company self-reported an FCPA violation even before its own internal investigation was complete, and received a declination for its swift admission, cooperation, and remediation, which included significant improvements to its compliance and internal controls.

Importantly, companies may obtain benefits under the policy even if they do not qualify for a declination. Companies that voluntarily self-disclose misconduct and provide full cooperation and remediation but are ineligible for a declination will generally receive a non-prosecution agreement with a term of fewer than three years, no independent monitor, and a reduction of 75% off the low end of the Guidelines fine range. The Criminal Division takes very seriously corporations’ efforts to cooperate and remediate wrongdoing, even outside of the parameters of the voluntary self-disclosure program, and will take such efforts into consideration when resolving a case.

By contrast, companies that fail to self-disclose and fail to cooperate and remediate when approached by law enforcement about their conduct will be prosecuted consistent with applicable law. And we continue to receive a significant volume of tips from corporate whistleblowers through our Corporate Whistleblower Awards Pilot Program, pertaining to health care fraud and beyond, which is even more reason to come forward now.

Our pipeline of upcoming voluntary self-disclosure and other corporate cases is strong, as we expect you’ll see in the coming months. I encourage those of you who represent corporations, including those in the health care space, whether as in-house counsel or at an outside law firm, or who serve in compliance departments or business functions, to take the program seriously and to act quickly when misconduct is discovered.

Thank you again for having me. I look forward to continuing the discussion of the Criminal Division’s important work during this Fireside Chat.