Just as Covid-19 has interrupted businesses and imposed restrictions on industries throughout the economy, it is also having a major impact on healthcare enforcement actions brought by the DOJ and other agencies. Even as regulations have loosened and social distancing restrictions have interrupted the progress of existing cases and slowed the rate at which new cases are being brought, other cases directly relating to Covid-19 have moved forward at an accelerated pace. This effort to refocus and allocate resources began in late March when the government announced a national task force to combat Covid-19 related-crime. In line with this approach, the Attorney General has instructed each US Attorney to appoint a Coronavirus Fraud Coordinator in his or her district to help implement and prioritize the investigation and prosecution of Covid-19 fraud including:
- Anyone selling fake testing kits, treatments, or cures for Covid-19;
- Websites seeking donations for illegitimate or nonexistent Covid-19 charities;
- Fraudulent phone calls from individuals posing as health insurers seeking personal information;
- Phishing emails from entities posing as the CDC or WHO, which may contain malware;
- Robocalls offering medical supplies with no intent to deliver;
- Scams claiming to provide economic impact payments (colloquially known as stimulus funds) if consumers input their bank information;
- Fraudulent medical billing for procedures related to Covid-19;
- Threats to public officials advocating quarantines;
- Hoarding or price-gouging of necessary supplies; and
- Threats to intentionally infect individuals with Covid-19.
Not only has Covid-19 resulted in a shift in enforcement priorities, but we are also seeing the DOJ take a different approach in the way they structure and pursue criminal investigations of Covid-19 fraud. In general, fraud investigations are lengthy affairs, they can progress for months or years before ever becoming public or being brought before a grand jury. The government needs to overcome reasonable doubt and that means painstaking collection of evidence. This usual lengthy process is in tension with the urgency of the Covid-19 situation as the government now needs to balance its desire to collect more evidence and strengthen its case with its desire to promptly shut down alleged Covid-19 frauds.
The recent criminal complaint filed in United States v. Dr. Charles Donald Mok II provides an interesting illustration of this compromise. Not only did the government choose to proceed under the abbreviated process of a criminal complaint before seeking indictment before a grand jury, but the complaint itself describes an abnormally fast investigation process. Although the complaint alleges additional unrelated billing misconduct dating back to 2018, the alleged Covid-19 related conduct (the marketing of Vitamin-C injections as a Covid-19 cure) begins on April 14, 2020, results in the FBI opening an investigation that same month which concludes with the issuance of a complaint by April 24, 2020. This is a unique approach driven by the current circumstances that could have a significant impact how these cases are ultimately charged in the Grand Jury process and how they are defended.
We have also seen several courts issue injunctions requiring defendants to halt their marketing or provision of Covid-19 treatments that do not appear to be scientifically supported. On April 24, in United States v. Purity Health and Wellness Centers, Inc., a federal court in Dallas Texas entered a permanent injunction halting a purported “ozone therapy” center from offering unproven treatments for Covid-19. Similarly, on April 29, in United States v. My Doctor Suggests, LLC, a Utah court issued an order freezing a defendant’s assets and prohibiting them from promoting and selling silver products based on fraudulent claims of protection against and treatment for Covid-19. These injunctions represent a similar compromise in favor of stopping potentially problematic conduct over continuing an investigation without a defendant’s knowledge. The benefit to the government in these cases is the lower evidentiary threshold for civil liability compared with proving criminal culpability as well as the availability of effectively shutting down schemes quickly through the injunction process.
It is yet to be seen the full impact of the government’s changing approach, or whether the government will be as successful carrying their burden based on evidence collected during abbreviated investigations as it has been in the past. But this new reactive approach of accelerated investigations of Covid-19-related allegations may provide new opportunities to defendants and defense counsel and new avenues to challenge the sufficiency of the evidence collected by the government.
If you have questions about Covid-19 enforcement actions, or if you have been accused of operating your business in a manner that is not consistent with Covid-19 rules and regulations, do not hesitate to contact Elliott Sauter at 469.758.4152.