Hoping for the worst

Defense lawyers itch for a health-care fraud bonanza

When U.S. Attorney Paul Coggins began putting together one of the nation's first and largest health-care fraud task forces two years ago, criminal defense lawyers were salivating. They dreamed of a business boom like the one that followed the prosecution of the savings-and-loan bunglers by a similar high-profile task force in the early '90s.

But to their frustration, the fraud-case windfall, so far, has failed to materialize. The health-care task force has generated too few cases and moved slowly on the ones it has filed, defense lawyers complain.

"I haven't seen any large volume of cases coming out of this task force," says Robert Davis, a Dallas defense lawyer. "I don't know if it is a lack of resources or what."

"I don't think they have met their mandate," says Charles Blau, who represents three lawyers and two doctors targeted for fraud investigations by the task force. So far, only one of his clients has been indicted.

The health-care-fraud task force includes investigators and lawyers from the FBI, the Internal Revenue Service, the U.S. Post Office, the U.S. Department of Health and Human Services, the U.S. Department of Labor, the Texas Attorney General's Office, the Department of Defense, and the U.S. Drug Enforcement Agency.

In November 1994, shortly after the creation of the task force, U.S. Attorney Coggins said he expected to accelerate the prosecution of some 30 cases he had under investigation.

Now, he admits he had been overly optimistic. "Frankly, we are just now getting started," he told the Observer this week. "I would agree with defense lawyers that we need more resources. We are just scraping the surface [of health-care fraud]."

Even after the task force hits its stride, Coggins warns, it won't produce the number of cases that the S & L group did. "They had 40 attorneys; we don't have nearly the resources."

The delay is probably not surprising, given the complexity of the health-care fraud investigations and the novel approach the task force is using.

Specifically, the task force has set its sights on prosecuting doctors and lawyers who allegedly worked cooperatively to defraud the insurance industry. "When you indict a doctor or a lawyer, you'd better be sure," warns Blau, "because their career and their integrity is at stake."

The task-force investigations, according to the defense lawyers, have focused on doctors and lawyers who have high volumes of transactions and cases related to accident victims. The task force is probing allegations that specific doctors and lawyers cooperated with what are known in the business as "runners."

Runners are individuals who cull through newspaper automobile-accident reports and other sources to contact victims. The runners then allegedly steered these accident victims to the doctors who billed their medical-insurance carriers, often Medicare, for unnecessary tests and services. The doctors, in turn, allegedly directed the accident victims to particular personal-injury lawyers who filed civil suits seeking damage awards and used the high medical bills and doctors' testimony as evidence to support their cases.

In some instances, the prosecutors have alleged, the doctors and lawyers cooperated with runners who have even staged accidents. Typically, the runner suddenly swerves into a lane in front of another car, then slams on his brakes, causing unsuspecting drivers to crash into the rear of the runner's vehicle. In most states, an automobile hitting from behind is legally at fault, so the runner can file a claim against the victim's insurance carrier.

Defense lawyer Blau says the personal-injury lawyers in the alleged conspiracy groups of runners, doctors, and lawyer schemes are the most significant but also most difficult targets for the prosecutors. The lawyers, using the civil courts known for high-dollar damage awards, have the capability to generate the most money for the alleged conspiracy group. But they also can easily claim ignorance as a defense. "When does an attorney who doesn't know what the hell is going on in the doctor's office have to accede liability?" Blau says.

The prosecutors, Blau says, have been exacting in investigating the doctors and lawyers he represents. They have interviewed hospital staff members and patients.

Such painstaking prosecution efforts will not be wasted, Blau says, because he expects many of these cases--when the U.S. attorney finally delivers the indictments--will go to trial. The doctors and lawyers indicted, because of the federal sentencing guidelines, will face not only expulsion from their profession but jail time. Given those stakes, Blau says, they will want to defend themselves in court.

But before that happens, they have to be indicted.
Blau, who had been complaining a week ago that the prosecution was moving too slowly, is now anticipating the legal battle soon will begin. The U.S. Attorney's office informed him last week that a wide range of indictments was imminent. Blau says he was told that if he wanted to make a deal for his clients, he had better get in early.

Other defense lawyers, not yet seeing any new clients generated by the task force, are still disappointed. They complain that the federal prosecutors--despite the hoopla surrounding the task force's inception--have not yet begun to tap the rich variety of health-care fraud out there.

"I know that they had some press conferences," Dallas defense lawyer Tom Mills says. "But I haven't seen much else."

Coggins, a former defense lawyer himself, sympathizes with the lawyers' impatience. The stakes for them, he says, are "not only a lot of criminal defendants, but a lot of criminal defendants with money.

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