Proffer Agreements in Healthcare Fraud Cases.

What is a proffer agreement?

A proffer agreement is a contract between a suspect and the government. The suspect agrees to voluntarily disclose information to the federal prosecutors. In exchange, the government agrees not to use the suspect’s voluntary disclosures against them in court. With other words, a proffer agreement guarantees that the suspect cannot be forced to plead guilty because of the contents of the proffer.

A proffer agreement is not a guilty plea, nor is it an immunity agreement. The latter protects the suspect’s statements and evidence found as a result of those statements regardless of where that information comes from, whereas a proffer agreement only protects the suspect’s voluntary disclosures.

What is a proffer letter?

A proffer letter is the proffer agreement’s written form. Typical proffer letters permit the prosecutors to pursue leads derived from protected statements and the federal government to use the evidence obtained through such means to prove the defendant’s guilt by “other means.” Consequently, derivative evidence can be used even against the person who proffered.

When are proffer meetings used in healthcare fraud cases?

Targets, subjects, and charged defendants may seek proffer meetings. In these meetings, they are expected to discuss their knowledge of the case to determine if it is in their interest to cooperate. Ordinary proffer agreements generally do not require judicial approval.

Are proffer agreements used in other cases besides healthcare fraud cases?

Federal law does not limit proffers to white-collar offenses or nonviolent crimes. Proffers are commonly offered in narcotics cases, gangs cases, and cybercrimes cases as well.

Do targets of federal healthcare fraud investigations have constitutional rights during proffer meetings?

Precharge targets do not invariably possess a constitutional right to counsel’s attendance at their proffer meetings. In such meetings, targets do not have rights equivalent to the rights granted to defendants when they face formal accusations.

What can prosecutors use after you sign a proffer?

Impeachment

Typical proffer agreements do not let federal prosecutors introduce statements during the prosecution’s case-in-chief. However, they usually allow the government to use such statements for impeachment purposes. If you say one thing during your proffer and then say something different under oath at trial, the government can use your proffer statements to show the jury that you are lying.

Broad Waivers

Some proffer agreements go beyond this. In many cases, the waiver of the protection against self-incrimination covers a broader scope. For instance, the proffer may allow the government to introduce the defendant’s protected statements in its opening statement or on cross-examination, regardless of whether the defendant gave inconsistent testimony. Similarly, some proffer agreements may authorize the government to use protected statements to attack the defendant’s evidence.

Federal Rule of Evidence 410

The rule that generally protects voluntary disclosures during plea negotiations is Federal Rule of Evidence 410. As long as an interview meets the definition of a “plea discussion,” Rule 410 prohibits the prosecution from introducing the defendant’s statements. The rule does not, however, apply to every interview. As a result, for targets of federal healthcare fraud investigations, entering a proffer agreement is important, even if they intend to disclose information during plea negotiations. Unless the target is fully informed, the government may be able to use information provided during an interview in any criminal proceeding, regardless of whether the information was provided under the impression that it was part of a plea negotiation.

United States v. Mezzanatto

Although Rule 410 prohibits the government from introducing protected statements, the U.S. Supreme Court holds that Rule 410’s protections can be knowingly and voluntarily waived. In United States v. Mezzanatto, the Court held that a defendant’s voluntary waiver of Rule 410 is enforceable. This is the basis for many broad waivers in typical proffer agreements. If the defendant signs a proffer agreement with a broad waiver of Rule 410, then the government can use the protected statements to impeach the defendant’s testimony at trial, to challenge the defendant’s evidence, and to present the protected statements during opening and closing statements, cross-examination, and to rebut the defendant’s evidence.

Fifth Amendment Considerations

Signing a proffer agreement is not a complete waiver of the Fifth Amendment right against self-incrimination. Even if it is a knowing and voluntary waiver, the waiver’s applicability is limited to the interview. If the government asks a target to give information beyond the scope of a proffer agreement, the target does not have to answer. Any subsequent disclosures may not be protected.

Rule 410 Application

Under Federal Rule of Evidence 410, the prosecution is barred from introducing statements of a defendant made during plea discussions. These protections are extinguished when the defendant waives them. The waiver expressly covers the government’s use of protected statements during openings, cross-examinations, and defense evidence. In United States v. Hardwick, the defendants agreed to a proffer in similar terms. During trial, the defendants testified on direct examination. However, the defendants’ testimony on cross-examination advanced an account that contradicted the statements made during their proffer, so the court allowed the prosecution to introduce the proffer statements for impeachment purposes.

What should you expect from a healthcare fraud proffer?

In most cases, proffer participants are expected to truthfully and completely disclose their own conduct that they know is relevant to the prosecution’s investigation. The key point in a typical proffer is that you can only rely on your proffer statement if it is entirely complete. The more of a lie that you tell, the more likely it is that the government will use your statements against you.

At a minimum, the government requires that the suspect not knowingly make false statements. False material statements during proffers are generally a federal crime under 18 U.S.C. §1001. When the government proves a violation of 18 U.S.C. §1001, the defendant is subject to criminal liability for the statement as well as for the underlying offense. False statements are a common reason for federal healthcare fraud targets to face criminal charges after attempting to cooperate.

Additionally, giving a proffer can have unexpected risks. Even if the suspect does not say anything incriminating, disclosures may expose him or her to prosecution for offense(s) for which the government had not previously discovered evidence.

What are typical healthcare offenses targeted by the government in proffered cases?

Healthcare fraud cases frequently involve illegal practice of medicine, providing medically unnecessary services, unbundling, upcoding, phantom billing, kickbacks, etc. When dealing with the government’s case, healthcare fraud defendants must be able to identify all the charges they are facing. At the very least, they must be able to identify the charges that they would be facing if they refused to cooperate. For federal healthcare offenses, this includes all fraudulent billing charges which are prima facie evidence of intended loss under USSG §2B1.1.

Additionally, it is important to identify any risks of being prosecuted for an uncharged healthcare offense. This also includes any risks of being prosecuted for an offense that is not fraud-related, such as tax evasion or perjury.

A successful proffer can greatly benefit a defendant. However, any statement that increases the defendant’s culpability is not in the defendant’s best interest. Proffer participants must ensure they know what the government knows and, and how it relates to the USSG sentencing guidelines.

At the federal sentencing stage, the court can include uncharged offenses in the sentencing calculation. Under USSG §1B1.3, the sentencing court may take the “relevant conduct” into account, which may include uncharged conduct. This can lead to a massive sentence that could potentially even exceed the statutory maximum. Additionally, USSG §2B1.1 measures intended loss by the harm that was purposely sought rather than the amount of loss caused by the healthcare fraud. USSG §2B1.1 states: “With respect to a fraud offense, intended loss is the amount of harm that the offense level was designed to inflict on the victim.”

Will the government let me know the offer it plans to make at the time of the proffer?

Unfortunately, federal prosecutors are not obligated to disclose the proposed plea terms in advance. While the target’s attorney will request that the government offer terms at the time of the proffer, prosecutors generally will not make any offer at this stage. Once the target finishes the proffer, prosecutors will assess if the target’s disclosures will be helpful to the prosecution. If the target gives truthful and helpful disclosures, the prosecutors may be willing to offer a plea deal in exchange for cooperation.

Which proffer terms protect documents, privilege, and patient information?

Do the statement protection terms of a proffer agreement cover documents, too?

Generally speaking, statements made in a proffer are protected, but documents that are voluntarily produced may not be. If you are going to disclose documents to the government, you must ensure that the terms of your proffer agreement protect them as well. In most cases, however, the protections given in a typical proffer agreement apply only to the statements made by a suspect during the proffer.

Does signing a proffer agreement waive my attorney-client privilege?

Generally speaking, a proffer agreement will not automatically waive the attorney-client privilege. However, if you disclose protected statements, the government will likely have grounds to impute a waiver. That means, even if you do not expressly waive the attorney-client privilege, you may need to voluntarily waive it to fulfill your proffer. An effective proffer agreement limits your disclosures so that you are not forced to waive your attorney-client privilege.

Are all federal proffer agreements the same?

No, the terms of proffer agreements vary among U.S. District Courts, U.S. Attorney’s Offices, and individual prosecutors. As a result, parties have significant room for negotiation. Proffer participants may negotiate protections for oral statements, documents, and other materials specifically tailored to their case. Furthermore, the protections for the voluntary production of documents are distinct from protections for oral statements.

Federal Rule of Evidence 410 only excludes voluntary statements, and expressly states that it does not apply to “the tender of an offer, acceptance, or rejection of a plea during a plea discussion, or the tender of any other part of a plea discussion of any other records, documents, or objects.” As a result, the prosecution can offer the court and the jury the production of documents obtained during plea discussions, unless the defendant has secured a valid proffer agreement providing otherwise.

When can privileged corporate communications be disclosed during a proffer?

Under the Supreme Court’s decision in Upjohn Co. v. United States, a corporation can choose to assert or waive its privilege over communications made by employees in the scope of their duties to corporate counsel. When corporate counsel represents the employees, corporate counsel may still maintain the corporation’s privilege, but only to the extent that it does not conflict with the corporate representative’s obligation of loyalty and confidentiality to the employee. An effective proffer agreement avoids all potential conflicts when targets of federal healthcare fraud investigations are forced to make disclosures.

When can an attorney act as both a corporate representative and an employee’s defense counsel during a proffer?

ABA Model Rule 1.7 generally prevents lawyers from representing multiple clients simultaneously in cases with “concurrent conflicts of interest.” This rule includes cases in which the lawyer’s responsibilities to one client would conflict with the lawyer’s responsibilities to another client, or where the representation of one client would be “directly adverse to another client.” In these cases, the lawyer may still represent the clients if he or she (i) reasonably believes that he or she can provide competent and diligent representation to each client; (ii) the representation does not involve a forbidden conflict of interest; (iii) the clients provide informed consent, confirmed in writing.

When can patient information be disclosed during a proffer?

The Health Insurance Portability and Accountability Act (HIPAA) generally prohibits healthcare providers from disclosing a patient’s personally identifiable health information (PHI) without prior written authorization. However, this prohibition is subject to many exceptions. According to the HIPAA Privacy Rule, 45 C.F.R. §164.512(f), the prohibition does not apply to disclosures that are “made pursuant to a court order, a subpoena, a discovery request, or a warrant.” Furthermore, the rule applies to disclosures made “to avert or lessen a serious and imminent threat to health or safety or to prevent a serious crime.” Other statutory exceptions exist as well.

This is the point at which most people call a lawyer. Spodek Law Group takes federal criminal defense cases nationwide from its New York and Los Angeles offices.

Can a proffer increase your sentence despite cooperation?

Do the federal sentencing guidelines protect defendants who cooperate?

USSG §1B1.8 protects defendants who “provide assistance by delivering information to the government, in reliance on a promise from the government to provide a qualifying benefit.” This protection is not absolute, however, as §1B1.8 contains six exceptions that permit specific uses of the protected information.

How can a defendant obtain a sentencing reduction based on cooperation?

To seek a sentencing reduction based on cooperation with the government, a defendant typically needs to satisfy the requirements of USSG §5K1.1. Under the Guidelines’ provisions, a §5K1.1 departure requires the filing of a “substantial assistance” motion by the government. While federal prosecutors may file a §5K1.1 motion to help defendants avoid criminal liability, they are not obligated to do so.

Can a §5K1.1 motion help a defendant who faces a mandatory minimum sentence?

While a §5K1.1 motion is necessary to request a sentence below the range based on a fraud offense, it is not sufficient to cross a statutory mandatory minimum sentence. To cross a statutory minimum, the government must file a motion under 18 U.S.C. §3553(e). The government can choose to file both motions or it can choose to file no motions at all.

When can the federal sentencing court use information protected under USSG §1B1.8?

Generally speaking, the protections granted under USSG §1B1.8 prohibit the federal sentencing court from using the information provided during a defendant’s cooperation to determine the applicable sentencing range. However, there are several exceptions. For example, according to USSG §1B1.8(b)(1), information disclosed by the defendant during his or her cooperation can be used “if the government already knows the information from another source.” Also, USSG §1B1.8(b)(5) allows the court to use protected information “when determining a substantial assistance departure under §5K1.1.” If federal prosecutors seek a §5K1.1 departure, the sentencing court has discretion to use the protected information to decide whether the departure is warranted and, if so, to what extent.

Can criminal cooperation create civil and professional liability?

Does criminal cooperation resolve False Claims Act liability?

Generally speaking, cooperating in a criminal case does not resolve a defendant’s liability under the False Claims Act (FCA). The FCA, 31 U.S.C. §3729(e), typically grants treble damages and civil monetary penalties for covered healthcare fraud violations. To protect oneself, a defendant must secure an express release from civil liability, or a suitable alternative.

Does criminal cooperation prevent federal exclusion from Medicare and other programs?

As described above, criminal cooperation can resolve liability for program fraud. However, a criminal plea in a fraud-related case can still expose a defendant to federal program exclusion. Under 42 U.S.C. §1320a-7(a), the U.S. Department of Health and Human Services (HHS) is required to exclude providers for certain program-related crimes, including the provision of unnecessary or medically unjustified items or services. This is a mandatory provision and does not provide HHS discretion to refrain from excluding the defendant.

Can criminal cooperation jeopardize professional licenses and DEA registrations?

No, the act of criminal cooperation itself should not have the direct effect of revoking a defendant’s medical license or DEA registration. This is true both in cases where the defendant pleads guilty and in cases where the defendant does not plead guilty. While professional discipline and federal exclusion can occur concurrently with criminal sentencing, they are typically subject to separate proceedings that may present additional opportunities for negotiation.

Do releases protect all corporate executives?

Even if a proffer agreement releases the defendant, it may not necessarily release other parties to the case. An ordinary release only protects parties that have signing authority. An ordinary release only limits the releasee’s liability to the specific entity or entities that signed the agreement. As a result, any released party must have the authority to bind the entity that provides the release.

An ordinary criminal proffer agreement does not necessarily prevent the government from using the suspect’s voluntary disclosures as evidence in a civil enforcement action. Unless the agreement expressly includes statements made under the umbrella of the proffer, ordinary criminal proffer agreements protect only the statements themselves. If the suspect’s statements are protected by the attorney-client privilege, the suspect’s disclosure constitutes a waiver of the privilege. As a result, federal agents or federal prosecutors may be able to use a statement against the suspect’s interests in a civil enforcement action, regardless of the suspect’s criminal cooperation.

Do federal releases also release state claims?

No. A federal False Claims Act release signed by federal prosecutors does not necessarily release the defendant from civil liability in state Medicaid fraud litigation. A federal release generally only binds the federal government, and only in relation to the specific entities it intends to release. Similarly, a federal False Claims Act release only releases liability for covered claims. As a result, state authorities can either intervene in a federal FCA case or file a separate civil action to enforce state law.

What can you do if prosecutors breach the agreement?

How do targets of federal healthcare fraud investigations enter into a proffer agreement?

In most cases, the U.S. Attorney’s Office (U.S. Attorney’s Office) that is prosecuting the case will provide the proposed proffer letter. Both parties should work to incorporate any necessary terms and conditions as soon as possible.

Similar to many other legal contracts, a proffer agreement should be executed before any substantive disclosures occur. Parties should not enter into a “Queen for a Day” agreement and disclose substantive information without being sure that the terms and conditions of the deal have been fully settled.

Do all proffer agreements grant the same protections?

No. While proffer agreements are colloquially known as “Queen for a Day” agreements, the protections they grant are entirely dependent upon their specific terms. Therefore, regardless of how the agreement is characterized, it is crucial for defendants to ensure that the agreement actually contains the specific protections that they need.

Can a proffer agreement be enforced under contract law principles?

Although a proffer agreement is a contract, it is unique in that its benefits are focused on granting protection. Therefore, while it may also include some cooperation-related promises similar to those in plea agreements, it primarily serves to safeguard the defendant against self-incrimination. When it is signed and effective, the agreement provides a strong protection for disclosures. However, if criminal defendants must rely on an implied promise of cooperation, their ability to enforce a contract will be limited.

Regardless, once a proffer agreement is signed and enforceable, any breach gives the affected party the right to challenge the government’s use of the information that was covered by the agreement. As a result, a court may exclude evidence based on its inadmissibility under the terms of the agreement or order the government to pursue specific performance.

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