Extracted from Law360
In U.S. v. Beauchamp, a Texas surgeon recently agreed to plead guilty to federal conspiracy and violation of the Travel Act for his role in the Forest Park Medical Center saga.[1] He now faces up to 77 months in prison. The Forest Park Medical Center case, which includes allegations of a widespread scheme involving millions of dollars in bribes and kickbacks for patient referrals, confirms that the Travel Act has officially come to health care enforcement.
The government alleged that Dr. Wade Barker, co-founder and co-owner of Forest Park Medical Center, violated the Travel Act when he used email to facilitate the payment of bribes and kickbacks prohibited by the Texas commercial bribery statute. The Travel Act, formally known as the Interstate and Foreign Travel or Transportation in Aid of Racketeering Enterprises Act, is a federal criminal statute that prohibits the use of interstate and foreign commerce, including travel and mail, to further “unlawful activity.”[2]
Recent developments in Forest Park Medical Center and other cases show that the Travel Act has become a dynamic addition in the government’s expanding health care enforcement arsenal. Since 2013, federal prosecutors have increasingly included Travel Act allegations among the typical roster of charging theories for health care fraud. These developments have a tangible impact on the health care industry and the future of health care compliance programs.
An Old Law With New Appeal
The Travel Act is not new. President John Kennedy signed the Travel Act into law in 1961, less than a year after his famous “New Frontier” speech. Attorney General Robert F. Kennedy stated in his congressional testimony that the Travel Act was “[t]he most controversial and … one of the most important” facets of his crimes package proposal.[3] Congress enacted the Travel Act to help fight organized crime that sprawled across state lines, such as illegal gambling, production and distribution of liquor and narcotics, and bribery of public officials, but the Travel Act’s use has expanded over the years.[4]
The Travel Act’s broad language makes it a powerful tool to combat illegal activity across a large range of legal theories. It can easily convert a violation of certain state laws, such as extortion or commercial bribery, into a federal crime if the accused used interstate or foreign travel, mail, or any facility in interstate or foreign commerce to facilitate the “unlawful activity.”[5] This could be as simple as using a telephone, the mail, email or even the internet. Violation of the Travel Act carries hefty fines and prison sentences.
Travel Act Gets Green Light in Health Care Enforcement Cases
In February 2014, the U.S. Department of Health and Human Services and the U.S. Department of Justice released a joint report that described a government victory involving Travel Act allegations as “representing a departure from ordinary changing theories in health care fraud cases.”[6] Since that time, federal prosecutors have continued to pursue health care fraud through the Travel Act, expanding the scope of its traditional use.
Two recent developments show how the government is using the Travel Act to prosecute massive health care schemes. In June, a federal judge sentenced the president of Biodiagnostic Laboratory Services LLC and another high-level employee to 72 and 43 months in prison after they pleaded guilty to conspiring to violate the Travel Act and another criminal statute.[7] The Biodiagnostic Laboratory Services case, pending since 2013, has already resulted in 53 convictions. Thirty-eight of the convicted are doctors, which is thought to be the largest number of medical professionals ever prosecuted in a bribery and health care fraud case.
Earlier this year, another federal judge sentenced the former owner of Pacific Hospital to five years in prison for his part in a 15-year health care fraud scheme, and three more doctors were recently charged with violating the Travel Act in connection with the case.[8] These new charges, prison sentences and guilty pleas show just how powerful the Travel Act is, and will continue to be, in health care enforcement.
New Roadblocks Ahead for Health Care Providers
The Travel Act has become a particularly potent mechanism for pursuing kickbacks involving private insurance and programs that are beyond the reach of the anti-kickback statute. The anti-kickback statute, another federal criminal statute and a longtime fixture in health care enforcement, is limited to acts affecting “federal health care program[s].”[9] A “federal health care program” includes “any plan or program that provides health benefits, whether directly, through insurance, or otherwise, which is funded directly, in whole or in part, by the United States government.”[10]
Unlike the anti-kickback statute, the Travel Act is not limited to government programs. For example, late last year a federal jury convicted Atif Babar Malik, a pain management physician who co-owned Advanced Pain Management Services LLC, on a number of counts related to a long-running fraudulent billing scheme, including three counts of violating the Travel Act and one count of conspiring to violate the Travel Act. The Travel Act allegations applied equally to government programs and private insurers. In June, a federal judge denied Malik’s motion for a new trial or acquittal.[11]
The Travel Act is broader than many other health care enforcement statutes. It not only reaches private payors, it also bases liability on violation of varying state laws. This means that in addition to health care‑specific issues, compliance programs must consider various state commercial bribery laws with no historic ties to health care or government entitlement programs.
The Travel Act has become a powerful force in the government’s efforts to prosecute health care fraud. As health care enforcement continues to increase, so will the government’s use of the Travel Act. As we move into this new frontier of health care enforcement, health care companies and providers must respond with redoubled commitment to nimble and effective compliance programs that cover private payors and adapt to new enforcement angles on old laws. Barker’s recent plea agreement is a potent reminder that the Travel Act is here to stay, and it has real implications for health care providers.
The opinions expressed are those of the author(s) and do not necessarily reflect the views of the firm, its clients, or Portfolio Media Inc., or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.
[1] U.S. v. Beauchamp, et al., No. 3:16-cr-00516-JJZ-3 (N.D. Tex. Aug. 18, 2018).
[2] 18 U.S.C. § 1952(a).
[3] The Attorney General’s Program to Curb Organized Crime and Racketeering: Hearings Before the Comm. on the Judiciary, United States Senate, 87th Cong. 16 (1st Sess. 1961) (statement of Attorney General Robert F. Kennedy).
[4] 18 U.S.C. § 1952(b).
[5] 18 U.S.C. § 1952(b).
[6] The Department of Health and Human Services and The Department of Justice, Health Care Fraud and Abuse Control Program: Annual Report for Fiscal Year 2013 (February 2014).
[7] U.S. v. Nicoll, No. 2:13-cr-00386-SRC (D.N.J. June 13, 2018); U.S. v. Nicoll, 2:13-cr-00385-SRC (D.N.J. June 13, 2018).
[8] U.S. v. Payne, No. 8:17-cr-00053-JLS (C.D. Cal. April 25, 2018); U.S. v. Tantuwaya, No. 8:18-cr-00040-JLS (C.D. Cal. Feb. 23, 2018); U.S. v. Gross, No. 8:18-cr-00014-JLS (C.D. Cal. Jan. 23, 2018); U.S. v. Drobot, No. 8:14-cr-00034-JLS (C.D. Cal. Jan. 16, 2018).
[9] 42 U.S.C. § 1320a-7b
[10] 42 U.S.C. § 1320a-7b(f).
[11] U.S. v. Malik , No. 16-cr-00324 (D. Md. June 19, 2018).