By Sara Mieczkowski and Eddie Suarez / www.SuarezLawFirm.com
DOJ Is Changing How Fraud Cases Begin and Florida Is One of Its First Testing Grounds
A federal fraud investigation used to have a fairly familiar starting point. A whistleblower raised a complaint. An inspector general spotted a problem. An agency made a referral. Someone talked. The Justice Department appears to be heading towards new more data driven model.
That is what makes the Florida Anti-fraud Task Force more interesting than the September 9 meeting that launched it. The meeting itself was hardly revolutionary. Prosecutors, agents, inspectors general, and state officials gathered in Miami, announced their commitment to fighting fraud, and posed for the obligatory photograph.
Not much to discuss there.
But over the past several months, DOJ appears to be building a new fraud-enforcement structure designed to find cases across government programs before they arrive through the traditional referral process and Florida appears to be one of the first places where the pieces are being put together.
From referrals to detection
DOJ created its National Fraud Enforcement Division in April. In August, the Division said it planned to grow to roughly 500 attorneys and staff and described its ambition in unusually sweeping terms: to build a sophisticated, data-driven white-collar enforcement operation.
Then came the more consequential development. On August 24, DOJ launched the National Fraud Detection Center, or NFDC—a prosecutor-led operation intended to combine information and analytical resources from agencies that have historically maintained separate databases and investigated separate programs. Instead of waiting for one agency to recognize fraud within its own program, the government can look for patterns across programs.
A company appears in one database. Its owners appear in another. Payments appear somewhere else. Benefits, corporate registrations, addresses, related entities, and other information can be compared and connected. In other words, it looks like the government is positioning themselves so they no longer have to wait for someone to bring it a case; they seem to be gearing up to find the cases themselves.
Florida is part of that experiment
Florida’s September meeting makes more sense in that context. It was not a one-off Florida initiative. In July, DOJ announced federal-state anti-fraud task forces in Florida, North Carolina, and Mississippi as part of a broader Southeast enforcement effort. At the same time, DOJ announced agreements giving its Fraud Division access to state-held corporate-registration and public-benefits information. Florida then became one of the states feeding information into the new national detection system. The Florida task force is designed, in turn, to act on leads generated by that system.
For defense lawyers, the first subpoena may no longer be the beginning
Suppose a health-care provider receives a subpoena from HHS. Traditionally, counsel might naturally begin with the billing practice that appears to have attracted HHS’s attention. That may no longer be enough. If the investigation originated with an NFDC-generated lead, the government may already have compared the provider’s billing data with corporate records, ownership information, benefit payments, tax-related information, or data from another government program.
Counsel needs to ask not only, “Why is this agency interested?” but also, “What other data could the government already have, and what story does that data appear to tell when it is put together?” That is especially important because data can identify correlations. It cannot necessarily explain them.
Two entities may share an address for a perfectly legitimate reason. Payments may cluster because of an ordinary business practice. Ownership records may lag behind reality. Different government databases may define the same information differently. An algorithm can flag the pattern. It cannot cross-examine it or even correctly interpret it.
The meeting was not the story
There is no public indication that the September 9, Miami meeting produced a new charging policy, investigative protocol, or specific prosecution. On the public record, the meeting itself seems largely organizational. But dismissing it as another government photo op might miss the more important point. DOJ appears to be assembling a system intended to change how fraud cases are identified. The National Fraud Detection Center supplies the analytics. Federal and state data-sharing supplies more information. State task forces such as Florida’s provide prosecutors and investigators who can turn those leads into cases. Whether that system ultimately works as advertised remains to be seen. But for companies and individuals doing business with the government, and for the lawyers who advise them, the important question may soon be less about who complained and more about what some AI driven analysis of databases said. Now is the time to start thinking about these issues.
