Criminal Settlements
Since most of a criminal investigation is over before the defendant is charged, the defendant does not know what is being investigated, who the investigators are talking to, or what information they have developed. It is not unusual for criminal investigations to be carried out for a year or more. In some of the Medicare/Medicaid false claims cases that have been settled, the government investigated the case for 3 years before confronting the defendants. This allows the prosecutor or U.S. Attorney to put the defendant under tremendous pressure: the defendant, say a major hospital and its administrators, is threatened with civil and criminal prosecution, potential fines in the hundred- million-dollar range, and an offer to settle for $10,000,000 and a misdemeanor plea from the administrator. They have a day to decide. They know there are some problems, but have no idea what the government knows. The downside, even if they win, is huge attorney’s fees (not paid by insurance) and months or years of adverse publicity. If they lose, it can be prison for a felony conviction and a mandatory fine that will cripple the institution.
In this situation, almost all corporate defendants settle the case and pay the fine. As long as the government sets the fine at a level that will not cripple the institution, few institutions are willing to take the risk of a jury trial. Although the institutions often accuse the government of extortion in such cases, the reality is that the government usually only goes after serious cases and only threatens to charge the defendants when it has substantial evidence. The government does not want to try most of the cases because it costs so much money and takes so much personnel time that it may draw critical resources from many other investigations.
The settlement decision is harder for individual defendants, especially physicians and other licensed medical care practitioners. If they plead to a crime, they will usually lose their license to practice. If the crime involves fraud against a federal program, they will be barred from treating federal pay patients and from working for any entity that treats federal pay patients. This would include almost all hospitals and clinics. Even if they avoid prison, their career will be ruined. They have a strong incentive to fight the charges, at least long enough to see more of the government’s case to make a more informed settlement decision.