Q.  When does a purely state criminal law-based matter transform into a federal felony prosecution?

A.  When the Federal Travel Act (the "Travel Act") is implicated.Under the Act, a party who travels in interstate commerce or uses the mail or any facility in interstate commerce, with intent to promote or carry on "unlawful activities", is subject to financial penalties and/or imprisonment. "Unlawful activity" includes bribery in violation of applicable state law.A state misdemeanor such as commercial bribery can thus morph into a federal felony.

The U.S. Department of Justice has recently revived the decades-old Act to aggressively expand Federal enforcement against healthcare providers. Two recent prosecutions of healthcare providers in New Jersey and Texas provide pertinent examples.In those cases, the DOJ brought charges and secured convictions under the Travel Act based on underlying state laws prohibiting general commercial bribery and/or remuneration for referrals of healthcare services.

The DOJ's reliance on the Travel Act has significant implications for healthcare providers.  Notably, Federal law only prohibits remuneration for referrals of services reimbursed by a federally-funded healthcare program.However, many states have laws prohibiting remuneration for referrals of all healthcare services.  The Act thus allows the DOJ to prosecute a much larger array of cases allegedly involving illegal remuneration. It is extremely important for physicians and their counsel to recognize that the safe harbors granted by laws such as the Anti-Kickback Statute may possibly not act as a defense against charges brought under the Travel Act. In light of the recent developments, it is critical that providers remain alert to the DOJ's new healthcare-related enforcement priorities under the Act.

If you have questions or require legal guidance about a health care investigation, feel free to call the experienced attorneys in our Healthcare Investigations and White-Collar Defense Practice at (212) 668-0200 or email the firm at info@mdrxlaw.com