A recent federal government indictment of a former executive for national hospital chain Health Management Associates (HMA) provides yet another example of the fact that a cover-up can lead to consequences as severe as the crime itself.  The indictment, which was unsealed November 26, charges the executive, who worked for HMA between 1994 and 2011, with falsifying a document to impede a federal government investigation in 2008. The executive, Joshua Putter, could face up to 20 years of imprisonment if convicted.

The indictment alleges that Putter took part in the creation of a fictitious letter. Putter’s attorney has characterized the production of the letter as purporting to be from a doctor to HMA employees regarding a dispute between the doctor and HMA and has stated that it was an innocent act with no intent to hinder the government investigation.  The government has stated that it anticipates seeking additional charges against Putter.

The alleged obstruction relates to a fraud investigation of HMA by the FBI and the Department of Health and Human Services.  HMA has faced other government inquiries and investigations in recent years.  In December 2012, HMA was revealed to be under investigation for allegedly establishing quotas requiring doctors to admit certain numbers of patients who came to the emergency room.   The investigation led to a report on the CBS show 60 Minutes in which two doctors formerly employed by HMA claimed that HMA had a policy of requiring 20 percent of emergency room patients to be admitted while another claimed that HMA required the admission of 50 percent of Medicare patients.  The doctors also claimed that management had asked them to admit patients who did not require admission.  More recently, HMA revealed in May 2013 that it was being investigated by the SEC for both its accounting practices and the reporting of its revenue from patients and had received an SEC subpoena.  HMA has stated that it believes the investigations were triggered by whistleblower suits.

The recent criminal charge of an HMA executive provides a reminder to companies and their employees of the risks inherent in government investigations.  In the process of responding to the government, companies must not only appropriately provide the government with requested information but must also be vigilant about ensuring that executives or employees are not taking actions that could be construed as obstructing a government investigation. Obstruction of government investigations can lead to significant penalties for companies and the potential for prison time for those who participate.  Having a robust compliance program along with routine training that thoroughly apprises all company personnel on how to properly handle any interaction with the government before a company receives any type of government inquiry is the key to creating a culture of educated executives and employees who understand and follow proper procedures in the face of a government investigation.