Bacon's Rebellion

by James C. Sherlock

In an interview Sunday in the Virginian-Pilot, Sen. Louise Lucas, president pro tempore of the Virginia state senate, says she still doesn’t know why the feds raided her businesses. We will look at the possibilities.

Senator Lucas has a right to due process and a presumption of innocence. But there are clear signs of what violations federal and state prosecutors might investigate. In response to Sen. Lucas’s quandary, the author (see endnote) will outline potential sources of evidence and the roles of federal and state investigators in examining them.

Potential evidence

The scope of potential evidence against Louise Lucas, Lisa Lucas-Burke, Lucas Lodge, and Louise Lucas’s The Cannabis Outlet is indicated from five sources:

1. Whatever evidence that convinced a federal judge to sign off on search warrants of Lucas Lodge and The Cannabis Outlet.
2. The FBI has not publicly detailed the specific target of the probe of The Cannabis Outlet, although the New York Times reported a lengthy Justice Department investigation connected to possible corruption related to marijuana dispensaries and bribery allegations. 
3. Lisa Lucas Burke told the Virginian-Pilot that the FBI seized medical records from Lucas Lodge (Louise Lucas, CEO, and Lisa Lucas-Burke, Executive Director). That appears to indicate a separate investigation into concerns about the treatment of the Medicaid clients who populate Lucas Lodge, the services rendered or not rendered that were billed to Medicaid, or both. 
4. The records of the Department of Behavioral Health and Disability Services (DBHDS) inspections of Lucas Lodge may offer a source of potential evidence of neglect and abuse of Medicaid clients, or of Medicaid fraud through serial citations of non-compliance with regulations, or both.  
5. Bacons Rebellion has provided in-depth analysis of the DBHDS inspections and of Sen. Lucas’s activities in the Senate of Virginia.

Federal investigations

From the evidence above, federal investigations may inquire into:

1. Lucas Lodge, Louise Lucas (CEO), and Lisa Lucas-Burke (Executive Director) for potential Medicaid fraud. Medicaid funds all of the government payments to Lucas Lodge for services to people with intellectual and developmental disabilities, which constitutes Lucas Lodge’s entire business. Federal Medicaid fraud is investigated under several core statutes, primarily the False Claims Act (31 U.S.C. §§ 3729-3733), the Health Care Fraud Statute (18 U.S.C. § 1347), and the Anti-Kickback Statute (42 U.S.C. § 1320a-7b). Those laws enforce severe civil and criminal penalties for submitting false claims, paying for patient referrals, and executing schemes to defraud government health care programs. Medicaid fraud is investigated at the federal level by the Office of Inspector General for Health Care, Department of Health and Human Services (HHS OIG). HHS OIG investigators have the authority and responsibility to assess DBHDS inspection reports, the medical records seized from Lucas Lodge, and any other evidence that may have persuaded a federal judge to issue the search warrants. The Virginia Attorney General’s website offers an excellent summary of the complex subjects of Medicaid fraud and abuse, related investigations and prosecutions, and Virginia’s Medicaid Fraud Control Unit (MFCU). Note that states often join the federal government in global settlements of Medicaid fraud charges. Any federal investigation of Medicaid fraud will be led by HHS OIG investigators, with the state MFCU normally joining.
2. Lucas Lodge, Louise Lucas (CEO), and Lisa Lucas-Burke (Executive Director) for neglect and abuse of persons with intellectual and developmental disabilities, again from evidence in DBHDS inspection reports. Specific federal definitions of abuse and neglect are offered in the Code of Federal Regulations. Key federal statutes proscribing neglect and abuse of such persons include the Developmental Disabilities Assistance and Bill of Rights Act (DD Act), Section 504 of the Rehabilitation Act, and the Americans with Disabilities Act (ADA). A federal investigation would again be led by HHS OIG investigators. State police, Portsmouth Police, or both might join the federal investigation.
3. Louise Lucas and/or her employees for various violations of law at her The Cannabis Outlet. There are numerous laws governing the sale of cannabis. The report that the raid was looking for evidence of “bribery,” if true, suggests it was seeking evidence of bribery involving a public official. The investigation will be led by the FBI. There is no public information on what the raid was specifically looking for or the evidence that led a federal judge to sign the search warrants. Once again, state police, Portsmouth Police, or both might join the investigation.
4. Louise Lucas for potential public corruption. Federal statutes include 18 U.S.C. § 201, (It distinguishes between bribery (a direct quid pro quo to influence future actions) and illegal gratuities (rewards given for acts already performed; 18 U.S.C. § 666 (Bribery); and 18 U.S.C. §§ 1341, 1343, 1346 (Honest Services fraud). Those investigations are led by the FBI. The Federal public corruption statutes are generally less forgiving than Virginia’s.

Virginia Medicaid fraud investigation

Federal regulation, state Medicaid fraud investigation. State Medicaid agencies (DMAS in Virginia), assisted by the Attorney General’s MFCU, are directed by federal regulation to investigate Medicaid fraud and abuse.

 § 455.15 Full investigation

If the findings of a preliminary investigation give the (State Medicaid) agency reason to believe that an incident of fraud or abuse has occurred in the Medicaid program, the agency must take the following action, as appropriate:

   (a) If a provider is suspected of fraud or abuse, the agency must—

      (1) In States with a State Medicaid fraud control unit certified under subpart C of part 1002 of this title (Virginia has an MFCU), refer the case to the unit under the terms of its agreement with the unit entered into under § 1002.309 of this title; or

         (b) If there is reason to believe that a beneficiary has defrauded the Medicaid program, the agency must refer the case to an appropriate law enforcement agency.

   (c) If there is reason to believe that a beneficiary has abused the Medicaid program, the agency must conduct a full investigation of the abuse.  

Virginia law, Medicaid fraud investigation.  § 32.1-320. Duties of Attorney General: the medical services providers audit and investigation unit (MFCU) provides the Attorney General with sweeping authority and a special unit to investigate Medicaid fraud and the neglect and abuse of Medicaid patients. That special unit is directed to all of the states by federal law.

A. There shall be established within the Office of the Attorney General a unit to audit and investigate providers of services furnished under the State Medical Assistance Plan. The Department of Medical Assistance Services shall cooperate with the Office of the Attorney General in conducting such audits and investigations and shall provide such information for these purposes as may be requested by the Attorney General or his authorized representative.

The Attorney General shall:

Conduct audits and investigations of providers of medical and other services furnished under medical assistance. Such investigations shall include investigation of complaints alleging abuse or neglect of persons in the care or custody of others who receive payments for providing health care services under the state plan for medical assistance, regardless of whether the patient who is the subject of the complaint is a recipient of medical assistance.

State investigations are subject to 42 CFR Part 1002, Subpart C, § 1002.210, which directs states to have procedures in place to exclude providers from Medicaid participation. That Subpart also requires:

Before imposing an exclusion under § 1002.210, the State agency must give the individual or entity the opportunity to submit documents and written argument against the exclusion. The individual or entity must also be given any additional appeals rights that would otherwise be available under procedures established by the State.

Other potential Virginia investigations

1. The Virginia Senate Ethics Committee can investigate potential violations of Virginia’s General Assembly Conflicts of Interest Act and refer findings to the Attorney General. Enforcement is the responsibility of the Attorney General. If he determines that any legislator has knowingly violated any provision of this chapter, he shall designate an attorney for the Commonwealth who shall have complete and independent discretion in the prosecution of the legislator. The author presumes but is not certain that any additional investigation in support of an indictment would be conducted by the state police.
2. There was mention of bribery in connection with the raid on The Cannabis Outlet. If it involves bribery of a public servant, such allegations and evidence are investigated by local and state law enforcement agencies, including the Portsmouth Police Department and the Virginia State Police.
3. State investigations of felony neglect or abuse of vulnerable adults. In Virginia, that is a Crime Involving Morals and Decency. Any such allegations and evidence will once again be investigated by local and state law enforcement agencies, including the Portsmouth Police Department and the Virginia State Police. 
4. State and local investigations and prosecutions of criminal behavior related to activities associated with The Cannabis Outlet, not including bribery, would normally be led by the Portsmouth police.  
5. State investigation of potential charges against Louise Lucas for operating that business without an active registration with the State Corporation Commission, a Class 1 misdemeanor, would be conducted by the appropriate state authorities.

Bottom line

This article has offered a summary of potential investigations and the evidence that might be pursued. We reiterate that we, like Sen. Lucas, are not sure which investigations will be pursued or where the evidence may lead. All parties are innocent until proven guilty.

Like Sen. Lucas, Virginians watch and wait.

End Note.  James Sherlock is a more than ten-year veteran of journalistic investigations into Medicare fraud, the neglect and abuse of the elderly, and the neglect and abuse of persons with intellectual and developmental disabilities in the Commonwealth. He was selected as a member of the Governor’s Nursing Home Oversight and Accountability Advisory Board based on those qualifications. The author is not an attorney and presents here only information gathered from public sources.