Federal Health Care Fraud

If you, a family member, or your medical practice is under investigation for federal health care fraud, or has already been charged, here is what the law says, what penalties are possible, and where the line falls between a billing mistake and a crime.

Any federal fraud charge is serious, but health care fraud often gets extra attention from federal prosecutors, because the schemes can involve huge sums of money. The government has been pushing hard to investigate these cases, in part to discourage people and businesses from trying to profit illegally from government programs.

So take any health care fraud charge against you or a loved one very seriously, and bring in a lawyer who handles health care fraud cases as early in the process as you can.

What does the federal health care fraud law say?

The main federal law is 18 U.S.C. § 1347. It makes it a crime to knowingly and willfully carry out, or try to carry out, a scheme "to defraud any health care benefit program," or to get money or property owned or controlled by a health care benefit program "by means of false or fraudulent pretenses, representations, or promises." The conduct must be connected to providing or paying for health care.

The government does not have to prove you knew about this specific law or meant to break it (18 U.S.C. § 1347(b)).

Every state has its own health care fraud laws. But the federal law is so broad that it almost always comes into play when the government investigates a health care fraud scheme.

How much prison time can health care fraud carry?

The penalties go up with the harm the fraud caused:

• Up to 10 years in federal prison.
• Up to 20 years if the fraud caused serious bodily injury to someone.
• Any number of years, up to life, if the fraud caused a death.

The federal sentencing guidelines — the rules a federal judge must consult when choosing a sentence — also add extra levels when the loss to a government health program is over $1,000,000 (U.S.S.G. § 2B1.1(b)(7)).

A health care fraud felony also leads to being banned from Medicare and Medicaid, called exclusion, for at least five years (42 U.S.C. § 1320a-7(a), (c)(3)(B)).

With penalties this heavy, the sooner a lawyer looks at the billing records and the government's theory, the more time there is to build a defense.

What kinds of conduct lead to health care fraud charges?

Health care providers, such as doctors, clinics, labs, pharmacies, and equipment suppliers, are the most common targets of federal health care fraud investigations. Practices that often lead to trouble include:

• Billing twice for the same service to a patient
• Billing for services that were never provided
• Paying for patient referrals (kickbacks)
• Billing for services the insurance policy does not cover
• Billing for care that was not medically needed

Each of these can bring in a lot of money for a provider who wants more from the government or an insurer without actually giving medically needed care.

Providers are not the only ones who can commit health care fraud. Patients can too — for example, by knowingly lying to get medicine they don't need so they can sell it illegally.

Does it matter whether the insurer is public or private?

No. The U.S. has many health plans, run by both public and private insurers. Federal health care fraud charges apply to fraud against either kind. A "health care benefit program" includes any public or private plan that pays for medical care (18 U.S.C. § 24(b)). Don't assume the government will go easier on a case just because it involves a private insurer.

The two main public insurers are Medicare and Medicaid. Some federal laws deal specifically with fraud on those programs. For example, 42 U.S.C. § 1320a-7b(a) makes it a crime to knowingly make a false statement on a Medicare or Medicaid claim to get payments you are not entitled to. That felony carries up to 10 years in federal prison and a fine of up to $100,000.

Under the general federal fine law, an organization convicted of a felony can face a higher fine, up to $500,000, or twice the gain or loss if that is more (18 U.S.C. § 3571(c), (d)).

What other charges often come with health care fraud?

• False statements in a health care matter, 18 U.S.C. § 1035: up to 5 years.
• False statements on a Medicare or Medicaid claim, 42 U.S.C. § 1320a-7b(a): up to 10 years and a $100,000 fine.
• Kickbacks, meaning paying or taking anything of value for patient referrals paid by Medicare or Medicaid, 42 U.S.C. § 1320a-7b(b): up to 10 years and a $100,000 fine.
• Conspiracy to commit health care fraud, 18 U.S.C. § 1349: same penalty as the fraud itself.

Is a billing mistake a crime?

No. The health care system is complicated, and a conviction requires more than a simple mistake: the law requires that you acted knowingly and willfully. A billing error on a patient's bill that a provider or insurer seeks payment for is not, by itself, health care fraud.

But if the government can show a pattern of billing errors that brought in significant money for the person who billed, it becomes easier for the government to argue the errors were on purpose. That is why the details matter: how the records were kept, who did the coding, and what you were told.

Read about the main health care fraud and abuse laws

Why start preparing a defense early?

Given the prison time and fines at stake, preparing a defense should be a top priority if you are facing health care fraud charges — or if you are worried that you or your organization may be under investigation.

What should you do next?

Book a consultation to talk it through with Brandon Sample.

Book a consultation