Health Care Fraud and Abuse: A Primer

health care fraud and abuseThe United States loses billions of dollars due to health care fraud and abuse each year. In fact, some estimate the cost to be close to $100 billion annually. Moreover, as national health care expenditures rise – currently into the $3 trillion range – health care fraud schemes appear to be growing in complexity and severity.

As a result, the U.S. Department of Justice has dedicated a number of law enforcement efforts to the problem of health care fraud. The Health Insurance Portability and Accountability Act (HIPAA) was established in 1996. The program coordinates many federal, state, and local law enforcement agencies with a laser focus on combating health care fraud and abuse.

Government Enforcement Efforts on Health Care Fraud and Abuse

Specifically, HIPPA established a program called the Health Care Fraud and Abuse Control Program (“HCFAC” or “the Program”). This program has joint oversight by the Attorney General and the Secretary of the Department of Health and Human Services. In addition to that overarching HCFAC program, the DOJ and HHS recently created the Health Care Fraud Prevention & Enforcement Action Team (“HEAT”), and the Medicare Fraud Strike Force. Both task forces pull law enforcement officials from many government agencies together to prevent and prosecute health care fraud.

This coordinated government enforcement effort has had results. Between 2009 and 2016, the DOJ obtained civil settlements and judgments for health care fraud. These settlements amounted to $19.3 billion. The Medicare Fraud Strike Force, in 2014 alone, brought federal criminal charges against 353 people for health care fraud. Of the people convicted and sentenced for criminal health care fraud, the average prison sentence was over four years.

This government enforcement backdrop is given. It is helpful to understand the statutes most commonly used to fight against health care fraud. It is particularly important to ensure that your health care practices are complying with the law.

Criminal Statutes

These statutes are criminal statutes, where a conviction may result in significant jail time and monetary fines. It is important to note that these statutes typically require a knowing or purposeful mental state. Accordingly, to be guilty of such crimes, the perpetrator must have some sense that the conduct was wrong.

  • Criminal Health Care Fraud Statute. This statute, at 18 U.S.C. §1347, makes it a crime to intentionally (i) defraud any health care benefit program or (ii) use false statements to obtain funds held by a federal health care program. The penalties upon conviction could be up to 10 years in prison and a $500,000 fine.
  • Anti-Kickback Statute (AKS). The federal AKS prohibits transactions intended to induce or reward referrals for items or services reimbursed by federal health care programs such as Medicare and Medicaid. Simply stated, this statute prevents against the classic case of a doctor offering money to others to get referrals of patients who are covered by a federal health care program. Penalties upon conviction can be up to five years in prison and a $250,000 fine.

Civil Statutes

The two statutes below are not criminal, so there is no threat of jail time. However, the civil penalties that result from health care fraud cases brought under these statutes can be significant.

  • The False Claims Act (FCA). The FCA holds people liable for knowingly presenting a false or fraudulent health care claim to the government for payment, and making a false record or statement that is material to the false or fraudulent claim. The penalty can be $11,000 for each false claim, plus three times the amount of damages the government sustains due to each claim. Also, a FCA violation may lead to exclusion from federal health care programs.
  • The Stark Law. This statute stops a physician from referring a Medicare patient for certain covered health services to any entity in which the physician has a financial relationship. “Referral” and “financial relationship” are terms that have some complexity, so making sure you do not run afoul of the statute can sometimes be difficult. A violation of the Stark Law could result in an order to refund any payments received as a result of the referral. Also, the penalty could be up to $15,000 per service, with possible exclusion from the Medicare program.

Brandon Sample represents clients who have been accused of health care fraud under either the criminal or civil statutes. Call today for a free consultation if you believe that you may be facing a health care fraud accusation.

Additional Resources

https://www.justice.gov/criminal-fraud/health-care-fraud-unit

https://www.cms.gov/Medicare-Medicaid-Coordination/Fraud-Prevention/Medicaid-Integrity-Education/Downloads/fwa-laws-resourceguide.pdf

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