Healthcare Fraud

The health care industry is one of the largest sectors of the U.S. economy. Because of this, health care fraud is aggressively investigated and prosecuted by the federal government.

Health care fraud cases vary greatly and it is somewhat difficult to generalize about such a broad subject.  However, in this post we discuss topics that are relevant to most if not all health care fraud cases.  If you do not find the answer to a question about your case on this page, please contact us.

Basics of Healthcare Fraud

Health care fraud covers numerous white collar offenses at all levels of the health care industry. It can include the following types of conduct:

  • Billing fraud
  • Falsifying medical records
  • HIPAA (Health Insurance Portability and Accountability Act) violations
  • Insurance fraud
  • Kickbacks
  • Medicare and Medicaid fraud
  • Performing unnecessary procedures
  • Unbundling
  • Upcoding

Under 18 USC § 1347, the health care fraud statute, it carries up to 10 years in prison. Charges of health care fraud are also often accompanied by conspiracy charges. These cases can be factually and legally complicated and may require the help of an expert (such as a physician or medical billing expert) who can work with your attorney to prepare for trial or other court proceedings. It is important to obtain the help of a federal health care fraud attorney who is knowledgeable and experienced in defending against charges of health care fraud and who has experience in working with such experts.

health care fraud

Where do Healthcare Fraud Cases Originate?

Where to healthcare fraud cases come from?  As with other types of criminal cases, there are many circumstances which could give rise to a government health care fraud investigation.  We comment on two of the more common ones here.

The first is an audit by the private health insurance provider or government health care program.  Health insurance providers have a strong incentive to combat fraud as a means of keeping their costs down.  An audit of a certain provider’s billing records may reveal indicators of fraud.  If this is the case, the health insurer may refer the case to law enforcement for prosecution.

Another source of health care fraud investigations are so-called Qui-Tam lawsuits.  The False Claims Act includes a provision allowing private citizens to file claims of fraud on behalf of the government and to receive a portion of the recovery.  Persons who file such claims are referred to as “relators” or “whistle blowers.”  Whistle blower claims of fraud against government health care programs are another important source of healthcare fraud investigations and prosecutions.

Statutes Used to Prosecute Health Care Fraud and the Penalties they Carry

As mentioned above, 18 USC § 1347 is the basic health care fraud statute.  It criminalizes defrauding any “health care benefit program” as defined under the law.  The penalty is up to ten years in prison or, if the violation results in serious bodily injury, up to 20 years.

The government may also bring charges for conspiracy or attempt to commit health care fraud under 18 USC § 1349.  This brief statute  (which applies to other offenses besides health care fraud) states that:

Any person who attempts or conspires to commit any offense under this chapter shall be subject to the same penalties as those prescribed for the offense, the commission of which was the object of the attempt or conspiracy.

A conspiracy is an agreement between two or more people to commit a crime.  Thus, if the government proves that two or more people agreed to commit health care fraud (whether or not the conspiracy was successful), it may obtain a conviction under this section.  The penalties are the same as health care fraud itself, that is, up to ten years or, if the offense results in serious bodily injury, up to twenty years.

Health care fraud may also be prosecuted as wire fraud under 18 USC § 1343.  This versatile statute can cover any type of fraud (as long as it involves wire communications) including health care fraud.  It carries up to 20 years in prison which, you will note, is more than the health care fraud statute carries (absent serious physical injury).  For a much longer examination of wire fraud, please visit our wire fraud page.

18 USC § 287 criminalizes “false, fictitious or fraudulent claims” submitted to the United States government.  It is a short statute so we take the liberty of quoting it in full for ease of reference:

Whoever makes or presents to any person or officer in the civil, military, or naval service of the United States, or to any department or agency thereof, any claim upon or against the United States, or any department or agency thereof, knowing such claim to be false, fictitious, or fraudulent, shall be imprisoned not more than five years and shall be subject to a fine in the amount provided in this title.

As you can see, this statute criminalizes submitting false claims for money to the government for any type of good or service.  It is not limited to health care but can easily be applied to that context, for example if false claims are submitted to medicare or medicaid.  It’s five year maximum penalty is lower than the other statutes we have discussed.

This does not exhaust the statutes that could be used to prosecute health care fraud (federal prosecutors are as creative as the federal code is long) but these offenses are some of the most common.

Medical Billing in Health Care Fraud Cases

In the United States, medical billing is often done through the use of Current Procedural Terminology codes (“CPT codes”).  Because CPT codes are often so central to a health care fraud case, we comment on them briefly here.

In summary, medical providers bill their patients’ insurance companies by transmitting codes that correspond to the treatment provided to the patients.  The health care providers are compensated based on the codes.  As you can imagine, the system is complex and health care providers often employ “coders” who have gone to school to learn how to perform this service.

The CPT codes are often the focus of government health care fraud investigations.  As mentioned in the first section above, some health care fraud cases involve allegations of “upcoding” that is, falsely submitting a code that results in greater compensation to the health care provider.  For example, perhaps the health care provider submitted a code that reflects a service provided by a physician, when in reality the service was provided by an R.N. who bills at a lower rate.  That could form the basis for a health care fraud charge.

Importantly, the CPT codes are complex, contain ambiguities, and are often change.  If an inaccurate CPT code is submitted by mistake, that does not constitute fraud.  We explore this concept in more detail in the next section.

Defenses To Health Care Fraud

Healthcare fraud cases frequently turn on whether the defendant acted with “fraudulent intent.”  Often, the key to winning healthcare fraud cases is showing that the defendant acted in good faith or made an innocent error.  This is sometimes referred to as the “good faith defense.”

For example, if you are prosecuted for over-billing an insurance company, but someone in your office made a clerical error or believed in good faith that the billing was appropriate, you may have a valid defense based on lack of fraudulent intent. Similarly, if the government alleges that a medical procedure was unnecessary, you may have a defense by presenting evidence that the procedure was objectively medically appropriate, or that you subjectively believed the procedure was medically appropriate.  Health care fraud cases can be based on a wide range of conduct, so it is imperative to obtain the advice of a skilled federal criminal defense attorney who can advise you after thoroughly reviewing the facts of your case.

Another common defense is simply that someone else committed the fraud.  For many health care providers, especially smaller ones, it can be unclear who exactly is responsible for the billing.  The task may be shared between several staff members.  Support personnel who are not formally designated as billers may periodically “help out” with the billing.  The billing process can also be split into discrete tasks and divided between employees – for example, one employee may work up paperwork on medical services provided while a second employee submits the information to the insurance companies.  The bottom line is that federal agents may often be confused about who exactly was responsible for allegedly fraudulent billing and are liable to arrive at mistaken conclusions.

An unfortunate dynamic that often presents itself in in healthcare fraud investigations is that physicians and the support staff blame one another for billing irregularities.  The support staff claim they were simply following the instructions on billing received from the physicians.  Meanwhile, the physicians claim they were not involved in billing and relied on support staff to perform the task correctly (these are both versions of the “good faith” defense discussed above).

The foregoing discussion is not an exhaustive list of healthcare fraud defenses.  There are other defenses as well as variations on the ones we have discussed.  You should discuss your case with an attorney to decide what defenses might be available.

Healthcare Fraud Sentencing Guidelines

As you can see from our discussion above of various statutes used to prosecute healthcare fraud, there is a wide range of penalties a judge may impose.

Health care fraud sentences are based on the same sentencing guidelines that apply to all fraud cases (wire fraud, bank fraud, mail fraud, etc.).  USSG § 2b1.1 sets out the calculations for fraud sentences.  As with other fraud cases, the dollar amount of the loss is the driving factor for the guidelines.  In other words, the more money lost as a result of the fraud, the greater the suggested sentence under the guidelines.  There is also an enhancement specific to health care where the victim is a federal program and the loss amount is from $1,000,000 to $20,000,000.

According to the United States Sentencing Commission, the average sentence for health care offenders in 2019 was 30 months and 73.4% of health care offenders received at least some prison.

This brief discussion merely scratches the surface of what goes into a health care fraud sentencing.  Every case is different and the guidelines, though important, are far from the only factor to consider.  For more information on federal sentencing, feel free to visit our pages on the sentencing process and the guidelines.

Pre-Indictment Representation

It is a truism for all types of criminal cases that the earlier you retain counsel and begin your defense, the better your chances of a successful outcome.  This maxim applies perhaps most strongly to the healthcare fraud context.

In an ideal world, health care providers should institute a proactive compliance program to minimize the chances of ever being embroiled in a government investigation.  Compliance counsel can assist in reviewing your billing procedures and instituting best practices.  Special attention can be given to particularly sensitive areas such as prescribing controlled substances.

As mentioned above, many investigations begin with an insurance audit.  If your organization is the subject of such an audit, retain counsel to assist you in responding to the audit and identify any exposure to criminal investigation.

If law enforcement seeks to interview yourself or members of your organization, consult counsel before making any statements, even if law enforcement has approached you in a friendly and nonthreatening manner (interested readers on this topic may wish to visit our page about whether to speak to law enforcement).  Likewise, consult counsel immediately if you have received a target letter or grand jury subpoena.

Experienced Federal Healthcare Fraud Defense Attorneys

If you are being investigated or prosecuted, speak to a health care fraud lawyer to learn what defenses you may have.

At Burnham & Gorokhov, PLLC, we represent clients charged with or under investigation for health care fraud, including doctors, pharmacists and staff. In some cases, we have been able to resolve health care fraud investigations without charges ever being filed.

To schedule a free phone consultation, please call our office in Washington, D.C., at 202-386-6920. You can also complete the online contact form.