Penalties for Health Care Fraud in the United States

The United States spends more on healthcare per person than any other industrialized nation in the world. In 2015, the country spent more than $3.2 trillion on healthcare. When an industry generates so much capital the potential for abuse increases. Health care fraud is a rising problem in the United States. In fact, the FBI estimates that health care fraud costs the United States “tens of billions of dollars” each year. Health care fraud is considered a federal white collar crime. A person who is charged with a health care fraud can face serious criminal consequences.

White collar crime is often thought of as a victimless crime. This, however, is not true. White collar crime is a nonviolent, financial crime that can cause serious problems for its victims. When a country and its taxpayers suffer losses of nearly 80 billion dollars each year, it is hard to say that health care fraud is a victimless crime. Crimes of fraud may seem less harmful than violent crimes because the victim of the crime is out of sight. However, real people suffer can real consequences when white collar crimes are committed. Former Attorney General Loretta Lynch has gone on record to say that “health care fraud is not an abstract violation or benign offense – it is a serious crime.” Perpetrators of health care fraud “seek to use public funds for private enrichment” at the expense of “real people” who are often in need of “significant medical care.”

Health care fraud is a general term that includes insurance fraud, pharmaceutical and drug fraud, and medical fraud. Health care fraud is, of course, a crime of fraud. What exactly makes an act fraudulent? Fraud is loosely defined as knowingly and willfully deceiving another for the purpose of financial or personal gain. Essentially, fraud is lying (either overtly or by omission) to achieve a financial or personal advantage.

Health care fraud is a federal offense. This means that the federal government will investigate and prosecute the crime for which you have been accused of committing. Federal crimes are often subject to harsher criminal penalties, including detainment in a federal prison.

Crimes of health care fraud can be prosecuted under 18 U.S. Code Section 1347. Under the federal criminal law, a person is guilty of health care fraud when they knowingly and willfully execute (or attempt to execute) a scheme to:

  1. Defraud any health care benefit program; or
  2. Obtain, by mean of false or fraudulent pretenses, representations, or promises, any money or property owned by or under the control of any health care benefit program in connection with the delivery of or payment for health care benefits, items, or services.

As you can see, the crime of health care fraud is actually quite broad. The statute covers a wide range of possible acts. The statute can be applied to individuals, health care providers, and/or insurance companies. In 2016, the FBI’s Fraud Section executed the largest health care fraud takedown in the country’s history for a scheme that defrauded Medicare and Medicaid. Individuals charged with health care fraud included nurses, doctors, and other medical professionals.

Examples of acts that may be prosecuted under the federal health care fraud statute include:

  • Kickbacks
  • Submitting duplicate claims
  • Providing and billing for excessive services
  • Providing and billing for unnecessary services
  • Unbundling
  • Upcoding of services provided
  • False billing
  • Using another person’s health care coverage
  • Medicaid and Medicare fraud
  • Copying and pasting medical records, and
  • Improper referrals.

Actions taken to deceive a health care service provider or the payor of health care services (Medicare, Medicaid, etc.) can be prosecuted as acts of health care fraud.

When the federal government stands to lose nearly $80 billion each year you can be certain that they will aggressively prosecute individuals and companies who are believed to have committed health care fraud. The Department of Justice under Attorney General Jeff Sessions has vowed to seek the most serious criminal charges and harshest penalties possible for federal crimes. A conviction for health care fraud carries the possibility of serious time in federal prison. Generally, health care fraud is punishable by up to 10 years in a federal prison. However, if a victim suffers serious bodily injury or dies as a result of the fraudulent act, the fraud may be punishable by 20 years to life in prison.

White collar crimes, including health care fraud, are taken very seriously by the federal government. The FBI and DOJ will not hesitate to bring federal charges against anyone who is believed to have participated in a fraudulent scheme. If you are accused of health care fraud, it is important to contact an experienced criminal defense attorney who is familiar with the nuances and complexities of federal white collar crime laws.

About the Author: Attorney Gus Kostopoulos is a former prosecutor and owner of Kostopoulos Law Group

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