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What are the Penalties for Medicare Fraud?

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Federal Defense Attorneys Discuss Medicare Fraud Penalties

Medicare fraud costs the federal government billions of dollars every year. As Medicare fraud schemes become more sophisticated, federal authorities are increasingly pouring resources into combating fraud and abuse. While this means that more organized fraud schemes are being uncovered, it also means that legitimate health care providers are facing increased scrutiny – more than ever before – with regard to their federal benefit program billing practices.

When audits and investigations lead to federal prosecution, the consequences can be extreme. The financial costs of a Medicare fraud conviction can easily climb far beyond what most medical practitioners and health care facilities can afford to pay; and, when multiple charges are combined, providers can suddenly find themselves facing the prospect of spending decades in federal prison. As a result, all health care providers must take action to protect themselves at the first sign of a potential investigation. They must be prepared to work with legal counsel to execute a comprehensive defense strategy focused on avoiding Medicare fraud penalties.

Defining Medicare Fraud

In its most direct sense, Medicare fraud refers to collecting payment through the Medicare system when no payment is rightfully due. However, this can take many forms, and Medicare fraud investigations can involve allegations of a wide range of ancillary offenses as well. It is this breadth of prosecution that creates the greatest risk for legitimate health care providers, as even unintentional violations can potentially lead to substantial civil liability.

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Dr. Nick Oberheiden
Dr. Nick Oberheiden

Attorney-at-Law & Founder

Amanda Marshall
Amanda Marshall

Former U.S. Attorney

Local Counsel

Lynette S. Byrd
Lynette S. Byrd

Former Federal Prosecutor

Partner

Aaron L. Wiley
Aaron L. Wiley

Former Federal Prosecutor

Local Counsel

Subodh Chandra
Subodh Chandra

Former Federal Prosecutor

Local Counsel

Elizabeth K. Stepp
Elizabeth K. Stepp

Partner

Roger Bach
Roger Bach
(Non-Lawyer)

Former Special Agent, OIG

Dennis A. Wichern
Dennis A. Wichern
(Non-Lawyer)

Former Special Agent-in-Charge

Chris Quick
Chris Quick
(Non-Lawyer)

Former Special Agent, FBI

Kevin M. Sheridan
Kevin M. Sheridan
(Non-Lawyer)

Retired Supervisory Special Agent, FBI

Ray Yuen
Ray Yuen
(Non-Lawyer)

Former Supervisory Special Agent, FBI

Gamal Abdel-Hafiz
Gamal Abdel-Hafiz
(Non-Lawyer)

Former Supervisory Special Agent, FBI

Four of the primary federal statutes used to prosecute Medicare fraud are the federal health care law (18 U.S.C. Section 1347), the False Claims Act, the Anti-Kickback Statute, and the Stark Law. The False Claims Act is by far the broadest of the three, covering any and all “false or fraudulent” claims submitted for Medicare reimbursement. As its name suggests, the Anti-Kickback Statute applies to illegal compensation arrangements that involve payments from Medicare, and the Stark Law creates civil liability for so-called “physician self-referrals.”

In addition to these statutes that apply specifically to payments from the federal government and health care providers, there are numerous other offenses that the U.S. Department of Justice (DOJ) can charge as the result of a Medicare fraud investigation. For example, conspiracy charges are common, as are charges for money laundering, mail fraud, wire fraud, and other white-collar federal offenses.

Within this context, there are numerous examples of billing practices, compensation arrangements, and other acts and omissions that can lead to Medicare fraud investigations and charges. Some of the most common allegations include:

  • Medicare billing and coding violations, including up coding, unbundling, phantom billing, and billing for medically-unnecessary services or supplies
  • Unintentional billing mistakes resulting from human error that result in overpayments from Medicare
  • Obtaining or supplying fraudulent physician certifications for home health and hospice services
  • Falsification of patient records and test results
  • Illegal kickbacks, physician self-referrals, and other compensation arrangements
  • Prescription medication fraud, including drug diversion
  • Using the mail, telephone, or electronic communications to facilitate unlawful billing of Medicare
  • Aiding or abetting any activity that constitutes Medicare fraud

The Penalties for Medicare Fraud

The penalties for Medicare fraud depend upon the specific allegations and federal laws involved in each particular case. In a civil case, the penalties are strictly financial in nature – although they can be far more substantial than most providers realize. In criminal cases, providers can face both fines and prison time – as well as various other significant consequences that can flow from a Medicare fraud conviction.

Here is a basic introduction to the penalty provisions of the various health care fraud and related laws discussed above.

1. Federal Health Care Fraud Law

Under the federal health care fraud law, a “standard” offense can result in a 10-year prison sentence. If the fraud results in bodily injury, this is increased to 20 years. In cases involving death, health care providers (including physicians, pharmacists, executives, and other key personnel) can face life behind bars. A conviction under 18 U.S.C. 1347 can also result in substantial fines and loss of eligibility for Medicare and other health care benefit programs (also referred to as “program exclusion”).

2. False Claims Act

Under the False Claims Act, the DOJ and other federal authorities can pursue either civil or criminal penalties. Generally speaking, civil cases involve allegations of fraud without indication of intent, while criminal cases require proof that a provider knowingly or intentionally submitted false and fraudulent claims for Medicare reimbursement. Civil monetary penalties under the False Claims Act can include over $21,000 per false claim, treble (triple) damages, and recoupment of overbilled amounts. In criminal cases, providers can face potentially hundreds of thousands of dollars in fines, and up to five years of incarceration for each violation. In both civil and criminal cases under the False Claims Act, providers can also face loss of hospital privileges, non-payment of future claims, program exclusion, and other penalties.

3. Anti-Kickback Statute

Like the False Claims Act, the Anti-Kickback Statute includes provisions for both civil and criminal penalties. In civil cases, providers can face civil monetary penalties, fines, triple damages, recoupments, and program exclusion. Criminal fines can reach $25,000 per violation, and a conviction can result in five years of incarceration for each separate offense.

4. Stark Law

The Stark Law is a civil statute with financial penalties similar to those under the False Claims Act and the Anti-Kickback Statute. A finding of liability under the Stark Law can result in recoupment demands, fines, treble damages, civil monetary penalties, and program exclusion for knowing violations.

The Office of Inspector General’s (OIG) Health Care Fraud Prevention and Enforcement Action Team (HEAT) has published a one-page chart outlining the legal standards and penalties that apply under the Anti-Kickback Statute and the Stark Law – and can be accessed here.

5. Conspiracy, Money Laundering, Mail Fraud, Wire Fraud, and Other Offenses

Conspiracy, money laundering, mail fraud, wire fraud, and other similar offenses are all heavily prosecuted and heavily punished at the federal level. For each individual count of each offense, health care providers can potentially face hundreds of thousands of dollars in fines and a decade or more in federal prison. In criminal Medicare fraud cases, it is not uncommon for providers to face multiple counts for a wide range of offenses; and, when combined, the penalties can become insurmountable.

Avoiding Civil and Criminal Penalties for Medicare Fraud

Experienced Health Care Fraud Defense Lawyers with DOJ Experience

In order to avoid civil and criminal penalties for Medicare fraud, health care providers must intervene in the government’s investigation, assert their legal and Constitutional rights, and demonstrate to the federal investigators and prosecutors that the evidence does not support a federal prosecution. This requires experienced legal representation. At Oberheiden, P.C. we have decades of experience in Medicare fraud cases as both defense attorneys and senior federal health care prosecutors.

When you choose our legal team for your Medicare fraud defense, we will use our past federal government experience to quickly make contact with the investigators and prosecutors involved in your case. We will use our vast knowledge of federal health care law and the Medicare billing regulations to mitigate your risk as much as possible. When clients contact us during their investigations (as opposed to after they have already been charged) we have one goal: to ensure that our client does not face a federal Medicare fraud prosecution.

A Strategic Approach to Comprehensive Medicare Fraud Defense

Our strategic approach to Medicare fraud defense involves three key phases: (i) early intervention, (ii) attacking the government’s case, and (iii) asserting statutory and regulatory defenses.

  • Early Intervention – When the future of your business (and your personal freedom) is on the line, every second matters. Our attorneys will intervene in the government’s investigation as soon as possible, and seek to obtain the information we need in order to build a defense strategy that is custom-tailored to the factual allegations and legal issues involved in your case.
  • Attacking the Government’s Case – Federal health care fraud investigators and prosecutors are very good at what they do. In fact, federal authorities such as HEAT focus 100% of their time and attention on prosecuting cases of suspected Medicare fraud. However, these cases are often extremely complex, and the point of conducting an investigation is to determine whether there is sufficient evidence to support civil or criminal charges. We will work to convince the authorities that they do not have a case to prosecute.
  • Asserting Statutory and Regulatory Defenses – Laws such as the Anti-Kickback Statute include numerous safe harbors and exceptions, and regulations enacted pursuant to these statutes establish additional safe harbors as well. If the evidence appears to point to Medicare fraud, we will seek to prove that your compensation arrangement or billing practices have been exempted from civil or criminal culpability.

Are You Under Investigation for Medicare Fraud? Contact Us Now

If your business or practice is under investigation for Medicare fraud, the attorneys at Oberheiden, P.C. can help. To request a free and confidential case assessment, call (214) 692-2171 or submit your case online now.

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