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What Are the Penalties for Healthcare Fraud Conspiracies?

Categories: Health Care Fraud

healthcare fraud conspiracies
Dr. Nick Oberheiden, Esq.
www.federal-lawyer.com
Direct: (214) 469-9009

It is common practice for the government to charge healthcare offenses as conspiracies. What this means is that several defendants are jointly accused of having entered an agreement to commit healthcare fraud, typically in form of Medicare Fraud, Medicaid Fraud, Tricare Fraud, or fraud in connection with federal workers’ compensation patients. This brief article portrays the key elements and statutory basis of healthcare conspiracies and explains how the sentencing process for conspiracies works in practice.

Conspiracy Explained

The essence of a healthcare conspiracy is that two or more persons have combined, or mutually agreed, to do something illegal.  Iannelli v. United States, 420 U.S. 770, 777 (1975). It is irrelevant whether the goals of the agreement were actually accomplished. To find a defendant guilty of conspiracy, the government must prove beyond a reasonable doubt that:

  • Two or more persons agreed to try to accomplish a common and unlawful plan, as charged in the indictment; and
  • That the defendant knew the unlawful purpose of the agreement and joined in it willfully, that is, with the intent to further the unlawful purpose.

It is important to note that one may become a member of a healthcare conspiracy without knowing all of the details of the unlawful plan or even the identities of all of the other alleged conspirators. In fact, quite often, defendants in criminal healthcare conspiracies have never heard of the other defendants and have never communicated with them in any form. The factor that allows the government to nonetheless lump them all together and connect the conspiracy defendants in one single case is that each conspirator is vicariously liable by entering into an agreement and thus authorizes every member of the conspiracy to act as an agent of the others. Put differently, if a defendant knowingly joins an unlawful scheme, that act alone is enough to convict him of conspiracy, even though he had not participated before and even though he played only a minor part in the conspiracy.  Blumenthal v. United States, 332 U.S. 539, 557 (1947).

Applicable Law

Federal health care offenses are defined in 18 U.S.C. 24(a) to mean violations of, or conspiracies to violate: 18 U.S.C. 669, 1035, 1347 or 1518 and 18 U.S.C. 287, 371, 664, 666, 1001, 1027, 1341 or 1954 if the violation or conspiracy relates to a health care benefit program as defined in 18 U.S.C. sect 24(b).

18 U.S.C. § 24 [Definitions]

(a) As used in this title, the term “Federal health care offense” means a violation of, or a criminal conspiracy to violate—

(1) section 669, 1035, 1347, or 1518 of this title or section 1128B of the Social Security Act (42 U.S.C. 1320a–7b); or

(2) section 287, 371, 664, 666, 1001, 1027, 1341, 1343, 1349, or 1954 of this title section 301 of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 331), or section 501 of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1131), or section 411, 518, or 511 of the Employee Retirement Income Security Act of 1974,,[1] if the violation or conspiracy relates to a health care benefit program.

(b) As used in this title, the term “health care benefit program” means any public or private plan or contract, affecting commerce, under which any medical benefit, item, or service is provided to any individual, and includes any individual or entity who is providing a medical benefit, item, or service for which payment may be made under the plan or contract.

18 U.S.C. § 371 [Conspiracy to Commit Offense or to Defraud the United States]

If two or more persons conspire either to commit any offense against the United States, or to defraud the United States, or any agency thereof in any manner or for any purpose, and one or more of such persons do any act to effect the object of the conspiracy, each shall be fined under this title or imprisoned not more than five years, or both.

If, however, the offense, the commission of which is the object of the conspiracy, is a misdemeanor only, the punishment for such conspiracy shall not exceed the maximum punishment provided for such misdemeanor.

18 U.S.C. § 1349 [Attempt & Conspiracy]

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.

18 U.S.C. § 1347 [Health Care Fraud]

(a) Whoever knowingly and willfully executes, or attempts to execute, a scheme or artifice—

(1) to defraud any health care benefit program; or

(2) to obtain, by means of false or fraudulent pretenses, representations, or promises, any of the money or property owned by, or under the custody or control of, any health care benefit program,

in connection with the delivery of or payment for health care benefits, items, or services, shall be fined under this title or imprisoned not more than 10 years, or both. If the violation results in serious bodily injury (as defined in section 1365 of this title), such person shall be fined under this title or imprisoned not more than 20 years, or both; and if the violation results in death, such person shall be fined under this title, or imprisoned for any term of years or for life, or both.

(b) With respect to violations of this section, a person need not have actual knowledge of this section or specific intent to commit a violation of this section.

Penalties for Conspiracies

Generally speaking, starting point of sentencing in federal court are the federal Sentencing Guidelines (“the Guidelines”).  The Guidelines first set a base offense level.  Offense levels are then added to or subtracted from to reflect the defendant’s prior criminal record as well as the aggravating and mitigating circumstances surrounding the offense.  Once the court calculates the offense level, it then determines the defendant’s criminal history.  After these two factors have been calculated, the court matches the two numbers on a table, leading to the recommended sentencing range for a particular crime.  As any of these two numbers increase, so does the length of the sentence.  Section 2B1.1 of the Guidelines applies to various forms of fraud and includes enhancements based on the amount of loss associated with the fraud.  Obviously, many factors must be considered in order to properly assess the potential sentence.  Additionally, the judge has some discretion in applying the Guidelines, and it would be impossible to predict the outcome with precise accuracy.

What is critical to understand is that the ultimate sentence amount largely depends of the “loss” that the fraud scheme has cost the government. With each range of higher loss, the sentence as suggested by the Guidelines increases. For example, if a defendant is accused of a conspiracy exceeding $ 3,500,000 in loss, the Guidelines suggest to add 34 points to the base level due to the loss amount alone.

Example:

A defendant is considered the leader in a healthcare fraud conspiracy with a loss amount exceeding $ 3,5m. Because the defendant was a physician, the government accuses the defendant also of abusing his trust towards the patients. In this hypothetical, a calculation could look like this:

Offense Character Points Prison Term
Base Offense 6 0-6 months
Abuse of Trust 10 6-12 months
Leader 14 15-21 months
Loss Above $ 1,5m 32 121-151 months
Loss Above $ 3,5m 34 151-188 months
Potentially: 15 years

Obviously, there are many ways to impact that calculation. For one, experienced lawyers could simply challenge the government’s assertion that the defendant engaged in illegal conduct. Lawyers can further dispute that the defendant had the required intent to do something illegally. Further, if the facts are overwhelming and the defendant’s guilt is hard to deny, defense attorneys can often significantly reduce a theoretically calculated sentence by introducing mitigating circumstances and by providing assistance with the resolution of the case. In the example above, healthcare fraud defense attorneys could reduce the potential maximum of 15 years to very little or no prison time, depending on the circumstances of the case. Main goal, however, has to be to dismiss the case by effective counseling.

Who We Are

Oberheiden & McMurrey, LLP advises healthcare clients on regulatory compliance as well as defends healthcare executives, marketers, physicians, and healthcare companies against fraud accusations. Clients that are subject to a government healthcare investigation know they can rely on our healthcare fraud defense experience and our proven track record of avoiding criminal charges. Former prosecutors from the Department of Justice and experienced defense lawyers have formed a team to represent clients from across the nation against government investigations.

  • Nick Oberheiden has achieved no civil and no criminal liability results for physicians and healthcare executives in proceedings before the Office of Inspector General (OIG), the Department of Health and Human Services (HHS), the Department of Justice (DOJ), and the Department of Labor (DOL) and he has defended Stark Law, False Claims Act, and Anti-Kickback cases across the country.
  • Attorney Lynette S. Byrd focuses her practice on civil and criminal litigation, Medicare and insurance audits, and general advice and counseling in health care law. She is a former Assistant United States Attorney with years of substantial trial experience under her belt who merges excellent litigation skills with profound understanding of the law.

Our Healthcare Track Record

Our attorneys are among the most demanded healthcare fraud defense attorneys. Our team of former federal prosecutors, senior government officials, and nationally respected lawyers have accomplished some impeccable results in federal healthcare investigations. Here are some recent examples.

  • Healthcare Fraud
    Result: No criminal charges.
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    Result: No criminal charges.
  • Healthcare Fraud
    Result: No criminal charges.
  • Healthcare Fraud
    Result: No criminal charges.
  • Healthcare Fraud
    Result: No criminal charges.
  • Healthcare Fraud
    Result: No criminal charges.
  • Healthcare Fraud
    Result: No criminal charges.
  • Healthcare Fraud
    Result: No criminal charges.
  • Healthcare Fraud
    Result: No criminal charges.
  • Healthcare Fraud
    Result: No criminal charges.
  • Healthcare Fraud
    Result: No criminal charges.
  • Healthcare Fraud
    Result: No criminal charges.

This information has been prepared for informational purposes only and does not constitute legal advice. This information may constitute attorney advertising in some jurisdictions. Reading of this information does not create an attorney-client relationship. Prior results do not guarantee similar future outcomes. Oberheiden & McMurrey, LLP is a Texas LLP with headquarters in Dallas. Mr. Oberheiden limits his practice to federal law.

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