Federal Health Care Fraud Statute 18 USC 1347
Health care fraud is one of the primary concerns of the Department of Justice (DOJ). Since financial resourcing for healthcare benefit programs like Medicare are limited, the DOJ not only targets major organizations like hospitals and drug companies, they will also go after individual physicians suspected of defrauding a healthcare benefit program. One of the DOJ’s most powerful healthcare fraud weapons is 18 USC Section 1347, also known as the federal health care fraud statute. Its prohibitions are broad and its penalties are severe.
Examples of Activities Covered by the Health Care Fraud Statute
There are several activities that are typically prosecuted under this statute. One of the most common examples is billing a healthcare benefit program for medical services or prescriptions that were never provided. Another common kind of case is providing a patient with medical services or prescriptions that were not actually needed. Self-referral is another, as well as duplicate submissions for the same medical services or prescriptions. Upcoding, or billing for a more expensive medical service or prescription than was actually provided, is also frequently prosecuted under this statute, as is unbundling, or billing for each step of a single procedure as a separate procedure.
Complications Involving The Federal Fraud Statute
However, these are not the only kinds of cases that can be prosecuted under the federal health care fraud statute. The statute is written broadly enough to apply to almost any potential case of healthcare fraud. Many things that healthcare providers might not even consider to be fraud can be prosecuted.
It is all too easy for a competitor or a disgruntled former employee to make a complaint out of malintent. Complaints to medical boards or prosecutors can be made anonymously and trigger criminal investigations. Some companies and government agencies use computer programs that track and analyze the billing codes submitted by healthcare providers against “typical” billing codes for the provider’s area. Since computers lack human judgment and use algorithms to identify differences, natural statistical variance can trigger a criminal investigation. Even a new or inept employee mistakenly using the wrong codes can trigger an investigation.
Once an investigation has begun, it can all too easily snowball out of control. Normal billing practices can be seen as potentially fraudulent billing activity when a complaint is made. Investigators will go over all billing issues with a fine-toothed comb looking for things that can seem like fraud regardless of whether there was any actual intent. To many healthcare practitioners, the evidence supporting fraud charges can seem to come out of left field.
Due to these issues, no healthcare provider or organization can afford to believe that they are immune from federal investigation for healthcare fraud. Any healthcare provider or organization needs to be vigilant in defending against federal healthcare fraud prosecution.
18 USC 1347: The Federal Health Care Fraud Statute in a Nutshell
The statute says that
“(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.”
In other words, anybody who makes false claims to a healthcare benefit program in order to receive something of value that they otherwise could not obtain is guilty of health care fraud and subject to fines and imprisonment.
What to Expect from Prosecution Under the Criminal Health Care Fraud Statute
The prosecution will concentrate on proving the following:
1) Fraudulent Intent
To be considered guilty of a violation of 18 U.S.C. 1347, the prosecution needs to prove that the defendant intended to “knowingly and willfully execute” a scheme to defraud a healthcare benefit program. This can be done by presenting actual proof of prior knowledge that a claim was fraudulent, but prior knowledge can also be inferred from the defendant’s other actions and statements. As long as there is proof that the defendant knew that there was potential for their conduct to be considered illegal, or took steps to avoid learning about whether or not their conduct was illegal, the prosecution can prove that there was criminal intent.
2) Fraudulent Activity
If possible, the prosecutor will try to prove that the defendant actually committed fraud. This will generally take one of two forms. The first involves the healthcare provider willfully and knowingly submitting claims to a healthcare benefit program for products or services that were never actually provided. The second involves the healthcare provider providing medical products and/or services that were not medically necessary. However, if the prosecutor cannot prove either of the elements, they may instead try for prosecution based on attempting to commit fraud.
The criminal health care fraud statute does not distinguish between actually committing healthcare fraud and attempting to commit it. Making the attempt is punishable by the same penalties as successful execution. In order to prove that an attempt was made, prosecutors will first try to prove intent, then show that the defendant took a substantial step toward acting on the fraud. When there is not enough evidence to prove that healthcare fraud took place, prosecutors will often pursue a case based on attempted fraud.
If anyone else was involved in the activity that prosecutors have decided is questionable, they might decide to prosecute on conspiracy charges under 18 U.S Code 1349. This statute states that any person conspiring with another person to commit an offense such as healthcare fraud can be subject to the same penalties that exist for the offense that they conspired to commit. In other words, 18 U.S Code 1349 means that even if prosecutors cannot prove that fraud took place, or that an attempt was made, they can still press charges based on conversations or interactions with other people. This, too, is an extremely broad standard. It can be ridiculously easy to press charges of conspiracy based on innocuous conversations with somebody who has committed healthcare fraud.
3) Target of Fraud was a Health Care Benefit Program
18 U.S.C. section 1347 applies to fraud directed at a healthcare benefit program, defined as “any public or private plan or contract, affecting commerce, under which any medical benefit, item, or service is provided to any individual.” Practically speaking, this includes Medicaid, Medicare, Tricare, Veteran’s Administration benefit programs, Department of Labor benefit programs, private health insurance plans, and state benefit programs.
It is not necessary for the prosecution to prove that the healthcare provider had any knowledge of the criminal health care fraud statute. The prosecution also does not need to prove that there was intent to violate this statute. To be found guilty under the federal fraud statute, the prosecution does not need to prove you knew that your conduct was unlawful. All the prosecution needs to prove is that the defendant was aware that he or she was involved in a potentially fraudulent scheme or that he or she was willfully ignorant of the nature of the scheme.
The Consequences of a Conviction
An individual health care provider who is convicted under 18 U.S.C. 1347 can be fined up to $250,000. An organization convicted under this statute can be fined up to $500,000. Healthcare providers who are convicted also can be put in federal prison for as much as 10 years. Penalties tend to be more severe in proportion to the amount of money involved.
However, these are just the penalties for a basic case. If the fraud causes the victim serious bodily harm, such as an overdose on an unnecessary prescription, a healthcare provider can be imprisoned for up to 20 years. If the fraud results in a death, then a life sentence is a realistic possibility.
Additionally, healthcare providers facing prosecution under the healthcare statute often face charges under other federal statutes. This includes prosecution under the Anti-Kickback Statute, the False Claims Act, controlled substance laws, and more. This can result in substantial additional fines and prison time. For example, according to 21 U.S.C. 841, the Controlled Substances Act, there is also the possibility for a one year maximum sentence for the fraudulent distribution of Schedule V drugs, five years maximum for Schedule IV drugs, ten years maximum for Schedule III drugs, 20 years maximum for Schedule II drugs, and 20 years maximum for Schedule I drugs. The numerous combinations of charges that can result from healthcare fraud prosecution can amount to some very lengthy prison sentences.
According to the United States Sentencing Commission, 71.4% of people convicted under 18 U.S.C. 1347 were imprisoned. The average prison sentence was two years and five months. 86.5% of people convicted under this statute had little to no criminal history. Prosecution under this statute is a serious matter.
Once an investigation under the federal fraud statute has begun, the danger for a healthcare provider increases. The faster that provider obtains the assistance of a defense lawyer experienced in healthcare fraud cases, the better. Healthcare fraud cases are complicated, and healthcare providers can be arrested as soon as investigations are complete. This leaves providers scrambling to build a criminal defense while federal prosecutors have already had months to build a case.
An aggressive defense is needed immediately so that the defense can investigate and challenge the procedures that the investigators are using, as well as the evidence they find. The authentication of every document that prosecutors present must be checked, the admissibility of every piece of evidence must be scrutinized, and the constitutionality of every step of the investigation must be examined. If the investigation can be strongly challenged before it is completed, there is a good chance that it will fall apart before charges are pressed. The charges could be dismissed before the trial even starts. Even if the case goes to trial, experienced defense attorneys can convince the judge to dismiss the case after the prosecution presents its case, or convince the jury to come back with a favorable verdict. Good defense attorneys can present arguments to the judge that may compel them to ignore sentencing guidelines and show leniency. If the prosecutors have a strong case, good defense attorneys can often negotiate a plea bargain based on possible weaknesses in the case that the prosecutors might not want to take a risk on.
Because of the vague, broad nature of the health care fraud statute, it is easy to allege healthcare fraud. Charges under this statute can be difficult to fight, and the consequences of being found guilty can be severe. Fighting the charges and minimizing sentencing requires a knowledgeable, comprehensive strategy. If you are facing charges related to healthcare fraud, or are currently under federal healthcare fraud investigation, contact us today 888-402-4054 for a free confidential assessment of your case.