Federal Healthcare Fraud: Medicare and Medicaid Fraud Defense.

Medicare is a federal program administered by the Centers for Medicare and Medicaid Services (CMS), while Medicaid is jointly funded and administered by the U.S. government and the state governments. Both of these healthcare benefit programs are heavily regulated, and the U.S. Department of Health and Human Services (HHS) Office of Inspector General (OIG) plays a key role in overseeing the federal government’s healthcare spending.

When an individual or entity is accused of Medicare or Medicaid fraud, the federal government can initiate criminal, civil, and administrative proceedings simultaneously. This complex legal process means that an allegation of fraud does not automatically translate into criminal charges, and the defense strategy depends heavily on the nature of the case and the evidence against the accused.

With this in mind, if you are facing Medicare or Medicaid fraud allegations, it is important to remember that an innocent billing error is not the same as a federal crime. Here are a few reasons why you may not face a criminal case:

• An innocent billing error does not automatically establish criminal healthcare-fraud intent. To constitute federal healthcare fraud under the law, the federal government must prove that the inaccurate bill was submitted “knowingly and willfully.”

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• Although allegations of Medicare or Medicaid fraud can trigger criminal investigations, they do not automatically result in criminal charges. In some cases, civil or administrative investigations are more likely than criminal prosecution.

That said, even if you are not facing criminal charges, it is still important to respond to the allegations. The best way to do this is to preserve evidence and speak with a highly experienced healthcare fraud defense attorney. By working with an experienced defense team, you can respond to allegations in a way that helps avoid facing unnecessary penalties in the future.

Which mental states and conduct do the main healthcare-fraud laws require?

Federal healthcare-fraud laws impose liability based on both a defendant’s conduct and their state of mind. Understanding how these elements interact is essential for building a strong defense. Each of the primary statutes and regulations, including the federal criminal healthcare-fraud statute, the Anti-Kickback Statute (AKS), the Stark Law, and the False Claims Act (FCA), defines the mental state and conduct necessary to trigger civil or criminal liability.

18 U.S.C. § 1347, Criminal Healthcare Fraud

Section 1347 of Title 18 of the U.S. Code is the government’s primary tool for prosecuting healthcare fraud. It applies when a defendant “knowingly and willfully” executes, attempts to execute, or conspires to execute a “scheme or artifice” to defraud a health care benefit program or to obtain its money or property by means of false or fraudulent pretenses, representations, or promises, in connection with the delivery of or payment for health care benefits, items, or services. As the language of Section 1347 indicates, federal criminal prosecution under the statute is possible in a variety of circumstances, including:

• Defrauding a healthcare benefit program or offering payments that are provided through government benefits;
• Obtaining money or property by using false or fraudulent representations in connection with the delivery or payment of healthcare benefits; and
• Aiding, aiding or abetting, or conspiring with others to do any of the above.

Anti-Kickback Statute (AKS)

The Anti-Kickback Statute is a federal criminal statute that prohibits those who pay, offer, solicit, receive, or seek to receive remuneration to induce or encourage “referrals” in connection with items or services paid for under federal healthcare benefit programs. To establish criminal liability under the AKS, the government must prove that a defendant acted “knowingly and willfully.” “Remuneration” is broadly defined to include not only money, but anything of value, such as:

• Rent and utilities;
• Discounts;
• Scholarships and fellowship opportunities;
• Cash gifts or loans; and
• Rebates and kickbacks.

Stark Law

The Stark Law generally imposes civil liability for physician referrals for designated health services (DHS) to an entity with which the physician or an immediate family member has a financial relationship. To prove liability under the Stark Law, the government must establish that the referral transaction: (i) violates one or more requirements of the Stark Law, and (ii) does not fall within any applicable statutory or regulatory exception.

False Claims Act (FCA)

The False Claims Act imposes civil liability when someone “knowingly” presents, or causes the presentation of, a claim for payment to a federal healthcare program that contains “materially false or fraudulent” information. The statute defines “knowingly” to include (i) actual knowledge of the truth or falsity of the information; (ii) “deliberate ignorance” of the truth or falsity of the information; or (iii) “reckless disregard” of the truth or falsity of the information. In other words, the government does not need to prove “specific intent” to impose civil liability under the False Claims Act.

Todd Spodek cross-examined Alec Baldwin at the 2013 stalking trial in Manhattan.

How do subpoenas, audits, and investigative demands change a provider’s first moves?

If you or your business is under investigation for federal healthcare fraud, your first moves need to be informed by an understanding of what is being scrutinized, which federal agencies are involved, and the legal process being employed.

As we’ve discussed, healthcare fraud investigations are broad and cover a wide range of activities. If you face a federal healthcare-fraud investigation, it could focus on any or all of the following areas of your business:

• Billing Practices and Records, Many investigations begin with an inquiry into a provider’s billing practices, medical records, prescribing habits, referral patterns, and/or ownership interests. Even if the scope of the inquiry starts narrow, federal agents and prosecutors may quickly expand it as they look for additional avenues of liability.
• Regulatory Violations, In addition to billing practices, federal agents and prosecutors will scrutinize a provider’s adherence to relevant laws and regulations. This includes making sure that physicians do not have financial relationships that violate the Stark Law, that healthcare providers do not seek or accept kickbacks that violate the Anti-Kickback Statute, and that prescriptions and other medical services that are provided are a result of patient needs.
• Criminal, Civil, or Administrative Violations, Healthcare fraud investigations can involve allegations of any of the types of liability that are subject to healthcare fraud prosecution.

Which Federal Agencies Are Involved in Healthcare Fraud Investigations?

The Department of Health and Human Services Office of Inspector General (HHS OIG) and the Department of Justice (DOJ) work together to investigate and prosecute healthcare fraud. While HHS OIG has broad authority to investigate fraud, waste, and abuse involving federal healthcare programs, it depends on the DOJ for criminal prosecution. The DOJ’s Civil Division, Criminal Division, and U.S. Attorneys’ Offices can all initiate and conduct fraud investigations. In criminal matters, the FBI, DEA, and HHS OIG all participate in the investigative process, and in civil matters, FBI and HHS OIG agents also play roles.

Subpoenas vs. Civil Investigative Demands (CIDs)

Depending on the type of case, the government may issue a subpoena or a civil investigative demand. A civil investigative demand (CID) is a type of administrative subpoena that can require the production of documents, written answers to questions, or oral testimony during an investigation under the False Claims Act. Grand jury subpoenas and civil investigative demands serve different legal purposes and impose different procedural rules. They require very different legal strategies in the courtroom, and each must be addressed by a legal team with experience and skill in the specific type of proceeding involved.

What do criminal sentences, FCA damages, and Medicare exclusion each do to a provider?

The consequences of a successful government healthcare fraud case can vary widely depending on the laws involved and the findings of the investigation. The three types of penalties that federal agents and prosecutors have at their disposal are:

• Damages Under the False Claims Act (FCA), If the government successfully pursues a claim under the FCA, individuals and businesses can be subject to treble damages plus civil penalties for each false claim. While the FCA imposes civil penalties, businesses can face substantial financial liability, and individuals can face personal financial consequences.
• Exclusion From Federal Healthcare Benefit Programs, Exclusion is a form of administrative penalty that is imposed when a healthcare provider is convicted of certain crimes or found liable for civil violations. When excluded, providers are barred from participating in federal healthcare programs (such as Medicare, Medicaid, Tricare, and others) and will be unable to seek reimbursement for their services under these programs. Exclusion is a catastrophic consequence for most healthcare providers, and it can affect providers regardless of whether they received a criminal conviction or civil damages.
• Professional Licensing Discipline, In addition to the federal government’s penalties, professional licensing boards and other regulatory authorities can impose disciplinary action against individuals suspected of federal crimes, including those practicing medicine or pharmacy. However, disciplinary action is not imposed automatically, and state and federal licensing boards generally rely on separate proceedings to impose license suspensions and revocations.

What Penalties Can a Provider Face in a Federal Criminal Healthcare Fraud Case?

In federal criminal healthcare fraud cases, criminal sentences are primarily based on the U.S. Sentencing Guidelines. Factors that judges use to determine sentencing are:

• Amount of Loss, The amount of money or value at issue in the offense (and the number of victims involved) is a central factor when determining criminal penalties.
• Nature and Circumstances of Offense, The U.S. Sentencing Guidelines also identify sentencing factors based on the nature and circumstances of a defendant’s conduct. These factors are used to assess relevant conduct, and they can increase or decrease a defendant’s culpability depending on their level of participation.
• Defendant’s Role in the Offense, If a defendant is an aider or abettor (rather than a primary actor), this can play a role in determining their sentencing.
• Defendant’s Criminal History, Like all federal criminal cases, prior criminal history can play a role in determining the sentencing judge’s decision.
• Harm Done to Victims, Judges will also consider the harm caused to victims when determining the appropriate sentence in a healthcare fraud case.

Contact a Federal Criminal Defense Attorney

Nothing here is legal advice, and the details of your case matter. Todd Spodek and Spodek Law Group take federal criminal and white collar cases nationwide, from offices in New York, Brooklyn, Queens and Los Angeles. You can reach the firm at 888 348 8028.