Healthcare Fraud Cases Against Doctors and Practices.

The federal statute that imposes criminal liability for healthcare fraud, 18 U.S.C. § 1347, requires proof of “knowing and willful” conduct. For physicians, pharmacists, other healthcare providers, and business owners, this includes conduct intended to result in fraudulent reimbursement from private payers in addition to government payers. With the knowledge of these requirements, providers often have an opportunity to present the clinical or business context of their billing and practices, and how these practices align with legal and ethical requirements, before criminal charges are filed.

After Gathering Evidence, How Do Prosecutors Choose the Criminal, Civil, or Administrative Path?

Prosecutors can gather evidence from audits, subpoenas, patient interviews, and other sources without indicating which type of resolution they are pursuing. When evaluating the evidence, federal prosecutors will consider factors like the scope and duration of the alleged fraud, the nature and extent of any patient harm, and the specific legal violations involved. Ultimately, the prosecution’s decision will depend on whether they believe they can prove the necessary elements of a crime beyond a reasonable doubt and how that affects their strategy for achieving the most favorable resolution.

Early documentation can offer a way to counter the data-driven narrative that often leads prosecutors to file criminal charges. This process also can be critical for providers facing FCA CIDs, since providers must either respond to a CID or petition to challenge a CID within 20 days or by an earlier deadline stated in the CID.

While facing criminal prosecution can be terrifying, early intervention can not only protect providers from unnecessary criminal charges, but also help to minimize potential civil and administrative penalties.

Criminal prosecution can expose healthcare providers to imprisonment as well as substantial financial penalties.

What should I do when federal scrutiny first appears?

What Types of Investigation Documentation Should I Expect?

When the federal government targets a healthcare provider or a healthcare-related business, the scrutiny can begin in various ways. Initially, this may be apparent from documentation such as an audit letter, a False Claims Act (FCA) civil investigative demand (CID), a subpoena, or a search warrant.

What Does a Unified Program Integrity Contractor (UPIC) Record Request Indicate?

While a Unified Program Integrity Contractor (UPIC) is often involved in routine matters, a UPIC record request can serve as an indicator that federal authorities are initiating an investigation centered specifically on allegations of fraud.

What Does a Target Letter Mean for Someone Under Federal Investigation?

A target letter is a notification from the prosecutor that an individual is a target of a federal investigation. However, receiving a target letter does not necessarily mean the investigation will lead to an indictment. Along with the information provided in a target letter, prosecutors will often provide information about any potential defenses available and offer the individual the opportunity to present a defense.

What Does a Search Warrant Mean in the Context of a Federal Investigation?

A search warrant is a court order that authorizes federal agents to search a specific location for specific items. It must be supported by probable cause and must describe the property to be seized with particularity. Within the scope of a search warrant, agents can legally enter the specified location, seize anything within the warrant’s scope, and potentially uncover information they can use in a prosecution.

With a search warrant, it is important to identify a lawyer who can quickly intervene. Even in urgent situations, legal intervention can sometimes delay execution or provide important protections against overreach.

What Does a Grand Jury Subpoena Mean?

A grand jury subpoena is a court order compelling a recipient to produce documents or provide testimony before the grand jury by a specified return date. While a grand jury subpoena may precede or follow other forms of investigative documentation, it will frequently be accompanied by other methods of gathering evidence, such as patient interviews, search warrants, and forensic analysis of electronic records.

Grand jury subpoenas require timely responses, but they also present an opportunity to work with the grand jury prosecutor to limit the scope of the inquiry or the need for testimony.

Does a Target Letter Impose the Same Obligations as a Grand Jury Subpoena?

A target letter is not an obligation, and it compels neither testimony nor document production. However, responding to a target letter can still be a strategic move for mitigating the risk of facing criminal charges or civil liabilities.

When Can the Government Suspend or Recoup Healthcare Reimbursements?

Payment suspensions can be imposed at different stages of the investigative process. Before any final determination of an overpayment, the government may impose an interim payment suspension. This will require the recipient to provide a “demonstration of a lack of danger to the integrity of the program” to lift the suspension. Even after determining an overpayment, the government can suspend or recoup payments prior to any formal adjudication.

What Intent Must the Government Prove in Healthcare Fraud Cases?

The U.S. Supreme Court addressed the issue of whether the phrase “knowingly” under the False Claims Act includes a subjective or objective intent requirement. In United States ex rel. Schutte v. SuperValu Inc., 598 U.S. 739 (2023), the Court held that the False Claims Act's scienter element turns on the defendant's own knowledge and subjective beliefs at the time the claims were submitted, not on what an objectively reasonable person might have known or believed.

What Intent Must the Government Prove Under 18 U.S.C. § 1035 (Healthcare Fraud)?

Under 18 U.S.C. § 1035, a healthcare-specific statute, the government must prove a “knowing and willful” material falsehood. While the terms “knowing” and “willful” are subject to a variety of interpretations, in criminal prosecutions the two terms generally require evidence of subjective intent and knowledge of the pertinent law or requirement.

What Intent Must the Government Prove Under 18 U.S.C. § 287 (False Claims Against the United States)?

Under 18 U.S.C. § 287, a defendant “knowingly” presents a false, fictitious, or fraudulent claim to the federal government. While this provision’s requirements are similar to those of 18 U.S.C. § 1035, this section does not mention “willful” conduct. Instead, it imposes penalties for all kinds of fraudulent claims presented under federal law.

What Intent Must the Government Prove Under the Anti-Kickback Statute?

The Anti-Kickback Statute requires evidence of “knowing and willful” conduct. The Supreme Court addressed this requirement in United States v. Greber, 760 F.2d 68 (3d Cir. 1985), ruling that the defendant must have the “specific intent to violate the law.”

Under 42 U.S.C. § 1320a-7b(h), added by the Affordable Care Act in 2010, a defendant need not have actual knowledge of the Anti-Kickback Statute or a specific intent to violate it; prosecutors must prove only that the defendant knowingly and willfully offered, paid, solicited, or received remuneration to induce referrals. However, a defendant is not necessarily shielded from prosecution simply because it is unaware of the precise provisions and penalties of the statute.

What Intent Must the Government Prove Under the Stark Law?

The Stark Law applies regardless of intent. Unlike the Anti-Kickback Statute, the Stark Law’s prohibitions against improper physician referrals and billings apply to any improperly paid fee or arrangement, regardless of intent.

What Does 31 U.S.C. § 3729(b)(1) Say About Knowledge under the False Claims Act?

Under 31 U.S.C. § 3729(b)(1), knowledge under the False Claims Act includes:

• Actual knowledge,
• Deliberate ignorance, or
• Reckless disregard

Although 31 U.S.C. § 3729(b)(1) includes “reckless disregard” within its definition of “knowing,” this does not necessarily mean the government can pursue civil charges without proving intent.

Does the False Claims Act Require the Government to Prove Specific Intent to Defraud?

Under the False Claims Act, the government generally does not need to prove that a person had a “specific intent to defraud” or intended to “knowingly” execute a deceptive plan. The government can pursue civil or criminal penalties if the person or entity knowingly files a claim for reimbursement without the means to prove its accuracy.

However, there are certain situations that warrant proving intent. For example, proving a defendant’s specific intent to deceive the government can significantly increase the likelihood of a successful appeal, and in criminal cases intent is an essential element that cannot be inferred from a provider’s ignorance of the federal rules and regulations governing the program involved.

How can clinical context defeat suspicious billing data?

How Do Billing Analytics Trigger Federal Healthcare Fraud Investigations?

They rely on automated billing analytics. This technology compares providers’ billing data against peer averages and flags outliers. This is typically the first step in the process, and it precedes any involvement by human investigators.

Do Outlier Billing Patterns Establish Fraudulent Intent?

No. While outlier billing may prompt scrutiny, it is not, by itself, evidence of fraudulent intent. There are various legitimate reasons for billing anomalies. Factors such as higher patient acuity may justify more intensive services and, consequently, higher billing.

When Do Higher-Acuity Patients Explain Unusually Intensive Billing Patterns?

Higher-acuity patients, those with more complex conditions or higher risks, generally require more services and time. If a provider treats a higher-acuity population than their peers, their billing may legitimately deviate from the norm.

A provider’s practice pattern can explain why more services are billed per patient. This is one example of how clinical context can challenge a data-driven fraud narrative.

Can Specialty-Specific Coding Ambiguities Trigger Billing Allegations?

Yes. For example, in some specialties, there is ambiguity or disagreement over the appropriate use of certain billing codes. If the government’s interpretation of the rules differs from that of the provider or their billing company, the government may characterize legitimate billing as fraudulent.

Why Doesn’t Billing Data Tell the Full Story?

Billing data records services billed and patient demographics. It does not record patient acuity, the reasons for the services provided, or any other clinical rationale. To understand these details, an investigator or auditor needs to review the patient’s medical records.

Although this information is important, federal investigators often focus on billing data, as this data is readily available and can quickly reveal deviations from the norm.

How Should Providers Use Clinical Context to Help a Federal Healthcare Fraud Defense?

Clinical context must connect services provided to documented medical necessity. With the guidance of experienced defense lawyers, providers should use patient charts and other clinical records to demonstrate a rational connection between the patient’s condition and the services billed.

When Should Clinical Context Be Provided?

The best time to provide clinical context is as soon as possible, ideally before charges are filed. Pre-charge presentations can offer the opportunity to reframe billing anomalies as a compliance or coding problem, which are not criminal offenses.

While providing clinical context at all stages of an investigation is important, the information is most impactful when it is used to steer the investigation away from criminal allegations.

How Important Is a Preexisting Compliance Program for a Good-Faith Intent Defense?

Preexisting compliance programs are extremely important for defending against criminal charges based on intent. They can demonstrate a good-faith intent to comply with federal healthcare laws and regulations.

While a compliance program is not a defense against civil penalties and exclusion, having an implemented program that includes training and auditing procedures can convince federal prosecutors not to pursue criminal charges for fraud.

If any of this describes your situation, it is worth talking it through with counsel. Spodek Law Group can be reached at 212-300-5196.

How should my practice investigate without creating new risks?

What Documents Must My Organization Retain Following an Investigation or in Response to an Allegation?

You must preserve all potentially relevant electronic and paper records. An initial step is to issue a litigation hold that requires the preservation of all relevant records, including, but not limited to:

• Billing records,
• EHR records (including audit trails),
• Email records,
• Text messages,
• Records relating to the practice’s compliance efforts, and
• Any other relevant records.

What Should My Business Owner Be Careful About Doing During an Investigation?

Business owners should be especially careful not to destroy records after a government inquiry or civil case is filed. In many cases, shredding or deleting records can constitute criminal obstruction of justice.

What Is an EHR Audit Trail, and What Information Does It Store?

An EHR audit trail is a record of all activity within an EHR system. With an EHR audit trail, investigators can see who accessed a patient’s record, what additions, deletions, or edits were made to the record, when a record was accessed or edited, and other information.

As a result, an EHR audit trail can expose any evidence of record falsification.

For this reason, making amendments to patient records after an investigation is initiated can expose a provider or a business owner to charges for criminal obstruction of justice.

What Is an Upjohn Warning?

An Upjohn warning is a notice provided to employees when a company’s internal counsel is conducting an interview. The warning makes clear:

• The attorney is interviewing on behalf of the company;
• The attorney represents the company and not the individual employee;
• The attorney-client privilege covers the information disclosed to the attorney;
• The company, not the individual employee, controls the attorney-client privilege; and,
• The company may, at its discretion, disclose the attorney-client privilege to federal prosecutors or other government investigators.

What Is the Significance of a Corporate Counsel’s Attorney-Client Privilege?

Corporate counsel’s attorney-client privilege is highly significant for two reasons. First, it means that what is said during an interview is covered by the privilege, and what is said is confidential. Second, the corporate privilege allows for sharing the privileged attorney-client advice with federal prosecutors or other government investigators without revoking a grant of immunity to the individual interviewed.

However, if you share that advice with your practice’s billing company, your right to claim the attorney-client privilege may be waived.

What Is the “Corrupt Persuasion” Provision Under 18 U.S.C. § 1512(b)?

18 U.S.C. § 1512(b) prohibits “corruptly persuading” someone in a matter for the purpose of which the person’s testimony or information is sought. This criminal statute prohibits any attempts to influence or dissuade a colleague from testifying in a federal healthcare fraud case.

Which legal process am I actually facing?

Which Other Legal Proceedings and Collateral Consequences Could I Face?

Depending on your practice’s role, there may be additional legal proceedings and collateral consequences involved. These include, but are not limited to:

• Federal criminal charges and civil lawsuits,
• Professional license discipline,
• Audit findings,
• Medicare payment suspensions,
• OIG exclusion from federal healthcare programs,
• Suspension or loss of Medicare, Medicaid, or Tricare certification,
• False Claims Act (FCA) liability,
• Private-payor liability,
• Medicare payment overpayment,
• Pre-trial conditions (such as restrictions on professional practice), and,
• Denial of criminal appeal based on the nature of criminal acts,

When Should Medicare Redetermination Requests Be Filed?

Medicare redetermination requests generally must be filed within 120 days of receiving a request for recoupment. This applies in both the first and second-level appeals, and also for appeals involving either Part B or Part D reimbursement for Medicare-covered drugs and DME devices.

During redetermination and reconsideration, the provider must be able to substantiate a claim for payment for healthcare services. If the government audits the healthcare provider during this process, the healthcare provider can use clinical context to substantiate claims made for payment.

How Is FCA Liability Proven?

Unlike criminal prosecutions, liability under the FCA can be proven by a “preponderance of the evidence.” This lower burden allows the government to seek civil penalties without proving “beyond a reasonable doubt” that the defendant intended to commit a fraud.

In addition to proving a “preponderance of the evidence,” the government must show that the provider had knowledge of the allegedly fraudulent act and that the act involved false, fictitious, or fraudulent billings or submissions to the federal government.

When Is an OIG Exclusion Hearing Request Due?

Hearing requests for OIG exclusion can generally be made within 60 days of receipt of an Order of Exclusion from the Federal Healthcare Programs (OIG Exclusion). If a provider has received a request to review an exclusion, a request for a reconsideration must be made within 15 days of the request receipt.

The OIG Exclusion is not a criminal penalty but it is not without consequences. The OIG exclusion renders the provider unable to bill Medicare, Medicaid, Tricare, or other federal healthcare benefit programs.

How Are Private-Payor Disputes Handled?

Private-payor disputes involving Medicare-covered drugs and DME devices are not subject to Medicare appeal regulations. These disputes are handled according to the applicable private-payor contract or state law.

Should I Repay or Self-Disclose a Billing Problem?

Yes. Here are some key considerations.

How Important Are Records of Compliance Efforts for a Good-Faith Intent Defense?

Compliance records are extremely important when building a good-faith intent defense. Records of internal efforts to educate employees, maintain coding and billing compliance, and self-audit are most persuasive when they are created before the provider or business owner comes into contact with the government.

How Can Internal Audit Records Benefit a Good-Faith Intent Defense?

Internal audit records show the efforts the provider made to detect and correct billing and coding problems before being contacted by the government. This can help to disprove the element of “willful” conduct required under 18 U.S.C. § 1035 and the Anti-Kickback Statute.

What Effect Does a Provider’s History of Cooperation Have?

A provider’s history of cooperation with the government can also be very important when trying to convince federal prosecutors and the OIG to pursue civil or administrative remedies rather than criminal ones.

When Must a Provider Repay overpayments, and What Are the Penalties for Failing to Repay?

Under 42 U.S.C. § 1320a-7k(d), healthcare providers that identify overpayments resulting from Medicare payments must report the overpayment and return the overpayment amount, either during the course of an audit or within 60 days of identifying an overpayment. Failing to report and return identified overpayments can subject a provider or business owner to civil penalties under the False Claims Act (FCA), in addition to civil or administrative sanctions.

When Can a Provider Voluntarily Disclose Potential Fraud and When Can a Provider Self-Disclose a Stark Law Violation?

A provider can voluntarily disclose potential fraud involving a federal healthcare benefit program under the OIG’s Self-Disclosure Protocol. A provider can also self-disclose an actual or potential Stark Law violation under the CMS’s Self-Referral Disclosure Protocol.

Can a Provider Voluntarily Disclose to the OIG in order to Avoid Criminal Charges?

If a provider or business owner has committed criminal fraud, making an OIG self-disclosure does not automatically resolve criminal liability. While an OIG self-disclosure can resolve liability under the False Claims Act, the self-disclosure does not necessarily grant immunity against criminal charges.

Talk to Spodek Law Group

Every case turns on its own facts, and general information is no substitute for advice about yours. Todd Spodek, managing partner of Spodek Law Group, and the firm's attorneys defend federal criminal and white collar matters nationwide. Reach the firm at 212-300-5196.