Federal Healthcare Fraud Defense

The government recovered $6.8 billion through the False Claims Act in fiscal year 2025, and more than $5.7 billion of that figure came from healthcare.

That number is not an abstraction. It is the sum of individual cases, each one involving a person who received a letter, or a visit, or a phone call from agents who had already decided what the evidence meant. Section 1347 of Title 18 criminalizes schemes to defraud healthcare benefit programs. The Anti-Kickback Statute prohibits remuneration intended to induce referrals. The Stark Law forbids certain physician self-referrals. These statutes overlap, contradict, and reinforce one another in configurations that even the prosecutors who invoke them do not always fully apprehend.

In June 2025, the Department of Justice announced what it called the largest healthcare fraud takedown in American history. Operation Gold Rush. 324 defendants. $14.6 billion in alleged losses. The centerpiece was a transnational scheme run from Russia and Estonia in which stolen identities belonging to more than one million Americans were used to submit $10.6 billion in false claims for catheters and glucose monitors that no patient requested. Twelve arrests. Seven at the border.

That operation made the front pages. The cases that did not make the front pages are the ones that resemble yours.

The Statutes Were Designed to Overlap

A physician who refers patients to a facility in which she holds a financial interest has potentially violated the Stark Law. If that referral was induced by remuneration, the Anti-Kickback Statute applies. If the resulting claims submitted to Medicare contained false information, Section 1347 is available. And if a whistleblower inside the practice noticed the pattern and filed a sealed complaint, the False Claims Act permits the government to recover treble damages.

Four statutes. One set of facts. The government selects the combination that produces the most pressure.

The Anti-Kickback Statute, codified at 42 U.S.C. 1320a-7b, is a criminal law requiring proof of knowing and willful conduct. But in 2010, the Affordable Care Act amended it to specify that a person need not have actual knowledge of the provision or specific intent to violate it. One need only act with knowledge that the conduct was unlawful. The distance between those two formulations is the distance between acquittal and a ten-year sentence.

Safe harbors exist. They protect specific payment arrangements from prosecution. To be protected, the arrangement must satisfy every element of the harbor. Not most elements. Every element.

The safe harbors for employment relationships, personal services and management contracts, electronic health records, and value-based arrangements each contain requirements that practitioners routinely satisfy in spirit and violate in letter. The government does not prosecute spirits.

The False Claims Act Rewards the Informant

In fiscal year 2025, whistleblowers filed 1,297 qui tam lawsuits. That figure broke the prior record of 980, set just one year earlier. Relators received a collective $330 million in share payments. Since 1986, total relator awards have exceeded $9.9 billion.

The economics are instructive. A qui tam relator receives between 15 and 30 percent of the government’s recovery, depending on whether the Department of Justice intervenes. In January 2026, Kaiser Permanente affiliates paid $556 million to resolve allegations that they had pressured physicians to add diagnoses through addenda to medical records, inflating Medicare Advantage reimbursements by approximately $1 billion over nine years. The whistleblowers in that case received $95 million.

Ninety-five million dollars is a sufficient incentive to encourage disclosure.

What this means for the defense is structural. The threat does not originate solely from the government. It originates from within the organization itself. A billing specialist. A compliance officer who raised concerns that were noted and not addressed. A physician whose compensation was tied to referral volume and who recognized, at some point, the implication of that arrangement. These individuals possess the original knowledge that the False Claims Act was designed to extract. And once a qui tam complaint is filed under seal, the investigation may proceed for years before the target receives any indication of its existence.

Sentencing in Healthcare Fraud Is Not What the Averages Suggest

The United States Sentencing Commission reported that the average sentence for healthcare fraud in fiscal year 2024 was 27 months. The average guideline minimum was 50 months. That disparity suggests leniency. It conceals something else.

Under Section 2B1.1, the loss table drives the offense level calculation. A loss exceeding $1.5 million but falling below $3.5 million adds eighteen levels. Above $550 million, thirty levels are added. The base offense level for fraud is six. A defendant in a $5 million billing scheme faces a starting point of offense level 26 before adjustments for role in the offense, abuse of trust, or obstruction of justice. At criminal history category I, offense level 26 corresponds to a guideline range of 63 to 78 months.

Five years. For a physician who believed she was operating within the norms of her practice.

And if the fraud resulted in serious bodily injury, the statutory maximum rises from ten years to twenty. If a patient died, the statute authorizes life imprisonment. Section 1347 is not a regulatory infraction dressed in criminal clothing. It is a federal felony with consequences that correspond to its classification.

The Government Has Reorganized Around This Priority

In 2025, the DOJ Criminal Fraud Section underwent a significant reorganization. The Health Care Fraud Data Fusion Center, announced alongside Operation Gold Rush, combines the investigative resources of HHS-OIG, the FBI, and other agencies with artificial intelligence and cloud computing to identify patterns in claims data. The government is no longer waiting for whistleblowers. It is building the capacity to detect schemes algorithmically, in real time, before the qui tam complaint arrives.

The 2025 takedown charged 74 individuals for diverting more than 15 million pills of prescription opioids. Eight separate cases targeted fraudulent wound care schemes, including one in which seven defendants, five of them licensed medical professionals, were charged in connection with $1.1 billion in allegedly fraudulent claims. Walgreens paid $300 million to resolve allegations that it had filled invalid opioid prescriptions. These are not prosecutions of marginal actors. These are prosecutions of institutions.

But consider the arithmetic. 395 healthcare fraud cases were sentenced in fiscal year 2024, out of 61,678 total federal cases. The percentage is small. The attention is not.

What the Defense Requires Before It Can Begin

The most consequential period in a healthcare fraud case is the one the defendant does not know about. The sealed qui tam complaint. The data analysis conducted by the OIG. The CID, the civil investigative demand, which arrives and announces that the government has been asking questions for some time.

We have represented physicians, hospital administrators, pharmacy owners, laboratory executives, and billing companies in healthcare fraud investigations at every stage. The pre-indictment phase, when it is available, permits a form of engagement that the post-indictment phase does not. Presentations to the United States Attorney. Voluntary production of compliance records. The correction of misapprehensions that, left to calcify, become allegations in a superseding indictment.

There was a case, several years ago, in which a client came to us after a CID had been issued but before the government had made a charging determination. The billing pattern the government had identified looked, on the data, like systematic upcoding. Examined in the context of the practice’s patient population, the acuity of the conditions treated, and the documentation supporting each code, the pattern dissolved. Not every statistical anomaly is fraud. Some anomalies are sick patients.

That case did not result in charges. Most of the public will never know it existed.

Compliance Is Not a Defense, but Its Absence Is an Accusation

A formal compliance program does not immunize an organization from prosecution. The government has stated this repeatedly, and the statement is accurate. What a compliance program does, when it is genuine, is alter the inference that the government draws from the conduct. The organization that maintained written policies, conducted annual training, appointed a compliance officer with actual authority, and responded to internal complaints with documented corrective action presents a different evidentiary picture than the organization that did none of those things.

The word is inference. Prosecutors draw inferences from facts. The fact that a compliance program existed and was functioning suggests that the conduct in question was aberrational. The fact that no compliance program existed suggests that the conduct was systemic. Both inferences can be wrong. But the second inference is the one that produces indictments.

DEFENSE TEAM SPOTLIGHT

Todd Spodek

Lead Attorney & Founder

Featured on Netflix's "Inventing Anna," Todd Spodek brings decades of high-stakes criminal defense experience. His aggressive approach has secured dismissals and acquittals in cases others deemed unwinnable.

NY Bar Admitted Multi-State Licensed Federal Courts

Meet the Full Team

The OIG has published detailed guidance on the elements of an effective compliance program. Seven elements. Written policies. A designated officer. Training. Internal monitoring. A reporting mechanism. Enforcement through discipline. Response to detected offenses. These elements are known. Their implementation is where the difficulty resides, because implementation requires resources, and resources require a commitment that is measured not in intention but in expenditure.

Medicare Advantage Is the New Terrain

The Kaiser Permanente settlement signaled something. Medicare Advantage plans are paid on a risk-adjusted basis: the sicker the enrolled population appears on paper, the higher the per-capita payment from CMS. The incentive to document conditions aggressively is embedded in the payment model itself. The line between accurate coding and upcoding is a matter of clinical judgment, and clinical judgment is exercised by thousands of physicians across hundreds of facilities under varying degrees of institutional pressure.

Independent Health paid $98 million. Seoul Medical Group paid $60 million. Kaiser paid $556 million. The trajectory is visible.

For organizations participating in Medicare Advantage, the question is no longer whether the government will examine risk adjustment practices. The question is when the examination will reach a particular plan. And for individuals within those organizations, the physician who added a diagnosis code at the suggestion of a retrospective chart review vendor, the coder who recorded a condition that was mentioned in a note but never treated, the question is whether their conduct will be characterized as clinical documentation improvement or as fraud.

The characterization depends on facts that the individual may not have considered significant at the time they occurred.

The Shape of the Call

Healthcare fraud investigations arrive in different forms. A subpoena. A CID. A search warrant executed at six in the morning. A colleague who mentions, in a tone that does not quite conceal its purpose, that she has been interviewed. Each form demands a different immediate response, but all of them demand the same underlying recognition: the government has been working on this matter longer than you have known about it.

We practice federal criminal defense. Healthcare fraud constitutes a significant and growing portion of the federal docket, and the enforcement apparatus behind it has never been larger, better funded, or more technologically sophisticated than it is in this season. The penalties are severe. The reputational consequences extend beyond the criminal case. And the window for the most effective forms of intervention is finite.

A consultation with this office is an assessment. The facts are examined. The exposure is estimated. The available defenses are identified with the specificity that the situation demands. Healthcare fraud is a designation the government assigns. The accuracy of that designation is a question that can be contested, and the contest begins with a conversation.