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NY Penal Law § 177.20: Health Care Fraud in the Second Degree

What is Healthcare Fraud? Definition and Overview

Healthcare fraud is a kind of white collar crime that entails putting in false medical claims in order to get payments from a health plan. Health care fraud affects everyone and causes tens of billions of dollars in losses each year.

Pursuant to the statute, the term “health plan” is defined as any health insurance, managed care plan or contract under which a health care product or service may be provided and paid for. For example, Medicaid is included in this definition.

Common Forms of Healthcare Fraud

Health care fraud commonly takes the form of a doctor, dentist, chiropractor or other medical specialist sending claims to insurance companies for services, items or medications that were not actually given to any patients. Another example is if a pharmacist submits claims to a health plan for medications that they never provided or for medications provided to someone other than the individual whose name is on the claim.

Five Degrees of Healthcare Fraud in New York

Five offenses related to health care fraud exist in the New York criminal code. They are health care fraud in the first, second, third, fourth and fifth degrees.

The specific charge that you could be looking at depends on the amount of money you received as a result of the fraud in a single year. The FBI works closely with federal, state, and local law enforcement partners to address vulnerabilities, fraud, and abuse in the health care system.

Healthcare Fraud Second Degree: New York Penal Code § 177.20

You could be charged with health care fraud in the second degree under New York Penal Code § 177.20 if you knowingly submitted falsified health insurance claims and, as a result, you received payments to which you were not entitled. For this charge to be valid, the amount of the payments you received fraudulently must be more than $50,000 but less than $1,000,000 in a single year.

Real-World Example of Healthcare Fraud Second Degree

Dr. Prince Jackson had a practice as an orthopedic surgeon. In looking for ways to boost his income, he began performing unnecessary surgeries on patients and billing the insurance companies for the surgeries.

After several complaints were filed against Dr. Jackson for botched surgeries, investigators started to look into Dr. Jackson’s practice. They discovered that he was carrying out unnecessary procedures.

If the quantity of money that he brought in from the insurance companies for those unnecessary procedures totaled more than $50,000, but was under $1,000,000, then Dr. Jackson could be prosecuted for health care fraud in the second degree.

Related Healthcare Fraud Offenses

Complete List of Healthcare Fraud Charges

• Health care fraud in the fifth degree: New York Penal Law § 177.05
• Health care fraud in the fourth degree: New York Penal Law § 177.10
• Health care fraud in the third degree: New York Penal Law § 177.15
• Health care fraud in the first degree: New York Penal Law § 177.25

Possible Defenses Against Healthcare Fraud Charges

Challenging the Amount of Fraudulent Payments

For you to get convicted of health care fraud in the second degree, the prosecutor must bring evidence that you received payments on fraudulent insurance claims from an individual health plan that totaled more than $50,000, but less than $1,000,000.

If the prosecutor is not capable of producing solid evidence of the amount of payments involved, then you may have a plausible defense against the charge. For example, if the prosecutor shows proof that you took in payments of between $300,000 and $500,000, this wide range may be too vague to hold up a charge of health care fraud in the second degree.

Employee Defense Under New York Penal Law § 177.30

Furthermore, You cannot be prosecuted under New York Penal Law § 177.30 for health care fraud if your position in a hospital, medical clinic or private practice office is bookkeeper, clerk or other employee besides a manager or physician, and you simply executed the orders of your superiors without gaining any personal benefit from the fraud.

The Sentence and Penalties

The crime of health care fraud in the second degree is categorized as a class C felony offense. In fiscal year 2023, the average sentence for individuals sentenced for health care fraud was 27 months.

Criminal Penalties

Should you are convicted of this offense, you could get sent to jail for up to 15 years. You could also get sentenced to up to 5 years of probation.

Financial Consequences

The pecuniary consequences of a conviction may be that you will be obligated to pay restitution to the victim as well as a substantial fine to the court. The Justice Department’s health care fraud enforcement efforts have resulted in billions of dollars in recoveries.

Why Healthcare Fraud Matters

Health care fraud is not a victimless crime. It affects everyone—individuals and businesses alike—and causes tens of billions of dollars in losses each year. It can raise health insurance premiums, expose you to unnecessary medical procedures, and increase taxes.

National Impact of Healthcare Fraud

The General Accounting Office estimates that health care fraud, waste and abuse may account for as much as 10 percent of all health care expenditures. Health care expenditures now exceed one trillion dollars each year, so that more than $100 billion may be lost in fraud, waste and abuse annually.