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What to Do if You’re Under Investigation for Healthcare Fraud

What to Do if You’re Under Investigation for Healthcare Fraud

Getting that dreaded letter informing you that you’re under investigation for healthcare fraud can be terrifying. Your mind races with questions and concerns about your reputation, your practice or business, your employees, your family – not to mention the possibility of huge fines or even jail time.Take a deep breath. Although the situation is serious, panicking won’t help. Let’s walk through this step-by-step so you understand what’s happening, what you need to do next, and how to protect yourself.

The Background

First, understand that healthcare fraud investigations are on the rise. This is due to a few key factors:

  • More people have health insurance now – Since the Affordable Care Act, more Americans have health insurance. That means more claims filed, more opportunities for mistakes or fraud.
  • Technology makes it easier to detect fraud – Investigators are using sophisticated data analytics to spot anomalies and patterns that may indicate fraud.
  • The opioid epidemic has increased focus on healthcare fraud – With opioid abuse on the rise, regulators are closely watching prescribing patterns for controlled substances.
  • Penalties for healthcare fraud have increased – The Affordable Care Act increased fines and jail time for those found guilty of healthcare fraud.

So if you receive that dreaded letter, know that you’re not alone. But also understand that the stakes are high if fraud is proven, so you need to take it very seriously.

If You Get a Target Letter

If you receive a letter informing you that you are under investigation for healthcare fraud, it’s called a “target letter.” This means prosecutors have reason to believe you may have committed fraud, but they have not filed formal charges yet.Target letters will come from the Department of Justice (DOJ), the FBI, the Drug Enforcement Agency (DEA), or your state’s Medicaid Fraud Control Unit. Often, several agencies are investigating together in a joint task force.Do not panic. You’re not required to do anything yet. But you should immediately contact a lawyer experienced in healthcare fraud defense. Choosing the right legal counsel is crucial. This complex specialty requires knowledge of healthcare regulations and laws as well as experience negotiating with federal prosecutors.Be careful who you tell about the investigation. Do not discuss it with employees or colleagues without your attorney present. Prosecutors often try to get targets to make incriminating statements early in the process.

The Investigation Process

Healthcare fraud investigations typically follow this general process, although each case is unique:1. Prosecutors issue subpoenas to collect evidence.They will subpoena medical records, billing records, bank statements, phone records, etc. You must comply, but always consult your attorney first about how to respond. Never provide more than what is legally required.2. Auditors review records looking for improper claims.The audit examines your documentation – medical charts, billing records, etc. – to identify any claims that were improperly billed to Medicare, Medicaid, or private insurers.3. Investigators interview you, employees, and sometimes patients.Answer questions truthfully, but do not speculate or volunteer information. Always have your attorney present. Say you don’t recall if you’re unsure.4. Prosecutors decide whether to pursue criminal charges or a civil settlement.Your attorney will negotiate aggressively to prevent or minimize any charges.5. If charged, you can fight the case in court or settle.Settlements often involve repaying overpayments, fines, practice monitoring, and exclusion from federal programs.6. If found guilty of criminal fraud, you face fines, prison time, and exclusion.Prosecutors typically offer plea bargains to avoid trial. An experienced attorney is key to getting the best deal.This process can take many months or even years before reaching resolution. It is a marathon, not a sprint. Manage stress and anxiety through exercise, meditation, talking to friends and family, or professional counseling. Don’t go through it alone.

If Investigators Show Up Unannounced

If federal agents appear unannounced at your home or office to interview you, remain professional and courteous, but do not consent to an interview without your attorney present.Tell them you want to cooperate, but need to have your lawyer with you first. Ask for their contact information so your attorney can reach out to schedule an interview.Instruct employees not to answer questions without an attorney present. Federal agents may use pressure tactics or make threats, but employees have the right to consult a lawyer before talking.If agents have a warrant, do not interfere with their search. Tell them you do not consent to any search, then step aside and let them do their job. Take notes of what they photograph or seize as evidence. Having an attorney present during the search is extremely helpful.

Common Types of Healthcare Fraud

While each case is unique, most healthcare fraud allegations fall into a few general categories:Medicare/Medicaid fraud – Billing for services not provided, duplicate billing, billing for unnecessary services, etc.Improper coding – “Upcoding” to bill for more expensive services than provided or “unbundling” billing codes.Kickbacks – Accepting money or gifts to refer patients to a certain healthcare provider.Misrepresenting services – Falsely billing non-covered services as medically necessary covered services.Prescription fraud – Billing for drugs that were not dispensed, selling prescriptions, etc.Identity theft – Using a patient or provider’s information without authorization to submit fraudulent claims.Self-referrals – Referring patients to your own business for profit.Tax fraud – Not reporting income from fraud schemes.There are also many types of fraud committed by patients, such as selling prescriptions, doctor shopping, and using someone else’s insurance.

Christine Twomey
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Key Defense Strategies

An experienced attorney will deploy many tactics to build your defense case:

  • Attack sloppy audits – Many audits have significant flaws. Your legal team will scrutinize the audit evidence.
  • Highlight honest mistakes – Unintentional billing errors happen and don’t always constitute willful fraud.
  • Question use of sampling – Extrapolating fraud from a small sample often overstates the scope.
  • Dispute overpayments – You have the right to appeal audit findings and overpayment amounts.
  • Challenge witness credibility – Witness or co-conspirator testimony can often be called into question.
  • Demonstrate good faith – Jurors relate to honest mistakes and efforts to follow complex rules.
  • Show lack of intent – Prosecutors must prove you knowingly and willfully committed fraud.
  • Highlight compliance efforts – Showing you tried to comply with regulations helps undermine allegations.
  • Appeal to prosecutorial discretion – Your attorney will work to convince prosecutors not to pursue minor or questionable cases.

The bottom line is you have strong defenses and experienced counsel can get charges dismissed or greatly reduced in many cases. So don’t panic and don’t go it alone.

If You’re Found Liable

If ultimately found guilty of healthcare fraud, the penalties can be severe depending on the extent of the fraud proven:

  • Civil monetary penalties – These can include having to repay 2-3x the amount of any overpayments, plus fines of $5,000-$50,000 per claim.
  • Criminal fines – For criminal fraud convictions, individuals can face fines up to $100,000 per fraudulent act.
  • Jail time – Healthcare fraud may be punished by up to 10 years in prison for each count. Harsher sentences apply if patients were endangered.
  • Exclusion from federal programs – Those convicted of healthcare fraud are prohibited from participating in Medicare and Medicaid.
  • Loss of licensure – Your professional license can be suspended or revoked if found guilty of fraud.
  • Debarment – You may be prohibited from doing business with any government healthcare program.
  • Asset forfeiture – The government can seize personal assets obtained through fraud schemes.
  • Reputational harm – Fraud convictions destroy careers and professional reputations.

The stakes are high, which is why having an experienced legal team in your corner from the start is so critical.

How to Prevent Healthcare Fraud

The best protection is putting measures in place to prevent fraud from ever occurring:

  • Conduct regular audits – Routinely audit a sample of your own billing and medical records to catch any problems.
  • Implement a compliance program – Create formal policies and procedures to promote compliance with billing and documentation rules.
  • Train your staff – Educate all employees on proper billing, coding, documentation, etc.
  • Use billing software with auditing features – Choose technology that flags errors and includes auditing tools.
  • Stay up to date on regulations – Sign up for email updates from Medicare or join associations to stay current.
  • Correct errors immediately – If you discover you’ve been overpaid by a federal program, disclose and return the overpayment promptly.
  • Seeks legal counsel when needed – Have an experienced healthcare attorney review new ventures like joint ventures or employment agreements.
  • Ask questions if unsure – Don’t ever guess about proper billing, coding, etc. Speak up if you need clarification.

Healthcare regulations are incredibly complex. Even with robust compliance efforts, innocent mistakes can happen. But implementing these best practices will help you avoid or more quickly detect inadvertent errors and reduce your fraud risk.


Allegations of healthcare fraud should always be taken very seriously given the potential consequences. If you receive a target letter or visit from federal agents, contact experienced legal counsel immediately. An attorney well-versed in this niche area of law will advise you on responding to investigators and build the strongest case possible in your defense. Don’t panic, but don’t go it alone. With the right legal strategy, many healthcare fraud investigations can be resolved favorably.


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