Healthcare Fraud Laws, Charges & Statute of Limitations

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Defrauding the US government through healthcare fraud is illegal. Committing Medicare and Medicaid fraud exposes individuals and health care organizations to possible criminal, civil, and administrative penalties. Some healthcare fraud criminals face years in prison and thousands of dollars in fines.

Healthcare fraud typically involves any of the following crimes:

  • Knowingly submitting false claims or making misrepresentations of fact to obtain a Medicare or Medicaid payment to which the person is not entitled.
  • Knowingly receiving, soliciting, offering, or paying (through bribes, kickbacks, or rebates) to induce or reward referrals for services or items reimbursed by Medicare or Medicaid.
  • Making illegal referrals for various healthcare services.

Healthcare fraud schemes can range from solo operations to conspiracies by a group or healthcare facility. Some organized crime groups have been known to abuse the Medicare and Medicaid programs and work as healthcare providers and suppliers.

Common examples of healthcare fraud include:

  • Billing for services at a complexity level higher than services provided.
  • Billing for services not offered, supplies not provided, or both. These include falsifying records to show delivery of these items.
  • Ordering medically unnecessary services or items for patients.
  • Paying for referrals of Medicare or Medicaid beneficiaries.
  • Billing Medicare for appointments that patients did not keep.

Healthcare Fraud Laws

There are several federal laws in place to combat healthcare fraud. They are:

  • False Claims Act (FCA)
  • Anti-Kickback Statute (AKS)
  • Physician Self-Referral Law (Stark Law)
  • Social Security Act, which includes the Exclusion Statute and the Civil Monetary Penalties Law (CMPL)

Below are details of each of these important healthcare fraud laws. Violation of any of these laws by a healthcare provider may result in serious civil and criminal penalties, including fines, restitution, and prison time. Individuals or healthcare entities also can be barred from participating in the Medicare and Medicaid programs if they participate in healthcare fraud.

Federal False Claims Act

The FCA protects the US government from being overcharged or sold poor quality goods and services. The FCA places civil liability on a person who knowingly submits fraudulent claims to the US government healthcare programs.

The word ‘knowingly’ means the person has knowledge of the information and acts in purposeful ignorance or reckless disregard of the truth of the information related to the claim. There does not need to be specific intent to defraud to violate the FCA.

For example, a doctor may submit a Medicare claim for medical services he did not provide. Or, he submits a claim for a higher level of healthcare services than he provided.

Civil penalties for violating the FCA can be the recovery of as much as three times the amount of damages the US government sustains because of the false claims. There also can be a penalty of up to $22,927 per false claim.

Under the criminal portion of the FCA, there are criminal penalties for submitting false claims, which include fines and imprisonment.

Anti-Kickback Statute

The AKS makes it illegal to knowingly and willfully offer, pay, solicit, or receive any payment directly or indirectly to induce or reward patient referrals, or the generation of business involving a service or item that can be reimbursed by a Federal healthcare program.

Payment can include anything with value, such as free rent, cash, hotel stays and meals, and excessive payment for medical directorships and consultancies.

For example, a healthcare provider might receive cash or under-market-value rent for office space in exchange for patient referrals.

Violations of the AKS can result in fines, imprisonment, and exclusion from participating in the Medicare and Medicaid programs. Under the law, penalties for violations can include three times the amount of the kickback, plus up to $100,000 in fines per kickback.

Physician Self-Referral Law (Stark Law)

This healthcare fraud law bars a doctor from referring patients to receive certain healthcare services that are payable to Medicaid or Medicare to a healthcare entity with which the doctor or his immediate family has a financial relationship.

For example, a doctor could refer a patient for a healthcare service to a healthcare facility where the doctor is a financial investor.

Penalties for violations of the Stark Law include fines up to $24,478 for each service, repayment of claims, and possible exclusion from participating in Medicare and Medicaid.

Criminal Health Care Fraud Statute

This law bans knowingly and willfully executing a scheme in connection with the delivery of or payment for healthcare benefits, items, services to defraud any healthcare benefit program, or obtain any money or property owned by or under the control of any US healthcare benefit program.

For example, several physicians and medical clinics could conspire in a scheme to defraud Medicare by submitting medically unnecessary claims for electric wheelchairs.

Penalties can include fines and prison time, or both.

Exclusion Statute

The Exclusion Statute requires of the Office of the Inspector General to exclude individuals and facilities that are convicted of the following offenses from all US government healthcare programs:

  • Medicaid or Medicare fraud, as well as any offenses that related to delivery of services or items under Medicare or Medicaid
  • Abuse or neglect of patients
  • Felony convictions for any other type of healthcare-related fraud, financial misconduct, or theft.
  • Felony convictions for illegal manufacture, distribution, prescription or dispensing of controlled substances.

The Office of the Inspector General also can exclude healthcare providers on other grounds:

  • Misdemeanor convictions that relate to healthcare fraud in other programs besides Medicare or Medicaid; or misdemeanor convictions for the illegal manufacture, distribution, prescription or dispensing of controlled substances.
  • Suspension or revocation of a healthcare license for reasons relating to professional competence, financial integrity, or professional performance.
  • Engaging in kickbacks
  • Submitting false claims to Medicare or Medicaid
  • Providing substandard or unnecessary services

Civil Monetary Penalties Law (CMPL)

This law allows the Office of the Inspector General to seek civil monetary penalties (CMPs) and/or exclusion from Medicare and Medicaid participation for several types of healthcare fraud. Penalties and assessments vary based on the violation type.

CMPs can include an assessment as much as three times the amount claimed for every service or item, or up to three times the amount of payment offered, paid, solicited, or received.

Some examples of violations that can bring CMPs are:

  • Presenting a healthcare claim that you know is for a service or item not provided
  • Violating the Anti-Kickback Law.
  • Making false misrepresentations or statements on contracts or applications to participate in Medicare or Medicaid.

Healthcare Fraud Punishment

Healthcare fraud punishments depend on the severity of the crime and which healthcare fraud law you violated:

  • Federal False Claims Act: Civil penalties for violating the FCA can be the recovery of as much as three times the amount of damages the US government sustains because of the false claims. There also can be a penalty of up to $22,927 per false claim.
  • Anti-Kickback Statute: Violations can include fines, imprisonment, and exclusion from participating in the Medicare and Medicaid programs. Under the law, penalties for violations can include three times the amount of the kickback, plus up to $100,000 in fines per kickback.
  • Stark Law: Penalties for violations of the Stark Law include fines up to $24,478 for each service, repayment of claims, and possible exclusion from participating in Medicare and Medicaid.
  • Criminal Health Care Fraud Statute: Penalties can include fines, prison time, or both.
  • Exclusion Statute: OIG can exclude individuals and facilities that are convicted healthcare fraud from participating in Medicare and Medicaid for a certain period, or permanently.
  • Civil Monetary Penalties Law: Fines can include an assessment as much as three times the amount claimed for every service or item, or up to three times the amount of payment offered, paid, solicited, or received.

Sentencing Guidelines

The United States Sentencing Commission has guidelines that establish the prison time that violators can receive for committing healthcare fraud.

According to 2018 USSC statistics, the average sentence for healthcare fraud is 30 months, and 73.4% of offenders received a prison sentence.

Approximately 55.5% of healthcare fraud offenders were sentenced according to the USSC Guidelines Manual, with 55.9% sentenced within the guideline range. Approximately 40% received a substantial assistance departure, with the average sentence reduction being 67.6%.

The average prison sentence for healthcare fraud violations has increased: In 2014, the average sentence was 42 months; in 2018, it was 48 months.

Statute of Limitations

Under federal statute 18 USC 3282, people who commit health care fraud are protected from prosecution for any noncapital offense in which an indictment is not found within five years of the criminal act.

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