Healthcare Fraud Charges & Penalties by State

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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.

Healthcare Fraud Laws By State

Healthcare fraud involves knowingly submitting false claims or making misrepresentations to obtain a health care payment to which one is not entitled. The specifics and penalties for healthcare fraud vary by state:

AlabamaHawaiiMassachusettsNew MexicoSouth Dakota
AlaskaIdahoMichiganNew YorkTennessee
ArizonaIllinoisMinnesotaNorth CarolinaTexas
ArkansasIndianaMississippiNorth DakotaUtah
CaliforniaIowaMissouriOhioVermont
ColoradoKansasMontanaOklahomaVirginia
ConnecticutKentuckyNebraskaOregonWashington
DelawareLouisianaNevadaPennsylvaniaWest Virginia
FloridaMaineNew HampshireRhode IslandWisconsin
GeorgiaMarylandNew JerseySouth CarolinaWyoming

Alabama

Under Code of Alabama Section 13A-9-3:

  • Healthcare fraud is a Class C felony, punishable by up to 10 years in prison and fines up to $15,000.

Alaska

Under Alaska Stat. Section 47.05.210:

  • Healthcare fraud is a Class B felony, punishable by up to 10 years in prison and fines up to $100,000.

Arizona

Under A.R.S. Section 13-2311:

  • Healthcare fraud is a Class 2 felony, punishable by up to 12.5 years in prison and significant fines.

Arkansas

Under Ark. Code Ann. Section 5-55-111:

  • Healthcare fraud is a Class B felony, punishable by up to 20 years in prison and fines up to $15,000.

California

Under California Penal Code Section 550:

  • Healthcare fraud can be a felony, punishable by up to 5 years in prison and fines up to $50,000 or double the fraud amount.

Colorado

Under Colo. Rev. Stat. Section 18-4-401:

  • Healthcare fraud is a Class 3 felony, punishable by up to 12 years in prison and fines up to $750,000.

Connecticut

Under Connecticut General Statutes Section 53a-290:

  • Healthcare fraud is a Class B felony, punishable by up to 20 years in prison and fines up to $15,000.

Delaware

Under Title 11, Section 913:

  • Healthcare fraud is a Class E felony, punishable by up to 5 years in prison and fines determined by the court.

Florida

Under Florida Statutes Section 817.234:

  • Healthcare fraud is a first-degree felony, punishable by up to 30 years in prison and fines up to $10,000.

Georgia

Under Georgia Code Section 49-4-146.1:

  • Healthcare fraud is a felony, punishable by up to 10 years in prison and fines up to $10,000 per violation.

Hawaii

Under Hawaii Revised Statutes Section 346-43.5:

  • Healthcare fraud is a Class C felony, punishable by up to 5 years in prison and fines up to $10,000.

Idaho

Under Idaho Code Section 56-227:

  • Healthcare fraud is a felony, punishable by up to 14 years in prison and fines up to $5,000.

Illinois

Under Illinois Compiled Statutes 720 ILCS 5/46-1:

  • Healthcare fraud is a Class 1 felony, punishable by up to 15 years in prison and fines up to $25,000.

Indiana

Under Indiana Code Section 35-43-5-7.1:

  • Healthcare fraud is a Level 6 felony, punishable by up to 2.5 years in prison and fines up to $10,000.

Iowa

Under Iowa Code Section 249A.8:

  • Healthcare fraud is a Class C felony, punishable by up to 10 years in prison and fines up to $10,000.

Kansas

Under Kansas Statutes Section 21-5925:

  • Healthcare fraud is a severity level 7 felony, punishable by up to 34 months in prison and fines up to $100,000.

Kentucky

Under Kentucky Revised Statutes Section 205.8463:

  • Healthcare fraud is a Class D felony, punishable by up to 5 years in prison and fines determined by the court.

Louisiana

Under Louisiana Revised Statutes Section 14:70.1:

  • Healthcare fraud is a felony, punishable by up to 5 years in prison and fines up to $20,000.

Maine

Under Maine Revised Statutes Title 22, Section 15:

  • Healthcare fraud is a Class C crime, punishable by up to 5 years in prison and fines up to $5,000.

Maryland

Under Maryland Code Section 8-512:

  • Healthcare fraud is a felony, punishable by up to 5 years in prison and fines up to $100,000.

Massachusetts

Under Massachusetts General Laws Chapter 118E, Section 42:

  • Healthcare fraud is a felony, punishable by up to 5 years in prison and fines up to $10,000.

Michigan

Under Michigan Compiled Laws Section 400.607:

  • Healthcare fraud is a felony, punishable by up to 4 years in prison and fines up to $50,000.

Minnesota

Under Minnesota Statutes Section 609.466:

  • Healthcare fraud is a felony, punishable by up to 20 years in prison and fines up to $100,000.

Mississippi

Under Mississippi Code Section 43-13-215:

  • Healthcare fraud is a felony, punishable by up to 10 years in prison and fines up to $10,000.

Missouri

Under Missouri Revised Statutes Section 191.905:

  • Healthcare fraud is a Class C felony, punishable by up to 7 years in prison and fines up to $10,000.

Montana

Under Montana Code Annotated Section 45-6-313:

  • Healthcare fraud is a felony, punishable by up to 10 years in prison and fines up to $50,000.

Nebraska

Under Nebraska Revised Statutes Section 68-1017:

  • Healthcare fraud is a Class IV felony, punishable by up to 5 years in prison and fines up to $10,000.

Nevada

Under Nevada Revised Statutes Section 422.540:

  • Healthcare fraud is a Category D felony, punishable by up to 4 years in prison and fines up to $5,000.

New Hampshire

Under New Hampshire Revised Statutes Section 167:61:

  • Healthcare fraud is a Class B felony, punishable by up to 7 years in prison and fines up to $4,000.

New Jersey

Under New Jersey Statutes Section 30:4D-17:

  • Healthcare fraud is a second-degree crime, punishable by up to 10 years in prison and fines up to $150,000.

New Mexico

Under New Mexico Statutes Section 30-44-7:

  • Healthcare fraud is a third-degree felony, punishable by up to 3 years in prison and fines up to $5,000.

New York

Under New York Penal Law Section 177.10:

  • Healthcare fraud is a Class D felony, punishable by up to 7 years in prison and fines determined by the court.

North Carolina

Under North Carolina General Statutes Section 108A-63:

  • Healthcare fraud is a Class I felony, punishable by up to 24 months in prison and fines determined by the court.

North Dakota

Under North Dakota Century Code Section 12.1-23-02:

  • Healthcare fraud is a Class C felony, punishable by up to 5 years in prison and fines up to $10,000.

Ohio

Under Ohio Revised Code Section 2913.40:

  • Healthcare fraud is a fifth-degree felony, punishable by up to 12 months in prison and fines up to $2,500.

Oklahoma

Under Oklahoma Statutes Section 63-5050.2:

  • Healthcare fraud is a felony, punishable by up to 3 years in prison and fines up to $10,000.

Oregon

Under Oregon Revised Statutes Section 165.692:

  • Healthcare fraud is a Class C felony, punishable by up to 5 years in prison and fines up to $125,000.

Pennsylvania

Under Pennsylvania Consolidated Statutes Section 4117:

  • Healthcare fraud is a felony of the third degree, punishable by up to 7 years in prison and fines up to $15,000.

Rhode Island

Under Rhode Island General Laws Section 11-41-29:

  • Healthcare fraud is a felony, punishable by up to 10 years in prison and fines up to $50,000.

South Carolina

Under South Carolina Code Section 43-7-60:

  • Healthcare fraud is a felony, punishable by up to 10 years in prison and fines up to $5,000.

South Dakota

Under South Dakota Codified Laws Section 22-30A-10.1:

  • Healthcare fraud is a Class 4 felony, punishable by up to 10 years in prison and fines up to $20,000.

Tennessee

Under Tennessee Code Annotated Section 71-5-181:

  • Healthcare fraud is a Class D felony, punishable by up to 12 years in prison and fines up to $50,000.

Texas

Under Texas Penal Code Section 35A.02:

  • Healthcare fraud is a state jail felony, punishable by up to 2 years in state jail and fines up to $10,000. Severe cases can be first-degree felonies.

Utah

Under Utah Code Section 76-6-1102:

  • Healthcare fraud is a second-degree felony, punishable by up to 15 years in prison and fines up to $10,000.

Vermont

Under Vermont Statutes Title 33, Section 141:

  • Healthcare fraud is a felony, punishable by up to 10 years in prison and fines up to $10,000.

Virginia

Under Virginia Code Section 32.1-314:

  • Healthcare fraud is a Class 6 felony, punishable by up to 5 years in prison and fines determined by the court.

Washington

Under Revised Code of Washington Section 74.09.230:

  • Healthcare fraud is a Class C felony, punishable by up to 5 years in prison and fines up to $25,000.

West Virginia

Under West Virginia Code Section 9-5-7:

  • Healthcare fraud is a felony, punishable by up to 10 years in prison and fines up to $10,000.

Wisconsin

Under Wisconsin Statutes Section 946.91:

  • Healthcare fraud is a Class H felony, punishable by up to 6 years in prison and fines up to $10,000.

Wyoming

Under Wyoming Statutes Section 42-4-111:

  • Healthcare fraud is a felony, punishable by up to 10 years in prison and fines up to $10,000.

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