Healthcare Fraud + Laws, Charges & Statute of Limitations

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Healthcare fraud is a white collar crime that occurs when a health practitioner or a consumer intentionally submits fake or misleading information that is used to determine how much of a health care benefit should be paid. It is estimated that healthcare fraud costs the US government about $68 billion per year. This accounts for 3% of the $2 trillion in healthcare spending each  year. Other estimates have found that healthcare fraud could cost the government $230 billion per year.

Over the last several decades, dealing with healthcare fraud and abuse has become very important to the US government. Several government programs, task forces and teams have been set up to handle fraud and abuse in Medicare and Medicaid.

Some of the more common types of healthcare fraud charges include:

  • Billing for a health service that was not performed
  • Billing on a separate basis for every step in a medical procedure to increase the cost of the total procedure
  • Faking a diagnosis of a patient to provide justification to perform unneeded tests and procedures that are not needed
  • Not accurately representing procedures that are performed, so as to get payment for services that are not covered; this includes things such as cosmetic surgery.
  • Upcoding – to bill for a service that costs more than the one that was done
  • Practicing medicine and billing Medicare and Medicaid for services when you do not hold a license or have proper training
  • Accepting a kickback for a patient referral
  • Waiving copays or deductibles
  • Billing a patient for a higher amount than the copay requires

Some common examples of health care fraud committed by consumers include:

  • The filing of a claim for a service or a medication that was not received
  • Altering a bill or receipt
  • The use of the coverage of another person or their insurance card

Healthcare Fraud Laws

The most important federal laws governing healthcare fraud include the following:

  • False Claims Act: Prohibits you from submitting a false or fraudulent claim to the US government.
  • Anti-Kickback Statute: Prohibits a person or company from seeking or receiving payment in exchange for referring a patient to receive services by the government.
  • Physician Self-Referral Act: This also is known as the Stark Law, and it regards to practice of referring patients to get a service or to visit a facility where that doctor has a financial interest.
  • Exclusion Statute: A doctor that has been convicted of many types of criminal offenses can be banned from participating in Medicare.
  • Civil Monetary Penalty Law: HHS may pursue monetary penalties and exclusion for various behaviors involving defrauding the US government of funds.

These statutes are what make up the federal Medicare fraud and abuse laws, which are enforced by the US Department of Justice, the Department of Health and Human Services and the Office of the Inspector General.

Healthcare Fraud Punishment

An attorney defending you against healthcare fraud can give a rough estimate of what you could face for a sentence. But the sentence is largely determined by the dollar value of the false claims that were involved. Generally, being convicted of healthcare fraud can get you a 10 year maximum prison sentence, but this can be a 20 year maximum sentence if there was serious bodily injury. Also, there can be a maximum life in prison sentence if the violation caused death. Per the Federal Sentencing Guidelines, all healthcare fraud charges begin with a base offense level 6 (of 43).

If you are convicted under the False Claims Act, you can receive up to five years in prison, and a fine of $250,000. People who get convicted for violating the Anti-Kickback Statute can face a criminal fine of $25,000 and a prison sentence of five years. Also, the civil penalties for taking healthcare kickbacks and giving the payments to other people or making fraudulent claims can also result in heavy consequences.

In addition to fines and jail time, healthcare providers who are convicted of healthcare fraud may not be able to work with federal healthcare programs in the future. Exclusion will prevent the person or company from working with Medicare for any services or items. This can make it difficult for a healthcare provider to work with patients who receive benefits through healthcare programs at the federal level.

Failing to comply with all exclusion terms can bring even more penalties. According to the Officer of the Inspector General, a fine of $10,000 for each item or service for which a party who has been excluded tries to bill Medicare can be imposed. Also, as reinstatement into federal healthcare programs is not automatic, violations may give grounds for being excluded in the future.

Healthcare Fraud Complexities

Sadly, some healthcare providers may find they have been charged with healthcare fraud improperly. It is possible to face serious criminal sanctions simply as the result of administrative errors, misinterpreted actions and oversights. For instance, some healthcare providers may be checked for healthcare fraud after they made an honest billing error. Also, providers who are careless when entering a healthcare transaction or making a financial agreement might be accused of accepting a kickback.

People who work for healthcare providers may become knowledgeable of healthcare fraud that is occurring in their work or through friends and relatives. The False Claims Act offers ‘qui tam’ actions where a private person can file a lawsuit that is sealed that can bring to federal court the allegations of healthcare fraud. Qui tam actions are complex because the requirements regarding the actions and situations where they can be used are controversial and varied.

Healthcare Fraud Defense

As with any type of fraud, it is the obligation of the federal government to prove beyond a reasonable doubt that you intended to engage in healthcare fraud. Fraud has to be committed on purpose and cannot be on accident.

In recent times, the US government has started work with state and local governments to stop healthcare fraud. Investigators on these cases may be ruthless and use informants who are confidential. They also may use information from previous employers and others who have inside information to help with prosecution and investigation. Thus it is not unusual for honest errors or negligence to be viewed as possible healthcare fraud.

Also, the Medicaid and Medicare billing procedures are very complex. It is possible that misunderstandings and coding errors can lead to charges of healthcare fraud. With more funding being given by the federal government to root out healthcare fraud, it is common for doctors to face healthcare fraud investigations.

In defending against such serious charges, your attorneys should have detailed interviews of all employees former and present who were involved in any part of the areas being investigated. There also should be a complete analysis and review of the documents that were submitted to payers and those that support the healthcare claims. If employment records have not yet been offered by the federal government, the defense may interview ex-employees before they are reached by federal agents. This would give the lawyer the chance to tell the former employees about their rights.

Most healthcare fraud cases have several defendants or targets. Some of the defendants could be providers of services, including nurses, doctors, dentists and pharmacists. Others could be accountants, managers and others who work in billing. The defense needs to identify all of the people who are being investigated for healthcare fraud. Note that reviewing billing records for the defense often necessitates an accounting firm that is highly experienced in healthcare fraud audits.

Defense attorneys also need to review memoranda, internal documents, reports, bank records and financial data to determine how likely the client could face criminal sanction for healthcare fraud.

If you are being investigated for healthcare fraud, it is important to be very careful to not obstruct justice or to tamper with witnesses. These actions can expose you to federal charges even if you are eventually found innocent of healthcare fraud. It has been reported in some states that a tactic used by investigators is to issue a records subpoena and then seize the garbage of the business for the next month to see if any critical records have been thrown away. People being investigated for fraud in these cases should be aware of such aggressive federal techniques and should always be sure to follow federal law once an investigation has commenced.

One of the more challenging crimes to defend against in a healthcare fraud case is the kickback. For instance, if a doctor is promised $200 for every patient that is given to a certain service provider, that provider may overbill by $200 and kickback that portion to the doctor. This is illegal, and if you caught doing it, it is highly likely you will be convicted.

Healthcare Fraud Cases

  • Louisiana Woman Convicted of Healthcare Fraud – A business owner in Baton Rouge was sentenced to 37 months in prison and must pay over $1 million in restitution, after her two companies employed unlicensed social workers to visit Medicare beneficaries and to perform services. She submitted false claims to Medicare, claiming that her employees were licensed and had provided psychotherapy services when they had not.
  • WV Chiropractor Sentenced for Heatlhcare Fraud and Tax Evasion – A chiropractor in Wheeling WV has sentenced to 18 months in prison for one count of healthcare fraud and one count of income tax evasion in 2008.
  • Mental Health Counselor Convicted for Defrauding Medicaid – A mental health worker in Shelby NC was sentenced to 6 years in prison and ordered to pay $6 million in restitution to Medicaid. He was convicted of one count of health care fraud and two counts of money laundering.

Healthcare Fraud Punishment

Punishment for healthcare fraud generally starts at approximately five years in federal prison, and fines can range from $250,000 to more than $1 million, and even higher, depending upon the amount of money stolen from the government.

Sentencing Guidelines

The sentence involved for healthcare fraud depends upon the amount of money that is defrauded from the federal government. For larger amounts, you could face up to 10 years in prison, and fines and restitution that could total hundreds of thousands or millions of dollars.

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.

In the majority of these cases, noncapital federal offenses that do not meet such guidelines cannot be prosecuted. However you should know that even if you are not able to be prosecuted, committing health care fraud even years ago can lead to severe consequences in terms of employment.

Healthcare Fraud Laws by State

Alabama, Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin, Wyoming