Medicare Fraud Charges & Penalties by State

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Medicare fraud is a serious federal crime that happens when a person knowingly submits fraudulent claims or makes misrepresentations of fact to obtain a federal health care payment to which they are not entitled.

Medicare fraud also involves knowingly receiving, soliciting, offering or paying compensation to induce or reward referrals for services, or items reimbursed by federal healthcare programs.

Prosecuting Medicare fraud has become a federal priority in recent years. Over the past 10 years, more than 2,100 people have been charged for Medicare fraud, according to the Centers for Medicare & Medicaid Services (CMS). Those convicted usually face serious penalties, including an average of four years in prison.

Medicare Fraud Laws

Federal laws that provide penalties for Medicare fraud and abuse include:

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

These laws detail the criminal, civil, and administrative penalties that the federal government can impose on people or entities that engage in Medicare fraud.

Violating any of these laws in the commission of Medicare fraud can result in nonpayment of claims, civil monetary penalties, exclusion from all federal healthcare programs in the future, and civil and criminal liability. Below are more details about each law.

False Claims Act

The FCA protects the US government from being overcharged or sold poor-quality goods or services. The FCA places civil liability on anyone who knowingly submits or causes the submission of false or fraudulent claims to the US government.

For example, a doctor knowingly submits Medicare claims for medical services he did not provide or for a higher level of medical service than he actually provided.

Civil penalties for an FCA violation can include up to three times the damages sustained by the government because of the false claims, plus penalties up to $22,927 per violation. Violators also can face criminal penalties that include imprisonment and/or fines.

Anti-Kickback Statute

The AKS makes it illegal to knowingly and willfully offer, pay, solicit, or receive funds directly or indirectly to induce or reward patient referrals. It also is a crime to generate business that involves any item or service that is reimbursable by a federal healthcare program.

Any time a provider offers, pays, solicits, or receives illegal remuneration, it is a violation of the AKS.

For example, a healthcare provider receives cash for medical office space in exchange for referrals.

Criminal and administrative penalties for AKS violations can include fines, imprisonment, and exclusion from participating in any federal healthcare program. Penalties for AKS violations can include three times the amount of the kickback, plus a fine of $100,000 for each kickback.

Physician Self-Referral Law (Stark Law)

The Stark Law makes it illegal for a doctor to refer patients to receive healthcare services payable to Medicare or Medicaid to an entity to which the doctor or a member of his family has a financial relationship unless limited exceptions apply.

For example, a doctor refers a beneficiary for a health service to a health clinic where the doctor has invested his money.

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

Criminal Health Fraud Statute

This law prohibits knowingly or willfully executing a scheme or lie connected to the delivery of, or payment for, healthcare items, benefits or services to either defraud any healthcare benefit program or obtain by fraudulent pretenses any money or property under the control of any healthcare benefit program.

For example, several physicians and medical clinics create a conspiracy to defraud Medicare by submitting medically unnecessary claims for electric wheelchairs.

Penalties for violations of this law can include fines and imprisonment.

Exclusion Statute

This law requires the Office of the Inspector General to exclude people or entities that have been convicted of any of the below offenses from participating in federal healthcare programs:

  • Medicare or Medicaid fraud
  • Patient abuse or neglect
  • Felony convictions for any healthcare-related fraud, theft, or financial misconduct
  • Felony convictions for illegal manufacture, distribution, prescription, or dispensing controlled substances

Medicare Fraud Crimes & Charges

One or more of the federal Medicare fraud laws above may apply to a particular Medicare fraud case. Below are a few examples.

  • False claims: A doctor who is accused of submitting a false medical claim, participating in fraudulent medical billing or creating fraudulent records can face a prison sentence of up to five years and a fine up to $250,000. Some doctors may be able to contest these charges by proving they did not know and should not have known the claim was fraudulent.
  • Giving or taking kickbacks: Doctors convicted of offering or accepting kickbacks can face identical penalties as people convicted of submitting false claims. Also, people convicted under the Anti-Kickback Law may be barred from participating in federal healthcare programs for several years or permanently.
  • General Medicare fraud: Doctors convicted of fraudulent schemes that defraud Medicare or Medicaid can face even worse sanctions under the Health Care Fraud Statute. The CMS reports these criminals can be put in jail for up to 10 years. If the scheme causes another person’s injury or death, the prison sentence can be longer. In addition, those who are convicted of Medicare fraud may have to pay fines up to $250,000.
  • Additional penalties: Healthcare professionals who are accused of any of these Medicare fraud schemes can face heavy civil fines. The fine for every false claim is $11,000, and the fine for every kickback is $50,000.

Medicare Fraud Punishment

As noted above, violations of any of the laws involving Medicare fraud can result in heavy fines and prison time. People convicted of Medicare fraud receive an average prison sentence of four years. Prison sentences for Medicare fraud can range from three to 10 years, and fines can run into hundreds of thousands of dollars.

Medicare Fraud Sentencing Guidelines

According to the United States Sentencing Commission, the average sentence for health care fraud convicts is 30 months, and 73.4% were sentenced to prison in FY 2018.

Of the 55.5% of healthcare fraud offenders sentenced to prison under the Guidelines Manual, 55.9% were sentenced within the guideline range, and 40.7% received a substantial assistance departure with an average sentence reduction of 67.6%.

Also, the average guideline minimum sentence for Medicare fraud has fluctuated, with the minimum average increasing from 42 months in 2014 to 48 months in 2018.

The average sentence imposed rose from 29 months in fiscal year 2018 to 30 months in 2018.

Medicare Fraud Statute of Limitations

For Medicare and Medicaid fraud, US law establishes a statute of limitations of six years for civil violations and five years for criminal violations.

Medicare Fraud Cases

Some of the recent Medicare fraud cases in the news include:

  • Compounding Pharmacy Mogul Pleads Guilty to Healthcare Fraud and Money Laundering: Wade A. Walters, 53, of Hattiesburg, Mississippi, a co-owner of several compounding pharmacies and pharmaceutical distributors, pleaded guilty to one count of conspiracy to commit healthcare fraud and conspiracy to commit money laundering. He admitted that he designed a scheme to defraud TRICARE of millions of dollars by distributing compounded medications that were not medically necessary.
  • Florida Man Charged With COVID Relief Fraud and Healthcare Fraud: Carlos Belone, 37, of Coconut Creek, has been charged with fraudulently seeking several Paycheck Protection Program loans, and that he attempted to defraud Medicare of at least $5.6 million. He allegedly submitted fake tax documents and doctored P&L statements for R&S Pharmacy.
  • Two PA-Based Doctors and Five Others Charged in Kickback Scheme: Seven people were charged this month for their role in a conspiracy to pay and receive kickbacks in exchange for ordering genetic tests, according to the Department of Justice. The seven were charged with conspiring to violate the Federal Anti-Kickback Statute of several million dollars. Lee Bensen, 64, and Barry Kurtzer, 60, were both doctors with offices in Scranton who accepted monthly kickback bribes in exchange for collecting DNA samples from Medicare patients and sending them for genetic tests at NJ and PA clinical laboratories.

Medicare Fraud Laws By State

Medicare fraud involves knowingly submitting false claims or making misrepresentations to obtain a federal health care payment to which one is not entitled. The specifics and penalties for Medicare 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 22-1-11:

  • Medicare 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:

  • Medicare 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:

  • Medicare 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:

  • Medicare 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:

  • Medicare 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:

  • Medicare 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:

  • Medicare 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:

  • Medicare 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:

  • Medicare 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:

  • Medicare 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:

  • Medicare 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:

  • Medicare 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:

  • Medicare 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:

  • Medicare 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:

  • Medicare 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:

  • Medicare 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:

  • Medicare 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:

  • Medicare 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:

  • Medicare 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:

  • Medicare 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:

  • Medicare 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:

  • Medicare 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:

  • Medicare 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:

  • Medicare 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:

  • Medicare 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:

  • Medicare 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:

  • Medicare 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:

  • Medicare 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:

  • Medicare 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:

  • Medicare 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:

  • Medicare 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:

  • Medicare 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:

  • Medicare 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:

  • Medicare 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:

  • Medicare 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:

  • Medicare 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:

  • Medicare 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:

  • Medicare 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:

  • Medicare 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:

  • Medicare 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:

  • Medicare 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:

  • Medicare 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:

  • Medicare 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:

  • Medicare 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:

  • Medicare 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:

  • Medicare 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:

  • Medicare 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:

  • Medicare 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:

  • Medicare 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:

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

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