Medicare Fraud Charges & Penalties by State

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:

References

• Health Care Fraud FY18. Accessed at https://www.ussc.gov/sites/default/files/pdf/research-and-publications/quick-facts/Health_Care_Fraud_FY18.pdf
• Medicare Fraud and Abuse. Accessed at https://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNProducts/Downloads/Fraud-Abuse-MLN4649244.pdf