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Health Care Fraud Crimes

The Federal Bureau of Investigation’s Financial Crimes Section (FCS) handles health care fraud investigations. According to the FBI, the overall objective of the FCS "is to oversee the investigation of financial fraud and to facilitate the forfeiture of assets from those engaging in federal crimes." FEDERAL BUREAU OF INVESTIGATION, Financial Crimes Report to the Public, A1 (May 2005) [FCS Report], which may be found here. The Health Care Fraud Unit (HCFU), one of four units that comprise the FCS, administers investigations of fraud crimes committed against private and public health care organizations. Id. The HCFU handles investigations of such fraudulent behaviors as:

  • Committing medical equipment fraud
  • Selling pharmaceuticals online
  • Charging for services not performed
  • Committing outpatient surgery fraud
  • Diverting pharmaceuticals
  • Performing nonessential services
  • Receiving kickbacks
  • Increasing fees by separating bundled services and tests
  • “Upcoding” or charging for a more expensive service than performed. Id.

The HCFU reports that there is a growing tendency in fraudulent health care crimes for “medical professionals to risk patient harm in their schemes. Current fraud schemes consist of traditional schemes that involve fraudulent billing, but also incorporate unnecessary surgeries, diluted cancer drugs, and fraudulent lab tests." Id. at C3. Additional, patients voluntarily go through "unnecessary and unwarranted medical procedures to generate fraudulent claims and profits" to receive kickbacks in return. Id. Individuals who commit health care fraud will be charged with violating 18 U.S.C. § 1347 (2005), although it is possible that they also be prosecuted for additional crimes. For example, in the case of United States v. Bobo, 344 F.3d 1076 (11th Cir. 2003), the defendant was prosecuted for both health care fraud and conspiracy.

18 U.S.C. § 1347 (2005).

The Crime
Under section 1347, it is a crime for a person to knowingly and willfully execute, or attempt to execute, a scheme or artifice-

  • to defraud any health care benefit program; 18 U.S.C. § 1347(1) or
  • to obtain, by means of false or fraudulent pretenses, representations, or promises, any of the money or property owned by, or under the custody or control of, any health care benefit program, Id. § 1347(2),
in connection with the delivery of or payment for health care benefits, items, or services.

The Punishment
A violation of section 1347 can be punished by

  • a fine, imprisonment for not more than 10 years, or both.

If the violation results in serious bodily injury (as defined by 18 U.S.C. § 1365 (2005), that person can be punished by

  • a fine imprisonment for not more than 20 years, or both.

If the violation results in death, that person can be punished by

  • a fine, imprisonment for any term of years or for life, or both.

Case Law Interpreting Section 1347
Section 1347 was enacted to punish executions or attempted executions of schemes to defraud, and not simply acts done in furtherance of a scheme. United States v. Hickman, 331 F.3d 439, 446 (5th Cir. 2005) vacated on other grounds by Hickman v. United States, __ U.S. __, 125 S. Ct. 1043 (2005). Furthermore, the focus of health care fraud prosecutions is normally the medical community, any person who purposefully endeavors to defraud a health care benefit program can be found guilty of health care fraud; it is not limited solely to professionals. United States v. Lucien, 347 F.3d 45, 51 (3d Cir. 2003).

The crime of health care fraud is complete upon the execution of the scheme, and any scheme can be executed any number of times, with each execution being charged as a separate count. Hickman at 446. "Obviously, the next question is what constitutes an 'execution of the scheme.'" Id. In Hickman, the defendant submitted her claims separately, and all though she grouped the claims together for efficiency, each claim was considered and approved individually; with each claim submission, she owed a new, independent obligation to be truthful to the insurer. Id. at 447. Furthermore, the court notes, "the process of defining a scheme and/or execution is a fact-intensive one." Id. at n.8.

An indictment alleging an attempt to defraud a health care benefit program must, at least,

  • allege how the scheme to defraud operated
  • contain the language found in section 1347, such as "in connection with delivery of or payment for health care benefits, items, or services; and
  • specify of what precisely the defendant was trying to defraud the program. Bobo, supra, at 1084.

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