Healthcare Fraud Laws, Statutes & Penalties

Medicare and Medicaid healthcare fraud are particularly fertile ground for opportunist fraudsters. Unlike private insurance, Medicare and Medicaid do not require preauthorization for expenses. With most private insurance, providers must preauthorize a healthcare expense before it’s performed in order for the insurance company to cover it. However, with the government healthcare programs, a provider can often administer care and other services to the patient without prior confirmation that it is needed and then bill Medicare or Medicaid. Common types of Medicare or Medicaid fraud include:

• Billing for services that were not provided
• Charging for services individually that are typically charged together
• Performing unnecessary tests
• Providing unnecessary referrals

There are numerous statutes designed to punish Medicare fraud and outlaw a wide array of conduct. The following are the four primary healthcare laws and related penalties:

Healthcare Fraud Civil Laws

A civil penalty is a fine imposed for a violation of a law (like a parking ticket). Civil penalties or fines typically don’t require jail time, but in the case of Medicare fraud, can be severe. There are two primary laws to obtain civil penalties from defendants:

The Physician Self-Referral Law (Stark Law)

The Stark Law statute, with some exceptions, prohibits physicians from referring a Medicare or Medicaid patient for certain health services (like lab work or physical therapy) to any organization in which the referring physician has a financial relationship. It also prohibits those entities from submitting claims for payment to Medicare based on those forbidden referrals. The law is intended to prevent physicians from ordering unnecessary testing for patients that could increase healthcare costs.

The penalties and consequences for physicians and entities that violate the Stark Law can be incredibly costly:

• The provider or organization may be forced to refund the amount
• The provider or organization can face a civil monetary penalty of $15,000 for each service and a civil assessment of three times the amount claimed
• The provider or organization may also be excluded from claiming anything from Medicare or Medicaid

Plain violations of the Stark Law do not require an intent to break the law. However, for civil monetary penalties, program exclusion, civil assessments, and False Claims Act Liability (FCA), the violation must have been done knowingly.

The False Claims Act

The False Claims Act allows private citizens, or whistleblowers, to sue any individual, or company that is deceiving the government or receiving reimbursement through government healthcare programs. Whistleblowers can receive financial rewards as well as job protection against retaliation.

The FCA covers submitting claims for procedures that were not performed and wrongful conduct like upcoding and unbundling. In short, the FCA makes unlawful the knowing submission of a false claim for payment to the government by a government contractor.

There are significant criminal and civil penalties for violating the FCA:

• Total penalties can total three times the amount paid on the fraudulent claim, plus fines
• The FCA also has criminal enforcement penalties for those who engaged in Medicare fraud

Healthcare Fraud Criminal Laws

The government can also bring a criminal case against a provider or practice for violating certain statutes. These laws require that the prosecutor prove a level of intent or knowledge of the wrongdoing and can result in the conviction of a felony or prison time.

The Anti-Kickback Statute

The Anti-Kickback Statute (AKS) is a criminal statute that prohibits providers from intentionally accepting or paying anything of value to induce the referral of Medicare or Medicaid business. Violating the AKS can result in:

• Fines of $25,000 and up to $50,000 per violation and prison sentence of five years per violation
• Exclusion from Medicare and Medicaid programs for at least five years

There are numerous exceptions, called “safe harbors,” from AKS liability, which may otherwise give immunity to providers. An experienced Medicare fraud attorney can help whistleblowers navigate the complexities of laws like AKS.

Title XI of the Social Security Act

The Social Security Act contains anti-fraud provisions related to Medicare and Medicaid. It prohibits false and fraudulent claims for payment as well as representations regarding a person’s eligibility to receive a benefit. Similar to other statutes it imposes civil monetary penalties and treble (triple) damages in some situations. It also includes a criminal enforcement provision allowing for five years in prison and $25,000 per violation.