Health Care Fraud Defense Lawyer

Health care is one of the most heavily regulated industries in the United States, making physicians, hospitals, pharmacies, laboratories, hospice providers, drug and medical device manufacturers, and other suppliers vulnerable to allegations of both civil and criminal fraud. There is no question health care fraud remains a top Department of Justice priority, with the government aggressively pursuing industry participants both civilly and criminally. We have significant experience successfully defending clients in both civil and criminal health care fraud investigations and proceedings. In many cases we have been able to resolve these matters without charges ever being brought. If you are or think you might be the target of a healthcare fraud investigation, call us at (404) 658-9070.

Health care fraud involves making false and fraudulent representations in order to receive payment from health care benefit programs in connection with the delivery of or payment for health care benefits, items, or services. The federal health care fraud statute, 18 U.S.C. § 1347, criminalizes the knowing and willful execution, or attempted execution, of a scheme or artifice (1) to defraud any health care benefit program; or (2) 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, in connection with the delivery of or payment for health care benefits, items, or services.

Importantly, “health care benefit program” means any public or private plan or contract under which medical benefits, items, or services are provided to any individual, not just Medicare and Medicaid and other federal programs.

Health care fraud can take many forms. Examples of health care fraud include:

• Billing for services that were never rendered or for supplies that were never provided
• Performing and billing for medically unnecessary services
• Soliciting, paying, or accepting kickbacks in exchange for patient referrals
• Falsifying medical records in order to justify medically unnecessary tests, surgeries or other procedures
• “Upcoding,” or billing for more expensive services or procedures than were actually provided or performed
• Unbundling, or billing multiple procedure codes for a group of procedures normally covered by a single code
• Misrepresenting the nature of the services, procedures, or supplies provided or performed
• Misrepresenting the identity of the provider
• Routinely waiving patient co-pays or deductibles
• Billing twice for the same service when it was only performed once
• Billing for a non-covered service as a covered service
• Overutilization of services

Violations of the federal health care fraud statute carry a 10-year maximum prison sentence, and a 20-year maximum sentence if the violation results in serious bodily injury. Individuals who are convicted of health care fraud also face fines of up to $250,000 per offense, while organizations face up to $500,000 in fines per offense. Administrative penalties, such as exclusion from participation in federal health care programs, and civil penalties can also be used to punish healthcare fraud.

Health care fraud matters often turn on whether the government can prove that you had the requisite intent to defraud. The key in these cases is to show that you acted in good faith or made an innocent mistake. For example, you may be able to show that you relied in good faith on a billing expert or that you inadvertently billed certain services using the wrong CPT code. In other cases, defense counsel may also be able to show that the government lacks sufficient evidence to support allegations of fraud. This is often a defense in cases where the government alleges that a certain procedure was medically unnecessary. Such defenses depend on the use of qualified experts to show that the procedure was reasonable and medically necessary.

One of the most frequently investigated and prosecuted forms of health care fraud involves the offering, paying, soliciting, or receiving of kickbacks in exchange for patient referrals, in violation of the federal Anti-Kickback Statute (“AKS”). The AKS is a criminal law that makes it a felony to knowingly and willfully pay any “remuneration” to induce or reward patient referrals or the generation of business involving any item or service payable by the federal health care programs (e.g., drugs, supplies, or health care services for Medicare or Medicaid patients). AKS liability extends to those who solicit and receive the kickbacks as well as those who pay or offer to pay remuneration, and thus covers both sides of the transaction. A person need not specifically intend to violate the AKS or even know of its existence. 

Remuneration is not limited to cash, but is defined broadly as “anything of value.” Remuneration includes credit arrangements, gifts, supplies, equipment, excessive rent payment, free rent, expensive hotel stays and meals, and excessive compensation for medical directorships or consultancies. Remuneration also includes intangible economic benefits, such as the opportunity to earn a fee.

Criminal penalties under the AKS include a maximum term of 5 years’ imprisonment per violation and fines up to $25,000 per violation. AKS violations are punishable by civil and administrative penalties, including False Claims Act liability, civil monetary penalties of up to $50,000 per violation, and exclusion from participation in federal health care programs.

Because violations of the AKS often implicate complex business arrangements structured by attorneys, advice of counsel should always be explored as a potential defense. You may be able to present evidence that you consulted with counsel with respect to the arrangement at issue and thus lacked the requisite intent to violate the AKS.

In addition to defenses that negate intent, there are several statutory and regulatory safe harbors that protect certain payment and business practices from criminal and civil prosecution that otherwise might violate the AKS. For safe harbor protection to apply, the arrangement must fit squarely within the safe harbor and must satisfy all of its requirements. A key defense strategy in AKS cases is therefore to show that your conduct complies with a statutory or regulatory safe harbor. Although there are over 20 safe harbors, some of the most commonly invoked safe harbors include:

• Space rental. Under this safe harbor, “remuneration” does not include any payment made by a lessee to a lessor for the use of premises, as long as the lease agreement is set out in writing and signed by the parties; the lease covers all of the premises leased between the parties for the term of the lease and specifies the premises covered by the lease; the term of the lease is for not less than one year; the aggregate rental charge is set in advance, is consistent with fair market value in arms-length transactions and is not determined in a manner that takes into account the volume or value of any referrals or business otherwise generated between the parties for which payment may be made in whole or in part under Medicare, Medicaid or other Federal health care programs; and the aggregate space rented does not exceed that which is reasonably necessary to accomplish the commercially reasonable business purpose of the rental.
• Personal services and management contracts. Under this safe harbor, “remuneration” does not include any payment made by a principal to an agent as compensation for the services of the agent, as long as: the agency agreement is set out in writing and signed by the parties; the agreement covers all of the services the agent provides to the principal for the term of the agreement and specifies the services to be provided by the agent; the term of the agreement is for not less than one year; the aggregate compensation paid to the agent over the term of the agreement is set in advance, is consistent with fair market value in arms-length transactions and is not determined in a manner that takes into account the volume or value of any referrals or business otherwise generated between the parties for which payment may be made in whole or in part under Medicare, Medicaid or other Federal health care programs; the services performed under the agreement do not involve the counseling or promotion of a business arrangement or other activity that violates any State or Federal law; and the aggregate services contracted for do not exceed those which are reasonably necessary to accomplish the commercially reasonable business purpose of the services.
• Employees. Under the bona fide employment safe harbor, “remuneration” does not include any amount paid by an employer to an employee, who has a bona fide employment relationship with the employer, for employment in the furnishing of any item or service for which payment may be made in whole or in part under Medicare, Medicaid or other Federal health care programs.
• Investments in group practices. Under this safe harbor, “remuneration” does not include any payment that is a return on an investment interest, such as a dividend or interest income, made to a solo or group practitioner investing in his or her own practice or group practice if: the equity interests in the practice or group are held by licensed health care professionals who practice in the practice or group; and the equity interests are in the practice or group itself, and not some subdivision of the practice or group. In the case of group practices, the practice must meet the definition of “group practice” and be a unified business with centralized decision-making, pooling of expenses and revenues, and a compensation/profit distribution system that is not based on satellite offices operating substantially as if they were separate enterprises or profit centers. Any revenues from ancillary services must be derived from “in-office ancillary services.”

Health care fraud is a serious offense, the defense of which requires not only experience handling federal criminal matters generally, but a deep knowledge of and familiarity with substantive health care law and regulations. It is extremely important to involve, as early as possible, qualified federal criminal defense counsel to investigate the allegations, explore potential defenses, and interface with the government. We routinely represent clients in health care fraud matters, and in our experience, it is rarely a good idea to wait to hire an attorney.

Under the federal exclusion statute, the Office of the Inspector General (OIG) must exclude an individual from participation in any federal health care program if that individual was convicted under federal or state law of a criminal offense related to the delivery of an item or service under Medicare or a state health care program. OIG does not have discretion when it comes to imposing a “mandatory exclusion.” If the criteria are satisfied for a mandatory exclusion, then OIG must exclude the individual.

Mandatory exclusions must be imposed for at least five years, but are often imposed for much longer periods if justified by the underlying facts and circumstances. OIG does therefore have some discretion when it comes to the length of the exclusion. Defense counsel with experience handling these kinds of matters will be able to help you respond to a notice of exclusion and may be able to persuade the OIG to impose a lesser period of exclusion.

If you have a health care fraud matter that you would like to discuss with experienced federal criminal defense lawyers, please contact us at (404) 658-9070.