Health care fraud.

AuthorHarrison, Steven
PositionI. Introduction into II. Statutes Addressing Medicare and Medicaid Fraud B. Anti-Kickback Statute, p. 1223-1254 - Thirtieth Annual Survey of White Collar Crime
  1. INTRODUCTION II. STATUTES ADDRESSING MEDICARE AND MEDICAID FRAUD A. False Statements in Connection to Health Care Applications 1. Elements of the Offense a. Statement of Material Fact b. False Representation c. Knowing and Willful 2. Penalties B. Anti-Kickback Statute 1. Elements of the Offense a. Knowing and Willful b. Solicitation or Receipt of Remuneration c. For the Purpose of Inducing Referral of Business 2. Defenses a. Unconstitutional Vagueness b. Entrapment by Estoppel c. Good Faith 3. Penalties 4. Safe Harbor Provisions a. Purpose b. Uncertainty in the Regulations c. Enumerated Safe Harbors i. Investment Interest ii. Sale of Physician Practices, Practitioner Recruitment, and Obstetrical Malpractice Insurance Subsidies iii. Contracts for Space, Equipment, Services, and Employment iv. Advertisements and Promotions v. Electronic Prescription Systems vi. Referral Services vii. Relationships Between Providers viii. Arrangements Between Providers and Health Plans ix. Relationships Between Providers and Suppliers x. Ambulance Replenishing C. Self-Referral/Stark Amendments 1. Elements of the Offense a. Financial Relationship b. Referral c. Submission of a Claim for Services 2. Absence of an Exception or Safe Harbor 3. Penalties D. The Health Insurance Portability and Accountability Act of 1996 1. Offenses a. Health Care Fraud b. Theft or Embezzlement in Connection with Health Care c. False. Statements Relating to Health Care Matters d. Obstruction of Criminal Investigations of Health Care Offenses e. Violation of Assignment Terms 2. Corporate Compliance Program 3. Exemptions 4. Penalties III. PROSECUTING HEALTH CARE FRAUD WITH GENERAL FEDERAL STATUTES A. False Claims Act 1. Elements of the Offense a. Presentation of a Claim b. False, Fictitious, or Fraudulent Nature of a Claim c. Intent 2. Defenses 3. Penalties B. False Statements 1. Elements of the Offense a. Statement to a Governing Agency b. Falsity of Statement c. Intent 2. Defenses 3. Penalties C. Mail and Wire Fraud 1. Elements of the Offense a. Scheme or Artifice to Defraud b. Use of the Mails or Wire in Furtherance of the Scheme 2. Defenses 3. Penalties IV. ENFORCEMENT A. Introduction B. Entities Responsible for Enforcement 1. Federal Enforcement a. Department of Justice b. Department of Health and Human Services i. Health Care Financing Administration ii. Office of the Inspector General c. Private Parties and Qui Tam Actions 2. State Level Enforcement 3. Federal and State Cooperation 4. Compliance Programs I. INTRODUCTION

    The Centers for Medicare and Medicaid Services ("CMS") estimates that by the year 2023, health care spending will account for 19.3% of gross domestic product, an increase of 2.1% over the preceding decade. (1) Government financing of health expenditures constitutes 44% of current national health spending, and is projected to rise to 48% by 2023. (2) With federal spending for the Medicare and Medicaid programs projected to reach $1.12 trillion in 2014, (3) Medicare and Medicaid comprise the largest single purchaser of health care in the world. (4) Thus, it is no surprise that criminals view health care fraud as a lucrative field for illicit profit. (5) The National Health Care Anti-Fraud Association ("NHCAA") estimates that health care fraud accounts for at least 3% of total health care expenditures, or more than $60 billion each year. (6) Because about $36 billion of that is fraud against public health care programs, (7) federal and state agencies have made health care fraud prosecution a primary focus. (8)

    In fiscal year 2013, the federal government negotiated or won over $2.6 billion in judgments and settlements, plus additional administrative measures in health care fraud cases and proceedings. (9) In addition, the Department of Health and Human Services ("HHS") is referring more health care fraud cases for criminal prosecution. (10) Even before the recent comprehensive health care reform, countering fraud and abuse remained a priority. (11) Continued implementation of the Patient Protection and Affordable Care Act will allow government agencies and private insurers to "better detect, investigate and prosecute suspected fraud," as well as provide substantial additional funding for the Health Care Fraud and Abuse Control Program. (12) This Control Program is foundational to an increase in private-public, anti-fraud information sharing, a critical step in fraud detection and prevention. (13) A major change may come when the government begins to use predictive modeling techniques to help combat fraud. These techniques have often been used in the private sector and can increase efficient identification of fraud. (14)

    The federal government concentrates on detecting and prosecuting health care fraud in its health care insurance programs. (15) Statutes enacted to deal with fraud in these programs are necessary because "[a]s the government's second largest social program, Medicare continues to be an attractive target for fraud and abuse." (16) Medicaid is a similarly attractive opportunity for fraud because, in addition to its size, unrestricted federal reimbursement of state Medicaid spending disincentivizes state enforcement. (17)

    Persons and organizations certified by HHS to receive payment under the Social Security Act are the most likely targets for Medicare and Medicaid fraud investigations. (18) Persons and organizations include hospitals, nursing and rehabilitation centers, managed care entities, health maintenance organizations ("HMOs"), and intermediate carriers such as private insurance companies, private and public clinics, medical laboratories, durable medical equipment ("DME") providers, physicians, and physician practice groups. (19)

    Several government agencies are involved in decreasing health care fraud. The Department of Justice ("DOJ") and HHS provide monitoring and enforcement of health care fraud regulations. (20) Individual states assist the HHS Office of the Inspector General ("OIG") and CMS to initiate and pursue investigations of Medicare and Medicaid fraud.21 In addition, the OIG uses its permissive exclusion authority to induce providers to help track fraud through a voluntary disclosure program. (22) Because OIG is authorized to exclude individuals and entities from federally funded health care services, providers are careful to screen hires for excluded persons or entities lest they be subject to civil monetary penalties. (23) In prosecutions of fraud, the DOJ employs the resources of its own criminal and civil divisions, as well as those of the U.S. Attorneys' Offices, HHS, and the FBI. (24)

    This Article examines federal and state efforts to combat health care fraud. Section II of this Article discusses the statutes specifically enacted to address Medicare and Medicaid fraud and reviews the elements, defenses, penalties, and safe harbor provisions for each statute. Section III of this Article discusses general federal statutes used to prosecute health care fraud, including those regulating false claims, false statements, and mail and wire fraud. Section III describes the elements of the offenses, available defenses, and penalties applicable under each general statute. Section IV provides an overview of federal and state government agencies' enforcement efforts to investigate and prosecute health care fraud.

    Where applicable, this Article discusses conflicts among federal circuit courts. Although this Article focuses on the criminal aspects of health care fraud, the Article also discusses important civil consequences because parallel proceedings have become standard practice for government health care fraud investigations and...

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