HEALTH CARE FRAUD

HEALTH CARE FRAUD

I. INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1075

II. STATUTES ADDRESSING MEDICARE AND MEDICAID FRAUD . . . . . . . . . . . 1076

A. False Statement Amendment . . . . . . . . . . . . . . . . . . . . . . . . . 1078

1. Elements of the Offense . . . . . . . . . . . . . . . . . . . . . . . . . 1078

a. Statement or Representation of Material Fact . . . . . . 1079

b. False Statement or Representation . . . . . . . . . . . . . . 1079

c. Knowing and Willful . . . . . . . . . . . . . . . . . . . . . . . . 1080

2. Penalties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1080

B. Anti-Kickback Amendment. . . . . . . . . . . . . . . . . . . . . . . . . . . 1081

1. Elements of the Offense . . . . . . . . . . . . . . . . . . . . . . . . . 1083

a. Knowing and Willful . . . . . . . . . . . . . . . . . . . . . . . . 1083

b. Solicitation, Receipt, Payment, or Offer of

Remuneration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1084

c. For the Purpose of Inducing Referral of Business. . . . 1085

2. Defenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1086

a. Unconstitutional Vagueness . . . . . . . . . . . . . . . . . . . 1086

b. Entrapment by Estoppel . . . . . . . . . . . . . . . . . . . . . . 1087

c. Good Faith . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1088

3. Penalties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1088

4. Safe Harbor Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . 1089

a. Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1089

b. Enumerated Safe Harbors. . . . . . . . . . . . . . . . . . . . . 1089

i. Investment Interest . . . . . . . . . . . . . . . . . . . 1090

ii. Sale of Physician Practices, Practitioner

Recruitment, and Obstetrical Malpractice

Insurance Subsidies . . . . . . . . . . . . . . . . . . 1092

iii. Contracts for Space, Equipment, Services, and

Employment . . . . . . . . . . . . . . . . . . . . . . . 1095

iv. Advertisements and Promotions . . . . . . . . . 1097

v. Electronic Prescription Systems . . . . . . . . . 1098

vi. Referral Services . . . . . . . . . . . . . . . . . . . . 1100

vii. Relationships Between Providers. . . . . . . . . 1101

viii. Arrangements Between Providers and Health

Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1103

ix. Relationships Between Providers and

Suppliers . . . . . . . . . . . . . . . . . . . . . . . . . . 1105

x. Ambulance Replenishing . . . . . . . . . . . . . . 1108

xi. January 2021 Safe Harbors . . . . . . . . . . . . . 1109

C. Self-Referral/Stark Amendments. . . . . . . . . . . . . . . . . . . . . . . 1110

1073

1. Elements of the Offense . . . . . . . . . . . . . . . . . . . . . . . . . 1112

a. Financial Relationship . . . . . . . . . . . . . . . . . . . . . . . 1112

b. Referral. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1113

c. Submission of a Claim for Services. . . . . . . . . . . . . . 1113

2. Exceptions and Safe Harbors. . . . . . . . . . . . . . . . . . . . . . 1113

3. Penalties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1115

D. The Health Insurance Portability and Accountability Act of

1996. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1116

1. Offenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1118

a. Health Care Fraud . . . . . . . . . . . . . . . . . . . . . . . . . . 1119

b. Theft or Embezzlement in Connection with Health

Care . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1120

c. False Statements Relating to Health Care Matters . . . 1120

d. Obstruction of Criminal Investigations of Health Care

Offenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1120

e. Violation of Assignment Terms . . . . . . . . . . . . . . . . 1121

2. Corporate Compliance Program. . . . . . . . . . . . . . . . . . . . 1121

3. Exemptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1121

4. Penalties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1122

E. The Eliminating Kickbacks in Recovery Act of 2018 . . . . . . . . 1123

1. Elements of the Offense . . . . . . . . . . . . . . . . . . . . . . . . . 1123

a. Knowing and Willful . . . . . . . . . . . . . . . . . . . . . . . . 1124

b. Solicitation or Receipt of Remuneration . . . . . . . . . . 1124

c. Referral. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1124

2. Safe Harbor Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . 1125

a. Differences from the Anti-Kickback Safe Harbor

Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1125

III. PROSECUTING HEALTH CARE FRAUD WITH GENERAL FEDERAL STATUTES . 1126

A. False Claims Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1126

1. Elements of the Offense . . . . . . . . . . . . . . . . . . . . . . . . . 1127

a. Presentation of a Claim . . . . . . . . . . . . . . . . . . . . . . 1127

b. False, Fictitious, or Fraudulent Nature of a Claim . . . 1128

c. Intent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1129

d. Materiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1130

2. Defenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1130

3. Penalties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1132

B. False Statements Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1132

1. Elements of the Offense . . . . . . . . . . . . . . . . . . . . . . . . . 1132

a. Submission of a Statement . . . . . . . . . . . . . . . . . . . . 1132

b. Falsity of Statement . . . . . . . . . . . . . . . . . . . . . . . . . 1133

c. Materiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1134

d. Intent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1135

1074 AMERICAN CRIMINAL LAW REVIEW [Vol. 58:1073

e. Statement to a Government Agency . . . . . . . . . . . . . 1135

2. Defenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1136

3. Penalties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1137

C. Mail and Wire Fraud . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1137

1. Elements of the Offense . . . . . . . . . . . . . . . . . . . . . . . . . 1138

a. Scheme or Artif‌ice to Defraud . . . . . . . . . . . . . . . . . 1138

b. Use of the Mails or Wire in Furtherance of the Scheme 1139

2. Defenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1139

3. Penalties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1140

IV. ENFORCEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1140

A. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1140

B. Federal Enforcement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1141

1. Department of Justice . . . . . . . . . . . . . . . . . . . . . . . . . . . 1141

2. Department of Health and Human Services . . . . . . . . . . . 1143

a. Centers for Medicare and Medicaid Services . . . . . . . 1143

b. Off‌ice of the Inspector General . . . . . . . . . . . . . . . . . 1143

3. Private Parties and Qui Tam Actions . . . . . . . . . . . . . . . . 1145

C. State Level Enforcement . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1147

D. Federal and State Cooperation . . . . . . . . . . . . . . . . . . . . . . . 1148

E. Compliance Programs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1149

I. INTRODUCTION

Health care fraud imposes huge costs on society. In turn, the government prose-

cutes health care fraud with vigor; during the 2019 f‌iscal year, for example, the fed-

eral government won or negotiated more than $2.6 billion in health care fraud

lawsuits.

1

In 2018, the joint Department of Justice (“DOJ”) and Department of

Health and Human Services (“HHS”) Medicare Fraud Strike Force announced its

largest health care enforcement action to date.

2

The action resulted in charges

against 601 defendants for over $2 billion in fraud losses.

3

Several government agencies are involved in f‌ighting health care fraud. The

DOJ and HHS enforce federal health care fraud laws and regulations.

4

Individual

states assist the HHS Off‌ice of the Inspector General (“OIG”) in initiating and

1. Press Release, U.S. Dep’t of Just., Justice Department Recovers over $3 Billion from False Claims Act

Cases in Fiscal Year 2019 (Jan. 9, 2020), https://www.justice.gov/opa/pr/justice-department-recovers-over-3-

billion-false-claims-act-cases-f‌iscal-year-2019.

2. National Health Care Fraud Takedown, FED. BUREAU OF INVESTIGATION (June 28, 2018), https://www.fbi.

gov/news/stories/national-health-care-fraud-takedown-062818.

3. Id.

4. DEP’T OF HEALTH AND HUM. SERVS. & DEP’T OF JUST., HEALTH CARE FRAUD AND ABUSE CONTROL

PROGRAM, ANNUAL REPORT FOR FISCAL YEAR 2018 10 (2019) [hereinafter HHS ANNUAL REPORT FY18], https://

oig.hhs.gov/publications/docs/hcfac/FY2018-hcfac.pdf (“With the creation of the Health Care Fraud Prevention

and Enforcement Action Team (HEAT) effort, DOJ and HHS pledged a commitment to prevent and prosecute

health care fraud.”).

2021] HEALTH CARE FRAUD 1075