Health care fraud

• Author: Brynne Peluso/Victoria Berzin/Harshita Ganesh/Anna Gyori/Adrienne Jackson/Micheal Nisper/Loro Schreiner
• Pages: 937-1002

HEALTH CARE FRAUD

I. INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 939

II. STATUTES ADDRESSING MEDICARE AND MEDICAID FRAUD . . . . . . . . . . . 940

A. False Statement Amendment . . . . . . . . . . . . . . . . . . . . . . . . . 942

1. Elements of the Offense . . . . . . . . . . . . . . . . . . . . . . . . . 942

a. Statement or Representation of Material Fact . . . . . . 943

b. False Statement or Representation . . . . . . . . . . . . . . 943

c. Knowing and Willful .. . . . . . . . . . . . . . . . . . . . . . . 943

2. Penalties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 944

B. Anti-Kickback Statute . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 945

1. Elements of the Offense . . . . . . . . . . . . . . . . . . . . . . . . . 946

a. Knowing and Willful . .. . . . . . . . . . . . . . . . . . . . . . 946

b. Solicitation, Receipt, Payment, or Offer of

Remuneration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 947

c. For the Purpose of Inducing Referral of Business . . . 948

2. Defenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 948

a. Unconstitutional Vagueness .. . . . . . . . . . . . . . . . . . 949

b. Entrapment by Estoppel . . . . . . . . . . . . . . . . . . . . . 949

c. Good Faith . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 950

3. Penalties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 950

4. Safe Harbor Provisions .. . . . . . . . . . . . . . . . . . . . . . . . . 951

a. Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 951

b. Enumerated Safe Harbors . . . . . . . . . . . . . . . . . . . . 951

i. Investment Interest . . . . . . . . . . . . . . . . . . . . 952

ii. Sale of Physician Practices, Practitioner

Recruitment, and Obstetrical Malpractice

Insurance Subsidies . . . . . . . . . . . . . . . . . . . . 953

iii. Contracts for Space, Equipment, Services, and

Employment . . . . . . . . . . . . . . . . . . . . . . . . . 955

iv. Advertisements and Promotions . . . . . . . . . . . 957

v. Electronic Prescription and Health Care Record

Systems . . . . . . . . . . . . . . . . . . . . . . . . . . . . 958

vi. Referral Services .. . . . . . . . . . . . . . . . . . . . . 959

vii. Relationships Between Providers . . . . . . . . . . 959

viii. Arrangements Between Providers and Health

Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 961

ix. Relationships Between Providers and Suppliers 962

x. Ambulance Replenishing . . . . . . . . . . . . . . . . 964

xi. January 2021 Safe Harbors . . . . . . . . . . . . . . 965

C. Self-Referral/Stark Amendments . . . . . . . . . . . . . . . . . . . . . . 966

937

1. Elements of the Offense . . . . . . . . . . . . . . . . . . . . . . . . . 967

a. Financial Relationship .. . . . . . . . . . . . . . . . . . . . . . 967

b. Referral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 968

c. Submission of a Claim for Services . . . . . . . . . . . . . 968

2. Exceptions and Safe Harbors . . . . . . . . . . . . . . . . . . . . . 968

3. Penalties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 970

D. The Health Insurance Portability and Accountability Act of

1996 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 970

1. Offenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 973

a. Health Care Fraud .. . . . . . . . . . . . . . . . . . . . . . . . . 973

b. Theft or Embezzlement in Connection with Health

Care . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 974

c. False Statements Relating to Health Care Matters . . . 974

d. Obstruction of Criminal Investigations of Health Care

Offenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 974

e. Violation of Assignment Terms . . . . . . . . . . . . . . . . 975

2. Corporate Compliance Program . . . . . . . . . . . . . . . . . . . 975

3. Exemptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 975

4. Penalties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 976

E. The Eliminating Kickbacks in Recovery Act of 2018 . . . . . . . . 977

1. Elements of the Offense . . . . . . . . . . . . . . . . . . . . . . . . . 977

a. Knowing and Willful . .. . . . . . . . . . . . . . . . . . . . . . 978

b. Solicitation or Receipt of Remuneration . . . . . . . . . . 978

c. Referral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 979

2. Safe Harbor Provisions .. . . . . . . . . . . . . . . . . . . . . . . . . 979

a. Differences from the Anti-Kickback Safe Harbor

Provisions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 980

III. PROSECUTING HEALTH CARE FRAUD WITH GENERAL FEDERAL STATUTES 980

A. False Claims Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 981

1. Elements of the Offense . . . . . . . . . . . . . . . . . . . . . . . . . 981

a. Presentation of a Claim . . . . . . . . . . . . . . . . . . . . . . 982

b. False, Fictitious, or Fraudulent Nature of a Claim . . . 983

c. Intent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 983

d. Materiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 984

2. Defenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 985

3. Penalties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 986

B. False Statements Act .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 986

1. Elements of the Offense . . . . . . . . . . . . . . . . . . . . . . . . . 986

a. Submission of a Statement .. . . . . . . . . . . . . . . . . . . 987

b. Falsity of Statement . . . . . . . . . . . . . . . . . . . . . . . . 987

c. Materiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 988

d. Intent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 989

938 AMERICAN CRIMINAL LAW REVIEW [Vol. 60:937

e. Statement to a Government Agency . . . . . . . . . . . . . 989

2. Defenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 990

3. Penalties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 991

C. Mail and Wire Fraud . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 991

1. Elements of the Offense . . . . . . . . . . . . . . . . . . . . . . . . . 991

a. Scheme or Artifice to Defraud . . . . . . . . . . . . . . . . . 992

b. Use of the Mails or Wire in Furtherance of the Scheme 992

2. Defenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 993

3. Penalties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 993

IV. ENFORCEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 993

A. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 993

B. Federal Enforcement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 994

1. Department of Justice .. . . . . . . . . . . . . . . . . . . . . . . . . . 994

2. Department of Health and Human Services . . . . . . . . . . . 996

a. Centers for Medicare and Medicaid Services . . . . . . 996

b. Office of the Inspector General . . . . . . . . . . . . . . . . 996

3. Private Parties and Qui Tam Actions . . . . . . . . . . . . . . . . 998

C. State-Level Enforcement . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1000

D. Federal and State Cooperation . . . . . . . . . . . . . . . . . . . . . . . 1001

E. Compliance Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1002

I. INTRODUCTION

Health care fraud imposes huge costs on society. Accordingly, the government

prosecutes health care fraud with vigor. For example, during FY 2021, the

Department of Justice (“DOJ”) recovered over $5 billion in settlements and judg-

ments in matters involving the health care industry.

1

Press Release, U.S. Dep’t of Just., Justice Department’s False Claims Act Settlements and Judgments

Exceed $5.6 Billion in Fiscal Year 2021 (Feb. 1, 2022), https://www.justice.gov/opa/pr/justice-department-s-

false-claims-act-settlements-and-judgments-exceed-56-billion-fiscal-year#:�:text=Recoveries%20in%20Whistle

blower%20Suits,of%20the%20False%20Claims%20Act.

In 2020, the DOJ announced

its largest health care enforcement action to date, which resulted in charges against

345 defendants for over $6 billion in fraud losses.

2

Press Release, U.S. Dep’t of Just., National Health Care Fraud and Opioid Takedown Results in Charges

Against 345 Defendants Responsible for More than $6 Billion in Alleged Fraud Losses (Sept. 30, 2020), https://

www.justice.gov/opa/video/national-health-care-fraud-and-opioid-takedown-results-charges-against-345-defendants.

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

DOJ and the Department of Health and Human Services (“HHS”) enforce federal

health care fraud laws and regulations.

3

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

PROGRAM, ANNUAL REPORT FOR FISCAL YEAR 2021 11 (2022) [hereinafter HHS ANNUAL REPORT FY21], https://

oig.hhs.gov/publications/docs/hcfac/FY2020-hcfac.pdf.

Individual states assist the HHS Office of

the Inspector General (“OIG”) in initiating and pursuing investigations of

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2023] HEALTH CARE FRAUD 939