Health Care Fraud

• Author: Abby Rickeman/Kathryn Demallie/Todd Kowalski/Sabrina Parisi/Brynne Peluso/Ryan Thomas
• Pages: 975-1053

HEALTH CARE FRAUD

I. INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 977

II. STATUTES ADDRESSING MEDICARE AND MEDICAID FRAUD . . . . . . . . . . . 978

A. False Statement Amendment . . . . . . . . . . . . . . . . . . . . . . . . . 980

1. Elements of the Offense . . . . . . . . . . . . . . . . . . . . . . . . . 980

a. Statement or Representation of Material Fact . . . . . . 981

b. False Statement or Representation . . . . . . . . . . . . . . 981

c. Knowing and Willful . . . . . . . . . . . . . . . . . . . . . . . . 982

2. Penalties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 982

B. Anti-Kickback Amendment. . . . . . . . . . . . . . . . . . . . . . . . . . . 983

1. Elements of the Offense . . . . . . . . . . . . . . . . . . . . . . . . . 985

a. Knowing and Willful . . . . . . . . . . . . . . . . . . . . . . . . 985

b. Solicitation, Receipt, Payment, or Offer of

Remuneration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 986

c. For the Purpose of Inducing Referral of Business . . . 987

2. Defenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 988

a. Unconstitutional Vagueness . . . . . . . . . . . . . . . . . . . 988

b. Entrapment by Estoppel . . . . . . . . . . . . . . . . . . . . . . 989

c. Good Faith . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 990

3. Penalties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 990

4. Safe Harbor Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . 991

a. Purpose. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 991

b. Enumerated Safe Harbors. . . . . . . . . . . . . . . . . . . . . 992

i. Investment Interest . . . . . . . . . . . . . . . . . . . 992

ii. Sale of Physician Practices, Practitioner

Recruitment, and Obstetrical Malpractice

Insurance Subsidies . . . . . . . . . . . . . . . . . . 994

iii. Contracts for Space, Equipment, Services, and

Employment . . . . . . . . . . . . . . . . . . . . . . . 997

iv. Advertisements and Promotions . . . . . . . . . 1000

v. Electronic Prescription and Health Care

Record Systems . . . . . . . . . . . . . . . . . . . . . 1001

vi. Referral Services . . . . . . . . . . . . . . . . . . . . 1003

vii. Relationships Between Providers. . . . . . . . . 1004

viii. Arrangements Between Providers and Health

Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1006

ix. Relationships Between Providers and

Suppliers . . . . . . . . . . . . . . . . . . . . . . . . . . 1008

x. Ambulance Replenishing . . . . . . . . . . . . . . 1012

xi. January 2021 Safe Harbors . . . . . . . . . . . . . 1013

975

C. Self-Referral/Stark Amendments. . . . . . . . . . . . . . . . . . . . . . . 1014

1. Elements of the Offense . . . . . . . . . . . . . . . . . . . . . . . . . 1016

a. Financial Relationship . . . . . . . . . . . . . . . . . . . . . . . 1016

b. Referral. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1017

c. Submission of a Claim for Services . . . . . . . . . . . . . 1017

2. Exceptions and Safe Harbors. . . . . . . . . . . . . . . . . . . . . . 1017

3. Penalties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1019

D. The Health Insurance Portability and Accountability Act of

1996. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1020

1. Offenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1022

a. Health Care Fraud . . . . . . . . . . . . . . . . . . . . . . . . . . 1023

b. Theft or Embezzlement in Connection with Health

Care . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1023

c. False Statements Relating to Health Care Matters . . . 1024

d. Obstruction of Criminal Investigations of Health Care

Offenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1024

e. Violation of Assignment Terms . . . . . . . . . . . . . . . . 1024

2. Corporate Compliance Program. . . . . . . . . . . . . . . . . . . . 1025

3. Exemptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1025

4. Penalties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1026

E. The Eliminating Kickbacks in Recovery Act of 2018 . . . . . . . . 1027

1. Elements of the Offense . . . . . . . . . . . . . . . . . . . . . . . . . 1027

a. Knowing and Willful . . . . . . . . . . . . . . . . . . . . . . . . 1028

b. Solicitation or Receipt of Remuneration . . . . . . . . . . 1028

c. Referral. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1028

2. Safe Harbor Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . 1028

a. Differences from the Anti-Kickback Safe Harbor

Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1029

III. PROSECUTING HEALTH CARE FRAUD WITH GENERAL FEDERAL STATUTES . 1030

A. False Claims Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1030

1. Elements of the Offense . . . . . . . . . . . . . . . . . . . . . . . . . 1031

a. Presentation of a Claim . . . . . . . . . . . . . . . . . . . . . . 1031

b. False, Fictitious, or Fraudulent Nature of a Claim . . . 1032

c. Intent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1033

d. Materiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1034

2. Defenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1034

3. Penalties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1036

B. False Statements Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1036

1. Elements of the Offense . . . . . . . . . . . . . . . . . . . . . . . . . 1036

a. Submission of a Statement . . . . . . . . . . . . . . . . . . . . 1036

b. Falsity of Statement . . . . . . . . . . . . . . . . . . . . . . . . . 1037

c. Materiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1038

976 AMERICAN CRIMINAL LAW REVIEW [Vol. 59:975

d. Intent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1039

e. Statement to a Government Agency . . . . . . . . . . . . . 1039

2. Defenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1040

3. Penalties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1041

C. Mail and Wire Fraud . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1041

1. Elements of the Offense . . . . . . . . . . . . . . . . . . . . . . . . . 1042

a. Scheme or Artifice to Defraud . . . . . . . . . . . . . . . . . 1042

b. Use of the Mails or Wire in Furtherance of the Scheme 1043

2. Defenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1043

3. Penalties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1044

IV. ENFORCEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1044

A. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1044

B. Federal Enforcement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1045

1. Department of Justice . . . . . . . . . . . . . . . . . . . . . . . . . . . 1045

2. Department of Health and Human Services . . . . . . . . . . . 1047

a. Centers for Medicare and Medicaid Services . . . . . . . 1047

b. Office of the Inspector General . . . . . . . . . . . . . . . . . 1047

3. Private Parties and Qui Tam Actions . . . . . . . . . . . . . . . . 1049

C. State Level Enforcement . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1051

D. Federal and State Cooperation . . . . . . . . . . . . . . . . . . . . . . . 1051

E. Compliance Programs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1053

I. INTRODUCTION

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

cutes health care fraud with vigor; during the 2020 fiscal year, for example, the fed-

eral government won or negotiated more than $1.8 billion in health care fraud

lawsuits.

1

In 2020, the Department of Justice (“DOJ”) announced its largest health

care enforcement action to date.

2

The action resulted in charges against 345

defendants for over $6 billion in fraud losses.

3

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

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

care fraud laws and regulations.

4

Individual states assist the HHS Office of the

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

1. Press Release, U.S. Dep’t of Just., Justice Department Recovers Over $2.2 Billion from False Claims Act

Cases in Fiscal Year 2020 (Jan. 14, 2021), https://www.justice.gov/opa/pr/justice-department-recovers-over-22-

billion-false-claims-act-cases-fiscal-year-2020.

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.

3. Id.

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

PROGRAM, ANNUAL REPORT FOR FISCAL YEAR 2020 11 (2021) [hereinafter HHS ANNUAL REPORT FY20], https://

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

2022] HEALTH CARE FRAUD 977