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Health Care Fraud Arrests for Violation of Federal False Claims Act: Criminal Defense Overview

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Schemes to take government money through nefarious means are far from new.  Over 150 years ago, as the Civil War was raging in this country, Congress passed its initial landmark false claims law “…in the wake of a spate of frauds upon the government.” United States v. Bramblett, 348 U.S. 503, 504, 75 S. Ct. 504, 99 L. Ed. 594 (1955).

With the enactment in 1863 of the first federal false claims statute, federal prosecutors were first empowered to seek the conviction of anyone deemed to cheat any number of government programs for money.  Things have escalated greatly since then.  Today, that 1863 statute has evolved into two widely-used False Claims statutes available to AUSAs in complaints alleging impropriety with federal funds:  31 U.S.C. § 3729 and 18 U.S.C. § 287.  Both are commonly used in federal Health Care Fraud prosecutions in Texas today.

Health Care Fraud: Civil False Claims Act (31 U.S.C. § 3729)

Insofar as health care fraud claims, the civil False Claims Act (“Civil FCA”) focuses upon invoices submitted to Medicare, Medicaid, or Tricare seeking payment for goods or services from a health care provider.

The statute provides as follows:

(1) In general. —Subject to paragraph (2), any person who—

(A) knowingly presents, or causes to be presented, a false or fraudulent claim for payment or approval;

(B) knowingly makes, uses, or causes to be made or used, a false record or statement material to a false or fraudulent claim;

(C) conspires to commit a violation of subparagraph (A), (B), (D), (E), (F), or (G);

(D) has possession, custody, or control of property or money used, or to be used, by the Government and knowingly delivers, or causes to be delivered, less than all of that money or property;

(E) is authorized to make or deliver a document certifying receipt of property used, or to be used, by the Government and, intending to defraud the Government, makes or delivers the receipt without completely knowing that the information on the receipt is true;

(F) knowingly buys, or receives as a pledge of an obligation or debt, public property from an officer or employee of the Government, or a member of the Armed Forces, who lawfully may not sell or pledge property; or

(G) knowingly makes, uses, or causes to be made or used, a false record or statement material to an obligation to pay or transmit money or property to the Government, or knowingly conceals or knowingly and improperly avoids or decreases an obligation to pay or transmit money or property to the Government,

is liable to the United States Government for a civil penalty of not less than $5,000 and not more than $10,000, as adjusted by the Federal Civil Penalties Inflation Adjustment Act of 1990 (28 U.S.C. 2461 note; Public Law 104–410[1]), plus 3 times the amount of damages which the Government sustains because of the act of that person.

 

Under the Civil FCA, if it can be established that the charges for these goods or services (1) have been inflated, or (2) if there is sufficient evidence that they were substandard, then an illegal act in violation of the law can be shown.  The claim will be deemed false and fraudulent.  There is no legal requirement for the government to prove intent on the part of the provider to commit fraud.

It is a powerful law.  Under the Civil FCA, each item or submission on an invoice will be evaluated separately.  Each one can be considered as a unique violation of the statute, allowing the AUSA to build a significant Health Care Fraud case rather quickly.

Punishment under the civil statute involves the imposition of monetary fines.  The Civil FCA allows for a judge to order the accused to pay fines of up to three (3) times the federal health insurance program’s loss plus $11,000 per claim.  Understandably, the total of these Civil FCA fines can be substantial.

A criminal defense note:  the AUSA may well dovetail the Civil FCA claim with the Anti-Kickback Law or the Stark Law if there is any evidence of these underlying claims being tied to kickbacks or illegal physician referrals.  Health Care Fraud cases alleging Civil FCA violations will often tag-team with these other fraud allegations.

For more, read our earlier discussions in:

Health Care Fraud: Criminal False Claims Act (18 U.S.C. § 287)

A distinctly different statute is also available for AUSAs seeking Health Care Fraud convictions, where criminal punishment is available that provides not only for monetary fines but for imprisonment of the provider.  The Criminal False Claims Act (“Criminal FCA”) has formed the basis for doctors to be sentenced to federal prison after a conviction for health care fraud.

Elements of the Criminal False Claims Act

The Criminal FCA, found in 18 U.S.C. §287, provides as follows:

Whoever makes or presents to any person or officer in the civil, military, or naval service of the United States, or to any department or agency thereof, any claim upon or against the United States, or any department or agency thereof, knowing such claim to be false, fictitious, or fraudulent, shall be imprisoned not more than five years and shall be subject to a fine in the amount provided in this title.

Of course, the Criminal FCA can be used in any number of situations involving invoicing for federal monies.  Insofar as health care fraud claims, the AUSA must introduce authenticated and admissible evidence establishing beyond a reasonable doubt that the provider-defendant:

  • knowingly
  • made a claim or statement to get the government to pay money on a health care insurance claim for goods or services; and
  • that the claim or statement was false, fictitious, or fraudulent.

As with the analogous Civil FCA, health care fraud complaints can pile numerous allegations of illegal acts as each request for payment on a single federal health insurance claim form may be argued to be an independent violation of the statute.  This means the AUSA may be able to build a significant criminal health care fraud case against the provider based upon a series of Medicare, Medicaid, or Tricare claim submissions.

Another criminal defense note:  Notice that “knowingly” is an element of intent that must be shown before there can be a conviction based upon health care fraud involving the Criminal FCA.  Since the statute itself does not define this intent within its provisions, court opinions must be researched and referenced to determine the legal definition that correctly applies to the situation.

Related Criminal Offenses to Federal False Claims Act Charges

As with the Civil FCA, the AUSA will likely find other criminal statutes to include in the charges brought against the provider for Criminal False Claims Act health care fraud.  Experienced defense attorneys will expect any one or more of the following allegations to follow alongside charges of violating the Criminal FCA.

Felony Conspiracy

First, there is a companion criminal law that will likely be used, 18 U.S.C. § 286.  Entitled “Conspiracy To Defraud The Government With Respect To Claims,” this Criminal Conspiracy Statute provides as follows:

Whoever enters into any agreement, combination, or conspiracy to defraud the United States, or any department or agency thereof, by obtaining or aiding to obtain the payment or allowance of any false, fictitious or fraudulent claim, shall be fined under this title or imprisoned not more than ten years, or both.

This is an independent crime, which upon conviction will allow the judge to sentence the provider to a maximum of ten (10) years imprisonment based upon violating this statute alone.

Felony Fraud

Other federal laws that may accompany allegations of health care fraud involving the Criminal False Claims Act include:

For more on these felony crimes, read our earlier discussions in:

Punishment for Violation of Criminal False Claims Act

As discussed earlier, each invoice charge on a federal health insurance claim can be argued by the government as an independent violation of the Criminal False Claims Act.  The same prosecution will often include allegations that other federal criminal statutes have been violated, too.

The sentencing under these independent statutes can add years, if not decades, to a case built on a cornerstone of the Criminal False Claims Act.

Federal Sentencing Guidelines

Since these will be federal cases heard in federal court, the United States Sentencing Guidelines (USSG) will be used by the judge in determining punishment.  The USSG establish formal procedures for determining the scope of the sentence and the judge must rule in accordance with their parameters.

Defenses to Federal Criminal False Claims Act Charges

Experienced health care fraud defense lawyers will face a complex representation whenever there is a federal investigation, much less a formal prosecution, based upon the Criminal FCA.  An aggressive approach will have to include a thorough review of the entirety of the federal prosecutor’s case file as well as an investigation into how each piece of investigatory information (witness statements; documents; digital information; etc.) was found.

Constitutional protections must be considered.  Was there any impropriety in the federal investigative process?  Can due process violations (e.g., improper search and seizure) be argued?

Evidentiary considerations are another defensive task.  For anything that the AUSA is using to support the criminal prosecution, an analysis must be made of its authenticity and its admissibility.  Is a witness statement the subject of a hearsay exception?  Are there documents in the file whose authenticity cannot be established under the federal evidentiary rules?

In either of the above defensive strategies, a motion to suppress may be filed that can result in a judicial order excluding a part of the government’s case.  If this is a substantial portion of the government’s case, then the matter may be dismissed or the charges significantly reduced.

After reviewing the facts of the AUSA’s case, there must be a comparison of the law to those facts.  The defense must consider the elements of 18 U.S.C. § 287 and whether or not the AUSA has met the government’s burden of proof regarding each of them.

What evidence is there of the provider (1) “knowingly” (2) making a claim or statement to get the government to pay money on a health care insurance claim for goods or services; and (3) that the claim or statement was false, fictitious, or fraudulent?  Is it enough to meet the burden of proof?

If there is a hole or gap in the case, then the defense can move to dismiss the matter, or negotiate for a reduction of charges.

 

Health Care Fraud Defense for False Claims Act Violations

Investigations into the financial component of any health care practice, from physician to pharmacist to regional hospital, are complex matters where federal agents may demonstrate great zeal as they delve into patient files, claim forms, and bookkeeping records.  These cases warrant an experienced health care defense presence as soon as possible to protect the interests of all involved.

For instance, when there are suggestions that claims have been submitted to Medicare, Medicaid, or Tricare that overreach a query must be made into whether or not there was any intent to knowingly defraud the federal government.  If the provider had a reasonable, good faith belief that the claim was proper and genuine, then an essential element of the Criminal FCA cannot be established.

Likewise, if a provider who is focused more on providing care than in keeping track of administrative tasks becomes the subject of investigation a health care defense query must be made of any investigator into that provider’s understanding of the process.  If the doctor’s understanding of how the Medicare, Medicaid, or Tricare contract works was based upon a reasonable and honest mistake, then there was no intentional misconduct.

Finally, if the AUSA has built a solid Criminal FCA case against a Texas health care provider, the health care fraud attorney can work to negotiate with the federal prosecutor on terms.  If the defense attorney is on board early in the investigative process, this can mean that a resolution can be negotiated and a deal struck before any formal indictment.  Charges can be reduced so that punishment ranges under the USSG are lowered.  See, Plea Bargaining and Making Deals in Federal Felony Cases: Criminal Defense Overview.

For more on health care fraud defense in Texas, read:

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For more information, check out our web resources, read Michael Lowe’s Case Results, and read his in-depth articles,” Pre-Arrest Criminal Investigations”  and 10 Questions to Ask Before You Hire a Criminal Defense Lawyer.

 


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