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Health Care Fraud Prosecutions in 2018: Money and Drugs

Criminal Investigations, Arrests, and Charges of Doctors, Pharmacists, Psychologists, Billing Services, Clinic Owners, and More on Felony Fraud Charges

Anyone involved in the healthcare industry here in Texas need to be prepared for scrutiny by local, state, and federal law enforcement.  Healthcare fraud is a big, big deal these days.

The heavy media coverage of the opioid crisis fuels this flame.  But money does, too.  Lots of fraud investigations are looking for suggestions of overpayments or inflated fees.

We’ve discussed health care fraud issues before. Defending against health care fraud charges has been more commonplace the past few years.  See:

2018 Unprecedented Year for Health Care Prosecutions

Here’s the thing:  2018 is positioned to be an unprecedented year for prosecutions of health care providers.  Criminal investigations in Dallas, Fort Worth, Plano, and the rest of North Texas (and the entire state) will be at levels we haven’t seen before.

At the federal level alone, there will be several different agencies focusing on this: i.e., the Justice Department (FBI); the Department of Health & Human Services’ Office of Inspector General (OIG); and the Centers for Medicare & Medicaid Services (CMS).

Get ready.  Rest assured, criminal defense attorneys are prepared for it.  Consider the following:


1.  Sessions Nomination Hearings: Promises to Go After the Money

In his opening remarks to Congress during his nomination hearings, now Attorney General Jeff Sessions said:

“Further, this government must improve its ability to protect the United States Treasury from waste, fraud, and abuse. This is a federal responsibility. We cannot afford to lose a single dollar to corruption and you can be sure that if I am confirmed, I will make it a high priority of the department to root out and prosecute fraud in federal programs and to recover any monies lost due to fraud or false claims.”

2.  White House Budget to Pay for It

The 2018 Budget has increased funding to be used in fraud investigations and prosecutions.  There’s around $70,000,000 more to be spent in fiscal year 2018 to “…support the Administration’s priorities of addressing fraud, waste, and abuse in Federal health care programs and strengthening the fight against opioid abuse in this country.”  See, May 2017 OIG Budget Overview published by the Department of Health and Human Services.

It also includes an increase in funding of the Health Care Fraud and Abuse Control (HCFAC) program, which coordinates joint task force efforts between federal, state and local health care fraud and abuse agencies.

Show Me The Money: Who’s Vulnerable to Investigation and Arrest?

In earlier posts, we discussed the growing concerns over prescription pain medication addiction and overdose.  It’s true that the opioid crisis will insure that not only drug manufacturers but physicians, pain clinics, and pharmacists will be investigated for health care fraud allegations based upon drugs.

Read: Doctors in Texas Alert: Feds Are Targeting Health Care Fraud Arrests

However, all providers need to know that it’s not just Oxycodone and Fentanyl prescriptions that are going to have law enforcement coming to their offices with search warrants.  It’s also going to be anyone claiming federal compensation for services provided to a patient.

Common Health Care Fraud Investigations Based On Money

From the investigator’s point of view, anyone who is asking the federal government to pay their invoice is inviting oversight and double-checking of their business.

From their perspective, if you are getting any amount of revenue from federal programs, then you may be guilty of things like:

  1. Billing for services that were more than necessary for the patient, in the opinion of the investigator;
  2. Billing for services which you did not provide and were never rendered;
  3. Altering your billing so you get paid for something that is not covered (claim for a non-covered service as a covered service);
  4. Changing or inflating diagnoses to get paid a higher amount;
  5. Altering description of the procedure to get paid more;
  6. Changing the dates or locations of where you performed the service so that you get paid, or so that the claim can be covered;
  7. Altering the claim insofar as who really provided the service, to get paid more;
  8. Waiving co-payments;
  9. Providing kickbacks from drug companies or other third parties;
  10. Accepting goods or services from drug companies or other third parties that constitute bribes.

The Federal Felonies for Health Care Fraud Based on Money

Any relationship between a pharmaceutical company and a health care provider will have investigators suspicious of illegal activity now.  They may consider arrests for felony charges based upon the False Claims Act (FCA), the Anti-Kickback Statute (AKS), or the Physician Self-Referral Law (Stark law), among other federal statutes.

Anyone found culpable under these laws faces all sorts of bad things, from losing their license to practice medicine, to hefty fines, and criminal penalties (like incarceration).

False Claims Act

It is against federal law to file a claim with Medicare or Medicaid or TriCare that you know isn’t accurate OR THAT IN THEIR OPINION YOU SHOULD HAVE KNOWN WAS NOT ACCURATE.

No intent needs to be proven to establish a violation of the False Claims Act. If they can show facts to establish “reckless disregard” or “deliberate ignorance” then they have they have enough to convict under the language of the Act.

Criminal penalties here include prison time and the imposition of fines.

Anti-Kickback Statute

It is against federal law to provide “remuneration” in order to get referrals or otherwise generate business for your medical practice where anything will be covered by Medicare or Medicaid or TriCare.

The word “remuneration” has been broadly defined.  It is lots more than cash: it can be things like a fine meal or two, or paying a nice fee for a consult.   Even waiving a copayment with the best of intent may be considered a kickback by investigators.

Example:  in March 2017, kickback charges were filed based upon Walmart gift cards being given to soldiers in exchange for their participation in urine and saliva testing.  See, “Nationwide health care fraud sweep implicates area labs in kickback scheme,” written by Kevin Krause and published in the Dallas Morning News on July 13, 2017.

Both sides of the transaction can be arrested and charged: the doctor who provided the ‘remuneration” as well as the doctor (or clinic administrator, etc.) who accepted it.

Intent does have to be proven here.

Criminal penalties include jail time and fines of up to $50,000 per “remuneration” held to be an illegal kickback.

Stark Law (Physician Self-Referral Law)

It is illegal under federal law to refer patients covered by Medicare or Medicaid or TriCare to someone with whom the doctor has a financial or familial relationship for certain “designated health services.”

These services include:

  1. Clinical laboratory services.
  2. Physical therapy services.
  3. Occupational therapy services.
  4. Outpatient speech-language pathology services.
  5. Radiology and certain other imaging services.
  6. Radiation therapy services and supplies.
  7. Durable medical equipment and supplies.
  8. Parenteral and enteral nutrients, equipment, and supplies.
  9. Prosthetics, orthotics, and prosthetic devices and supplies.
  10. Home health services.
  11. Outpatient prescription drugs.
  12. Inpatient and outpatient hospital services.

No intent needs to be proven in order for there to be a successful prosecution.  Punishment can include fines as well as exclusion from being able to bill any federal health care programs.

Be Ready for Investigation, Arrest, Charge, Conviction

Doctors must understand that there are a variety of ways that investigations can begin for either state or federal investigators, especially now that health care fraud has become a goal for many law enforcement agencies.

  • Whistleblowers may start the ball rolling.
  • Rumors or gossip may spark the fire.

This year, more and more doctors (and pharmacists) will be investigated – and reputations will be tarnished even if nothing comes of it.  In 2018, here in North Texas many will be shocked to find:

  • Doctors will be arrested – even if they are innocent of wrongdoing.
  • Doctors will be charged – even if the charges are later dropped or dismissed.
  • Physicians will face trial (and some may take a plea deal).
  • Reputations will be tarnished, relationships will be hurt.

If you practice medicine in the State of Texas and bill for federal health care claims, then you need to make sure you are ready for the potential knock on the door by an agent wanting to look at your books and talk to your staff.

Part of your preparation: you should know the laws that may be used against you and you should have a proactive defense strategy in place before any hint of an investigation comes your way.


For more information, check out our web resources, read Michael Lowe’s Case Results, and read his in-depth article,” Pre-Arrest Criminal Investigations.”


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