Health Care Fraud Sanctions Information
Individual and corporate health care providers facing federal investigations can face severe consequences if their investigations lead to civil enforcement actions or criminal prosecution. The Department of Justice (DOJ), Department of Health and Human Services (HHS) Office of Inspector General (OIG), Centers for Medicare and Medicaid Services (CMS), Department of Defense (DOD), Department of Labor (DOL), and other agencies have broad authority to seek and impose sanctions under a variety of different statutes. Providers that fail to mount an effective defense will often feel the effects of their investigations for years if not decades to come.
The specific sanctions that can be imposed in any particular case will depend on a number of different factors. The first is the specific statute (or statutes) involved. Complex health care fraud investigations will typically implicate multiple statutes, and understanding any one individual provider’s exposure will require a careful assessment of the statutory charges and defenses at play.
Next, it is necessary to determine whether the government’s inquiry is civil or criminal in nature. Many statutes have provisions for both civil and criminal enforcement, and the potential sanctions in civil and criminal cases will vary. Finally, the nature of the provider’s business or practice is also relevant, as certain providers (such as physicians and pharmacists) can face state-level sanctions as well.
5 Types of Sanctions in Health Care Fraud Enforcement Actions and Prosecutions
With the above considerations in mind, here is a list of the types of sanctions that can potentially be on the table if a health care fraud investigation leads to civil or criminal charges:
1. Fines and Treble Damages
Several statutes used to prosecute health care fraud including the False Claims Act (FCA), the Start Law, and the Anti-Kickback Statute include provisions for financial penalties (also known as civil monetary penalties, or “CMPs”). For example, under the Anti-Kickback Statute, providers can face fines of nearly $75,000 per violation (as of 2017). When the government alleges multiple violations, as will often be the case, providers can easily face millions of dollars in potential financial liability.
The same holds true under the False Claims Act. Under the FCA, providers can face fines of roughly $21,500 per false claim (as of 2017-the DOJ has the authority to increase this amount, and the maximum per-claim fine has nearly doubled since 2016). When an FCA investigation involves allegations of numerous false claims, the potential financial consequences can be devastating for most small practices and businesses.
Civil monetary penalties can also be imposed pursuant to:
- Physician Self-Referral Law (the “Stark Law”)
- Federal Health Care Fraud Statute
- Civil Monetary Penalties Law
In addition to fines, the financial sanctions for health care fraud can also include “treble” damages. This means that providers can be required to pay three times the actual losses sustained by the government as a result of the fraud. If a finding of civil responsibility appears likely, providers may need to focus their efforts on limiting the scope of the government’s allegations in order to mitigate their financial liability.
In criminal cases, providers can face steep fines as well. Criminal fines under the Anti-Kickback Statute can reach $25,000, and up to $250,000 under the FCA.
It is important not to forget that health care fraud enforcement actions arise out of allegations that providers have unlawfully obtained money from the government typically by improperly billing Medicare, Tricare, or another federal health care benefit program. As a result, when taking legal action against providers suspected of fraud, the government can also seek to recoup any amounts that were improperly paid.
For many providers, even more concerning than the risk of financial liability is the risk of federal and state health care benefit program exclusion. Under 42 U.S.C. Section 1320a-7, the OIG has the authority and in many cases the obligation to exclude providers from Medicare, Tricare, Medicaid, and other programs. When a provider faces exclusion, not only is the provider ineligible to seek reimbursement for services, equipment, and medications, but other eligible providers can face sanctions for improperly billing for the excluded provider’s services.
Mandatory Health Care Benefit Program Exclusion
Exclusion is a mandatory sanction in cases involving:
- Medicare fraud
- Felony convictions for other forms of health care fraud
- Felony convictions involving the manufacture, distribution, prescription, and dispensing of controlled substances (including prescription medications)
Discretionary Health Care Benefit Program Exclusion
The OIG has the discretion to exclude providers in cases involving:
- Misdemeanor convictions for health care fraud offenses other than Medicare or Medicaid fraud
- Misdemeanor convictions involving the manufacture, distribution, prescription, and dispensing of controlled substances (including prescription medications)
- Suspension, revocation, or surrender of a health care license due to issues involving professional competence, professional performance, or financial integrity
- Provision of medically-unnecessary or substandard medical services
- Submission of false and fraudulent claims in violation of the FCA
- Paying or receiving unlawful kickbacks
In criminal health care fraud cases, providers can also face federal incarceration. Federal health care laws including the False Claims Act and the Anti-Kickback Statute include provisions for imprisonment as a criminal sanction, with sentences of up to five years for a single offense.
5. Licensing Action
For physicians, pharmacists, and other licensed health care providers, sanctions for health care law violations can also include license suspension or revocation. Federal authorities routinely refer providers suspected of health care fraud to state licensing boards; and, even if a federal investigation does not ultimately lead to charges, the allegations could be sufficient to warrant disciplinary action by the governing board.
How to Avoid Sanctions for Health Care Fraud
With such severe consequences, and with health care fraud remaining a top federal law enforcement priority, providers in all sectors of the health care industry must be prepared to defend themselves in the event of a Medicare contractor audit or federal agency investigation. To mitigate the risk of inquiry, and to be prepared to defend against an inquiry leading to civil or criminal sanctions, providers can:
1. Implement a Comprehensive Compliance Program
Health care providers must take a proactive approach to avoiding federal and state health care law violations. This means implementing a comprehensive compliance program, and ensuring that the program remains up-to-date over time. The Medicare billing regulations change frequently, and we have seen significant changes in other areas of the law recently as well, so providers must treat their compliance programs as living documents that must be re-assessed regularly.
Our Guide to Setting Up a Pharmacy Compliance Program provides an introduction that is relevant to providers in other sectors of the health care industry as well.
2. Train Employees on Health Care Fraud
If your employees do not understand and follow your compliance program, it may not be worth much more than the paper on which it is written. Employee training is key to avoiding health care law violations; and, once again, this is something that requires consistent effort over time. Employees should have a clear understanding of the types of mistakes that can catch the government’s attention, and they should be provided with examples of best practices as well as practices to avoid.
3. Conduct Internal Assessments
How effective is your compliance program? How effective is your employee training? Are there any gaps that need to be filled? These are crucial questions, and the only way to answer them is to conduct an internal assessment before Medicare audit contractors or federal investigators conduct an assessment for you. Carefully documenting your internal assessment efforts can also help demonstrate your good-faith efforts to comply with the law if a rogue employee’s mistakes lead to an investigation.
4. Engage Experienced Health Care Counsel
When you find out that you are under investigation, you need to be able to hit the ground running with your defense. As a result, it is important to retain experienced health care counsel as soon as possible; and, ideally, you will have attorneys who have assisted with your compliance efforts and who can use their familiarity with your business or practice to quickly respond to the investigator’s allegations. When choosing legal counsel, it is important to do your due diligence, and select a firm with significant experience in both health care law compliance and health care fraud defense.
5. Learn More about the Risks Facing Your Business or Practice
Finally, when facing a federal health care fraud investigation, it is important to learn as much about your situation as possible. You should rely on your legal counsel for advice, but you can also do your own research to familiarize yourself with the issues involved. Our blog provides a wealth of information for health care providers facing possible sanctions in civil and criminal investigations nationwide.
Questions? Schedule a Free Case Assessment Today
If you are facing an audit or investigation and would like more information about the sanctions for health care fraud, we encourage you to contact us for a complimentary case assessment. To speak with our experienced health care fraud defense lawyers in confidence, please call (888) 452-2503 or inquire online today.
Dr. Nick Oberheiden is a national litigation and trial criminal defense attorney who practices exclusively in the area of federal law.