Defending your Federal or New York State Healthcare Fraud Case

What is Healthcare Fraud?

Under New York and Federal law, Healthcare fraud is a crime which involves improperly and illegally obtaining a benefit from a health plan. It is prosecuted in both federal and state courts. U.S. Attorney’s Office, State Attorney General’s Office and local district attorneys all investigate and prosecute Healthcare Fraud. Furthermore, the Federal Bureau of Investigations is the primary agency that investigates these cases. These investigations are often done in partnership with state and local law enforcement, as well U.S. Department of Health and Human Services’ Office of Inspector General. Sometimes, insurance companies also participate in these investigations.

Federal Prosecutions of Healthcare Fraud

The Federal Government prosecutes Healthcare fraud under 18 United States Code § 1347. In relevant part, the statute provides: 

(a) Whoever knowingly and willfully executes, or attempts to execute, a scheme or artifice—

(1) to defraud any health care benefit program; or

(2) to obtain, by means of false or fraudulent pretenses, representations, or promises, any of the money or property owned by, or under the custody or control of, any health care benefit program, in connection with the delivery of or payment for health care benefits, items, or services, 

(b) With respect to violations of this section, a person need not have actual knowledge of this section or specific intent to commit a violation of this section.

Penalties for Federal Healthcare Fraud under 18 U.S.C. § 1347

A conviction under 18 United States Code §1347, can result in imprisonment of up to 10 years. It the violation resulted in a serious physical injury, the maximum is 20 years. However, if death resulted from the offense, the maximum becomes life imprisonment. For example, a physician who sold oxycodone prescriptions, causing an overdose death would be facing life in prison. Additionally, 18 USC 3571 the fine for an individual is up to $250,000. Lastly, a fine for a corporation under 18 USC 3571 is up to $500,000.

For healthcare professionals, loss of a medical or pharmaceutical license is a real possibility as a collateral consequence of a federal criminal case. It is absolutely essential that you consult an attorney who has experience defending healthcare fraud matters, while working on minimizing any collateral consequences to your professional license. 

New York State Healthcare Fraud Prosecutions

The New York State’s Healthcare Fraud statutes are located in Article 177 of the New York Penal Code. Specifically, New York has five specific statutes relating to Healthcare Fraud.

Healthcare Fraud in the Fifth Degree (PL §  177.05 – “A” Misdemeanor)

New York Penal Law § 177.05, Healthcare Fraud in the Fifth Degree has the following elements:

  • Intent to defraud a health plan;
  • Knowingly and willfully, provide materially false information or omits material information;
  • For the purpose of requesting payment from a health plan;
  • For a healthcare item or service;
  • Resulting in payment in the amount to which they are not entitled to

In other words, Healthcare Fraud in the fifth degree requires an individual to intentionally provide false information or withhold information. Subsequently, the person has to to receive payment from a health plan to which they are not fully entitled to.

The charge of Healthcare Fraud in the Fifth Degree, is a Class “A” misdemeanor, which is punishable by up to one year in jail (or a probationary term of up to three years). Additionally, it is punishable by a fine of up to $1,000 for an individual (up to $5,000 for a corporation) or twice the pecuniary gains from the offense.  

Healthcare Fraud in the Fourth Degree (PL § 177.10 – “E” Felony)

This charge requires the commission of Healthcare Fraud in the Fifth Degree with one additional element. Namely, that the value of the wrongfully obtained benefit from a single plan exceeds $3,000 in the aggregate in one year. Healthcare Fraud in the Fourth Degree is a Class “E” non-violent felony, which is punishable by up to 4 years in prison. Additionally, there may be fine of up to $5,000 for an individual (up to $10,000 for a corporation) or twice the pecuniary gains from the offense. 

Healthcare Fraud in the Third Degree (PL § 177.15 – “D” Felony) 

This charge requires the commission of Healthcare Fraud in the Fifth Degree and receipt of $10,000 or more from a health plan within a year. Several fraudulent transactions can be combined to reach $10,000. Healthcare Fraud in the Third Degree is a Class “D” non-violent felony. Therefore, it is punishable by up to 7 years in prison. Additionally, there may be a fine of up to $5,000 for an individual (up to $10,000 for a corporation) or twice the pecuniary gains from the offense. 

Healthcare Fraud in the Second Degree (PL §  177.20 – “C” Felony)

Similarly, this charge requires the commission of Healthcare Fraud in the Second Degree and receipt of over $50,000 within a year from a health plan. Once again, that amount can come from multiple fraudulent transactions. Healthcare Fraud in the Second Degree is a Class “C” non-violent felony. Therefore, it is punishable by up to 15 years in prison. Additionally, there may be a fine of up to $5,000 for an individual (up to $10,000 for a corporation) or twice the pecuniary gains from the offense. 

Healthcare Fraud in the First Degree (PL § 177.25 – “B” Felony) 

This charge requires the commission of Healthcare Fraud in the Fifth Degree. However, over $1,000,000 in the aggregate must obtained from a single health plan in one year.  Healthcare Fraud in the First Degree is a Class “D” non-violent felony. This charge is punishable by up to 25 years in prison. Additionally, there is a fine of up to $5,000 for an individual (up to $10,000 for a corporation) or twice the pecuniary gains from the offense. 

Federal and New York Provider and Patient Healthcare Fraud

Healthcare fraud is prevalent. Specifically, National Health Care Anti-Fraud Association (“NHCAA”) estimates that healthcare fraud accounts for approximately 3% of all healthcare spending. However, other estimates are as high as 10%. Healthcare fraud can be committed by both medical professionals and as well as patients.

Provider Healthcare Fraud

To demonstrate, the following are examples of provider healthcare fraud under New York and Federal Law:

  • prescription fraud (fraudulently obtaining subsidized or insurance-covered medication and reselling for a profit),
  • billing for services that were never provided;
  • altering dates or descriptions of service provided,
  • unbundling (billing for the service separately to illegally obtain a higher reimbursement),
  • billing for higher-priced treatment than one that was actually performed) (upcoding),
  • use of unlicensed staff,
  • accepting of giving kickbacks for patient referrals, and
  • selling false prescriptions.

Patient Healthcare Fraud

As an illustration, below are examples of common healthcare fraud prosecutions involving patients under New York and Federal Law::

  • providing false information to qualify for programs or benefits,
  • selling prescriptions of their own prescription drugs, and
  • loaning or using someone else’s insurance card to obtain medical benefits. 

Contact Top Rated Healthcare Fraud Attorneys

If you are contacted by a member of state or local law enforcement regarding “a routine audit” or an “informal conversation,” please call us at 212-729-9494 or contact us. To emphasize, do not attempt to handle the matter on your own even if you believe you are innocent of all charges. You need an experienced healthcare attorney by your side during all stages of the case.