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What are the penalties for federal healthcare fraud in New York?

By Spodek Law Group | October 16, 2023
(Last Updated On: October 17, 2023)

Last Updated on: 17th October 2023, 05:28 pm

Penalties for Federal Healthcare Fraud in New York

Healthcare fraud is a serious issue that costs taxpayers and insurance companies billions of dollars each year. In New York, penalties for those convicted of federal healthcare fraud can be severe, including substantial fines and many years in prison. This article will provide an overview of federal healthcare fraud laws in New York and the potential penalties defendants face if convicted.

Federal Healthcare Fraud Laws

The main federal law concerning healthcare fraud is the Federal Healthcare Fraud Statute (18 USC § 1347), which makes it illegal to knowingly carry out a scheme to defraud any healthcare benefit program or obtain money under false pretenses from a healthcare benefits program. This includes public and private insurance programs like Medicare, Medicaid, and commercial health plans.

Other important federal fraud laws include:

  • The False Claims Act – Imposes penalties for knowingly submitting false claims for payment to the federal government, like fraudulent Medicare/Medicaid claims.
  • The Anti-Kickback Statute – Prohibits offering or accepting bribes, kickbacks, or rebates to induce referrals of federal healthcare program business.
  • The Physician Self-Referral Law (Stark Law) – Restricts referrals by physicians to entities with which they or their family have a financial interest.
  • The Exclusion Statute – Requires the exclusion of healthcare providers convicted of certain criminal offenses from federal healthcare programs.

Federal prosecutors in New York aggressively pursue healthcare fraud cases under these laws. Top prosecutors like the U.S. Attorney for the Southern District of New York have assembled teams specifically to investigate and prosecute healthcare fraud.

Penalties for Federal Healthcare Fraud

The penalties for federal healthcare fraud convictions in New York can be substantial:

Criminal Penalties

Healthcare fraud under 18 USC § 1347 is a felony charge carrying:

  • Up to 10 years in federal prison for each count
  • Fines up to $250,000 per count
  • Probation up to 5 years

Other healthcare fraud charges like mail/wire fraud or money laundering carry stiffer penalties of up to 20-30 years in prison. The total sentence depends on the scope of the fraud – penalties increase if the fraud scheme was extensive or caused significant financial loss.

Defendants also face forfeiture of any proceeds from the fraud and restitution to victims.

Civil Penalties

On the civil side, the False Claims Act imposes civil penalties of $11,803 – $23,607 per false claim in 2022, plus treble (triple) damages.

The Office of Inspector General (OIG) may also pursue civil monetary penalties for kickback and Stark Law violations.

Exclusion from Federal Programs

Healthcare providers convicted of certain offenses like healthcare fraud, drug diversion, or patient abuse may be excluded from participating in Medicare, Medicaid, and other federal programs.

Exclusion continues a minimum of 5 years and prevents providers from billing federal healthcare programs or being employed by entities that bill these programs.

Loss of Licensure

Doctors, nurses, pharmacists, and other licensed healthcare professionals convicted of felonies like healthcare fraud may lose their licenses and ability to practice. Each state has its own rules regarding license suspension/revocation.

Defenses to Federal Healthcare Fraud Charges

Despite the severity of penalties, experienced attorneys can often successfully defend clients against healthcare fraud allegations by challenging:

  • Lack of Criminal Intent – Prosecutors must prove the defendant knowingly and willfully planned to defraud healthcare programs or obtain funds illegally. Evidence showing a lack of intent can defeat charges.
  • No False Statements/Claims – Not all billing errors or disputes amount to intentional fraudulent claims. Strong documentation helps demonstrate claims were valid.
  • No Knowledge of Fraud – Employees or healthcare executives may have unknowingly been involved in larger schemes orchestrated by bad actors. Being misled or unaware of wrongdoing is a potential defense.
  • Statute of Limitations – Charges must be brought within 5-7 years for most federal fraud crimes. An experienced attorney can argue charges were untimely.
  • Jurisdictional Issues – Federal prosecutors may overreach if a fraud scheme has limited connections to federal programs like Medicare/Medicaid or involves healthcare providers/organizations outside their district.
  • Unconstitutional Searches – Evidence obtained through illegal searches or seizures may be suppressed. This is crucial in fraud cases built on documents obtained in questionable raids.
  • Sentencing Mitigation – Even if convicted, skilled attorneys can advocate for reduced sentences and penalties by presenting mitigating evidence regarding a defendant’s character, cooperation, health conditions, family circumstances, and other factors.

Avoiding Healthcare Fraud Investigations

The best protection against healthcare fraud penalties is avoiding problems altogether. Healthcare organizations should adopt robust compliance programs that:

  • Perform regular audits to catch and correct any erroneous billing early.
  • Implement mandatory training for employees on proper billing/coding and ethical requirements.
  • Maintain clear policies prohibiting kickbacks and outlining rules regarding patient referrals and conflicts of interest.
  • Perform thorough background checks on new hires, especially those with financial responsibilities.
  • Maintain secure reporting systems and encourage employees to report suspected misconduct through hotlines or to compliance staff without fear of reprisal.
  • Quickly investigate any credible fraud allegations and correct identified issues. Having strong compliance measures in place also helps demonstrate good faith if issues later arise.


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