Health care fraud is a serious crime which is investigated by the FBI's Financial Crimes Section [hereinafter FCS]. The mission of the FCS, in the FBI's words, "is to oversee the investigation of financial fraud and to facilitate the forfeiture of assets from those engaging in federal crimes." FEDERAL BUREAU OF INVESTIGATION, Financial Crimes Report to the Public, A1 (May 2005), also available here (last visited March 7, 2008), [hereinafter FCS Report]. The FCS is divided into four sections, one of which is the Health Care Fraud Unit [hereinafter HCFU]. Id. The HCFU oversees investigations that target individuals and organizations who defraud the public and private health care systems. Id.
Among the activities that are investigated by the HCFU are:
billing for service not rendered
billing for a higher reimbursable service than performed (also known as "upcoding")
performing unnecessary services
unbundling of tests and services to generate higher fees
durable medical equipment fraud
pharmaceutical drug diversion
outpatient surgery fraud, and
internet pharmacy sales. Id.
The HCFU estimates that fraudulent billings to health care programs comprise between 3 to 10 percent of total health care expenditures. Id. at C1. Furthermore, the HCFU has noticed that the most significant trend in recent health care fraud cases is "the willingness of medical professionals to risk patient harm in their schemes. Current fraud schemes consist of traditional schemes that involve fraudulent billing, but also incorporate unnecessary surgeries, diluted cancer drugs, and fraudulent lab tests." Id. at C3. In exchange for kickbacks, some patients will willingly undergo "unnecessary and unwarranted medical procedures to generate fraudulent claims and profits." Id.
The federal statute associated with health care fraud is 18 U.S.C. § 1347 (2007), but federal prosecutors may decide to charge the defendant with other crimes as well. See United States v. Bobo, 344 F.3d 1076 (11th Cir. 2003) (defendant charged with conspiracy and defrauding a health care benefit program).
18 U.S.C. § 1347 (2007).
The CrimeUnder section 1347, it is a crime for a person to knowingly and willfully execute, or attempt to execute, a scheme or artifice-
to defraud any health care benefit program; 18 U.S.C. § 1347(1) or
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, Id. § 1347(2),
in connection with the delivery of or payment for health care benefits, items, or services.
The PunishmentA violation of section 1347 can be punished by
a fine, imprisonment for not more than 10 years, or both.
If the violation results in serious bodily injury (as defined by 18 U.S.C. § 1365 (2007), that person can be punished by
a fine imprisonment for not more than 20 years, or both.
If the violation results in death, that person can be punished by
a fine, imprisonment for any term of years or for life, or both.
Case Law Interpreting Section 1347Section 1347 was enacted to punish executions or attempted executions of schemes to defraud, and not simply acts done in furtherance of a scheme. United States v. Hickman, 331 F.3d 439, 446 (5th Cir. 2005) vacated on other grounds by Hickman v. United States, 543 U.S. 1110 (2005). Furthermore, the focus of health care fraud prosecutions is normally the medical community, any person who purposefully endeavors to defraud a health care benefit program can be found guilty of health care fraud; it is not limited solely to professionals. United States v. Lucien, 347 F.3d 45, 51 (3d Cir. 2003).
The crime of health care fraud is complete upon the execution of the scheme, and any scheme can be executed any number of times, with each execution being charged as a separate count. Hickman at 446. "Obviously, the next question is what constitutes an 'execution of the scheme.'" Id. In Hickman, the defendant submitted her claims separately, and all though she grouped the claims together for efficiency, each claim was considered and approved individually; with each claim submission, she owed a new, independent obligation to be truthful to the insurer. Id. at 447. Furthermore, the court notes, "the process of defining a scheme and/or execution is a fact-intensive one." Id. at n.8.
An indictment alleging an attempt to defraud a health care benefit program must, at least,
allege how the scheme to defraud operated
contain the language found in section 1347, such as "in connection with delivery of or payment for health care benefits, items, or services; and
specify of what precisely the defendant was trying to defraud the program. Bobo, supra, at 1084.