Medicare Fraud: 18 USC 287 & 1320a-7b

According to the Centers for Medicare & Medicaid Services (CMS), Medicare fraud continues to cost taxpayers over $40 billion each year. In spite of recent declines in fraudulent payment rates, CMS is working to expand existing initiatives and incorporate innovative strategies into their multipronged approach to fraud prevention—a campaign that includes tightened provider enrollment and screening procedures, advanced data analysis and collaboration with enforcement authorities. Started in 2007, Medicare Fraud Strike Force Teams, made up of federal, state and local law enforcement and other federal agencies, have played a part of the growing momentum of these joint efforts.

The Chicago Strike Force Team (started in 2014) is one of 14 strike force teams operating in 23 districts. These strike force teams are responsible for the successful prosecution of various health care providers including doctors, patient recruiters and others. The scope of this collective force was most recently demonstrated in the September 2020 health care fraud takedown in which more than 345 defendants across 51 judicial districts were charged with participating fraud schemes that involved more than $6 billion in reported losses to Medicare and other federal health care programs.

Health care providers are not the only ones targeted by Strike Force teams. Anyone can be charged with Medicare fraud, including individuals involved in solo member schemes, groups and larger institutions accused of more widespread activities and even organized crime groups, who operate as Medicare suppliers and providers.

What type of conduct is prohibited?

Alleged offenders face penalties under a few separate criminal statutes, each prohibiting different conduct and carrying different penalties.

The Federal Criminal False Claims Act (FCA), 18 U.S.C. §287

To convict a defendant charged under this statute, a prosecutor must prove beyond a reasonable doubt that:

1. the defendant made a claim the United States or a U.S. agency; and
2. the claim was false, fictitious or fraudulent; and
3. the defendant knew the claim was false, fictitious or fraudulent; and
4. the defendant acted with the intent to defraud.

The Seventh Circuit is unsettled as to whether proof of intent is required (see United States v. Nazon, 1991 and United States v. Strong, 1997).

The Anti-Kickback Statute (AKS), 42 U.S.C. §1320a-7b

To convict a defendant charged under this statute, a prosecutor must prove beyond a reasonable doubt that the alleged offender knowingly and willfully solicited or received any remuneration (kickbacks, bribes or rebates) for referring (or inducing the referral of) an individual to another person for the furnishing of an item or service reimbursable under a Federal health care program, or for recommending, arranging or procuring any good, facility, service or item similarly reimbursable.

What are the possible penalties?

Individuals charged under 18 U.S.C. §287 face penalties including fines up to $250,000 and up to 5 years in prison, or both. Under 42 U.S.C. §1320a-7b, penalties include fines up to $100,000 and up to 10 years in prison, or both.

What are some related offenses?

Those charged with Medicare fraud may also face charges under 18 U.S.C. §1347, the criminal Health Care Fraud statute, which prohibits both the successful execution of a health care fraud scheme, and the attempt to execute such a scheme in which:

1. The defendant defrauded (or attempted to defraud) any health care benefit program as defined above; or
2. The defendant obtained (or attempted to obtain) money or property owned or controlled by any health care benefit program, under fraudulent pretenses or promises, associated with the delivery of services, or payment for benefits under the program.

Illinois Medicare fraud cases in the news?

In March of 2019 the owner of a Chicago-based home health company was found guilty for participating in a scheme that cost Medicare over $3 million in fraudulent claims. The defendant was convicted of ten counts including conspiracy to commit health care fraud, conspiracy to pay and receive kickbacks, payment of specific kickbacks and visa fraud. In May of that same year, a married couple who jointly owned a home health agency in the Chicago area pleaded guilty to participating in another scheme targeting Medicare. In this case, the defendants defrauded Medicare of nearly $2 million through a kickback scheme in which they made kickback payments in exchange for patient referrals.

Also in May, two Chicago women pleaded guilty to charges of defrauding the U.S. Department of Labor Office of Workers’ Compensations Programs (OWCP). Ella Garner and Chante Carrothers participated in a scheme that spanned a 7-year period during which both women falsely billed for 24-7 home care services purportedly provided by Garner to a single individual. OWCP paid nearly $1.7 million to Carrothers for Garner’s in-home, round-the-clock services. Garner received about $4,500 each month for her role in the scheme.

Strike Force Teams continue to increase their efforts to reign in Medicare fraud leaving numerous other alleged offenders in their sights facing charges in Illinois courts.