Health care fraud is the crime of getting a health plan to make a payment based on intentionally false information.  Generally, this means that a provider of health care services is billing for a service that he or she has not rightfully earned the reimbursement for.

Examples of Health Care Fraud

All individuals that make claims for payment from health plans could be subject to prosecution under this law.  The following situations illustrate where a person might be at risk for health care fraud charges:

• A physical therapist is retained to provide therapy sessions to an individual.  She provides four sessions but bills Medicaid for five.  The payment for the fifth session never provided creates a risk of health care fraud prosecution.
• A doctor sees a patient for a minor cold.  He directs his office manager to upcode to treatment for an infection that nets a higher reimbursement from insurance.  The additional payment, which was obtained on false information, puts the doctor at risk of health care fraud charges.
• An oncologist uses chemotherapy drugs that have not been approved by the FDA.  The doctor then bills insurance for providing this treatment.  This may lead to prosecution for health care fraud.
• A dentist permits his staff to complete certain procedures on patients.  These staff members are not licensed to do the type of work currently being done.  The dentist then submits a claim for the work as if it was done by a licensed professional.  These are fraudulent claims that create a risk of prosecution.

The Legal Definition of Health Care Fraud in New York

New York Penal Law defines the crime of health care fraud under “Offenses Involving Fraud.”

Health care fraud can be a misdemeanor or a felony under New York’s criminal laws.  It ranges from a class A misdemeanor for health care fraud in the fifth degree[3] to a class B felony for health care fraud in the first degree.[4]  All health care professionals who provide or anyone that submits health care claims could be prosecuted under the health care fraud statutes.

In order to be found guilty of health care fraud in New York, the prosecutor must prove that each element of the crime is true.  These are the elements of health care fraud under state law:[5]

1. To defraud a health plan intentionally;
2. Providing information that is materially false or omitting material information;
3. Requesting a health plan to pay for health care items or services based on that information; and
4. Receiving payment or causing someone to receive payment.

Each element has its own intricacies, and each must be proven for a person to be found guilty.  Here is an in-depth look at each element.

Element #1: Intent

Intent refers to the purpose that one had in performing a certain action or choosing not to do so.  This is generally not proven directly but through a demonstration of the circumstances surrounding the behavior.

In People v. Briggins, the court stated that the intent to defraud element is satisfied where a person deceives another to induce them to some sort of disadvantage.  For example, a nurse submits a claim for more services than she provided shows an intent to defraud the health plan.

Element #2: False or Omitted Information

This element requires that a person makes a statement that is materially false or omits something that is materially important.  The materiality of the information depends on the role it plays in causing the health plan payment.

This element also requires that it be done “knowingly and willfully.” In People v. Coe, the court said that this means it must be done intentionally.  For example, if the nurse in the example above just made a typo, such as inverting a number.

Element #3: Requesting Payment

Requesting payment is a generally straightforward, factual element.  If a claim is submitted, this element is satisfied.

Element #4: Payment

The individual or entity that submits the claim needs to receive the improper payment or cause a third-party to receive that payment.  This degree of health care fraud is determined by the money received.

Any payment is a fifth-degree charge. After that, it depends on how much is received over the course of one year from a single health plan: over $3000 is fourth degree, over $10,000 is third degree, over $50,000 is second degree,[9] and over $1 million is first degree.  

Related Offenses

Health care fraud charges may not be the only charges you face.  There are other charges that may be brought instead of or in addition to health care fraud under state law.  The following are the main related offenses: 

Larceny

Larceny is a theft crime in which one person takes something from someone else.  The elements of larceny are:

1. Taking property
2. With the intent to permanently deprive the rightful owner of that property.

Larceny is related to health care fraud as these charges are often brought in conjunction or may be an option for a plea deal. For example, a pharmacist billed Medicaid for $93,000 of drugs, supplies, and treatments that were never dispensed, which could be health care fraud in the second degree. Instead, he pleaded guilty to a class A misdemeanor charge of larceny.

Insurance Fraud

Insurance fraud makes it a crime to commit similar actions as health care fraud, but no payment needs actually to be made. The elements of insurance fraud are preparing, making, or causing someone to make a written statement or evidence that contains materially false or conceal material facts for a claim from a health plan with intent to defraud.

This crime is related to health care fraud because it has similar elements, but does not require actual payment.  It is another option for prosecutors to pursue charges without proving the full ramifications of fraudulent health claims.

Essential and Impactful Cases on Health Care Fraud 

Court cases considering charges of health care fraud have discussed what certain elements mean, what must be proven for a conviction, and other ramifications of a conviction. These cases are important considerations for defense counsel in assisting clients charged with health care fraud in New York.

• People v. Palmer considers the base purpose of criminal charges of fraud.  Relying on the quantity of damage to the victims is not the main issue.  The crime of fraud aims to address a nefarious scheme.  While it comes into play for the degree of a fraud charge, a nominal damage value does not excuse the crime.
• In People v. Khan, a pharmacist was charged with health care fraud after he provided drugs that were inconsistent with a written prescription, but billed Medicaid for the drugs in the written prescription. The pharmacist contended that the prosecution did not prove that the drugs were no the same drugs that were prescribed.

However, there was testimony about the color and quantity of the pills that did not match the written prescription.  The court case determined that the prosecution demonstrating that any part of what was provided was inconsistent with the prescription was enough to show that the pharmacist knew of the false information.

A jury can find that the person knowingly and willfully provided false information if any part of the information is false.  This case provides an example of how the element of false or omitted information could be broadly interpreted.

• Sentencing is not the only impact from a criminal conviction.  Professional licenses may also be jeopardized.  Huang v. Administrative Review Board for Professional Medical Conduct considered the issue of a penalty on a licensed physician.

The physician had pleaded guilty to health care fraud after he billed private insurers and public health programs for fraudulent services provided. The physician claimed that services were provided by licensed physical therapists, but the individuals did not hold the appropriate qualifications.

Over five years, the fraudulent bills totaled over $2.5 million.  While he was sentenced 12 months and one day, his sentence was suspended after he paid back $2 million in restitution within 8 months. The Bureau of Professional Medical Conduct suspended his license for 9 months, which the physician contested.

This penalty was affirmed because it was not disproportionate to the crime.  This case shows that other penalties beyond sentencing may be significant for individuals convicted of health care fraud.

• In re Horowitz considered the case of an attorney that was involved in a scheme that resulted in charges of health care fraud and tax evasion.  Individuals falsely claimed they were injured after automobile accidents and received payments from health insurance for unnecessary care.

When pleading guilty in federal court, the attorney’s statements were sufficient to be considered similar to the state insurance fraud crime.  This corollary resulted in disbarment for the attorney under state law.  This case demonstrates that proceedings outside of the New York justice system can still have in-state impacts.

Detection, Investigation, and Prosecution of Health Care Fraud

Health care fraud is the focus of several state and federal entities.  The Medicaid Fraud Control Unit (MFCU) within the Office of the Attorney General detects, investigates, and prosecutes cases of health care fraud that involve Medicaid.  These cases may also have charges of fraud against private health plans.

Within the MFCU, there are teams focused on, for example, civil enforcement, audits and investigations, and electronic investigations. The MFCU also works outside of New York, with the National Association of Medicaid Fraud Control Units (NAMFCU). The Federal Bureau of Investigation (FBI) works with the New York MFCU and corresponding entities in other states.

There are also public-private partnerships through the Healthcare Fraud Prevention Partnership and the National Health Care Anti-Fraud Association. The Health Care Bureau (HCB) is the within the Office of the Attorney General handles investigations and prosecutions of any practices within the health care market that are fraudulent, deceptive, misleading, or otherwise illegal.

Statutory Penalties for Health Care Fraud

The statutory penalties for health care fraud include fines and imprisonment, varying by the degree of the fraud charge.  The possible imprisonment is:

• Health care fraud in the fifth degree is a class A misdemeanor, which carries a prison sentence of up to one year.[14]
• Health care fraud in the fourth degree is a class E felony, which carries a prison sentence of at least three and up to four years.[15]
• Health care fraud in the third degree is a class D felony, which carries a prison sentence of at least three and up to seven years.[16]
• Health care fraud in the second degree is a class C felony, which carries a prison sentence of at least three and up to 15 years.[17]
• Health care fraud in the first degree is a class B felony, which carries a prison sentence of at least three and up to 25 years.[18]

The fine is up to $1000 for the misdemeanor health care fraud in the fifth degree. The other health care fraud degrees are all felonies.  Generally, felonies carry a fine of the higher of $5000 or double the amount of the gain. The felony health care fraud charges require at least $3000 of payments based on fraud, which would mean the fine would be at least $6000 for health care fraud felonies.

Additional Consequences of Conviction 

The consequences of a conviction do not end with imprisonment or a fine.  The potential impacts are widespread and long-lasting.  First, as seen in the cases of Huang and Horowitz, professional licenses are at risk.  The state licensing boards for health care professionals have the authority to suspend or revoke the license.

For attorneys caught up in these types of charges, like the defendant in Horowitz, New York has a unique law that leads to automatic disbarment. If you plead guilty to any felony in New York or any other jurisdiction, New York law requires that you be automatically disbarred.

Given that everything above health care fraud in the fifth degree is a felony, there is a strong risk of disbarment if there is a conviction.

Are there any related charges during the process of fighting health care fraud?

The process of fighting health care fraud and any related charges will also be taxing.  There will be costs associated with defending yourself, lost wages from the time that it takes to meet with investigators and go through the legal processes, and costs if you are imprisoned for any period of time.

In addition, there is the stress of not knowing what will happen.  Your loved ones will also suffer as they watch, and may also lose time and wages if they are pulled into the investigation and court proceedings.  Finally, your reputation could be associated with these charges well into the future.

Legal Defenses Health Care Fraud 

If you have been charged with health care fraud, you will hope to be able to avoid conviction.  The best hope of that is with a vigorous defense in order to keep a conviction off your record and distanced from your reputation.  Fortunately, there are a number of defenses available to you, which a defense attorney would utilize.

The health care fraud statute sets out one affirmative defense. If the person charged was a staff-level individual such as a clerk or bookkeeper and he or she was just acting on the orders of a superior without personal benefit, then he or she cannot be found guilty.  Proving an affirmative defense is the burden of the defendant. She would need to show:

1. Her role was not as an executive;
2. She received directions or orders from the employer or a superior employee; and
3. She did not personally benefit from the fraud.  If these elements are proven, the statutory affirmative defense is satisfied.

Other options for a defense rest on attacking the elements of the health care fraud statute.

• The prosecutor has the burden of proving that all of the elements are true.  A defense could show that there was no intent. Just as the prosecutor will likely be trying to demonstrate intent to defraud with evidence of the circumstances surrounding the incident, the defense can show those circumstances in a different light.

For example, a physician makes an error on a claims form and overcharges the health plan.  If the physician directs the billing staff to fix it, but they have not yet done so, that could show that there was no intent to defraud.

• In order to defend against the second element, a defense attorney could help show that the facts that were incorrect or omitted were not material to the claim.  For example, if a pharmacist submitted a claim for the wrong drug, but the two drugs had the same reimbursement levels.

That would not have played a material role in inducing the payment.  The payment would remain the same in either situation.  This could arguably show a lack of materiality.  Additionally, showing that the factual errors or omissions were mistakes as opposed to intentional actions could help defend against charges.

• The third element is a factual issue.  If a claim for payment was made, this is satisfied.  If there was no claim for payment, there is no cause for criminal charges.
• Finally, the fourth element is related to the actual payment received. If no payment has been made related to the allegedly fraudulent claims, the elements have not been satisfied. A defense attorney can also work to demonstrate that the amount of money received through the problematic claims is lower than the prosecutor charges.

By doing so, it may be possible to reduce the charge and minimize the sentencing impacts.  A well-rounded defense will look at legal attacks on each element, factual disputes, and options for mitigating the charges.

Let Us Help You

Health care fraud charges are stressful, and your future is at stake.  An experienced attorney can help you every step of the way.  When you are charged, an attorney can help you understand the nature of what is being alleged and what your options are.

If you are offered a plea deal, your legal team will help you evaluate the risks and benefits associated with taking the deal.  Finally, if you have to court, our team can help defend you against these charges.

If you would like to discuss your case confidentially with one of our criminal defense attorneys or if you have any questions about health care fraud in New York, call us today.  We have local offices near you and are ready to help.