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Federal Fraud and Abuse Laws Physicians Need to Be Aware of

Posted by Dmitry Gorin | Feb 22, 2024

In the United States, the healthcare industry is heavily regulated—and in a sense, rightfully so. Not only must patients' rights and finances be protected against fraud and abuse, but since federal dollars fund a great deal of healthcare, the government also wants to protect its own interests. 

Several significant federal fraud and abuse laws will typically apply to physicians. These include the False Claims Act (FCA), the Anti-Kickback Statute (AKS), the Physician Self-Referral Law (Stark Law), the Exclusion Authorities, and the Civil Monetary Penalties Law (CMPL). 

Federal Fraud and Abuse Laws Physicians Need to Be Aware of

Several government agencies are responsible for enforcing these laws. These include the Department of Justice (DOJ), the Department of Health & Human Services Office of Inspector General (OIG), and the Centers for Medicare & Medicaid Services (CMS).

Physicians and other healthcare professionals must know these laws because violations can result in substantial civil fines and criminal penalties. In severe cases, doctors could be excluded from federal healthcare programs and lose their medical license from their state medical board.

Physicians at the core of this industry must be vigilant in their practices to ensure compliance with these regulations and protect themselves against potential legal repercussions.

Violations of federal healthcare fraud and abuse laws can result in exorbitant fines, civil penalties, and sometimes even prison time. As a practicing physician, you should be familiar with the following federal laws regarding healthcare fraud to ensure your practices comply with these statutes.

False Claims Act (FCA)

The FCA is a federal law designed to protect the federal government from defrauding or overcharging. Specifically, in a healthcare context, it prohibits physicians and other healthcare providers from submitting false or fraudulent claims for payment to Medicare or Medicaid. Examples could involve billing for services not rendered, upcoding, or submitting claims for unnecessary procedures. 

The False Claims Act is highly consequential, with violations potentially resulting in substantial penalties. These can reach up to three times the claim amount plus an additional fine per claim (currently up to $27,894 as adjusted for inflation). 

Each service improperly billed to these programs is considered a separate claim, which can cause penalties to multiply rapidly. 31 U.S. Code 3729 false claims says liability for certain acts —

“(A) knowingly presents, or causes to be presented, a false or fraudulent claim for payment or approval.

False Claims Act (FCA)

(B) knowingly makes, uses, or causes to be made or used a false record or statement material to a false or fraudulent claim. (C) conspires to commit a violation. 

(D) has possession, custody, or control of property or money used, or to be used, by the Government and knowingly delivers, or causes to be delivered, less than all that money or property.

(E) is authorized to make or deliver a document certifying receipt of property used, or to be used, by the Government and, intending to defraud the Government, makes or delivers the receipt without completely knowing that the information on the receipt is accurate.

(F) knowingly buys or receives as a pledge of an obligation or debt public property from an officer or employee of the Government or a member of the Armed Forces, who lawfully may not sell or pledge property.

(G) knowingly makes, uses, or causes to be made or used a false record or statement material to an obligation to pay or transmit money or property to the Government, or knowingly conceals or knowingly and improperly avoids or decreases an obligation to pay or transmit money or property to the Government.” 

Anti-Kickback Statute (AKS)

The Anti-Kickback Statute (AKS) is a criminal law that prohibits intentionally offering "remuneration" to incentivize patient referrals or business transactions involving items or services covered by Federal health care programs. 

Examples of improper "remuneration" might include cash, free rent, hotel stays, etc. Breaching the AKS may result in criminal consequences, fines, imprisonment, and exclusion from Federal health care programs.

Physician Self-Referral Law (Stark Law)

The Stark law prohibits doctors from sending patients to receive certain "designated health services" paid by Medicare or Medicaid from places where the doctor or one of their family members has a financial interest.

For example, having an ownership stake in the clinic or receiving commissions from them. Breaking this law can lead to fines and being banned from Federal health programs. It's worth noting that the Stark law is a strict liability statute, meaning that prosecutors do not need to prove intent to violate the law for you to suffer penalties.

Exclusion Statute

The Exclusion Statute empowers the Office of Inspector General (OIG) to exclude individuals and entities from federally funded healthcare programs for various offenses, including fraud, patient abuse, or the conviction of certain crimes. 

Being excluded means that no payment can be made for any items or services furnished, ordered, or prescribed by the excluded individual or entity in any capacity.

Civil Monetary Penalties Law (CMPL)

The Civil Monetary Penalties Law allows the OIG to impose civil monetary penalties for various health-care-related offenses, including, but not limited to, fraud, granting unauthorized access to Medicare or Medicaid benefits, or engaging in practices that are inconsistent with professional standards. 

The CMPL is designed to combat fraud and abuse while protecting federal healthcare programs and their beneficiaries.

What are the Possible Penalties for Violating Fraud and Abuse Laws?

Physicians accused of violating federal fraud and abuse laws can face severe consequences that could significantly impact their professional and financial standing. 

Penalties for such violations differ according to which statute(s) federal prosecutors might invoke. However, penalties can range from the following:

  • Substantial monetary fines—often in hundreds or even millions of dollars.
  • Exclusion from participation in federal healthcare programs like Medicare and Medicaid.
  • Criminal charges may also be brought, leading to potential imprisonment.
  • Any breach tarnishes a physician's professional reputation and can lead to debilitating financial repercussions and legal sanctions. 

How Can a Federal Criminal Defense Attorney Help You?

Suppose you're a physician accused of violating federal fraud laws. In that case, your best hope of navigating the charges successfully is with the help of a federal criminal defense attorney with specific experience with healthcare fraud cases. The right attorney can do the following

  • Conduct an independent investigation to establish the facts and uncover any evidence that may be helpful in your defense.
  • Analyze the government's case against you, look for exceptions and "safe harbors" for which you may qualify, and (if possible) try to get charges reduced or even dismissed.
  • Devise a practical strategy for dealing with the charges. This may involve negotiating a plea bargain, trialing your case, or seeking another relief.
  • Counsel you on how to handle questioning by federal investigators and ensure your rights are protected throughout the process.
  • Help you to develop compelling counterarguments that can potentially sway prosecutors and judges in your favor. 

You can contact our federal criminal defense law firm for more information. We represent physicians throughout the United States on federal criminal matters. Eisner Gorin LLP is based in Los Angeles, California.

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About the Author

Dmitry Gorin

Dmitry Gorin is a licensed attorney, who has been involved in criminal trial work and pretrial litigation since 1994. Before becoming partner in Eisner Gorin LLP, Mr. Gorin was a Senior Deputy District Attorney in Los Angeles Courts for more than ten years. As a criminal tri...

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