Fighting Federal Healthcare Theft & Embezzlement Charges

18 U.S.C. § 669 – Healthcare Benefit Program Theft Defense Lawyer

An allegation under 18 U.S.C. § 669—the federal healthcare theft and embezzlement statute—can threaten your freedom, professional license, and livelihood.

A conviction may result in up to 10 years in federal prison, substantial fines, restitution orders, and likely exclusion from federal health care programs.

Federal prosecutors aggressively pursue healthcare fraud cases, particularly when Medicare, Medicaid, or private insurance funds are involved. If you or your practice is under investigation, early legal intervention can significantly impact the outcome.

Your best hope for a favorable outcome is with a highly experienced federal criminal defense attorney at Eisner Gorin LLP. To schedule a consultation, call (818) 781-1570 or contact us here.

What Is 18 U.S.C. § 669?

18 U.S.C. § 669 criminalizes the knowing and willful:

Embezzlement
Theft
Conversion
Intentional misapplication

of money, funds, securities, premiums, credits, property, or assets belonging to a healthcare benefit program.

Unlike broader healthcare fraud statutes that focus on billing fraud, § 669 specifically targets the misuse or diversion of healthcare program funds.

What Is Considered a “Healthcare Benefit Program”?

The statute incorporates the definition found in 18 U.S.C. § 24(b). A healthcare benefit program includes:

Federal Programs

Medicare
Medicaid
TRICARE

Private Insurance Plans

Blue Cross Blue Shield
Aetna
UnitedHealthcare
Other commercial carriers

Employer-Sponsored and Self-Insured Plans

Corporate-funded health benefit programs

Because the definition is broad, nearly all insurance reimbursement systems affecting interstate commerce fall within federal jurisdiction.

Understanding the Prohibited Conduct

Embezzlement

Embezzlement occurs when a person who lawfully possesses funds—such as a billing manager or hospital administrator—converts those funds for unauthorized use.

The key element is initial lawful access followed by improper use.

Theft

Theft involves taking property without lawful access or authority

Intentional Misapplication

This includes using program funds for unauthorized purposes—even if the defendant did not personally profit. The focus is on unauthorized diversion of assets.

Who Can Be Charged Under 18 U.S.C. § 669?

The statute applies to “whoever” commits the offense. It is not limited to licensed healthcare providers.

Individuals commonly prosecuted include:

Healthcare Executives and Administrators

Diversion of operating funds
Personal use of reimbursement accounts
EKRA violations

Billing Managers and Office Staff

Manipulating financial records
Redirecting payments

Third-Party Vendors and Contractors

Overbilling
Retaining funds improperly
Converting payments

Federal investigations often expand beyond providers to anyone with financial control over healthcare program assets.

Federal hospice fraud offenses involve the misuse of hospice care programs—primarily funded through Medicare—for illegal financial gain.

What Must the Government Prove?

To convict under 18 U.S.C. § 669, prosecutors must prove beyond a reasonable doubt:

1. Knowing and Willful Conduct

The defendant acted deliberately—not negligently or mistakenly.

2. Embezzlement, Theft, or Misapplication

Funds were converted, stolen, or used without authority.

3. Conversion of Assets

The defendant deprived the healthcare program of property or funds.

4. Connection to a Healthcare Benefit Program

The assets were held by a qualifying program under federal law.

Accounting errors alone are not sufficient. Intent is a critical element.

Penalties for Healthcare Embezzlement Under 18 U.S.C. § 669

Felony Offense (Value Over $100)

Up to 10 years in federal prison
Substantial fines
Restitution
Federal supervised release

Because healthcare transactions typically exceed $100, most cases are prosecuted as felonies.

Misdemeanor Offense (Value $100 or Less)

Up to 1 year in prison
Fines

How Sentencing Is Determined

Federal Sentencing Guidelines largely determine the actual sentence imposed.

The primary factor is the amount of loss. Higher alleged financial loss increases the advisory guideline range.

Defense attorneys frequently challenge:

Loss calculation methodology
Inclusion of intended vs. actual loss
Double-counted amounts
Attribution of conduct

Disputing loss figures can dramatically reduce sentencing exposure.

Common Defense Strategies

An indictment is not a conviction. Effective defense strategies often focus on dismantling the government's proof.

Lack of Intent

Prosecutors must show knowing and willful conduct. Defense may argue:

Accounting errors
Software glitches
Poor internal controls
Inadequate training

Mistakes do not equal criminal intent.

Claim of Authorization

The defense may demonstrate:

Reasonable belief funds were authorized for business use
Ambiguous corporate policies
Lack of clarity in reimbursement guidelines

Insufficient Evidence of Conversion

Funds moved between internal accounts may not constitute theft.

Disputing Asset Value

If the amount is contested, reducing the valuation to less than $100 could reduce a felony to a misdemeanor.

Real-World Scenarios

Example 1: Billing Software Confusion

An audit reveals retained overpayments. The defense presents recent changes to billing software and inadequate staff training, arguing that there is no willful intent.

Example 2: Corporate Credit Card Use

An executive charged with personal travel claims that the business purpose was mixed and that reimbursement policies were ambiguous, challenging intent and authorization.

Pre-Indictment Defense Strategy

The investigation stage is often the most critical time to act.

Early intervention may allow defense counsel to:

Present exculpatory financial records
Clarify billing disputes
Demonstrate civil compliance issues
Negotiate with federal prosecutors

In some cases, early advocacy prevents criminal charges altogether.

Consequences Beyond Prison

Conviction under § 669 can result in:

Permanent loss of professional license
Exclusion from Medicare and Medicaid
Damage to professional reputation
Financial ruin from restitution orders

For medical professionals, the impact can be career-ending.

Frequently Asked Questions

Is healthcare embezzlement a federal crime?

Yes. Theft or misapplication of healthcare benefit program funds under 18 U.S.C. § 669 is a federal offense.

What is the maximum sentence?

Up to 10 years in federal prison for felony violations.

Can billing errors lead to criminal charges?

Only if prosecutors prove the conduct was knowing and willful—not accidental or negligent.

Can charges be reduced?

Yes. Loss amount disputes, lack of intent, and authorization defenses may reduce or dismiss charges.

Why You Need Experienced Federal Defense Counsel

Healthcare financial investigations are document-intensive, technical, and aggressively prosecuted.

A strategic defense requires:

Forensic accounting review
Loss analysis
Regulatory compliance knowledge
Federal trial experience
Early negotiation with prosecutors

When your freedom and professional future are at stake, proactive defense matters.

Speak With a Federal Healthcare Embezzlement Defense Attorney

If you are under investigation or facing charges under 18 U.S.C. § 669, do not wait for an indictment to seek legal counsel.

A coordinated and aggressive defense can protect your rights, your career, and your future.

Under 18 U.S.C. § 1349, merely agreeing to participate in a scheme to defraud a federal health benefit program is a crime known as a healthcare fraud conspiracy.

Eisner Gorin LLP is here to help. Schedule your consultation at (818) 781-1570 or contact us here. Our law firm is based in Los Angeles.