Understanding Healthcare Fraud

What is Healthcare Fraud?

Healthcare fraud is defined as making false claims by misrepresenting or misstating information concerning the type, scope, or nature of the treatment or service a patient receives; this misinformation is made so that an unauthorized or unneeded payment can be made. This type of fraud can be committed by healthcare providers, patients, or others who have the aim to device the healthcare system for benefits or payment.

Types of Healthcare Fraud Schemes

Healthcare fraud is always a federal crime that is punishable under the False Claims Act at the federal level. The Federal Bureau of Investigation (FBI) investigates healthcare fraud cases; however, it is important to note that they work in conjunction with local and state agencies, the National Insurance Crime Bureau (and other insurance groups), and the Healthcare Fraud Prevention Partnership.

Common types of health care fraud schemes include:

• Waiver-of-deductible scams. These scams involve providers waiving deductibles without the knowledge or consent of the insurer in order to increase their own profits at the expense of the insurer’s bottom line.
• Upcoding. This type of fraud involves billing insurers for more expensive procedures than what was actually performed or billing multiple times for the same procedure or service.
• Unbundling. This type of fraud occurs when a person bills separately for components of a procedure that should be billed as one unit in order to increase reimbursement amounts from insurers.
• Pill mill schemes. These schemes involve pharmacies, providers, and/or patients working to divert prescription drugs in order to obtain fraudulent reimbursements from insurers.
• Phantom or double billing. This type of fraud involves medical providers submitting false or exaggerated claims for services they did not actually provide, or billing for more expensive services than what were actually performed.
• Kickback schemes. These schemes involve offering incentives such as money, gifts, or free services in exchange for referrals, which is illegal under federal law and can lead to significant fines and penalties if discovered by authorities.
• Impersonation. This type of healthcare fraud involves pretending to be a medical professional and providing and billing for services or equipment you offer.
• Fraud involving prescriptions. This type of fraud involves medical providers prescribing medications that are not medically necessary, or prescribing medications in exchange for kickbacks from pharmaceutical companies.
• Fraud committed by patients and other individuals. This type of fraud occurs when an individual uses someone else's insurance information to receive medical services, or when a patient provides false information in order to receive benefits from an insurance company.
• False marketing. This type of scheme involves trying to get people to offer their health insurance identification number (and other personal information) to you to commit identity theft, bill them for services they didn’t receive, and/or enroll the person in a fake healthcare benefit plan.
• False diagnosis schemes. These schemes involve perpetrators entering false diagnoses into a patient’s medical records in order to bill insurers for unnecessary treatments or services.
• Doctor shopping. This type of healthcare fraud occurs when a person visits multiple healthcare providers to get prescriptions for controlled substances.
• Billing for non-covered services. This type of fraud involves submitting claims for services that are not covered by an insurance policy in order to receive payment from the insurer illegally.

Examples of Healthcare Fraud Cases

Some examples of healthcare fraud cases include:

• N.J. Woman charged with conspiracy to commit healthcare fraud. Authorities have apprehended Aysha Khan of Kinnelon, New Jersey on charges of committing health care fraud. The 33-year-old is facing one count of conspiracy and four counts of fraud. From 2015 to 2022, Khan controlled and operated special pharmacies in four states that claimed to process expensive medication that treat Hepatitis C, Crohn’s disease, and other conditions. Khan had the pharmacies bill insurers for medications they did not provide, would falsely claim to handle refills they did not dispense, and billed for prescriptions they did not ship or dispense. Reportedly, Khan’s pharmacies obtained $10 million in Medicare reimbursement payments for these fraudulent prescriptions.
• Former Floridian charged for involvement in $101 million healthcare scheme. In late March 2023, Raheel Naviwala was charged with conspiracy to violate the federal Anti-Kickback Statute (which is punishable by up to five years in jail and a fine of $250,000). According to court documents, a group of individuals led by Naviwala were running a complex scheme involving multiple call centers, telemedicine companies, and bribery, resulting in Medicare losses of $101 million. Their focus was on obtaining doctors' orders for durable medical equipment, specifically orthotic braces, for Medicare beneficiaries. The group did provide the orders in exchange for bribes from certain brace companies to the Medicare beneficiaries.
• Man faces 95 months in prison for involvement in Medicaid fraud scheme. On March 29^th, 2023, Julio Alvarado was sentenced to 95 months in prison for spearheading a Medicaid fraud scheme. He was also sentenced to three years of supervised release and will be required to pay a little over $8.5 million in restitution. The scheme involved billing fake transportation claims. Transportation services company, KJ Transportation C Services Inc. (“KJ”), was paid over $20 million from Medicaid for services in the New York City area between August 2017 to February 2020. Unfortunately, a large portion of those claims were fraudulent. KJ claimed they were transporting people who were deceased or out-of-country and used stolen identities; they also offered unlawful kickbacks to other defendants to obtain their Medicaid information or entice them to schedule a fraudulent trip. Alvarado, who supervised a dozen other participants, was responsible for over $8 million in fraudulent trip claims.
• 23 people charged in $61.5 million Medicare fraud schemes. In February 2023, 23 Michigan residents were charged for alleged attempting to defraud Medicare by billing them for unnecessary medical treatments that were not provided and paying kickbacks and bribes. Some of the charges that these individuals face include (but are not limited to) conspiracy to commit healthcare fraud, payment of illegal healthcare kickbacks, specific instances of healthcare fraud, and receipt of illegal healthcare kickbacks. You can learn more about the specific charges that each individual faces by reviewing this release from the Department of Justice.
• Dozens charged for involvement in $1.2 billion in healthcare fraud. In July 2022, The Department of Justice uncovered a $1.2 billion in alleged fraudulent activity across 13 federal districts in the US. 36 defendants were charged with crimes related to telemedicine, cardiovascular and cancer genetic testing, and durable medical equipment schemes. These coordinated efforts focused on illegal kickbacks and bribes between laboratory owners and medical professionals working with fraudulent telemedicine and digital medical technology companies. The court documents also alleged that patients were subjected to cardiovascular tests that were neither diagnostic nor approved for screening purposes. The telemedicine schemes alone account for over $1 billion in total intended losses.
• Wisconsin substance abuse center’s Medicaid fraud case. A ruling by U.S. District Judge J.P. Stadtmueller has put The Healing Center LLC and its CEO, Dr. Siamak Arassi, in hot water. The court has found them liable for a staggering $2.3 million. This came after the U.S. Department of Justice filed a lawsuit against the center and Arassi in 2019. The suit alleges that Arassi had been ordering narcotics in the names of former patients and then selling them to others for an exorbitant sum of money.

Penalties for Healthcare Fraud

The penalties for healthcare fraud offenses are severe and can range in severity based on the specific offense committed (i.e. false claims, anti-kickback, etc.). For instance, while those who accept or pay kickbacks can face penalties of up to $50,000 per kickback, a person charged with making fake claims (under the False Claims Acts) can face fines of up to $250,000 and five years in prison.

Additionally, those found of healthcare fraud offenses may be excluded from participation in federal healthcare programs such as Medicare and Medicaid or lose their professional licenses, which means there can be negative long-term effects beyond jail time or paying a fine. Individuals and organizations who have been found to have committed health care fraud can also face reputational damage that can last long after they’ve served their sentence. There are increasingly strict penalties in place for companies that are found to violate HIPAA privacy laws by misusing patient information as well.

Defenses Against Healthcare Fraud Charges

Defending against healthcare fraud federal offenses requires specialized legal expertise and experience, as these crimes often involve complex issues and technical matters. The questions involved in defending against these charges can include:

• whether the prosecution has sufficient evidence,
• whether the prosecution can prove the defendant acted with an intent to defraud or acted with the necessary level of knowledge, and
• whether the defendant had assurances from regulators that the actions they were taking were permitted.

What to Do If You’re Accused of Healthcare Fraud

If you have been accused of healthcare fraud, it's essential to take the necessary steps to protect yourself, your reputation, and your freedom. The first move is to hire an experienced and professional criminal defense attorney who can guide you through the legal process. Your attorney can investigate the state’s evidence, collect evidence to support your case, and develop a strong defense strategy to prove your innocence.

If you are under arrest or being investigated for healthcare fraud charges, it would be best to avoid talking about your case on social media or with individuals who are not part of your legal team. Even innocuous conversations can and most likely will be used against you in court. You also need to follow the advice of your defense attorney and keep all communication about your case confidential.

At the Law Offices of Christopher J. Cherella, our attorney handles federal offense cases, including healthcare fraud cases. To schedule an initial consultation, call (414) 347-9334 or reach out online today.