Healthcare Fraud

What is Healthcare Fraud?

Healthcare fraud involves intentional deception or misrepresentation in healthcare transactions to gain unauthorized benefits. It can occur in various forms, including billing for services not rendered, falsifying diagnoses, or accepting kickbacks for patient referrals.

Common Types of Healthcare Fraud

1. False Claims: Submitting claims for services not provided or inflating the cost of services.
2. Upcoding: Billing for more expensive procedures than those actually performed.
3. Kickbacks: Offering or receiving illegal payments for patient referrals or services.
4. Unbundling: Separating services that should be billed together to increase reimbursement.
5. Phantom Billing: Charging for services or equipment that were never provided.

Healthcare fraud is governed by federal and state laws, including:

• New York Penal Law Article 177,
• False Claims Act (FCA): Prohibits submitting false claims to government programs like Medicare and Medicaid.
• Anti-Kickback Statute (AKS): Criminalizes offering or accepting remuneration for referrals.
• Stark Law: Restricts physician self-referrals for certain services.
• State Laws: Many states, including New York, have specific statutes addressing healthcare fraud.

Consequences of Healthcare Fraud

• Criminal Penalties: Fines, imprisonment, and loss of professional licenses.
• Civil Liabilities: Financial restitution and exclusion from federal healthcare programs.
• Reputational Damage: Loss of trust and credibility in the healthcare community.

New York’s health care fraud statutes are outlined in Article 177 of the Penal Law. Various offenses are categorized generally by the amount lost, defrauded, or stolen.

Degrees of Offense:

• Fifth Degree: Involves knowingly providing false information to defraud a health plan, resulting in improper payment. This is a Class A misdemeanor.
• Fourth Degree: Escalates when the fraudulent amount exceeds $3,000 within a year. This is a Class E felony.
• Third Degree: Applies when the fraudulent amount exceeds $10,000 within a year. This is a Class D felony.
• Second Degree: Involves fraudulent amounts exceeding $50,000 within a year. This is a Class C felony.
• First Degree: The most severe, involving fraudulent amounts exceeding $1,000,000 within a year. This is a Class B felony.

Prohibited Conduct:

• Submitting false claims, such as billing for services not provided or inflating costs (e.g., upcoding or phantom billing).
• Falsifying medical records to support fraudulent claims.
• Offering or receiving illegal kickbacks for patient referrals or services.

Enforcement:

• Investigations are often conducted by New York’s Medicaid Fraud Control Unit (MFCU) and the Office of the Medicaid Inspector General (OMIG).
• MFCU often brings these charges, and plays a critical role in investigating and prosecuting health care fraud. Here’s an overview of their process:

1. Investigation:
   • The MFCU investigates allegations of fraud involving Medicaid providers, such as doctors, hospitals, and pharmacies. They also look into abuse or neglect of patients in health care facilities.
   • Investigators use tools like audits, interviews, and surveillance to gather evidence. They may also collaborate with federal agencies like the Office of Inspector General (OIG) for Medicaid-related cases.
2. Legal Action:
   • Once sufficient evidence is collected, the MFCU’s attorneys file criminal charges or civil lawsuits against the accused parties.
   • Criminal cases may involve charges like grand larceny, falsifying business records, or health care fraud. Civil cases often seek financial restitution and penalties.
3. Prosecution:
   • The MFCU prosecutes cases in court, presenting evidence and witness testimony to prove fraudulent activities.
   • They aim to recover stolen Medicaid funds and ensure accountability for those who exploit the system.
4. Outcomes: Successful prosecutions can result in criminal convictions, fines, restitution, and exclusion from Medicaid programs.