Health care fraud.

I. INTRODUCTION

Present annual health care expenditures in the United States exceed $1 trillion(1) and are steadily on the rise. The Health Care Financing Administration ("HCFA") estimates that health care spending is expected to reach $2.1 trillion by the year 2007.(2) With so much money involved, it is no surprise that white collar criminals see health care fraud as a lucrative endeavor.(3) Indeed, the General Accounting Office ("GAO") estimates that such fraud accounts for up to 10% of total health care expenditures.(4) Because health care fraud is costing taxpayers nearly $100 billion dollars a year,(5) federal and state agencies have made health care fraud prosecution a primary focus. Attorney General Janet Reno, aided by a budget-conscious Congress, has made prosecuting health care fraud a top priority at the Department of Justice ("DOJ"), second only to violent crime.(6)

Several government agencies are involved in cutting down on health care fraud. Both DOJ and the Department of Health and Human Services ("HHS") provide regulatory monitoring and enforcement of health care fraud. In prosecutions of fraud, DOJ utilizes the resources of its own criminal and civil divisions, as well as of the United States Attorney offices and the Federal Bureau of Investigation ("FBI").(7) Within HHS, the Office of the Inspector General ("OIG") and the Health Care Financing Administration ("HCFA"),(8) aided by the individual states, initiate and pursue investigations of Medicare and Medicaid fraud. In addition to these resources, the OIG has begun to use its permissive exclusion authority as an incentive for providers to help in the effort through a voluntary disclosure program.(9)

Medicare and Medicaid are federal health care insurance programs. Medicare primarily reimburses health care providers for the costs of services and equipment for the elderly and disabled, while Medicaid supplies individual states with federal funds to subsidize the distribution of medical services and equipment to low-income people.(10) Persons and organizations certified by HHS to receive payment under the Social Security Act may be subject to Medicare and Medicaid fraud investigations.(11) Such persons and organizations include hospitals, nursing and rehabilitation centers, Health Maintenance Organizations ("HMOs"), intermediate carriers such as private insurance companies, private and public clinics, medical laboratories, durable medical equipment ("DME") providers, physicians, physician practice groups, and other certified health care organizations.(12) Statutes enacted to deal with fraud in these specific programs(13) have become necessities because "[a]s the government's second largest social program, Medicare continues to be an attractive target for fraud and abuse."(14)

This Article explores the current state of the law covering federal health care fraud and its enforcement. Section II of this Article discusses the general federal statutes used to prosecute health care fraud, which include the False Claims, False Statements, and Mail and Wire Fraud Acts, by describing the elements of the offenses, available defenses, and penalties applicable under each statute. Section III examines statutes specifically enacted to address Medicare and Medicaid fraud, reviews the elements, defenses, and penalties for each statute, and concludes with a discussion of available statutory safe harbor provisions. Section IV reviews health care fraud enforcement by providing an overview of federal and state government agencies' efforts to investigate and prosecute health care fraud. Finally, Section V discusses several recent developments in this field.(15)

II. PROSECUTING HEALTH CARE FRAUD WITH GENERAL FEDERAL STATUTES

When the government suspects health care fraud, it can bring charges under a variety of statutes.(16) Criminal prosecution can be based on the Social Security Act,(17) the False Statements Act,(18) generic criminal fraud statutes,(19) as well as on specific Medicare and Medicaid fraud statutes that target complex kickback arrangements and other sophisticated schemes.(20) Criminal violations can result in fines and/or imprisonment.(21) Additionally, OIG has the administrative authority to impose monetary sanctions or, more seriously, to exclude the provider from further participation in Medicare and Medicaid programs.(22)

Providers who falsify claim reimbursement submissions are generally subject to prosecution under two statutes: the False Claims Act(23) and the False Statements Act.(24) Further, since most Medicare and Medicaid fraud is camouflaged within legitimate business contacts between providers, insurance companies, and the federal government, the federal mail fraud(25) and wire fraud(26) statutes can provide additional prosecutorial options.

A. False Claims: 18 U.S.C. [sections] 287

The False Claims Act is a federal fraud statute frequently used in prosecuting Medicare and Medicaid fraud. It is favored among pros...

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