Healthcare Fraud Defense Lawyers (18 U.S.C. § 1347): Federal Laws & Penalties

Federal healthcare fraud under 18 U.S.C. § 1347 is a serious white-collar felony that occurs when an individual or entity knowingly and willfully executes, or attempts to execute, a scheme to defraud any public or private healthcare benefit program (such as Medicare, Medicaid, Medi-Cal, TRICARE, or commercial insurers).

Federal prosecutors target doctors, clinic owners, medical billing companies, home health agencies, and corporate executives accused of obtaining healthcare payments or property under false pretenses.

Federal investigations are data-driven, heavily funded, and often carry penalties of up to 10 years to life in federal prison.

Legal Advisory: The centerpiece of any 18 U.S.C. § 1347 prosecution is proving deliberate intent to defraud. Honest administrative mistakes, billing errors, or regulatory misunderstandings do not constitute federal criminal fraud.

What Conduct Violates 18 U.S.C. § 1347?

Under federal law, a person or organization commits healthcare fraud when they knowingly:

Execute a Scheme to Defraud: Deceiving a healthcare benefit program to receive unauthorized financial payouts.
Obtain Property via False Pretenses: Submitting misleading representations, false billing codes, or altered patient records to secure reimbursement.
Attempt Healthcare Fraud: Taking substantial steps toward executing a billing scheme, even if the government or insurer never actually disbursed funds.

Common Types of Healthcare Fraud Schemes

Federal law enforcement agencies—including the HHS-OIG, FBI, and DOJ Healthcare Fraud Strike Force—frequently investigate the following illegal practices:

Alleged Scheme	Legal Definition	Practical Example
Phantom Billing	Submitting claims for medical services, tests, or equipment never provided.	Billing Medicare for patient visits that never occurred.
Upcoding	Billing for a more expensive procedure or service than what was actually performed.	Coding a standard 15-minute consultation as a complex 60-minute evaluation.
Unbundling	Separating linked procedural codes to charge higher individual rates.	Billing routine panel tests as separate, higher-cost individual line items.
Medically Unnecessary Care	Ordering procedures, prescriptions, or equipment solely to generate revenue.	Prescribing costly durable medical equipment (DME) without clinical need.
Kickback Schemes	Paying or receiving financial incentives for patient or service referrals.	Paying marketers or physicians illegal referral fees under the Anti-Kickback Statute.

Federal Penalties and Statutory Exposure

Sentencing for 18 U.S.C. § 1347 is governed by the United States Sentencing Guidelines, scaled according to the total financial loss amount, number of victims, and patient safety impacts:

Standard Felony Sentence: Up to 10 years in federal prison per count.
Serious Bodily Injury Enhancement: Up to 20 years in federal prison if the fraudulent scheme results in serious physical injury to a patient.
Death Enhancement: Up to Life imprisonment if the fraudulent practice results in a patient's death.
Financial Penalties: Criminal fines of up to $250,000 for individuals ($500,000 for organizations), plus mandatory court-ordered restitution.
Collateral Consequences: Mandatory exclusion from Medicare/Medicaid programs, permanent revocation of state medical licenses, and asset forfeiture.

Related Federal Crimes Frequently Stacked by Prosecutors

Federal prosecutors routinely charge 18 U.S.C. § 1347 alongside companion white-collar statutes to maximize sentencing exposure:

18 U.S.C. § 1349 – Healthcare Fraud Conspiracy: Penalizes agreements to commit healthcare fraud; carries the same statutory penalties as the underlying crime.
42 U.S.C. § 1320a-7b – Anti-Kickback Statute (AKS): Criminalizes offering, paying, soliciting, or receiving remuneration to induce referrals for items or services payable by federal healthcare programs.
31 U.S.C. § 3729 – Civil False Claims Act (FCA): Imposes treble damages (3x actual loss) and civil monetary penalties for submitting false or fraudulent claims to the government.
18 U.S.C. § 1001 – False Statements to Federal Investigators: Penalizes lying or concealing material facts during an HHS-OIG or FBI investigation.
California Penal Code § 550: State-level insurance fraud prosecution for California-based claims.

Key Legal Defenses Against 18 U.S.C. § 1347

Defending a healthcare fraud case requires demonstrating that billing discrepancies resulted from administrative complexity rather than criminal intent:

Lack of Criminal Intent: Showing that improper claims were the result of honest oversight, clerical errors, or software glitches rather than deliberate intent to deceive.
Good-Faith Reliance on Advice: Establishing that the defendant relied in good faith on the guidance of certified medical billing specialists, accountants, or healthcare attorneys.
Regulatory Ambiguity: Demonstrating that the governing Medicare/Medicaid billing guidelines, modifier rules, or coverage determinations were vague or open to multiple reasonable legal interpretations.
Suppression of Evidence: Challenging search warrants executed at clinics or offices that violated Fourth Amendment protections.

Frequently Asked Questions (FAQs)

What constitutes federal healthcare fraud under 18 U.S.C. § 1347?

Healthcare fraud is a federal white-collar felony involving the deliberate submission of false or misleading claims to obtain money or property from any public or private healthcare benefit provider (such as Medicare, Medicaid, or private insurance).

Can simple billing errors lead to federal criminal charges?

Honest administrative errors, clerical mistakes, or billing oversights do not violate 18 U.S.C. § 1347. Federal prosecutors are legally required to prove beyond a reasonable doubt that you acted with specific, deliberate intent to defraud the healthcare program.

What are the maximum penalties for a federal healthcare fraud conviction?

A standard conviction under 18 U.S.C. § 1347 carries up to 10 years in federal prison per count, statutory fines, asset forfeiture, and mandatory restitution. If the scheme results in serious bodily injury, the maximum sentence increases to 20 years; if it results in death, the maximum sentence is life imprisonment.

How do federal authorities detect healthcare fraud?

Federal agencies use advanced data analytics, audit algorithms, and Medicare/Medicaid billing models to detect statistical anomalies, unusual coding trends, or sudden spikes in billing volume. Investigations often begin with audits, subpoenas, or whistleblower (qui tam) lawsuits.

Why is hiring a federal defense attorney early so critical?

Federal healthcare fraud investigations often take months or years before formal charges are filed. Retaining experienced defense counsel during the pre-indictment phase allows your attorney to manage communications with federal agents, challenge subpoenas, conduct independent billing audits, and negotiate with the U.S. Attorney's Office before an indictment is issued.

Contact Cron, Israels & Stark for Federal Healthcare Defense

If you are a physician, clinic owner, or healthcare executive facing a federal investigation, subpoena, or indictment under 18 U.S.C. § 1347, early intervention is essential to protecting your license, your freedom, and your reputation.

The California federal defense attorneys at Cron, Israels & Stark represent healthcare providers throughout California and nationwide in complex federal white-collar matters.

Phone: (424) 372-3112
Location: Los Angeles, CA / Southern California
Online: Contact our legal team today to schedule your confidential consultation.

Federal Healthcare Fraud