EnforcementConspiracy to Commit Healthcare Fraud Conviction OverturnedWilliam F. GouldIn United States v. Merino, No. 19-50291, 2021 WL 754589 (9th Cir. Feb. 26, 2021), the court of appeals reversed the conviction of Marina Merino of conspiracy to commit healthcare fraud in violation of 18 U.S.C. § 1349 and eight counts of healthcare fraud in violation of 18 U.S.C. § 1347. Merino was convicted after a trial in the Central District of California.

EnforcementConspiracy to Commit Healthcare Fraud Conviction OverturnedWilliam F. GouldIn United States v. Merino, No. 19-50291, 2021 WL 754589 (9th Cir. Feb. 26, 2021), the court of appeals reversed the conviction of Marina Merino of conspiracy to commit healthcare fraud in violation of 18 U.S.C. § 1349 and eight counts of healthcare fraud in violation of 18 U.S.C. § 1347. Merino was convicted after a trial in the Central District of California.

The Fifth Circuit agreed and reversed Nora’s convictions for conspiracy and aiding and abetting. The Fifth Circuit held that there was insufficient evidence to conclude that Nora acted willfully, as required under both the health care fraud statute, 18 U.S.C. § 1347(a)(1), and the anti‑kickback statute, 42 U.S.C. § 1320a-7b(b)(2).The Fifth Circuit emphasized that there was insufficient evidence to prove that Nora understood that Abide’s practices were fraudulent or unlawful.

The government also sought forfeiture of the proceeds. Notwithstanding the scope of the fraudulent conduct alleged, conspicuously absent is a charge of the comprehensive healthcare fraud statute – 18 U.S.C. Section 1347 – which encompasses schemes to defraud and false representations to obtain money in connection with a healthcare system. Nor is the statute included as an object of the charged conspiracy.

For example, a medical equipment supplier may not pay a kickback to a patient or a doctor to use his equipment that is covered by Medicare. 42 U.S.C. § 1320a-7b(b)(2)(A). Every violation of this anti-kickback provision, however, does not amount to health care fraud under 18 U.S.C. § 1347. Fraud requires proof of a false statement or some other kind of fraud.

Decided: May 11, 2015The Fourth Circuit reversed and remanded the district court’s ruling because it abused its discretion in excluding evidence that was reasonably necessary for the government to make its case regarding the fraudulent scheme. Dr. Amar Bajoghli was indicted for executing a scheme to defraud when billing public and private healthcare benefit programs in violation of 18 U.S.C. § 1347, and for related offenses. Dr. Bajoghli filed three pretrial motions to limit the government’s evidence against him at trial: (1) motion to strike allegations of certain financial details from the indictment; (2) motion in limine to exclude evidence of post-scheme conduct, which the government planned to introduce to show consciousness of guilt; and (3) motion in limine to exclude any evidence that was not directly related to one of the 53 executions specifically charged in the indictment.

iaries, falsely certifying that the tests were medically necessary for the diagnosis or detection of disease, and falsely claiming the results would be used in the medical management of the patient.The indictment also claims the physician solicited and received kickbacks and bribes, including at least one cash payment, from co-conspirators in exchange for ordering orthotic braces. In one instance, the government claims that the physician, via text message, offered to refer patients for orthotic braces in exchange for illegal kickbacks.An indictment is merely an allegation by the government that criminal conduct occurred; the government will still need to prove the physician is guilty beyond a reasonable doubt. According to a press release issued by the United States Department of Justice, the HHS – OIG and FBI are investigating the case. It will be up to Assistant Chief Rebecca Yuan and trial attorney Hyungjoo Han of the Criminal Division Fraud Section to prove the physician is guilty.18 USC §1347 prohibits knowingly and willfully executing a scheme to defraud any health care benefit program. Violators face ten years in prison. The False Claims Act prohibits knowingly and willfully making or causing to be made any false statement or representation of material fact in any application for any benefit or payment under a federal health care program, such as Medicare or Medicaid. On the civil (i.e., non-criminal) side, the False Claims Act is the main enforcement mechanism used by the government. Penalties include three times the amount of the government’s payment plus $11,000 per violation.https://www.justice.gov/opa/pr/medical-doctor-charged-207m-health-care-fraud-and-illegal-kickback-schemes[View source.]

ery year, a health care company may submit hundreds, or thousands, of Medicaid claims, meaning a final damages award for systemic fraudulent conduct can be massive.Similarly important is the fact that the FCA gives whistleblowers (called “relators”) significant financial incentives to file civil law suits (called “qui tam” actions) against health care providers, which can result in whistleblowers receiving 15 to 30 percent of the money recovered by the government. These whistleblower actions have played an ever-increasing role in health care fraud investigations.2. Anti-Kickback and the Health Care Fraud Statute (criminal)The Anti-Kickback Statute (“AKS”), 42 U.S.C. § 1320a-7b, is a federal criminal statute prohibiting any person from intentionally offering, paying, soliciting or receiving anything of value (called “remuneration”) to induce or reward health care referrals. AKS carries with it a maximum 10 year term of imprisonment and fines. The more general health care fraud statute, 18 U.S.C. § 1347, criminalizes any scheme to defraud the government or a private health care payer, and carries with it a maximum 10 year term of imprisonment and fines.Law Enforcement Tools to Collect Information and DocumentsThe government uses the following 7 tools to extract documents and information from health care providers:• Requests for Voluntary Cooperation/Letter Requests: These are informal inquires that allow for a broad scope of information to be collected.• Licensing Agency Audit/Inspection: State authorities can conduct periodic audits or inspections pursuant to state law, which can include on-site inspections and requests for documents.• Administrative Subpoena: Federal and State Inspector General (OIG) subpoenas can be issued in both criminal and civil investigations for the production of documents.• Civil Investigative Demand (CIDs): The false claims act authorizes the government to issue CIDs, which have become a more prominent tool in recent years because the demands are broad in

ms and filed for bankruptcy in 2021. GTT now operates as a private company.Ultimately, GTT entered into a settled order with the SEC, in which it agreed to cease and desist from violating the negligence-based antifraud provisions of the Securities Act of 1933 (Sections 17(a)(2) and 17(a)(3)) and the reporting, books and records, internal accounting controls, and disclosure controls and procedures provisions of the Securities and Exchange Act of 1934 (Sections 13(a), 13(b)(2)(A) and 13(b)(2)(B) and Rules 13a-1, 13a-11, 13a-13, 13a-15(a) and 12b-20 thereunder).The DOJ Will Also Reward RemediationThe SEC is not the only agency rewarding comprehensive remediation lately. On Oct. 25, 2023, the Fraud Section of the Criminal Division of the U.S. Department of Justice (DOJ) issued a non-prosecution letter announcing it was declining to prosecute HealthSun Health Plans Inc. (HealthSun) despite "the fraud committed by employees and agents" of the company in violation of 18 U.S.C. Sections 1343, 1347 and 1349. The DOJ's investigation found evidence that, from 2015 to early 2020, one of HealthSun's former directors orchestrated a scheme to submit false and fraudulent information about diagnoses for chronic ailments that enrollees in the company's Medicare Advantage Plan did not have or that were entered into patient healthcare records by non-healthcare providers to the U.S. Department of Health and Human Services' Centers for Medicare & Medicaid Services (CMS). The scheme allegedly resulted in $53 million in overpayments by CMS to HealthSun.In the letter, the DOJ cited several factors set forth in its revisedCriminal Division Corporate Enforcement and Voluntary Self-Disclosure Policy, including: 1) timely and voluntary self-disclosure, 2) "full and proactive cooperation," including providing all known relevant facts, including information obtained from company and personal cellphones and the identity of individuals involved and agreeing to continue cooperating through any future in

tigations and enforcement actions.Yet, in this climate of intense scrutiny on the healthcare industry on several fronts, the United States Supreme Court has shown over the last few years a willingness to interpret laws impacting the industry in an appropriately narrow and constrained manner. For example, in the 2022 case, Ruan v. United States, a unanimous Court held that to convict a physician of a criminal violation of the Controlled Substances Act, the government must prove that the physician knowingly or intentionally acted in a manner that was not "authorized" by the physician's license, not merely that the doctor violated objective standards of care. And earlier this month, in a healthcare billing fraud case, the Court, again unanimously, narrowed prosecutors' ability to use the federal aggravated identity theft statute in garden-variety overbilling and fraud cases generally.Dubin v. United StatesDavid Dubin was convicted of healthcare fraud under the healthcare fraud statute at 18 U.S.C. § 1347 for overbilling Medicaid for psychological testing performed by a company he helped manage. Dubin did so by "overstat[ing] the qualifications of the employee who actually performed [patient] testing," which resulted in the government paying Dubin "inflated" reimbursement amounts. In committing this crime, Dubin "used" the names and Medicaid identification numbers of various patients on "fraudulent billing sent to Medicaid," but those patients did receive some testing. The question at issue in Dubin was whether by using patient information on fraudulent bills, Dubin committed not just Medicaid fraud, but also aggravated identity theft, in violation of the Aggravated Identity Theft statute at 18 U.S.C. § 1028A.Section 1028ASection 1028A is harsh insofar as it imposes a mandatory two-year sentence on any person who, "during and in relation to any felony violation" enumerated in the statute, "knowingly transfers, possesses, or uses, without lawful authority, a means of identification of a