Because United enjoyed the prerogative to construe its own policy terms and conditions, the district court granted summary judgment for United. The 10 th Circuit affirmed the District Court. U.S. v. Baldwin, et al D. D.C. No. 02-0323 (PLF) (8/14/03)The U.S. District Court for the District of Columbia denied a motion to dismiss a health care fraud claim, declining to agree with defendants' argument that 18 U.S.C. § 1347 did not apply to fraud against a nonprofit HMO. Defendants were charged with defrauding Kaiser Foundation Health Plan, Inc.

If passed, the bill would aid the government in prosecuting health care fraud and provide stiffer penalties for cases that involve a loss of over $1 million. In addition to increasing the criminal penalties, the bill would lower the mens rea requirement of the existing health care fraud statute (18 U.S.C. 1347). Under this bill “a person need not have actual knowledge of this section or specific intent to commit a violation of this section.”

While the stated purpose of these amendments, according to a section-by-section summary of the bill, is “to ensure that whistleblowers who play a significant role in exposing fraud can be included in otherwise meritorious litigation,” the provisions seem likely to inject further uncertainty into already complicated questions of when a public disclosure has occurred and when a relator is an original source of publicly disclosed information. The Manager’s Amendment (at § 10606) also changes the intent requirement for health care fraud under 18 U.S.C. § 1347, such that “a person need not have actual knowledge of this section or specific intent to commit a violation of this section.” In addition, a potentially significant change for FDA-regulated companies, is the insertion of FDC Act § 301 in the definition of “Federal health care offense” at 18 U.S.C. § 24(a).

By Peter M. Jaensch – On January 14, 2010, the U.S. Attorney’s Office for the District of Massachusetts issued a statement announcing the charging of Doctor Scott Reuben, a former Chief of Acute Pain at Bay State Hospital in Springfield, Massachusetts, with one count of health care fraud (18 U.S.C. §1347), alleging that Dr. Reuben falsified medical research.The Information filed in the case alleges that Dr. Reuben sought and obtained research funding to study drugs used in multimodal analgesia therapy from companies manufacturing such drugs. In his proposals to these companies, Dr. Reuben represented that he would perform clinical trials and present the results in an article for publication.

Stronger Tools for Criminal Enforcement. In addition to establishing a lowered intent requirement under the AKS, the PPACA amends the federal health care fraud statute (18 U.S.C. § 1347) to state explicitly that, “[w]ith respect to violations of this section, a person need not have actual knowledge of this section or specific intent to commit a violation of this section.” It also amends the definition of a “federal health care fraud offense” (18 U.S.C. § 24(a)) to include violations of the AKS—and also to include violations of section 301 of the Food, Drug, and Cosmetic Act (21 U.S.C. § 331) (FDCA) or section 501 of the Employee Retirement Income Security Act of 1974 (29 U.S.C. § 1131).

Attorneys defending Medicare providers in Federal Health Care Fraud (18 U.S.C. §1347) trials should be prepared for the government to file motions in limine seeking to introduce highly prejudicial evidence from prior Medicare civil overpayment recovery efforts that can frequently precede criminal charges. These overpayment recovery efforts are implemented by Recovery Audit Contractors (“RACs”) or Zone Program Integrity Contractors (“ZPICs”) collectively the “Contractors.”

In another, the owner of a home health agency is alleged to have recruited “homebound” patients for home health services from local homeless shelters. The indictment charges the various parties with violations of 18 U.S.C. § 1349 (Conspiracy to Commit Health Care Fraud), 18 U.S.C. § 1347 (Health Care Fraud), or both.According to an article in the New York Times, the scheme was discovered by CMS using new computer analysis techniques that attempt to recognize suspicious billing patterns. Katie Thomas, “Seven Charged in Health Care Fraud,” New York Times, Feb. 29, 2012.

The complaints allege that the drug companies’ interference with insurance cost-sharing arrangements violates federal law.First, the complaints allege that the pharmaceutical companies’ co-pay coupon programs constitute substantive RICO violations and a conspiracy to violate RICO. According to the complaints, the coupons constitute illegal kickbacks amounting to health care fraud under 18 U.S.C. § 1347. Further, the programs allegedly cause false information about drug prices to be submitted to the plaintiff health care plans, which results in the plans reimbursing the original price of the branded prescription drug rather than the lower subsidized price.

Last week, Ohio Attorney General Mike DeWine warned individuals and small businesses shopping for coverage to be “on guard for potential scams and to take steps to protect themselves.”Consistent with the federal government’s prior efforts to pursue fraud in other major federal programs, it is expected that the government will contribute substantial resources to criminal prosecutions of fraud related to the ACA. Importantly, while we have reported that qualified health plans available on the exchanges are being exempted by HHS from the definition of “federal health care program,” thereby potentially affecting enforcement under the anti-kickback statute, we note that the vast majority of criminal statutes applicable to healthcare fraud do not use that term.For example, the laws governing healthcare fraud (18 U.S.C. § 1347), as well as false statements relating to healthcare matters (18 U.S.C. § 1035), prohibit certain activities involving a “federal health care benefit program.” Federal law defines a “federal health care benefit program” broadly to include “any public or private plan or contract, affecting commerce, under which any medical benefit, service, or item is provided to any individual.”

Consistent with the federal government's prior efforts to pursue fraud in other major federal programs, it is expected that the government will contribute substantial resources to criminal prosecutions of fraud related to the ACA. Importantly, while we havereported that qualified health plans available on the exchanges are being exempted by HHS from the definition of "federal health care program," thereby potentially affecting enforcement under the anti-kickback statute, we note that the vast majority of criminal statutes applicable to healthcare fraud do not use that term. For example, the laws governing healthcare fraud (18 U.S.C. § 1347), as well as false statements relating to healthcare matters (18 U.S.C. § 1035), prohibit certain activities involving a "federal health care benefit program." Federal law defines a "federal health care benefit program" broadly to include "any public or private plan or contract, affecting commerce, under which any medical benefit, service, or item is provided to any individual."