Federal health care fraud means knowingly and willfully carrying out, or trying to carry out, a scheme to cheat a health care benefit program, usually Medicare, Medicaid or a private insurer. Prosecutors charge it under 18 U.S.C. § 1347, and a conviction can mean up to 10 years in prison per count, more if a patient is seriously hurt. If you have received a subpoena, an audit letter, or a call from an agent, this guide explains what the government must prove, how these cases unfold, and where a defense can push back.
TL;DR
- Under § 1347 the government must prove a scheme to defraud a health care benefit program, intent to defraud, and a connection to health care benefits, items or services.
- Most cases start quietly: a hotline tip, a whistleblower suit, or a data pattern in your billing. By the time agents arrive, the file is often months or years old.
- A billing mistake is not automatically a crime. Intent, notice of the rule, and your compliance efforts are often the heart of the case.
- Penalties can reach 10 years per count, 20 years in serious-injury cases, plus fines, restitution and forfeiture. Conspiracy, money laundering and identity theft counts are often added.
- Talk to a federal defense lawyer before you answer questions, hand over records, or try to fix your billing on your own.
Table of Contents
- What counts as federal health care fraud
- What the government has to prove
- How a Medicare fraud investigation begins
- From audit to criminal case
- Civil False Claims Act versus criminal charges
- Penalties and consequences
- What defenses and evidence can matter
- What the process looks like if you are charged
- Perspective: why early moves matter
- Bank fraud: a close cousin
- How we can help
- FAQ
- Sources
What counts as federal health care fraud
The core statute is 18 U.S.C. § 1347. It punishes anyone who knowingly and willfully executes, or attempts to execute, a scheme to defraud a health care benefit program, or to obtain its money or property through false pretenses, in connection with delivering or paying for health care. The base penalty is a fine, up to 10 years in prison, or both.
"Health care benefit program" is broad. It covers Medicare, Medicaid and TRICARE, and also private plans that pay for medical care. The DOJ Health Care Fraud Section describes its work as investigating and prosecuting schemes involving federal programs including Medicare, Medicaid and TRICARE.
The conduct that gets charged tends to fall into familiar patterns:
- Billing for services never provided, or for patients who were never seen.
- Upcoding, meaning billing a higher-paying code than the service delivered.
- Billing for medically unnecessary care.
- Paying or receiving kickbacks for referrals.
- Running sham clinics, labs, pharmacies or hospice companies.
- Misrepresenting who performed or supervised a service.
The people charged are not only owners. Doctors, nurse practitioners, pharmacists, billers, marketers and office managers all appear in indictments. In the 2025 National Health Care Fraud Takedown, 324 defendants were charged across 50 federal districts, including 96 licensed medical professionals, with alleged intended losses above $14.6 billion.
What the government has to prove
According to the Third Circuit's model fraud instructions, a § 1347 conviction requires proof beyond a reasonable doubt of three things:
- The defendant knowingly devised a scheme to defraud a health care benefit program, or to obtain its money or property by false pretenses.
- The defendant acted with intent to defraud.
- The scheme was connected to the delivery of, or payment for, health care benefits, items or services.
Each element is a place to fight. Was there a scheme, or a handful of disputed claims? Did the defendant personally know the claims were false? Was the defendant the person who made the decisions, or a employee following instructions?
The knowledge question
Section 1347(b) says a person does not need actual knowledge of the statute itself, or specific intent to violate that section. The government points to this language in cases like a Texas pharmacist sentencing. That does not mean intent is irrelevant. The prosecution still has to show you acted knowingly, willfully and with intent to defraud. In 2025 the Sixth Circuit held that the jury instructions for a § 1347 violation must require proof that the defendant knew the conduct was unlawful. How courts handle this point differs by circuit, which is one reason the district where you are charged matters.
How a Medicare fraud investigation begins
Most people never see the start. According to HHS Office of Inspector General testimony, leads come from the OIG hotline, whistleblower (qui tam) suits under the False Claims Act, data analysis of unusual billing, and referrals from other agencies. The DOJ, the HHS-OIG and the FBI are the main players, and Medicare Fraud Strike Force teams lean heavily on claims data alongside traditional investigative work.
Once a pattern is flagged, investigators can combine analytics with field work. Congressional testimony from OIG describes witness interviews, search warrants, surveillance and evidence review layered on top of the data. The same testimony notes that allegations of patient harm raise the urgency, and teams may mobilize around the clock.
For criminal health care investigations, the Justice Manual says 18 U.S.C. § 3486 lets the Attorney General or a designee issue investigative demands for records. Courts can enforce them through contempt. So a records demand is not a polite request.
Signs you may be a target
- A subpoena or investigative demand for billing, patient or payroll records.
- Agents contacting your employees or former employees.
- A payment suspension, a pre-payment review, or an unusually broad audit.
- A search warrant at your office or home.
- A letter naming you as a subject or target.
Any of these is the moment to call a lawyer, not after the first interview.
From audit to criminal case
An audit is not an accusation, but it can turn into one. A billing review that finds errors may stay civil, ending in repayment or a False Claims Act settlement. It becomes criminal when the government believes the errors were deliberate. Words you say in an audit interview, emails about "how to bill it," and documents altered after the fact can all push a file across that line.
A civil investigative demand deserves the same care. The American Bar Association's health law section advises that counsel collect responsive records, consider an internal investigation and billing experts, preserve compliance, correct identified problems where appropriate, and expect related False Claims Act or qui tam claims.
One warning from our side: never delete, backdate or "clean up" records once you know of an inquiry. Obstruction of a federal investigation is a separate crime, and prosecutors often treat it as proof of guilty knowledge. Our page on 18 U.S.C. § 1519, the federal statute on destroying or falsifying records, explains why.
Civil False Claims Act versus criminal charges
These two tracks often run side by side, and they are not the same.
| Criminal (§ 1347) | Civil False Claims Act | |
|---|---|---|
| Who brings it | DOJ prosecutors, U.S. Attorney's Office | DOJ, or a whistleblower on the government's behalf |
| Standard of proof | Beyond a reasonable doubt | Preponderance of the evidence |
| Mental state | Knowing and willful intent to defraud | "Knowingly" includes deliberate ignorance and reckless disregard |
| Exposure | Prison, fines, restitution, forfeiture | Up to three times the program's loss plus a per-claim penalty |
The HHS-OIG explains that violators of the civil False Claims Act (31 U.S.C. §§ 3729-3733) face up to three times the program's loss plus a per-claim penalty, and that no specific intent to defraud is required for a civil violation. The Solicitor General has described the Act's "knowingly" standard as actual knowledge, deliberate ignorance or reckless disregard in a brief to the Supreme Court. That is a lower bar than criminal intent, which is why a civil settlement should never be signed without checking its effect on any criminal exposure.
Penalties and consequences
The statute sets up to 10 years per count. CMS's Medicare fraud training material states that penalties may include criminal fines up to $250,000 and imprisonment up to 20 years, with any term of years or life if the violations result in death. The same document says organizations that knowingly make a false claim may face a criminal fine up to $500,000.
Real sentences depend on the loss amount, role in the scheme, and sentencing guidelines. In one 2025 case, four California residents were sentenced for a nearly $16 million Medicare fraud and money-laundering scheme involving sham hospice companies, and one received 12 years.
That last case shows how charges stack. Investigators facing complex schemes may add conspiracy under 18 U.S.C. § 371, money laundering under § 1956, or aggravated identity theft under § 1028A. Beyond prison and fines, expect restitution, asset forfeiture, and exclusion from federal programs. For licensed providers, the licensing board is a separate front.
So, do people go to jail for this? Yes, and sentences are not rare for large or deliberate schemes. But a small number of billing errors with no intent behind them is a different file from a sham clinic, and outcomes reflect that.
What defenses and evidence can matter
No single defense fits every case. These are the lines we usually look at first.
No intent to defraud
A wrong claim is not the same as a fraudulent claim. Coding is complicated, payer rules change, and billing staff make mistakes. DOJ's own guidance in False Claims Act matters tells prosecutors to assess separately whether a claim was false and whether it was knowingly submitted. Factors like how clear the rule was, how widespread the problem was, and what compliance efforts were in place all bear on state of mind. Prior clean audits, written advice from a billing consultant, and a documented compliance program all help show good faith.
Unclear or disputed rules
When a claim rests on an ambiguous regulation or coverage rule, the government has trouble showing you knew you were wrong. The limit: DOJ has argued in the Mackby case that a claim can be false when it misrepresents facts that matter to payment, such as who performed or directed a service, and not just when it involves a hard interpretation of a regulation. Misstating the facts is harder to defend than misreading a rule.
Medical necessity is a judgment call
Clinicians disagree. A reviewer who thinks a service was unnecessary has an opinion, not proof of fraud. Expert testimony from clinicians and coding specialists often becomes central.
Challenging the evidence
Search warrants, subpoenas and interviews can be tested. A motion to suppress evidence obtained in violation of the Constitution is one of the motions the parties may file after a not-guilty plea, according to the U.S. Courts. Data summaries can also be challenged: sampling methods, extrapolation and loss calculations are frequently contested, and the loss figure drives sentencing.
Role and responsibility
Billing employees, nurse practitioners and associates are sometimes swept in by an owner's scheme. Showing that you did not know of, join or benefit from the scheme can change the outcome. Cooperation decisions are sensitive and must be made with counsel, not on the fly.
What the process looks like if you are charged
Federal procedure follows a set path. Per the U.S. Courts, at the initial appearance the judge advises you of the charges, addresses probable cause and detention, and informs a defendant who cannot afford a lawyer of the right to appointed counsel. At arraignment you enter a plea. A not-guilty plea leads to trial, and after a conviction sentencing may include imprisonment, a fine and restitution.
The District of Massachusetts's procedure guide adds the middle stages: a possible detention hearing, discovery, substantive motions, then a plea or trial. In health care cases, discovery can run to millions of claim lines, so this phase is long.
Perspective: why early moves matter
We handle federal and serious felony defense in Los Angeles, and we spend a lot of time in court. Time in front of local judges and prosecutors teaches you how an office actually approaches a case: who tends to push for a plea, what they care about, and when they will talk.
Here is what we see. The best chance to shape a health care fraud case is often before charges. A lawyer who contacts the prosecutor early can sometimes learn whether you are a witness, subject or target, steer production of records, and present the context that shows no intent. Once an indictment is returned, you have far fewer options. We also check how agents gathered evidence, because constitutional search and seizure challenges can change what a jury ever sees.
What we would tell a friend: do not talk to agents alone, do not alter anything, and do not assume that an honest explanation will clear things up on its own.
— Jake
Bank fraud: a close cousin
People searching for health care fraud often also look up bank fraud, 18 U.S.C. § 1344. The two statutes are close. The Third Circuit's model instructions note the Fifth Circuit's observation that the language and structure of the health care fraud statute are almost identical to the bank fraud statute. In both, the core question is a scheme to defraud, or to obtain money or property by false pretenses, plus intent. The difference is the victim: a financial institution in § 1344, a health care benefit program in § 1347.
That overlap means similar defenses apply: lack of intent, no scheme, and insufficient proof of the target. Cases involving electronic communications often add wire fraud as well. See our overview of wire fraud defenses and our page on federal wire fraud charges in California.
How we can help
Rubin Law, P.C. defends clients facing federal charges in Los Angeles, including fraud, money laundering and other white collar accusations. We offer pre-file intervention for people who know they are under investigation but have not been charged, courtroom advocacy, and constitutional challenges to how evidence was collected. You deal with your attorney directly, and your strategy is built around your facts.
If you have a subpoena, an audit letter or a visit from agents, review our federal and criminal defense services and reach out before you speak to investigators. If a case also involves a drug or prescription element, see our page on prescription drug fraud. Because these cases are felonies, you may also want to read what is classified as a felony.
FAQ
Do people go to jail for health care fraud?
Yes. Section 1347 carries up to 10 years in prison per count, and higher maximums apply when a patient is seriously harmed or killed. Sentences depend on the loss amount, your role and the evidence of intent. Many cases also involve fines, restitution and forfeiture.
Is a billing mistake a federal crime?
Not by itself. For a criminal conviction the government must prove a knowing scheme and intent to defraud. A mistake may still lead to repayment or a civil False Claims Act claim, where the knowledge standard is lower.
What should I do if I get a subpoena or audit letter about Medicare billing?
Do not respond or hand over documents on your own, and never alter or delete records. Contact a federal criminal defense attorney right away so someone can find out your status, protect your rights and manage what is produced.
What is the difference between health care fraud and the False Claims Act?
Health care fraud is a criminal charge that needs proof of intent beyond a reasonable doubt. The False Claims Act is mainly civil, allows treble damages plus per-claim penalties, and does not require specific intent to defraud. Both can arise from the same conduct.
Sources
- 18 U.S. Code § 1347, Health care fraud
- DOJ Health Care Fraud Section
- 2025 National Health Care Fraud Takedown, HHS-OIG
- Third Circuit model instructions, Fraud Offenses
- Texas pharmacist sentencing, DOJ Office of Public Affairs
- Sixth Circuit opinion on § 1347 jury instructions
- HHS-OIG testimony before the House Judiciary Committee
- HHS-OIG testimony, House Ways and Means
- Justice Manual 9-44.000, Health Care Fraud
- American Bar Association, civil investigative demand next steps
- HHS-OIG, Fraud and Abuse Laws
- Solicitor General filing on the False Claims Act
- Solicitor General, Mackby v. United States
- CMS, Medicare Fraud and Abuse: Prevent, Detect, Report
- DOJ, four California residents sentenced in hospice fraud
- U.S. Courts, Criminal Cases
- District of Massachusetts, typical criminal procedures in a felony case