Federal Health Care Fraud Defense
Federal health care fraud is charged under 18 U.S.C. § 1347, which makes it a crime to knowingly and willfully execute a scheme to defraud a health care benefit program. It carries up to 10 years in prison — 20 years if the violation results in serious bodily injury, and up to life if it results in death.
If you are a physician, a pharmacist, an agency owner or a billing professional and you have just learned you are under federal investigation, there are two things worth understanding before anything else.
The first is that the government does not have to prove you knew about the § 1347 statute, and it does not have to prove you personally submitted a single claim. What the government must prove is a scheme to defraud, your knowledge of it, and your participation in it.
The second is that the criminal case is not the only possible sanction. Exclusion from Medicare and Medicaid runs on a separate track, carries a five-year minimum, and will shut down medical practices that rely on government benefits. Most people facing this focus entirely on prison exposure and discover the exclusion problem far too late.
What does the government have to prove under 18 U.S.C. § 1347?
The statute states that:
“Whoever knowingly and willfully executes, or attempts to execute, a scheme or artifice — (1) to defraud any health care benefit program; or (2) to obtain, by means of false or fraudulent pretenses, representations, or promises, any of the money or property owned by, or under the custody or control of, any health care benefit program, in connection with the delivery of or payment for health care benefits, items, or services…”
Two important parts of the law shape every defense.
“Knowingly and willfully” is the whole fight. Billing is complicated, coding is contested, and providers disagree with auditors constantly. A mistake is not a crime. An aggressive but defensible reading of a coding rule is not necessarily a crime. The government must prove an unlawful state of mind, and the documentary record in these cases is very often equally consistent with disorganization, bad advice, or a billing company you trusted and did not supervise closely enough.
But ignorance of the statute is not a defense. Subsection (b) says plainly that “a person need not have actual knowledge of this section or specific intent to commit a violation of this section.” The knowledge that matters is knowledge of the falsity.
The reach of the statute is also wider than most people assume. A “health care benefit program” is defined at 18 U.S.C. § 24(b) as “any public or private plan or contract, affecting commerce, under which any medical benefit, item, or service is provided to any individual.” That is not limited to Medicare and Medicaid. Private insurers qualify. In Michigan, so do auto no-fault carriers.
How do federal courts in Michigan instruct juries on health care fraud?
The Sixth Circuit Pattern Criminal Jury Instructions set out the elements of health care fraud at Instruction 10.05. That instruction changed recently, and the change favors the defense.
In June 2026 the Sixth Circuit's Pattern Criminal Jury Instructions Committee amended Instruction 10.05, stating that “the definition of ‘willfully’ was corrected to require knowledge of the law based on United States v. Singh, 147 F.4th 652 (6th Cir. 2025).”
Singh is worth understanding if you are facing this charge. The Sixth Circuit held that a jury instruction defining “knowingly and willfully” as merely acting “voluntarily and intentionally, and not because of mistake or some other innocent reason” — language that tracked the older pattern instruction — “failed to convey the scienter that the government must prove to secure a conviction under 18 U.S.C. § 1347.” The court drew the distinction plainly: “The mail-fraud and wire-fraud statutes, for example, require only an intent to defraud, but the healthcare-fraud statute requires an intent to defraud and willfulness.” On remand, the court directed that any retrial instructions “must specify that the government is required to prove beyond a reasonable doubt that Singh acted with knowledge that her conduct was unlawful.”
That is a meaningful burden. It is not enough for the government to show a claim was wrong, or even that it was submitted deliberately. Under the current instruction it must prove the defendant knew the conduct was unlawful.
These are complex questions put to jurors who likely have little or no knowledge of the intricacies of billing Medicare. It is extremely important that these issues are explained in a way that an ordinary person can understand, and that the instruction the jury actually receives reflects the current state of the law. A useful question to ask any lawyer you are considering is how many federal jury trials they have tried as defense counsel.
Why is the Anti-Kickback Statute charged separately?
The Anti-Kickback charge is a separate offense. The Anti-Kickback Statute, 42 U.S.C. § 1320a-7b(b), makes it a felony to knowingly and willfully solicit, receive, offer or pay “any remuneration (including any kickback, bribe, or rebate) directly or indirectly, overtly or covertly, in cash or in kind” in return for referrals, or for ordering or arranging for items or services payable by a federal health care program.
The penalty changed in 2018, and much of what is published about it is out of date. The current statute provides for a fine of “not more than $100,000 or imprisoned for not more than 10 years, or both.” The older figures — $25,000 and five years — were superseded by the Bipartisan Budget Act of 2018. If you are reading a page that still gives the old numbers, it has not been updated in eight years.
The statute contains its own exceptions, including one for “any amount paid by an employer to an employee (who has a bona fide employment relationship with such employer) for employment in the provision of covered items or services,” and there is a set of regulatory safe harbors beyond that. Whether an arrangement fits inside one of them is frequently the entire case.
Is the Stark Law a criminal statute?
No — and this is the most common error in published material on this subject. The Stark Law, 42 U.S.C. § 1395nn, is civil. It contains no term of imprisonment and creates no criminal offense. Every sanction in the statute appears in subsection (g), and all of them are civil: denial of payment, refund obligations, and civil money penalties.
The distinction is not academic. Stark is a strict-liability referral prohibition — subsection (a)(1) has no intent element whatsoever. That is precisely why it is not, and could not be, a crime.
So if an auditor or an agent describes your compensation arrangement as a “Stark problem,” what you are facing at that moment is civil and regulatory. It becomes a criminal problem only if the same conduct is separately charged under the Anti-Kickback Statute or under § 1347. A lawyer who tells you that you are “being charged under Stark” has described something that cannot happen.
The False Claims Act, 31 U.S.C. § 3729, is also civil. It carries treble damages and per-claim penalties rather than prison, and it requires no proof of specific intent to defraud — “reckless disregard of the truth or falsity of the information” is enough. It is frequently the vehicle by which a Stark problem becomes very expensive without ever becoming criminal.
What conduct actually gets charged?
Federal health care fraud indictments tend to come out of a recognizable set of fact patterns. Knowing which one you are in tells you a great deal about the appropriate defense for the particular scenario.
1. Billing for services never provided
The most obvious of issues. There are a variety of scenarios here, including billing for too many patients in a day, for treatment that was never provided, or for billing individually for combined treatment, such as group therapy. The government relies heavily on the submitted documentation and then will identify specific patients who never received the claimed service.
2. Billing for services that were provided but were not medically necessary
Medical necessity is a clinical judgment. Disagreement between a treating physician who saw the patient and a government expert reviewing a chart three years later is not fraud, and saying so plainly is often the case.
3. Upcoding and unbundling
Coding disputes prosecuted as crimes. Whether the practice used a certified coder, followed published guidance, and documented its reasoning is important here. One thing we have seen is that it is extremely important that a provider understand the concepts of billing and codes, as a biller's incentive to increase revenue is only a few clicks away for them. Many times, oversight of a biller results in a provider's life being flipped upside down.
4. Kickbacks dressed as legitimate arrangements
Medical directorships with no actual duties, above-market rent, marketing fees that move with referral volume. The government has no problem making its own judgments and indicting on what you thought was a completely legitimate arrangement.
5. Telemedicine and lead-generation schemes
Physicians paid per consult to sign orders for braces, genetic tests or topical creams generated by a marketing company. The recurring question is what the physician knew about where the patients came from.
6. Patient recruiting and brokering
Payments to recruiters, or inducements to patients themselves through routine copay waivers or cash. Patient recruiting is an extremely common allegation in the Metro Detroit area and a focus of the Justice Department's Health Care Fraud Unit and its Midwest Strike Force, which operates in the Eastern District of Michigan.
7. Documentation and supervision failures
Pre-signed orders, templated notes, staff signing for supervising physicians. Frequently a compliance failure that the government reframes as criminal intent. Sometimes this is coupled with prescription fraud for a two-pronged conspiracy.
How is the sentence calculated?
You have to know what your exposure is if you are a provider charged with health care fraud. Federal judges calculate a guideline range under the Federal Sentencing Guidelines and must consider it, but the Guidelines are advisory — the judge is not bound by them. Your criminal history category, combined with the offense level, produces a guideline range expressed in months. In a health care fraud case, the higher the loss figure, the higher the range.
Fraud offenses are sentenced under U.S.S.G. § 2B1.1. The base offense level is 6 for most health care offenses — level 7 applies only where the statutory maximum is 20 years or more, which § 1347 does not reach in an ordinary case. From that low base, the loss table at § 2B1.1(b)(1) does nearly all of the work:
- More than $6,500 — add 2 levels
- More than $15,000 — add 4
- More than $40,000 — add 6
- More than $95,000 — add 8
- More than $150,000 — add 10
- More than $250,000 — add 12
- More than $550,000 — add 14
- More than $1,500,000 — add 16
- More than $3,500,000 — add 18
- More than $9,500,000 — add 20
- More than $25,000,000 — add 22
A practice that starts at level 6 and is assigned $2 million in loss sits at level 22 before anything else is counted. There is then a further enhancement specific to these cases at § 2B1.1(b)(7): where the defendant was convicted of “a federal health care offense involving a government health care program” and the loss to that program exceeded $1,000,000, add 2 levels; more than $7,000,000, add 3; more than $20,000,000, add 4.
The single most important sentence in the Guidelines for these cases
Application Note 3(E)(viii) provides:
“In a case in which the defendant is convicted of a federal health care offense involving a government health care program, the aggregate dollar amount of fraudulent bills submitted to the government health care program shall constitute prima facie evidence of the amount of the intended loss, i.e., is evidence sufficient to establish the amount of the intended loss, if not rebutted.”
Read that closely. The government gets to start from the total amount billed. That is an enormous advantage, and it is why the loss figure in a health care case is so often wildly larger than anything anyone actually received. When we are advising a provider on this issue, it is usually the biggest shock, because it is so inequitable. Why should you be responsible for so much when you received far less?
That is where careful strategic argument at sentencing comes in. Note the words the guideline itself uses — prima facie, and “if not rebutted.” The rebuttability is written into the text. And because the Guidelines are advisory, a judge who is shown a genuine disparity between the billed figure and what the provider actually received is free to impose a different sentence. Pointing out that kind of inequity can be very persuasive in the Eastern District of Michigan.
The Guidelines define loss as “the greater of actual loss or intended loss,” and define intended loss as the pecuniary harm the defendant “purposely sought to inflict.” That word — purposely — is doing work, and it is worth arguing about.
Further enhancements at § 2B1.1(b)(2) apply for ten or more victims, for mass-marketing, and for substantial financial hardship to victims. We litigate guideline disputes both in the district court and on appeal to the Sixth Circuit. It is imperative that you have a functional understanding of these issues when making the important decisions in your case.
Why is there an identity theft count in my indictment?
Aggravated identity theft is a charge prosecutors file because of its mandatory consecutive prison term. We have seen 18 U.S.C. § 1028A used as leverage to press defendants toward pleas they would not otherwise have made. It carries a two-year prison term that must run consecutively to everything else, the court cannot place the defendant on probation for it, and the court cannot reduce the underlying sentence to compensate for it.
The charge is narrower than it used to be. In Dubin v. United States (2023), a unanimous Supreme Court held that § 1028A(a)(1) is violated only where the misuse of another person's means of identification “is at the crux of what makes the underlying offense criminal, rather than merely an ancillary feature of a billing method.” Dubin was itself a Medicaid overbilling case. The Court explained that there, “the crux of petitioner's overbilling was inflating the value of services actually provided, while the patient's means of identification was an ancillary part of the Medicaid billing process.”
That holding matters directly to health care providers. Where a patient identifier appears in a claim simply because that is how claims are submitted, Dubin is a serious obstacle to the count. It is worth examining every aggravated identity theft charge in a billing case against that standard. We have defended these counts at trial.
Will the government take my assets?
Yes, and forfeiture here is mandatory rather than discretionary. Under 18 U.S.C. § 982(a)(7), a court sentencing a person convicted of a “Federal health care offense” “shall order the person to forfeit property, real or personal, that constitutes or is derived, directly or indirectly, from gross proceeds traceable to the commission of the offense.”
Note the words gross proceeds. Not profit. Not what you kept. The government's position is that the entire amount received on tainted claims is forfeitable, with no deduction for overhead, salaries, rent, or the actual cost of delivering care. Combined with the substitute-asset provisions, that reaches houses, retirement accounts and untainted business assets.
There is an argument buried in the definitions. Section 24(a)(1) makes certain offenses — including § 1347 and § 1035 — “Federal health care offenses” categorically. But the offenses listed in § 24(a)(2), which include mail fraud, wire fraud, § 371 conspiracy and § 1349, qualify only “if the violation or conspiracy relates to a health care benefit program.” Where a forfeiture hangs on an (a)(2) offense, that conditional is litigable.
What happens to my ability to practice?
This is the part that ends careers, and it is governed by a statute most people have never heard of.
Under 42 U.S.C. § 1320a-7(a), the Secretary of Health and Human Services must exclude — not may, must — anyone convicted of a criminal offense related to the delivery of an item or service under Medicare or a state health care program, and anyone convicted of a felony “relating to fraud, theft, embezzlement, breach of fiduciary responsibility, or other financial misconduct” in connection with the delivery of a health care item or service.
The minimum period of a mandatory exclusion “shall be not less than five years.” If you have one prior qualifying conviction, the minimum becomes ten years. With two or more, exclusion is permanent.
There is a narrow waiver where an individual is “the sole community physician or sole source of essential specialized services in a community” — but it must be requested by a program administrator, it applies only to that program, and the statute provides that the Secretary's decision “shall not be reviewable.” It should not be relied on.
Separately, the Secretary may exclude permissively under § 1320a-7(b) in seventeen further categories, including a misdemeanor conviction relating to a controlled substance, license revocation, and claims for excessive charges or unnecessary services. Permissive exclusions under the first three categories carry a benchmark period of three years.
The practical consequence is simple and severe. A physician can receive probation in the criminal case and still lose the ability to bill any federal health care program for five years, which for most practices is indistinguishable from losing the practice. Exclusion has to be part of the strategy from the beginning — including in how the offense of conviction is negotiated — not addressed afterwards.
What else gets charged alongside it?
Health care fraud rarely appears alone. Common companion counts include conspiracy under 18 U.S.C. § 1349, false statements under 18 U.S.C. § 1035 (five years), kickbacks under 42 U.S.C. § 1320a-7b(b) (ten years), aggravated identity theft under 18 U.S.C. § 1028A (two years, consecutive), and money laundering under 18 U.S.C. § 1956 (twenty years) or § 1957 (ten years, for transactions over $10,000).
The § 1349 point deserves emphasis, because it surprises people. Charging conspiracy under § 1349 rather than the general conspiracy statute means the conspiracy count carries the full penalty of the object offense. The statute says so directly: a person who conspires “shall be subject to the same penalties as those prescribed for the offense, the commission of which was the object of the attempt or conspiracy.” A conspiracy count is not the lesser count.
How do these cases begin in the Eastern District of Michigan?
Rarely with an arrest. Almost always with one of these:
- A provider charged in a separate health care fraud conspiracy tells prosecutors that you committed fraud
- A subpoena from HHS-OIG, or a civil investigative demand under the False Claims Act
- A payment suspension or prepayment review that appears without explanation
- A UPIC or ZPIC audit that escalates
- Agents appearing at employees' homes in the evening, without contacting the practice
- A qui tam complaint filed under seal by a former employee, sometimes years earlier
The United States Attorney's Office for the Eastern District of Michigan has increased health care fraud enforcement in recent years, working alongside the Justice Department's Health Care Fraud Unit and its Midwest Strike Force. The Department of Justice describes the Midwest Strike Force as operating “in collaboration with the United States Attorneys' Offices for the Eastern District of Michigan and the Northern District of Illinois,” prosecuting schemes involving “doctors and other medical professionals, medical corporations, telemedicine, diagnostic testing, physical and occupational therapy, pharmacies, laboratories, opioids, prescription drugs, and medical devices, among others.” Some of the prosecutors staffing these cases have been brought in from other districts.
In Detroit, many of these cases have been brought against physicians and other providers connected to group homes and adult foster care. We have seen them prosecuted in a number of ways, including alleged overbilling of psychiatric services, billing for services never received by incapacitated patients, and combinations of allegations that produced a multi-month trial involving tax charges alongside health care and prescription fraud elements.
In our experience these cases reward early, active defense work rather than waiting to see what the government does. Very few of them go to trial, which is worth asking any prospective lawyer about directly. There are defense strategies specific to health care fraud — attacking the loss calculation, the medical necessity opinion, the scienter requirement now required under the amended pattern instruction — that should be considered in any case, and motion practice in this district is worth taking seriously.
What should you do now?
The window between the first signal and an indictment is the most valuable period in the entire case, and it is the one most often wasted. It is when documents can be preserved before anyone is accused of destroying them, when a coherent account can be assembled while memories are intact, and when it is still possible to persuade a prosecutor that what they are looking at is a billing dispute rather than a fraud.
It is also when most of the damage gets done. Employees agree to interviews without counsel. Records get “cleaned up.” A well-meaning explanation to an agent becomes a false statement charge under 18 U.S.C. § 1001, which carries five years on its own.
- Speak with an experienced federal criminal lawyer immediately.
- Be aware that staff will be interviewed. They are entitled to their own attorneys.
- Do not call the agent to explain. It is the most common way a bad case becomes a worse one.
- Get your own billing data and understand it before someone else frames what it means.
- Start your own investigation. We use private investigators for exactly this.
- Go on the offensive. The government certainly will be.
- Build a strategy with your lawyer. The most common problem we see is a defense with no strategy, reacting to the government instead of setting the terms.
Frequently asked questions
Can I be charged if my billing company submitted the claims?
Yes. Section 1347 reaches a scheme, and you need not have pressed the key yourself. But reliance on a billing company — particularly a certified one you paid for its expertise — goes directly to whether you acted knowingly and willfully, which is the element the government must prove.
Is a billing mistake a crime?
No. Error is not fraud. The government must prove you acted knowingly and willfully, and under the Sixth Circuit's amended pattern instruction that now includes knowledge that the conduct was unlawful. That said, remember that government prosecutors and agents likely have a different idea of whether you committed fraud. Volume of errors is often used to suggest intent, which is why the pattern, and the advice you relied on, matter so much.
Can a doctor go to prison for a Stark Law violation?
No. Stark, at 42 U.S.C. § 1395nn, is a civil statute with no criminal penalty. Criminal exposure arising from the same arrangement would come from the Anti-Kickback Statute or § 1347.
What is the sentence for health care fraud?
Section 1347 carries up to 10 years, and up to 20 if the violation results in serious bodily injury. In practice the sentence is driven far more by the loss figure under U.S.S.G. § 2B1.1 than by the statutory maximum.
How does the government calculate loss?
Under Application Note 3(E)(viii), the aggregate amount of fraudulent bills submitted is prima facie evidence of intended loss. That is a starting point the defense can rebut, and the guideline says so in its own text.
Will I lose my medical license and my ability to bill Medicare?
A conviction for a health care fraud felony triggers mandatory exclusion under 42 U.S.C. § 1320a-7(a) for a minimum of five years, ten with one prior conviction, and permanently with two. Licensure is a separate state proceeding. Both have to be managed alongside the criminal case, not after it.
What is a civil investigative demand?
A pre-suit investigative tool under the False Claims Act. Receiving one means the government is examining you civilly — and often means a parallel criminal inquiry exists that you have not been told about.
Can I keep practicing while under investigation?
In the Eastern District of Michigan it is common for a provider's pretrial release conditions to prohibit billing federal health care programs. So while the court is unlikely to take your ability to practice medicine, you may be unable to bill any government benefit program while the case is pending.
By James W. Amberg, Amberg & Amberg, PLLC, 32121 Woodward Ave, Suite PH, Royal Oak, MI 48073 · (248) 681-6255 · Michigan bar no. P68564.