18 USC 1347: A Complete Guide to Federal Health Care Fraud Laws

Table of Contents#

1. What is 18 USC 1347? An Overview
2. Key Elements of a 18 USC 1347 Violation
3. Common Types of Health Care Fraud Covered by 18 USC 1347
4. Penalties for Violating 18 USC 1347
5. Enforcement of 18 USC 1347: Who Investigates and Prosecutes?
6. Defenses Against 18 USC 1347 Charges
7. Recent Notable Cases
8. How to Stay Compliant with 18 USC 1347
9. Conclusion
10. References

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1. What is 18 USC 1347? An Overview#

18 USC 1347 is a federal criminal statute that prohibits intentional fraud against health care benefit programs. It expanded the scope of prior health care fraud laws to cover both public programs (e.g., Medicare, Medicaid, TRICARE) and private insurance plans.

The statute’s core goal is to:

• Protect the financial integrity of health care systems
• Prevent misuse of taxpayer-funded health programs
• Deter providers from exploiting patients for financial gain
• Ensure patients receive appropriate, necessary care

Unlike civil laws (such as the False Claims Act), 18 USC 1347 focuses on criminal liability, meaning violators face imprisonment and fines in addition to civil penalties.

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2. Key Elements of a 18 USC 1347 Violation#

To secure a conviction under 18 USC 1347, prosecutors must prove all four elements beyond a reasonable doubt:

Element 1: Knowingly and Willful Execution of a Scheme#

The defendant must have acted intentionally, with knowledge that their conduct was fraudulent. Accidental billing errors or honest mistakes do not qualify. For example, a provider who purposefully submits false claims is acting willfully, but a staff member who miscodes a service due to training gaps is not.

Element 2: Scheme to Defraud or Obtain Property via False Pretenses#

The statute covers two types of misconduct:

• Defrauding a health care benefit program: Any plan designed to deceive the program (e.g., billing for services not provided).
• Obtaining money/property via false pretenses: Using lies or misleading statements to get the program to pay for services, items, or treatments.

Element 3: Connection to Health Care Delivery or Payment#

The scheme must be directly linked to the delivery of health care services, items, or payments. For example, kickbacks for patient referrals qualify because they influence the delivery of care, but fraud unrelated to health services (e.g., embezzling from a clinic’s general fund) does not.

Element 4: Targeting a "Health Care Benefit Program"#

This includes any plan or program that provides health care benefits, whether through insurance, reimbursement, or self-funding. Examples include:

• Federal programs (Medicare, Medicaid, VA health care)
• Private insurance plans (employer-sponsored, individual market)
• Self-insured employer plans

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3. Common Types of Health Care Fraud Covered by 18 USC 1347#

18 USC 1347 applies to a wide range of fraudulent practices. Below are the most prevalent:

Phantom Billing#

Billing for services, tests, or procedures that were never provided to patients. For example, a clinic submitting Medicare claims for physical therapy sessions that never occurred.

Upcoding#

Billing for a more expensive service or procedure than was actually performed. For instance, a doctor coding a routine office visit (Level 2) as a complex consult (Level 5) to receive higher reimbursement.

Unbundling#

Separately billing for services that are typically bundled into a single charge. For example, a hospital billing individually for each component of a surgery instead of using the bundled surgical code.

Kickbacks#

Paying or receiving money, gifts, or incentives in exchange for patient referrals or billing for services. A common example is a doctor receiving cash for referring patients to a specific diagnostic lab.

Falsifying Patient Records#

Altering or creating fake patient records to justify false claims. For example, adding false symptoms to a patient’s file to bill for unnecessary tests.

Prescribing Unnecessary Medications/Treatments#

Ordering medications, devices, or procedures that are not medically necessary to generate billing. For instance, a dentist prescribing unnecessary crowns to bill Medicaid.

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4. Penalties for Violating 18 USC 1347#

Penalties under 18 USC 1347 are severe and vary based on the severity of the offense:

Criminal Penalties#

• Base Offense: Up to 10 years in federal prison and/or fines of up to $250,000 for individuals,$500,000 for organizations.
• Serious Bodily Injury: If the fraud results in serious harm to a patient, the penalty increases to up to 20 years in prison.
• Death: If the fraud leads to a patient’s death, the offender faces life imprisonment.

Civil Penalties#

Most 18 USC 1347 cases are paired with civil charges under the False Claims Act (FCA), which adds:

• $11,665 to$23,331 per false claim
• Triple damages (three times the amount the program was defrauded)
• Restitution (repayment of the stolen funds)

Administrative Penalties#

Violators may also face:

• Exclusion from participating in federal health care programs (a career-ending penalty for most providers)
• Loss of professional licenses

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5. Enforcement of 18 USC 1347: Who Investigates and Prosecutes?#

Multiple federal agencies collaborate to enforce 18 USC 1347:

Department of Justice (DOJ)#

The DOJ’s Criminal Division and U.S. Attorneys’ Offices prosecute criminal cases under 18 USC 1347. They work closely with other agencies to build evidence against offenders.

Federal Bureau of Investigation (FBI)#

The FBI leads criminal investigations into health care fraud, using forensic accounting, wiretaps, and witness interviews to uncover schemes.

Office of Inspector General (OIG)#

The HHS-OIG conducts audits, investigations, and compliance reviews of Medicare and Medicaid programs. It also publishes guidance for providers to avoid fraud.

Centers for Medicare & Medicaid Services (CMS)#

CMS administers Medicare and Medicaid, and uses data analytics to detect suspicious billing patterns and refer cases to law enforcement.

Qui Tam Whistleblowers#

Under the FCA, individuals with knowledge of health care fraud can file "qui tam" lawsuits on behalf of the government. Whistleblowers receive 15–30% of any recovery and are protected from retaliation.

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6. Defenses Against 18 USC 1347 Charges#

If accused of violating 18 USC 1347, several defenses may apply:

Lack of Intent#

Accidental billing errors or honest misunderstandings of coding rules do not constitute "willful" conduct. For example, a provider who relies on outdated coding guidelines may not be liable.

Lack of Knowledge#

If a staff member committed fraud without the provider’s knowledge, the provider may not be held responsible (unless they were grossly negligent in supervising staff).

Materiality#

The false representation must be significant enough to influence the program’s decision to pay. A minor error in a patient’s address, for example, is not material.

Good Faith#

If the defendant acted in good faith, believing their billing was accurate, this can be a valid defense. For instance, a provider who followed guidance from a billing consultant may not be liable.

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7. Recent Notable Cases#

2023: Florida Telehealth Company $1.2 Billion Fraud Settlement#

A Florida-based telehealth company agreed to pay $1.2 billion in restitution for billing Medicare for unnecessary genetic tests. The company used kickbacks to induce doctors to order tests for patients who did not need them, violating 18 USC 1347 and the FCA.

2022: California Doctor Sentenced to 12 Years in Prison#

A California physician was sentenced to 12 years in prison for running a kickback scheme. He received cash and gifts in exchange for referring patients to a diagnostic lab, resulting in $20 million in fraudulent Medicare claims.

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8. How to Stay Compliant with 18 USC 1347#

For Health Care Providers#

• Implement a comprehensive compliance program (aligned with OIG guidelines)
• Conduct regular internal audits of billing and coding practices
• Train staff on health care fraud laws and proper coding
• Designate a compliance officer to oversee adherence
• Encourage anonymous reporting of suspicious activity
• Stay updated on changes to Medicare/Medicaid billing rules

For Patients#

• Review your Explanation of Benefits (EOB) carefully to ensure all charges are accurate
• Question any services or procedures you did not receive
• Report suspicious activity to the HHS-OIG or your insurance provider

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9. Conclusion#

18 USC 1347 is a critical tool in the fight against health care fraud, protecting patients, taxpayers, and the integrity of the U.S. health care system. For providers, understanding its requirements is essential to avoid criminal liability. For patients, knowing the signs of fraud can help you protect yourself and report misconduct. By working together, we can reduce fraud and ensure health care resources are used for their intended purpose: providing quality care to those who need it.

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10. References#

1. U.S. Code, Title 18, Section 1347: https://www.law.cornell.edu/uscode/text/18/1347
2. Department of Justice, Health Care Fraud: https://www.justice.gov/criminal-fraud/health-care-fraud
3. HHS Office of Inspector General, Compliance Guidance: https://oig.hhs.gov/compliance/index.asp
4. DOJ Press Release: "$1.2 Billion Settlement Resolves Allegations of Fraudulent Genetic Testing Scheme" (2023): https://www.justice.gov/opa/pr/12-billion-settlement-resolves-allegations-fraudulent-genetic-testing-scheme