Can Your Medical Practice be Liable for Aggravated Identity Theft?
Sadly, the answer is yes. In fact, the number of federal cases involving aggravated identity theft among healthcare providers has risen significantly. In a single year, the use of false identities and ghost patients in the commission of healthcare fraud increased by 22%.
This increase in cases of medical aggravated identity theft is due in large part to the federal government focusing on healthcare fraud and related offenses.
Both the Federal Bureau of Investigation (FBI) and the Office of the Inspector General (OIG) have named healthcare fraud and crimes incidental to healthcare fraud as major and growing concerns. For a number of reasons, the resulting climate surrounding aggravated identity theft should concern medical practitioners.
Most importantly, the growing incentive to audit medical practices more regularly and investigate any anomaly or indication of aggravated identity theft poses an ongoing threat.
Why should you be concerned?
The fact that your practice has undergone an investigation can harm your practice and future career. Audits, government investigations, and subpoenas can cause reputational harm and elicit complicated questions from patients and fellow practitioners. The ramifications of criminal charges for aggravated identity theft and its related offenses is even greater and may include:
- Loss of your medical license or board certification required to offer medical treatment
- Expulsion from industry organizations and medical associations
- Loss of employment or ability to participate in a medical group
- Reputational harm and loss of confidence among patients and other practitioners
- Steep financial implications following civil lawsuits
- Criminal punishment, such as incarceration in federal prison
If you are the target of an audit, internal investigation, or government investigation in conjunction with suspicion of medical aggravated identity theft, your first response should be to engage a federal defense attorney. Do that quickly because the very initiation of such investigatory processes can culminate in serious federal criminal charges that impact all aspects of your life.
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So, Exactly What Is Medical Aggravated Identity Theft?
Aggravated identity theft and healthcare fraud occur in two ways. The first scenario occurs when a medical practitioner makes use of a social security number, identifying information, and Medicare or Medicaid numbers to submit fraudulent or inaccurate claims to a government program.
To do this, the practitioner creates a “ghost patient” and submits bogus information representing that person as the recipient of fraudulent medical treatment. This unlawful practice utilizes information that represents a person who is not actually in their care.
The second form of medical aggravated identity theft occurs when a patient uses a fraudulent social security number, identifying information, and Medicare or Medicaid number to obtain care from a physician and then makes a false claim. This type of aggravated identity theft is typically perpetrated by non-medical professionals as a means of obtaining prescription drugs unlawfully.
For you, it is important to remember that both of these forms of aggravated identity theft can implicate you as a medical practitioner. Whether you are charged as the direct perpetrator of the fraud or as a knowing facilitator of the use of fraudulent and false identification, the aftermath can be severe and long-lasting.
Who Is Harmed by Medical Aggravated Identity Theft?
Government Healthcare Programs Take a Hit
By definition, medical aggravated identity fraud is an offense against the government or a government program. It cannot result from your submission of a fraudulent or false identity in support of a private insurance claim. Therefore, the impact on the government healthcare program is the most immediate and obvious.
Each use of false identification or creation of a ghost patient leads to a separate unlawful claim against Medicare and Medicaid. The federal government estimates that between 3% and 10% of the annual Medicare and Medicaid budget is spent on fraudulent claims, with a large portion of those claims being submitted for services that are not actually rendered and ghost patients.
Taxpayers and Patients Are Forced to Pay the Difference
When healthcare fraud involves government programs, its reach extends far beyond just the specific government program involved. Individual taxpayers and patients with legitimate needs for access to those programs are also impacted.
Taxpayers’ money is used to supplement more than the underprivileged or high-need health care covered by Medicare or Medicaid because the losses these programs incur through medical aggravated identity theft also represents a significant waste of tax dollars.
As a result, other patients in government programs are harmed because a lower standard of care is provided to legitimate patients. This also leads to today’s rising frustration with affected government programs.
Lastly, Medicare and Medicaid patients suffer direct harm when fraudulent schemes involve aggravated identity theft because it can impact their ability to receive needed treatment. In certain instances, patients whose identities had been stolen were arrested and accused of obtaining prescription drugs illegally or making fraudulent Medicare or Medicaid claims.
Impact on Other Practitioners
As a medical practitioner, you must maintain an awareness of the potential effects today’s increasing use of identity theft to defraud government healthcare programs can have on your practice. This ongoing trend places practitioners such as yourself at risk for investigation and prosecution resulting from honest record-keeping mistakes or administrative errors.
Because these kinds of cases are used to shine a broad spotlight on the entire healthcare industry, it is an area that is aggressively monitored by government investigators and the Office of the Attorney General.
Federal Law Criminalizes Aggravated Identity Theft
Federal law contains a specific statute that prohibits and criminalizes aggravated identity theft. Found in the U.S. Code at 18 U.S.C. Section 1028(A), the statute was passed in 2004 as a means of establishing a more severe deterrent to identity theft than the federal Identity Theft and Assumption Deterrent Act of 1998.
The Aggravated Identity Theft statute is not restricted to medical identity theft. It can also apply to the use of identifying information in connection with specified federal crimes or terrorist activities; however, it is commonly used as the basis for charging medical practitioners with identity theft crimes.
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Conviction of Aggravated Identity Theft Brings Steep Negative Consequences
Medical aggravated identity theft is a federal offense. By definition, aggravated identity theft has to support and be in furtherance of a separate federal offense. When applied to medical practitioners, it is a form of healthcare fraud. As such, federal law considers it a more severe crime than such other types of identity theft as the use of a false identity to make a purchase.
Taken together, conviction of aggravated identity theft and healthcare fraud can lead to:
- Many years in federal prison
- Significant financial losses
- Long-term detriment to both your personal life and career
Statutory Penalties and Criminal Punishment
Under 18 U.S.C. Section 1028(A), a statutory minimum punishment is established for those convicted of aggravated identity theft in relation to any other federal offense, like healthcare fraud. This minimum is 24 months, or two years, and to be served in federal prison. During sentencing, however, a federal judge may impose a longer sentence related to these charges.
In addition to the prescribed minimum 24-month prison sentence, if you are convicted of medical aggravated identity theft, you may be susceptible to a criminal fine.
In addition to incarceration in federal prison, a practitioner convicted of aggravated identity theft can be punished by a substantial fine. Certain instances of prolonged or substantial healthcare fraud and use of fraudulent identification can cause this fine to surpass $1,000,000. Even so, this is not the only financial repercussion you should be concerned about.
If you are accused of aggravated identity theft, you can also be sued in civil court. Damages awarded in certain civil lawsuits have similarly been upwards of $500,000, or even $1,000,000.
Loss of Medical License and Removal from Government Program
If you are convicted of a federal crime – particularly in connection with healthcare fraud or other fraudulent activity – that conviction will most likely result in suspension or revocation of your medical license.
In many states, conviction of a felony or federal offense constitutes professional misconduct, and will generally subject you to investigation and review by the applicable licensing board in your state.
Most states are particularly concerned with crimes involving moral turpitude or deceit. Licensing boards view these crimes – including aggravated identity theft – with more disfavor than other property or misdemeanor offenses, because of the very nature of the crime. This equates to a higher probability that, if you are convicted, your medical license or certification will be revoked.
Additionally, the Office of the Inspector General (OIG) and the Department of Health and Human Services (HHS) are specifically tasked with removing practitioners who commit fraud against a government program from these systems.
If you are accused or convicted of certain types of healthcare fraud, you will be placed on the List of Excluded Individuals and Entities and precluded from providing covered services or filing Medicare or Medicaid claims.
The names of individuals excluded from Medicare are also entered in the Excluded Parties List System. That means, if you are convicted of fraud, you will be prevented from contracting with the federal government in any capacity or for any purpose.
Future Employment and Reputation
As a medical professional, a conviction for medical aggravated identity theft will make it necessary for you to minimize the amount of permanent damage done to your future employment opportunities and reputation.
Because fraud is a crime of deceit or deception, potential patients, as well as other practitioners and medical groups are likely to view your offense as a reflection on your character. Practitioners must be proactive to mitigate this repercussion.
Process of Detection, Accusation, and Lawsuit
Which Entities Investigate and Prosecute Aggravated Identity Theft?
The U.S. Department of Health and Human Services is tasked with identifying and investigating civil claims and criminal activity involving fraud or other crimes against Medicare and Medicaid programs. These investigations are handled through the Office of the Inspector General, a division of the U.S. Department of Health and Human Services.
The Center for Medicare and Medicaid Services (CMS) also conducts certain investigations and monitors suspicious activity involving medical aggravated identity theft. As a separate division of the U.S. Department of Health and Human Services, CMS undertakes investigations separately or in conjunction with the Office of the Inspector General.
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Several years ago, CMS conducted an in-house study of its response to medical aggravated identity theft and identified several potential areas for improvement in its detection and notification practices.
Since that study was concluded, CMS has dedicated significant resources to become more proficient at detecting and responding to cases of medical aggravated identity theft.
As the federal entity tasked with the protection of American consumers, the Federal Trade Commission (FTC) also investigates potential cases of medical aggravated identity theft.
Because medical aggravated identity theft involves the use of another person’s identity to obtain unnecessary treatment or equipment, or to create a fake patient, the FTC’s goal is to protect individuals whose identity is fraudulently utilized in these instances.
How is Medicare Fraud Detected and Investigated?
A large number of government and internal investigations relating to aggravated identity theft are initiated based on tips or information submitted by a member of the general public. The FTC encourages individuals to file a complaint with the FTC if they are:
- Billed for services they did not receive
- Contacted by a debt collector attempting to secure payment of an unknown debt
- Charged for prescriptions that were not provided
- Contacted about unscheduled doctors or physical therapy visits
Financial audits conducted by an independent, third-party accountant or government entity, including the IRS are intended to uncover instances of aggravated identity theft. In addition, audits performed by CMS as part of their healthcare fraud detection efforts can also reveal the use of fraudulent or false identities in conjunction with Medicare claims.
The Office of the Inspector General utilizes the same methods to detect medical aggravated identity theft as those used to investigate potential healthcare fraud. These are data collection, monitoring and analysis, and closer policing of the overall medical community.
Full government investigations can be launched on the basis of either data or community information.
Other federal agencies – including the FBI, Food and Drug Administration, Internal Revenue Service, and Federal Trade Commission – can launch separate and independent investigations into cases of medical aggravated identity theft if they impact a division of their agency.
What Happens If Charges of Aggravated Identity Theft Are Filed?
Government Officials Make an Arrest
If you are suspected, and subsequently investigated for aggravated identity theft, you will be arrested by government officials before any formal charges are entered against you in federal court. Often, the FBI will be the arresting agency, and an arrest for a federal offense can be made either with a warrant or – by special agents – without a warrant.
Initial Appearance and Arraignment
If a warrant has been issued for your arrest as a named person, it is likely that a federal grand jury has already indicted you on specific charges, including aggravated identity theft. In certain instances, however, the federal prosecutor must still obtain a federal indictment. This takes place during an initial appearance which must occur within 72 hours of your arrest.
Arraignment follows, at which time you must plead guilty or not guilty.
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Hire an Experienced and Capable Defense Lawyer
While many criminal defense attorneys are experienced in trying federal cases – including those involving identity theft and fraud – those who are prepared to handle cases of healthcare fraud and medical aggravated identity theft are fewer in number. Hiring a capable and knowledgeable attorney is crucial to the successful defense of your federal case.
Develop a Strategy for Your Defense
The sooner you engage an attorney and begin developing a defense strategy, the better your outcome will be. Your lawyer must be thoroughly briefed on the specific facts of your case before he or she can begin to develop a clear and winning defense.
Defense Against Charges of Aggravated Identity Theft
Lack of Link to a Crime
Proving a case of aggravated identity theft – in a medical context or otherwise – has two broad requirements. These are:
- Unlawful use of another person’s identity
- Proof that the intent of the use of that identity was to commit a crime
One valid defense to aggravated identity theft is the argument that the falsified or fraudulent identity cannot be linked to the alleged crime.
Beyond a Reasonable Doubt
As in every criminal case, the prosecuting attorney has the burden of proving – beyond a reasonable doubt – that you knowingly committed each element of the crime. A skilled defense attorney can help construct a strong defense that refutes the prosecution’s evidence against you and creates a reasonable doubt in the minds of the jury.
Medical Aggravated Identity Theft in the News
In 2017, a federal court in Texas handed down a 27-year federal prison sentence for a case involving healthcare fraud, aiding and abetting aggravated identity theft, and aiding and abetting false statements related to a healthcare matter.
The case involved the use of false identities to request financial remuneration from Medicare and Medicaid for powered wheelchairs, powered scooters, and related accessories.
This seemingly severe sentence was entered against the defendant in this case for merely aiding and abetting the perpetrator of the actual criminal offense. Even so, the defendant was sentenced to 27 years in federal prison and over $3,200,000 in fines.
One of the biggest medical aggravated identity theft cases tried and documented in recent years was investigated, charged, and prosecuted in the U.S. Territory of Puerto Rico.
In that instance, the FBI uncovered healthcare fraud and aggravated identity theft committed by the owner of a durable medical equipment company and three physicians in Puerto Rico’s capital city of San Juan.
The owner of the company routinely utilized the names of Medicare beneficiaries to invoice Medicare for specific durable medical equipment. The supposed beneficiaries, however, would never receive – or even request – the equipment.
The three physicians who also participated in the scheme convinced patients to order equipment they did not need or simply utilized their patients’ information fraudulently. The total amount of the fraud uncovered was in excess of $1,200,000.
What First Steps Should You Take If You Are Accused of Aggravated Identity Theft?
If you ever find yourself accused of aggravated identity theft, you need a strong, strategic response to these criminal charges.
Discuss Potential Ramifications and Strategy With Your Medical Practice.
The other members of your medical practice must be immediately informed of any investigation, subpoena, or formal charges of healthcare fraud and related crimes.
These accusations will come to light eventually, and it is best if your medical group has already formed a cohesive strategy before a federal prosecutor submits requests for records, demands depositions, or begins to engage in due diligence.
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Hire an Attorney
The sooner you engage experienced legal counsel to guide your defense against your medical aggravated identity theft charges, the stronger your defense will be. An attorney who has specific prior experience in medical aggravated identity theft and healthcare fraud will be invaluable to you during all stages of your criminal and/or civil case.
Carry Out Your Own Internal Investigation or Audit.
The full scope of any potential fraud must be thoroughly understood before a formal complaint is filed against you by the government. The best way to gather this information is to conduct an internal investigation or commission an independent accounting firm to conduct an in-depth audit.
Consider the Impact on Your Community and Patients.
Handling media response and fallout should be a major focus of attention for you and your medical practice. Mitigating the damaging effects of press involvement and addressing community concerns are two essential and immediate requirements.
If You Are Charged with Medicare Fraud
Whether you are embroiled in a government investigation, subpoenaed by a federal prosecutor, or already facing criminal charges for medical aggravated identity theft, your most important need is the guidance of a top criminal defense attorney.
An attorney familiar with the specifics of healthcare fraud and federal white-collar crimes can build a comprehensive and inclusive defense and help you minimize long-term ramifications.