Mail Fraud in The Healthcare Industry
What is mail fraud?
Mail fraud commonly involves the use of the mail, telephone or internet to defraud another of money or property. Federal law defines mail fraud as a scheme to defraud healthcare insurers who use the mail through any public or private mail service, including the U.S. Postal Service. (18 U.S.C. § 1341).
The mail fraud statute requires three elements: (1) the existence of a scheme to defraud (2) involved the use of the mails to execute the scheme and (3) that the defendant had the specific intent to commit fraud. (18 U.S.C.§ 1341). In order to prevail, the federal prosecutor must satisfy all of these elements.
The intent element has always been the hardest for the government to prove in court. A good litigator must make the government prove their criminal case beyond a reasonable doubt.
What are the different types of mail fraud schemes?
- Fraudulent Health and Medical Products
- Financial Fraud (charity donation fraud, health insurance fraud, credit card fraud, Ponzi schemes & investment fraud, land fraud, etc.).
- Fraud Against Older Americans
- Employment Fraud
- Telemarketing Fraud
- Sweepstakes and Lottery Fraud
- Work from Home Scam
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Who is affected by mail fraud?
The United States government bears the economic consequences of mail fraud claims.
Medicare and Medicaid patients are often affected by mail fraud charges. Patients overbilled for fraudulent claims often bear the costs of higher health insurance premiums. This harms the healthcare system as fraud drains the government of federal dollars.
The United States Postal Service is also affected in that it has to use government money to pay for mail that is used for an improper purpose.
What are the negative effects of mail fraud in the healthcare industry?
Abusive healthcare claims drain funds from the U.S. Treasury. Mail fraud costs the government about $40 to 50 billion dollars per year. Medicare and Medicaid, therefore, have less federal funds available to pay for legitimate healthcare claims.
Who is commonly charged with mail fraud?
All medical professionals, including physicians, dentists, nurses, pharmacists, physician assistants, and other medical service employees are commonly charged with mail fraud.
Who usually files mail fraud charges?
The United States Postal Service and other government agencies such as the Department of Justice and Office of Inspector General, U.S. Attorney and FBI are often involved in the prosecution of healthcare fraud cases.
State and federal prosecutors often file healthcare claims on behalf of Medicare and Medicaid patients. The government often initiates criminal professional healthcare claims. Whistleblowers, as employees’ of healthcare organizations commonly, assist the government in this process.
How is your profession involved with federal programs or insurance?
Doctors, nurses and other medical professionals often bill through the federal government programs of Medicare and Medicaid. Claims are submitted to the healthcare providers insured for medical reimbursement on health care claims. The two largest medical insurance providers in New York State are Aetna and Blue-Cross Blue-Shield.
Why are you vulnerable to mail fraud claims?
You, as a medical professional often bill Medicare and Medicaid to obtain reimbursement for your healthcare services. These insurers often pay you for patient services, medical equipment, and other necessary medical services.
However, sometimes mistakes are made that affects the way you bill for insurance. Insurance billing errors have the potential over time to lead to healthcare investigations. Therefore, it is very important to accurately document the time and medical services provided by you as a medical professional. Careless bookkeeping often leads to mail fraud investigations
What kind of investigative measures are conducted in mail fraud cases?
- Audit– A corporation can be exposed to a multi-year financial audit by the Internal Revenue Service.
- Internal Investigation– The healthcare provider can also be subject to a multi-year investigation by the United States Postal Service with Federal Postal Service Inspectors. This investigation can often lead to formal recommendations and the issuance of a final report. The report could refer out the allegations for a further government investigation.
- Government Investigation– The Government investigation could be conducted at the State and or Federal Level. The Office of Inspector General, FBI, or Department of Justice could become involved in investigating violations of federal law for mail fraud under 18 USC § 1341.
- Criminal Charges: The Department of Justice or NYS Attorney General’s office might decide to pursue criminal charges against the involved physicians. Hospitals, clinics or other healthcare providers.
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What are the criminal penalties imposed under the federal mail fraud statute?
- Statutory Penalties: $250,000 for every single count of mail fraud. These fines could be enhanced up to one million dollars per occurrence for fraud on a financial institution. Administrative costs can also be imposed by the U.S. Postal Service or other government investigative agencies.
- Criminal Punishment: The Mail Fraud statute imposes a potential 30-year federal prison sentence for financial institutions convicted of mail fraud. The statute carries a 5-year sentence for individuals convicted of mail fraud. It is a federal felony offense. Lesser Punishment includes probation, and lower terms of federal incarceration.
- Restitution: May also be imposed to repay victims for the defendants’ fraudulent acts. This restitution may involve millions of dollars lost from abusive healthcare over-billing practices
What are the defenses to mail fraud?
1.) The Heightened Pleading Requirement Defense
2.) The Good Faith Defense
Typical cases and types of illegal action and defenses often appear in mail fraud cases:
Involve a medical clinic overbilling for chiropractic service through medical invoices that charge for treatment that isn’t occurring or isn’t occurring at the rate of frequency that the bills indicate. A chiropractor should not bill his client for ultrasounds 4 times per week when his patient is only showing up one time per month for therapy.
This type of practice could expose the chiropractor, referring lawyer and numerous hosts of other professionals to mail fraud allegations. You could be the doctor or hospital. Heightened pleading requirements to prove mail fraud by investigative authorities have made it harder to prosecute these cases.
The defense of heightened pleading requirements has made it somewhat harder to prosecute these cases. Our legal team could force the government to plead the fine details of their cases through extensive discovery practices. Our experienced practitioners could file the right motions and even possibly help you to win your case before trial. Motion practice often leads to early victories.
US v. Tencer. There, illegal action occurred when a chiropractor billed a three-year-old patient for forty-nine visits to his office when the patient only made three visits to his office. The doctor paid his staff and other patients to refer people to his office.
Furthermore, the chiropractor billed patients for services and treatments that often were ever performed or rarely occurred. (United States v. Tencer, 107 F.3d 1120, 1127 [5th Cir. 1997]). These red flags led the chiropractor to serve a 33-month jail term and to forfeit over a million dollars in business profits.
This healthcare provider had to shut down. Don’t let this happen to you. A possible defense to mail fraud would be a pre-trial motion arguing that the government presented insufficient evidence to satisfy the prongs of the mail fraud statute.
Concerned a medical equipment provider that submitted 25 million dollars to Medicare to obtain medical equipment and supplies that were not needed or medically necessary (U.S. Fadojutimi ).
The owner of the DME company received a 76-month prison sentence in a California jail and had to forfeit millions of dollars in business income to the government. Keep in mind that each count of mail fraud can carry a potential 30-year prison term. A good faith defense to the fraud might negate the specific intent element of mail and healthcare fraud.
If the government can prove intent, they can’t make out a case to defraud through the mails. Federal case law has held that good faith negates the requisite element of intent. Our firm always applies this defense to all of its mail fraud cases and makes sure that juries know about it when necessary.
Psychiatrists have lost their licenses and gone to jail over mail fraud in the healthcare industry. A psychiatrist who billed to see six patients for six hours based upon 30 minutes of actual services was charged with healthcare and mail fraud. His med payments didn’t make his office or family happy.
Now, this doctor is facing potential discipline with either consequence of loss of licensure of professional suspension. (https://ag.ny.gov/press-release/ag-schneiderman-announces-arrest-nyc-psychiatrist-who-stole-more-230k-medicaid ). Even if he gets probation, he will be responsible for substantial fines and restitution to the government. This doctor’s reputation will be ruined.
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During Hurricane Andrew, an anonymous individual used FEMA letterhead and sent letters targeting civic organizations, hospitals, and healthcare organizations.
Let’s assume that each of these letters on fake FEMA letterhead asked for $25 donations that represented that the money would be used only by the federal government to support FEMA in helping Texas hurricane survivors.
The bottom line is that lying Larry uses these letters to line his own pockets. Let’s assume that Larry puts $700,000 in a phony business account in another name. This is mail fraud. Larry could be sentenced to a maximum of 30 years in jail on each count of healthcare fraud.
He could pay a substantial fine and be debarred from his business. By example, if Larry owned a printing press, his business could be seized, and all of its yearly profits could be seized in a forfeiture proceeding.
Larry’s computers and laptops might be seized. If those computers had porn, Larry would be looking at additional federal charges along with mail fraud. A plea agreement to two counts of mail fraud and a count of child pornography could land Larry in federal prison for a long time.
He would later have to deal with the consequences of fines, federal parole, and even an enhanced sentence as an identity mail fraud offender.
Larry might want to secure white-collar criminal representation early in his case. His legal team might want to force the government to show a connection between the mailing of the FEMA letters and a scheme to defraud.
Larry’s lawyer might interpose a specific intent defense by saying that Larry’s good faith belief in the truth of his scheme negated the fraud.
The Supreme Court has recognized this defense, and many federal courts have held that “good faith negates the requisite element of intent to defraud.” New York Courts have held this defense to be a complete defense to fraudulent intent. (United States v. Gole, 21 F. Supp. 2d. 161,164, 167 [E.D.N.Y. 1997], United States v. Somerstein, 971 F. Supp. 736- 741 [E.D.NY. 1997]).
What are some examples of mail fraud in the healthcare industry?
The most common instance of medical mail fraud involves a hospital or clinic overbilling for medical services. This overbilling comes in the form of false bills or claims for service. Providers often bill for different healthcare procedures with multiple billing codes. The providers then receive excessive reimbursements in response to false and inflated medical claims.
Negative effects: In New York State, many psychiatrists, nurses, and other health care providers have had to pay restitution, face professional discipline and even incarceration for committing acts of mail and health care fraud.
Actions: Mail and healthcare fraud actions involve submitting false bills or claims for service or falsifying medical records or reports. Mail fraud schemes can also involve senior citizens. Social Security scams have often been used to defraud senior citizens
Intent: Federal law requires that a perpetrator or defendant must act with the intent to deceive or to scheme or defraud a person or entity. Modern case law has expanded the definition of intent in mail fraud as the “intent to deprive another person of his or her property or honest services” with the U.S. Postal Service. (18 U.S.C. § 1346 )[West 1998].
Here are some cases on mail fraud:
The New York Attorney General’s Office prosecuted many cases against New York Psychiatrists. All of the cases involved Medicaid and Medicare healthcare fraud charges. For example, on October 4, 2000, a Washington Heights Psychiatrist pled guilty to grand larceny, a felony in the second degree.
The doctor billed one thousand false reimbursement applications for Medicaid patients. The claims falsely stated that the doctor provided longer psychotherapy sessions substantially to each patient than were provided. Dr. Redondo overbilled Medicaid in the sum of $60,0000. (Manhattan Psychiatrist Pleads Guilty to Overbilling Taxpayers for $60,00,” Office of New York State Attorney General, Press Release, 4 Oct. 2000).
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A Brooklyn Psychiatrist was subsequently charged for healthcare fraud in September 2001. Dr. Glicklich stole $100,0000 by overbilling Medicaid Patients. The doctor billed a thousand dollars per day when he was often on vacation or out of the office.
In fact, this physician only worked five hours, one day per week but billed out as if he had seen 20 patients per day and given each patient one hour’s time for each individual psychotherapy session.
The doctor received 5 years’ probation and was ordered to pay $70,000 in restitution. (Brooklyn Psychologist Charged with $100,00 Fraud Following Undercover Probe,” Office of the New York State Attorney General Press Release, 6, Sept. 2001; State of New York: Department of Health Administrative Review Board).
In May 2002, a Bronxville Psychiatrist was charged with healthcare fraud for overbilling Fortis Insurance Company for psychiatric treatment sessions. Dr. Forester submitted $60,000 for insurance claims based on treatments that were alleged to have occurred six times per week. In fact, the treatments only occurred two to three times per week.
This doctor received a sentence of one month in prison, five months of home confinement, and two years’ supervised release with a $10,000 fine. “Licensed Psychiatrist Arrested for $60,000 of Overbilling to Health Insurer for Non-Existent Treatments, “New York State Insurance Department, 13 May 2002; Melissa Klein, Psychiatrist’s License Suspended for Fraud, “The Journal News, 10 July 2003.”
In March of 2005, a Long Island Psychiatrist was charged and convicted of insurance fraud for overbilling a phantom patient for 30 psychiatric sessions that never took place. He overbilled $3,677 for the sessions. (“The Incredible Shrinking Scam,” New York Post, 30 Mar. 2005).
Several federal court opinions have led to serious indictments of medical professionals for mail and healthcare fraud. In US v. Gabinskaya, 829 F.3d 127, 131 (2016) doctors were charged with healthcare fraud for overbilling by healthcare providers.
The doctors repeatedly overbilled for services that were not provided or simply overbilled for the reasonable value of their medical services. These doctors’ offices made false statements through the mail in their billing practices. This is mail fraud. The fraud led to serious accompanying RICO charges with mandatory jail terms.
Where can you seek legal assistance?
Doctors, nurses, physician assistants, and other healthcare professionals should seek legal help by contacting their local county or state bar association. They should also feel free to confer with the corporate counsel of their hospital organization or employer.
Every state has lawyer networks with lists of qualified health care defense attorneys. If you are audited, investigated, or accused of healthcare fraud, you should obtain proactive legal representation through Avvo.com.
What should legal representation be available for you?
Proactive representation is required for alleged perpetrators of health and mail fraud. Physicians, nurses, and other healthcare professionals should always take precautionary measures when audited, investigated, or formally charged of healthcare fraud.
These individuals have a right to secure counsel who can preserve their confidential information, avoid incriminating statements, and properly handle patient and community perceptions within their medical communities.
Proper care should be taken to ensure that each accused practitioner or provider is properly informed as to their rights and defenses in criminal court and as to all appropriate compliance with existing legal requirements under 18 U.S.C. § 1341.
Why you need us in your corner?
We can defend you in serious federal healthcare crimes resulting in mail fraud charges.
Mail fraud is a federal felony offense can carry up to thirty years in prison. We are experienced healthcare defense counsel who can vigorously represent your interests in federal court.
Overall, it is vital that you retain an experienced healthcare attorney who can provide the best possible legal defense for you and your healthcare organization.
This attorney should be able to file the right pretrial motions to suppress all incriminating statements and ensure full compliance with all legal health care requirements. If you are audited, investigated or accused of health care fraud, you need to fight the right law firm who will fight to protect your federal and constitutional rights.