Health Care Fraud Sentencing Stats | Criminal Defense Blog

Each year, the United States Sentencing Commission (USSC) produces final sentencing statistics for specific offense categories.  The following post will detail the report’s findings for all reported health care fraud convictions; including, average sentences, average losses and other important demographic information.

Health care fraud is an umbrella term that encompasses all deceitful activity that results in improper reimbursements for medical services or supplies.  Common indictable actions include kickback schemes for medical referrals, billing for services that were not rendered, billing for medically unnecessary services, and billing for products that were not provided.  All these courses of conduct involve a misrepresentation to Medicare or other insurance provider to obtain unwarranted reimbursements.

The unlawful distribution of scheduled substances is often thrown under the health care fraud umbrella; however, those schemes are not considered in the sentencing statistics.  They are separate offenses that normally do not involve defrauding a government or private entity.  The offense occurs when a physician or clinic provides scheduled substances (normally opiates) outside the normal course of practice.  For instance, a physician that prescribes opioids to patients without seeing them or otherwise confirming a diagnosis.

There is one important limitation to the report’s numbers.  The report only considers cases that have been reported to the USSC.  The USSC does not go out and compile data from the United States Clerk or other central repository.  They only report on the cases submitted to them.

Health Care Fraud – Monetary Loss

For 2021, the following relevant offense characteristics have been produced by the United States Sentencing Commission:

• Health care fraud convictions decreased by 28.7% from 2017 (471) to 2021 (336). It is not known if this decrease was the result of less criminal activity, less prosecution focus, system slow down during COVID, or a lower reporting figure.  Only final convictions and sentences are reported by the USSC.
• All health care fraud cases will result in a loss to the government or private entity. This loss controls the final sentencing recommendation under the guidelines.

The median loss in 2021 was just under $1,000,000.  Since 2017, the median loss in health care fraud cases has hovered around the $1,000,000 mark.

• 8% of cases involved a loss under $150,000 and 17.3% involved losses that exceeded $9,500,000.
  • It is important to note a potential deception in the loss numbers. If a defendant pleads pursuant to a plea agreement, it is common practice to negotiate a loss for sentencing purposes.  The USSC only reports the loss from the presentence investigation report, which at times, will consist of an agreed loss instead of the actual loss involved in the scheme.

Health Care Fraud – Offender Specific Data

The following details the demographic profile of health care fraud offenders:

• 8% of health care fraud offenders were men.
• 3% of offenders were white, 18.8% were black, 18.5% were Hispanic, and 9.3% were from other races.
• 3% of health care fraud offenders were United States citizens.
• 92% were sentenced in criminal history category I, indicating the vast majority had no major criminal history.

Under the sentencing guidelines, an offender can receive a harsher sentencing recommendation if certain facts are present in the case.  The following lays out the common grounds for upward enhancements:

• 7% were enhanced due to the number of victims or the excessive harm caused.
• 36% for the scheme involving a government health care program and the loss exceeding $1,000,000.
• 7% for using sophisticated means to execute or conceal the offense.
• 2% for using an unauthorized form of identification.
• 8% for assuming a leadership role in a conspiracy.
• 7% for abusing a position of public trust or using a special skill (ie, being a physician).
• 1% for obstructing or impeding the administration of justice.

Under the sentencing guidelines, an offender can receive a lower recommendation if mitigating factors are present in the offense characteristics:

• 4% of offenders received relief for being a minor or minimal participant in a conspiracy.

The USSC statistics cover reported cases across the United States.  The top five districts for health care fraud prosecutions were:

• Northern District of Alabama (31 cases)
• Southern District of Florida (30 cases)
• Northern District of Texas (22 cases)
• Southern District of Texas (21 cases)
• Central District of California (17 cases)

These numbers are somewhat confusing as they only consider the cases reported by district.  New York, Texas, California and the Gulf Coast strike forces handle the majority of cases in the United States.

Health Care Fraud – Sentence and Trends

For 2021, health care fraud offenders had the following punishment:

• The average sentence was 30 months in federal custody.
• 5% of offenders were sentenced to prison time.
• 9% of offenders carried a mandatory penalty; 30.88% of those offenders safety valved under the mandatory minimum sentence.
• 1% of the offenders were sentenced within the guideline range.
• 58% received a departure under § 5K1.1 for substantially assisting the government with an average reduction of 66.3%.
• 8% received some other downward departure under the sentencing guidelines with an average reduction of 66.5%.
• 6% offenders received a downward variance under 18 U.S.C. § 3553 with an average reduction of 56.6%.

The final USSC statistics take a global look at the sentencing trends over the last four years for health care fraud prosecutions:

• The average sentence imposed decreased over the past five years.
• The average guideline minimum has fluctuated over the last five years, hovering between 50-60 months.
• The average sentence decreased from 37 months in 2017 to 30 months in 2021.

The federal government has set up a vast network of law enforcement to combat waste within government insurance programs.  These strike forces are tasked with ferreting out persons who deceive the government for monetary gain.  Each year, numerous large-scale prosecutions take place across the country.  It is always interesting to peer into the final numbers to see trends in health care fraud prosecutions and the sentences that follow.