Mishandling an accusation of healthcare fraud can cost you and your facility millions of dollars in fines and potentially result in a prison sentence. Knowing how prosecutors coordinate civil and criminal investigations can save your practice, reduce individual and corporate penalties, and help you navigate your career seamlessly through a complex legal battle.
Lowther Walker is a leading national healthcare fraud defense law firm, and within this post, we explain the difference between civil and criminal healthcare fraud.
Criminal Healthcare Fraud
Criminal healthcare fraud is prosecuted under federal and state statutes and requires proof that the defendant acted with criminal intent.
The primary federal healthcare fraud statute is 18 U.S.C. § 1347, which prohibits knowingly and willfully executing a scheme to defraud any healthcare benefit program. Additional charges frequently accompanying fraud indictments include wire fraud, mail fraud, money laundering, identity theft, and violations of the Anti-Kickback Statute (which carries criminal penalties under 42 U.S.C. § 1320a-7b).
The defining feature of criminal enforcement is the burden of proof: the government must establish guilt beyond a reasonable doubt, the highest standard in American law. This requires prosecutors to demonstrate not merely that a billing error occurred, but that the defendant acted with specific intent to deceive.
Negligence, administrative carelessness, or good-faith disagreements about coding practices are insufficient grounds for criminal conviction.
| Criminal Healthcare Fraud | Civil Healthcare Fraud | |
| Primary Statute | 18 U.S.C. § 1347 | False Claims Act (FCA) |
| Burden of Proof | Beyond a reasonable doubt | Preponderance of the evidence |
| Intent Required | Specific criminal intent to deceive | “Knowingly” (includes deliberate ignorance or reckless disregard) |
| Imprisonment | Up to 10 years per count (up to life if death results) | None |
| Financial Penalties | Up to $250,000 (individuals) or $500,000 (entities) per count, plus asset forfeiture | Treble (triple) damages plus up to $28,619 per false claim |
| Program Exclusion | Mandatory exclusion from Medicare and Medicaid | Permissive exclusion or mandatory Corporate Integrity Agreements (CIAs) |
| Whistleblower Role | Not typically driven by whistleblower suits | Frequently initiated by private citizens via qui tam lawsuits |
Criminal Penalties
A criminal conviction for healthcare fraud carries some of the most severe consequences in federal law:
- Imprisonment.
A conviction under 18 U.S.C. § 1347 carries up to 10 years in federal prison per count. If the violation resulted in serious bodily injury, the sentence increases to up to 20 years. If death resulted, the sentence can extend to life imprisonment. Sentences are served in federal custody and are often consecutive when multiple counts are charged.
- Criminal fines
Individuals can be fined up to $250,000 per count under federal sentencing guidelines, with entities facing fines up to $500,000 per count. Fines are in addition to — not instead of — imprisonment.
- Forfeiture
The government can seize assets traceable to the fraud, including bank accounts, real property, vehicles, and business interests. Criminal forfeiture is a powerful tool that can leave defendants with little remaining wealth after resolution.
- Restitution
Courts must order full restitution to victims, including Medicare, Medicaid, and private insurers, for all amounts fraudulently obtained. Restitution obligations survive bankruptcy.
- Exclusion from federal healthcare programs
A criminal conviction for a healthcare offense triggers mandatory exclusion from Medicare and Medicaid under the OIG’s authorities.
For physicians and other licensed providers, this is frequently a career-ending consequence, as it prohibits participation in the programs that fund the majority of American healthcare.
- Loss of professional licensure
State medical, nursing, and pharmacy boards routinely initiate disciplinary proceedings upon a criminal conviction, often resulting in suspension or permanent revocation of the provider’s license to practice.
- Collateral consequences
A federal felony conviction can affect child custody, immigration status, housing eligibility, and the ability to obtain professional liability insurance.
Civil Healthcare Fraud
Civil enforcement operates under a different and more expansive legal framework. The centerpiece of federal civil enforcement is the False Claims Act (FCA), 31 U.S.C. §§ 3729–3733.
The FCA imposes liability on any person or entity that knowingly submits a false or fraudulent claim for payment to the federal government. The burden of proof is preponderance of the evidence — more likely than not — making civil actions far easier to bring and win than criminal prosecutions. The definition of “knowingly” encompasses actual knowledge of falsity and also deliberate ignorance or reckless disregard of the truth.
A unique feature of the FCA is the qui tam provision, which allows private citizens, relators, or whistleblowers to file suits on the government’s behalf and receive between 15% and 30% of any recovery.
Many of the largest healthcare fraud settlements in history were initiated by internal whistleblowers.
Civil Penalties
Civil liability for healthcare fraud can be financially devastating, even without a single day of imprisonment:
- Treble damages
The FCA mandates damages of three times the amount fraudulently billed to the government. A scheme that overbilled Medicare by $2 million produces a damages exposure of $6 million before any per-claim penalties are added.
- Per-claim civil penalties
The FCA imposes a separate penalty for each false claim submitted. Financial penalties range from approximately $13,946 to $27,894 per false claim.
A provider who submits thousands of improper claims over several years can face penalty exposure that dwarfs the actual overbilling amount.
- Civil monetary penalties under the OIG
Separate from the FCA, the OIG can impose civil monetary penalties of up to $20,000 per false claim, plus assessments of up to three times the amount improperly claimed, through administrative proceedings — without filing suit in federal court.
- Program exclusion
While mandatory exclusion follows a criminal conviction, the OIG also has permissive exclusion authority in civil cases. An excluded provider cannot bill Medicare or Medicaid directly or indirectly, cannot be employed by any entity that does, and any claims submitted while excluded are themselves false claims, creating additional FCA exposure.
- Corporate integrity agreements (CIAs)
Instead of exclusion, the OIG often requires providers to enter into CIAs as a condition of settlement. CIAs impose years of compliance monitoring, reporting obligations, independent review organization audits, and high administrative costs. Violation of a CIA can trigger immediate exclusion.
- Reputational and contractual consequences
Civil settlements are public record. Private insurers, hospital credentialing committees, and managed care organizations routinely terminate contracts following a civil fraud settlement, compounding the financial harm beyond the settlement amount itself.
Healthcare Audits Can Turn Civil Healthcare Fraud Investigations into Criminal Cases
Many healthcare fraud matters begin as civil audits or administrative reviews before evolving into criminal investigations. A Medicare audit, UPIC audit, RAC audit, Medicaid audit, Civil Investigative Demand (CID), or whistleblower complaint may initially focus on billing irregularities, overpayments, or False Claims Act exposure.
However, if investigators believe the evidence proves intentional misconduct, such as upcoding, phantom billing, kickbacks, or falsified medical records, the matter may be referred to the criminal divisions of the U.S. Department of Justice, Federal Bureau of Investigation, or Office of Inspector General for further review.
Call a Healthcare Fraud Lawyer Immediately Following These Indicators of Criminal Exposure
- Receipt of a grand jury subpoena instead of a routine audit request
- Contact from the Federal Bureau of Investigation, Office of Inspector General, or criminal prosecutors, rather than only Medicare contractors
- Execution of a search warrant at a medical office, laboratory, pharmacy, or billing company
- Investigators requesting interviews with employees, physicians, or former staff members
- Allegations involving kickbacks, patient recruiters, phantom billing, or falsified medical records
- Multiple agencies begin coordinating the investigation, including the U.S. Department of Justice, CMS, and OIG
- Sudden Medicare payment suspension or freezing of provider reimbursements
- Requests for large volumes of financial records, emails, text messages, or internal compliance documents
- Investigators focusing on intent, internal communications, or efforts to conceal billing practices
- Questions about physician compensation arrangements, referral relationships, or potential violations of the Anti-Kickback Statute or Stark Law
- Audits involving high-risk enforcement areas such as telemedicine, laboratory testing, durable medical equipment (DME), behavioral health, or opioid prescribing
- Requests to preserve records or warnings against document destruction, which may indicate concern about obstruction of justice
Facing a Healthcare Fraud Investigation? Call Lowther | Walker for Urgent Responses
Healthcare fraud investigations are among the most complex and high-stakes matters in federal law, sitting at the intersection of criminal defense, regulatory compliance, civil litigation, and professional licensing.
Lowther Walker brings deep, focused experience in healthcare fraud defense. Our attorneys understand how federal prosecutors build these cases, how the OIG conducts exclusion proceedings, and how to navigate parallel civil and criminal exposure simultaneously.
We represent physicians, dentists, pharmacists, hospitals, billing companies, and healthcare executives across the full spectrum of fraud allegations — from early-stage subpoenas to trial.
If you believe you are under investigation, have received a Civil Investigative Demand, have been named in a qui tam suit, or have been contacted by a government agent, do not wait and do not respond without counsel.
Contact Lowther Walker today for a confidential consultation. Your practice, your license, and your freedom may depend on it.
Am I Facing Civil or Criminal Healthcare Fraud Charges? Your Questions Answered
I received a subpoena for billing records from the Department of Justice. Does that mean I’m being criminally prosecuted?
Not necessarily. A subpoena for records is an investigative tool used in both civil and criminal proceedings. A grand jury subpoena (issued under a federal grand jury’s authority) is a stronger indicator of criminal exposure. A Civil Investigative Demand is typically associated with a False Claims Act investigation.
Government investigators interviewed my staff without telling me. What does that mean?
It typically means an investigation is already underway and has progressed beyond its earliest stages. The fact that agents interviewed employees before approaching you directly may indicate they are building a factual record and assessing your organization’s exposure. Do not attempt to speak with those employees about what was discussed, as that could create obstruction issues. Retain counsel immediately.
I received a letter from the OIG saying I am being considered for exclusion. Is this civil or criminal?
OIG exclusion proceedings are administrative and civil in nature, not criminal. However, mandatory exclusion is automatically triggered by certain criminal convictions, and the OIG also has permissive authority to exclude based on civil findings.
An exclusion letter does not mean criminal charges are coming, but it does mean the government has identified conduct it considers sanctionable. The exclusion process has formal response deadlines, and missing them can waive important rights.
The government has offered me a civil settlement. Does accepting it protect me from criminal prosecution?
No. A civil settlement under the False Claims Act does not provide immunity from criminal prosecution arising from the same conduct. The Department of Justice’s civil and criminal divisions operate independently, and a civil resolution does not bind federal prosecutors.
In some cases, cooperation in civil proceedings has been used against defendants in subsequent criminal cases. Any settlement negotiation should be handled by counsel who can assess and, where possible, address criminal exposure simultaneously.
Can I be held liable for Medicare billing errors made by a billing contractor?
In criminal proceedings, the government must prove you acted knowingly and willfully. Mere billing errors are generally not enough for conviction. In civil proceedings under the FCA, however, the standard is lower. If you were in a position to know about the errors,
if your compliance program was inadequate, or if red flags were ignored, you may face civil liability even without direct personal knowledge of each false claim. Supervisory liability and corporate liability are well-established doctrines in FCA enforcement.
A former employee filed a qui tam lawsuit against my practice. What happens now?
A qui tam complaint is initially filed under seal, so you may not be notified immediately. The government then investigates and decides whether to intervene and take over the case. If the government intervenes, it takes the lead in litigation, and the relator continues as a party.
Can I face both civil and criminal charges for the same conduct?
Yes. This is one of the most important and commonly misunderstood aspects of healthcare fraud enforcement. The same billing scheme can simultaneously be the subject of a criminal indictment, a False Claims Act civil suit, and OIG exclusion proceedings.
What should I do right now if I think I’m under investigation?
Stop. Do not discuss the matter with colleagues, staff, insurers, or government agents. Do not destroy, alter, or reorganize any documents. Document preservation obligations arise as soon as litigation or investigation is reasonably anticipated. Contact a healthcare fraud defense attorney immediately.
An experienced attorney can often assess the nature and stage of an investigation, identify your exposure across civil and criminal tracks, and position you for the best possible outcome.
