Updated: January 2026
Healthcare fraud is a federal offense that carries civil and criminal penalties. Healthcare providers, business owners, and others accused of healthcare fraud must engage experienced federal defense counsel to avoid practice-threatening consequences.
Penalties for healthcare fraud correspond to the increasing resources the federal government places behind fraud enforcement. If you’re convicted of healthcare fraud. This post explains healthcare fraud penalties and covers the full scope of healthcare fraud charges under federal and state laws.
What Are the Penalties for Healthcare Fraud?
| Statute | Offense Title | Summary | Potential Penalties |
|---|---|---|---|
| 18 U.S.C. §1347 | Healthcare Fraud | Making false statements or promises to defraud health care programs, including government and private insurers. | Up to 10 years in prison (20 years if serious bodily injury; life if death results) and fines up to $250,000. |
| 18 U.S.C. §1349 | Healthcare Fraud Conspiracy | Criminalizing agreements between two or more people to commit health care fraud, even if the plan is never executed. | Subject to the same penalties as the underlying offense (e.g., if conspiring to commit healthcare fraud, the penalty is up to 10 years). |
| 18 U.S.C. §§1341 & 1343 | Wire and Mail Fraud | Fraud involving mail or electronic communications; often used to increase potential penalties. | Up to 20 years in prison (up to 30 years if the violation affects a financial institution or involves disaster relief) and fines up to $250,000 (or $1,000,000). |
| 18 U.S.C. §287 | False Claims Act (Criminal) | Submitting false claims to the government, such as billing for services not rendered or not medically necessary. | Up to 5 years in prison and significant criminal fines. |
| 42 U.S.C. §1320a-7b | Anti-Kickback Statute | Prohibiting the exchange of value for referrals for services covered by federal health care programs. | Up to 10 years in prison and fines up to $100,000 per violation. |
Healthcare fraud encompasses deceptive practices designed to obtain improper payment from healthcare programs. The scope of federal healthcare fraud covers government-sponsored programs (Medicare, Medicaid, TRICARE) and private insurance companies. Fraudulent activities include:
- Billing for services never rendered
- Upcoding (billing for more expensive services than provided)
- Performing unnecessary medical procedures
- Unbundling (billing separately for procedures usually billed together)
- Falsifying patient diagnoses to justify treatments
- Accepting kickbacks for patient referrals
Healthcare Fraud Penalties (18 U.S.C. §1347)
The Healthcare Fraud Statute criminalizes knowingly executing or attempting to execute schemes to defraud healthcare benefit programs. It applies to fraud targeting both government and private insurance programs.
Penalties for Healthcare Fraud:
- Up to 10 years imprisonment
- Substantial fines
- Potential sentence enhancement if the violation results in serious bodily injury (up to 20 years) or death (up to life imprisonment)
The final sentence typically depends on factors such as financial loss, the defendant’s role, and criminal history.
18 U.S.C. §1347 Case Example
In United States v. S.I., HHS-OIG investigated a healthcare provider for Healthcare Fraud and Aggravated Identity Theft based on allegations that the provider participated in a “telemedicine” kickback scheme that defrauded Medicare of approximately $30 million in reimbursements for medically unnecessary durable medical equipment and genetic testing.
As defense counsel, Lowther | Walker conducted a thorough investigation. After several presentations to investigating agents and prosecutors, the firm convinced the government not to prosecute the client.
Health Care Fraud Conspiracy Penalties (18 U.S.C. §1349)
18 U.S.C. §1349 targets agreements between two or more individuals to commit healthcare fraud, even if the scheme was never successfully executed. Prosecutors need only prove the existence of an agreement to charge the target under 18 U.S.C. §1349.
Penalties for Healthcare Fraud Conspiracy:
- Up to 10 years imprisonment
- Fines corresponding to the contemplated fraud amount
- Asset forfeiture of proceeds connected to the conspiracy
Conspiracy charges are flexible enforcement tools for prosecutors because they can implicate individuals with limited direct involvement in fraudulent activities.
18 U.S.C. §1349 Case Example
In United States v. J.P., et al., the Department of Justice’s Criminal Division, Fraud Section, charged multiple defendants in a $1.4 billion healthcare fraud, wire fraud, and money laundering conspiracy. The case is the largest healthcare fraud case the DOJ has ever prosecuted, involving toxicology laboratories allegedly using rural and critical-access hospitals in a pass-through billing scheme.
After a six-week trial with forty-two witnesses and over 500 exhibits, the jury failed to reach a unanimous verdict, resulting in a mistrial. The government retried the case with different expert witnesses and an additional cooperating witness, but the jury ultimately found the defendant not guilty on all counts.
False Claims Act Penalties (18 U.S.C. §287)
The False Claims Act prohibits submitting false claims to the federal government. In healthcare contexts, this typically involves billing for services and products that were not provided or medically necessary.
Penalties under the False Claims Act:
- Up to 5 years imprisonment
- Fines up to $250,000 for individuals
- Civil penalties of $5,500 to $11,000 per false claim
- Treble damages (three times the government’s loss)
The False Claims Act also includes qui tam provisions that allow whistleblowers (known as “relators”) to file lawsuits on behalf of the government and potentially receive 15-30% of any recovery.
Example 18 U.S.C. §287 Case
In US v. F.R., a case involving multiple federal investigations, DEA and IRS-CI searched a medical doctor’s pain clinic and residence for evidence of overprescribing controlled substances to patients and evading business and personal income taxes. The agents seized approximately $1.2 million in cash from the residence and close to $1.8 million from various bank accounts.
As defense counsel, Lowther | Walker convinced the Department of Justice not to prosecute for drug offenses (which carried a potential 97-121 months in prison), secured dismissal of the civil asset-forfeiture case (recovering the full $3 million with interest), and negotiated a plea to tax evasion with a sentence of probation despite prosecutors’ arguments for imprisonment.
Lowther | Walker also convinced the medical board not to suspend or revoke the physician’s medical license.
Anti-Kickback Statute Penalties (42 U.S.C. §1320a-7b)
The Anti-Kickback Statute prohibits knowingly offering, paying, soliciting, or receiving remuneration to induce referrals for services covered by federal healthcare programs.
Penalties under the Anti-Kickback Statute:
- Up to 5 years imprisonment
- Fines up to $25,000 per violation
- Civil penalties of up to $50,000 per kickback
- Program exclusion (barred from participating in federal healthcare programs)
Unlike other fraud statutes, the Anti-Kickback Statute applies exclusively to services billed to government healthcare programs, not private insurance.
Stark Law Penalties (Physician Self-Referral Law) (42 U.S.C. § 1395nn)
While the Anti-Kickback Statute is a criminal law, the Stark Law is a strict liability civil statute. It prohibits physicians from referring Medicare or Medicaid patients for “Designated Health Services” (DHS) to any entity with which they (or an immediate family member) have a financial relationship, unless a specific exception applies.
“Strict liability” means the government does not need to prove you intended to break the law. If a prohibited financial relationship exists and a referral was made, you are liable, even if it was an honest administrative mistake.
Penalties for Stark Law Violations:
- Denial of Payment: Medicare is prohibited from paying for any claim resulting from an improper referral.
- Refund Obligation: The provider must refund 100% of the money collected for those services. This often totals millions of dollars in “overpayments” that must be paid back.
- Civil Monetary Penalties: Up to $15,000 (adjusted for inflation) for each service provided.
- Circumvention Schemes: Fines of up to $100,000 for schemes intentionally designed to bypass the law.
- False Claims Act Liability: Stark violations can serve as the basis for False Claims Act lawsuits, triggering treble (3x) damages.
Civil Monetary Penalties Law (CMPL) Statute: 42 U.S.C. § 1320a-7a
Under the healthcare fraud laws, the Office of Inspector General (OIG) has the authority to investigate medical providers and impose civil penalties even when the Department of Justice (DOJ) declines to pursue criminal charges. These are administrative penalties, meaning they are handled by the agency rather than a criminal court.
The CMPL covers a wide range of misconduct, including falsifying medical records, providing medically unnecessary services, and employing individuals who are already excluded from federal healthcare programs.
Common CMPL Penalties:
- General False Claims: Up to $20,000 per item or service wrongfully claimed.
- Kickbacks: Up to $100,000 per violation for paying or receiving kickbacks.
- Treble Assessment: The government may assess damages of 3 times the amount claimed for each item or service.
- Exclusion: Mandatory or permissive exclusion from Medicare/Medicaid participation.
The “Loss Amount” Driver (USSG § 2B1.1)
Under the Federal Sentencing Guidelines (USSG § 2B1.1), the single most critical factor determining a prison sentence is the “Loss Amount”—the total financial value of the fraud.
Federal judges start with a “Base Offense Level” (usually 6 for fraud) and then add points based on the loss. The higher the offense level, the longer the recommended prison sentence.
The table below shows how quickly the “points” stack up based on the financial value of the fraud:
| Loss Amount (Greater of Actual or Intended) | Offense Level Increase |
| $6,500 or less | +0 |
| More than $550,000 | +14 |
| More than $1,500,000 | +16 |
| More than $3,500,000 | +18 |
| More than $9,500,000 | +20 |
| More than $25,000,000 | +22 |
| More than $65,000,000 | +24 |
Note: An increase of roughly 6 levels can double a potential prison range. For example, a loss of over $3.5 million (+18 levels) can easily shift a sentence from probation to 4–5 years in federal prison.
Healthcare Fraud Sentencing Factors
When sentencing healthcare fraud offenses, federal judges consult the United States Sentencing Guidelines, which consider the following factors:
Loss Amount
The financial value of the fraud significantly impacts sentencing, with larger fraud schemes resulting in longer sentences.
Sophisticated Means
Providers can face higher sentences if the fraud involves complex or sophisticated methods to conceal the crime.
Role in the Offense
Organizers and leaders face enhanced penalties compared to minor participants.
Abuse of Position of Trust
Healthcare professionals who abuse their position of trust receive longer sentences.
Acceptance of Responsibility
Defendants who plead guilty and cooperate with authorities may receive reduced sentences.
Don’t Let Healthcare Fraud Penalties Impact Your Career and Practice – Schedule a Free Consultation with Lowther | Walker
Federal agents are now prioritizing healthcare fraud enforcement. Stakeholders such as the Medicare Fraud Strike Force bring to bear the entire data and analytics toolkit of the federal government. The penalties reflect the government’s commitment to protecting the integrity of healthcare programs and the patients they serve.
As enforcement efforts intensify and new fraud schemes emerge, staying informed about healthcare fraud laws and penalties remains essential for doctors, practice owners, and billing teams in the U.S. healthcare industry. The consequences of a healthcare fraud violation extend far beyond the courtroom, potentially ending medical careers and permanently damaging reputations medical service providers have built over decades of public service.
If you have questions about a potential healthcare fraud case involving your practice, now is the time to act. Lowther | Walker serves healthcare providers across the country facing potential healthcare fraud penalties.
Request a free, confidential consultation with Lowther | Walker.
Answers to Your Questions on Healthcare Fraud Penalties
Are healthcare fraud cases always federal?
Because healthcare fraud often involves Medicare, Medicaid, or TRICARE, these cases typically fall under federal jurisdiction. They are prosecuted by the U.S. Department of Justice (DOJ) or the Office of Inspector General (OIG). However, state-level healthcare fraud charges are also possible.
Are healthcare fraud sentencing guidelines fixed or flexible?
Federal judges use the U.S. Sentencing Guidelines as a framework, but they have discretion. Your attorney can argue for mitigating factors, such as lack of prior offenses, cooperation, or good character, to reduce penalties.
What happens if I’m excluded from Medicare or Medicaid?
Exclusion bars you from billing or participating in federal healthcare programs, meaning you cannot treat or bill patients under Medicare or Medicaid. Violating an exclusion order can result in additional criminal penalties.
Can my fraud penalties be reduced through cooperation or voluntary disclosure?
Yes. Individuals or organizations that self-report violations or cooperate with investigators may qualify for leniency, reduced fines, or even non-prosecution agreements under certain federal policies.
What is the difference between civil and criminal liability?
Civil liability typically results in monetary fines and the repayment of funds, whereas criminal liability involves potential prison time. Prosecutors determine which path to pursue based on the evidence of intent and the severity of the financial loss to government programs.
What is my potential prison sentence for criminal healthcare fraud convictions?
A conviction for healthcare fraud can carry a prison sentence of up to 10 years per count. If the violation resulted in serious bodily injury, the sentence can increase to 20 years, or up to life imprisonment if the fraud resulted in death.
How does the False Claims Act impact financial penalties?
The False Claims Act allows the government to recover up to three times the actual damages sustained. In addition to these treble damages, defendants may face substantial per-claim penalties for every false invoice submitted.
What are the penalties under the Anti-Kickback Statute?
Violating this statute is a felony that can result in a prison term of up to 10 years and fines of up to $100,000 per violation. It prohibits offering, paying, soliciting, or receiving anything of value to induce referrals for services paid for by federal healthcare programs.
What is the Civil Monetary Penalties Law?
The Civil Monetary Penalties Law authorizes the Secretary of Health and Human Services to impose administrative fines for a wide variety of fraudulent conduct. Penalties can range significantly, often reaching tens of thousands of dollars for each item or service that was falsely claimed.
Do state agencies have a role in healthcare fraud investigations?
Yes. State Medicaid Fraud Control Units frequently investigate and prosecute fraud specifically involving Medicaid funds. These state-level entities often work with federal partners but can also independently pursue charges under state law, leading to separate penalties.
Will a medical fraud investigation affect my professional license?
Yes, it can. State medical boards are typically notified of fraud convictions, settlements, or exclusions. This often leads to administrative actions in which the board may suspend or permanently revoke a professional license, preventing you from practicing medicine even after other penalties are satisfied.
