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Feds Expand Use of Healthcare Fraud Statutes

Historically, federal prosecutors have used the federal anti-kickback laws to prosecute those doctors and other healthcare professionals who engage in Medicaid and Medicare fraud schemes. As a result, many medical providers thought that avoiding Medicare patients in favor of those covered by private insurance would insulate them from federal prosecution.

A recent federal jury verdict that occurred in Texas, however, highlighted the increasing aggressiveness of federal officials in pursuing healthcare fraud schemes targeting commercial payors, as well. In this case, the Department of Justice applied state commercial fraud laws under the federal Travel Act. This approach allowed them to prosecute questionable patient referral schemes targeting federal healthcare insurance programs and commercial insurers. As a result, a federal jury convicted several surgeons and a director of a physician-owned surgical hospital in Dallas of conspiracy to pay or receive healthcare bribes for arranging patient referrals. Another ten defendants, in this case, pled guilty before the trial started.

Feds Expand Use of Healthcare Fraud Statutes

The Travel Act, 18 U.S.C. § 1952, relies on the predicate of commercial bribery under state law to constitute the “unlawful activity” necessary to federal prosecution. Under the Travel Act, it is illegal to use a facility in interstate commerce with the intent to distribute the proceeds of an “unlawful activity.” Since Texas, like most states, has a commercial bribery law, federal prosecutors used actions that constituted commercial bribery under Texas law as the basis for the Travel Act violations. In this particular case, the feds alleged that the defendants used email and the computer network of the Federal Reserve Bank to send kickback payments to a shell company, which qualified as commercial bribery. The money then went from the shell company to the bank accounts of defendants who had referred patients to the surgical hospital.

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