Health Insurance Fraud Penalties

Health insurance fraud is considered a major crime by both the federal government and state governments. Individuals, medical providers and insurance companies are all capable of committing the crime. In most states, health insurance fraud is considered a felony. Those found guilty of insurance fraud are tried on both the state and federal level, and are subject to fines, imprisonment and forfeiture of assets.

Fines

• States that consider insurance fraud a felony crime may impose hefty fines during the sentencing process. These fines can reach in excess of $15,000 per penalty. Beyond the state level, insurance fraud crimes may be subject to federal admonishment as well. Depending on the types of laws broken and the way in which the fraud is committed, health insurance fraud could result in an additional fine of up to $1 million in federal court. These penalties and fines are in addition to attorney fees, court fees and possible bail.

Imprisonment

• Health insurance fraud may also result in imprisonment. On the state level, a felony such as fraud could result in a prison term of up to 10 years. However, several federal laws such as the Racketeer Influenced and Corrupt Organization Act and the False Claims Act help regulate insurance fraud, each of which carries different maximum prison terms per charge. A person or company found guilty of insurance fraud could face a term of between 20 and 30 years in federal prison.

Forfeiture of Assets

• Any person or company that benefits financially from fraudulent health insurance activity is subject to a forfeiture of assets if found guilty. Only the assets that are directly obtained because of the insurance fraud apply. This could include cash, investments and physical property. Forfeiture of assets is most often sought in cases found in violation of the Racketeer Influenced and Corrupt Organization Act. This usually applies to convictions of profiteering in organized crime groups, or in cases involving the False Claims Act, which concerns a person or business knowingly supplying the federal government with false information for financial gain. An example of this would be a Medicare provider billing Medicare for services not rendered to a patient. The provider would be required to not only forfeit the money received, but to also pay it back double and with interest.