Healthcare Fraud Defense (18 U.S.C. § 1347)

By Elizabeth Franklin-Best, Esq., and Christopher Zoukis, JD, MBA

Healthcare fraud is one of the federal government’s highest enforcement priorities. Dedicated strike forces, data analytics, and inspectors general scrutinize billing patterns across Medicare, Medicaid, and private plans, and a flagged pattern can turn a physician, pharmacist, or company owner into a criminal target. Because so much of healthcare billing is genuinely complex and contested, an honest dispute can be misread as a scheme. If you are under investigation, a healthcare fraud lawyer should be involved early.

We are Elizabeth Franklin-Best, P.C., a federal criminal defense and appellate firm, and we defend physicians, pharmacists, practice owners, and healthcare companies in fraud cases nationwide. Our principal attorney, Elizabeth Franklin-Best, has handled more than 330 federal proceedings — over 100 of them appeals — and practices exclusively in the federal courts and agencies, from trial through the courts of appeals and the United States Supreme Court. Her work is recognized by Best Lawyers in America, which named her a 2026 “Best Lawyer” in Appellate Practice, and by Chambers USA, which ranks her in its 2026 guide for Litigation: White-Collar Crime & Government Investigations. Healthcare fraud is an intent crime, and we defend it by holding the government to every element.

This guide explains what healthcare fraud is, the statute that defines it, what prosecutors must prove, the penalties involved, and how a defense is built. It is general legal information, not legal advice. If you are under investigation or charged, we offer a paid, one-hour initial consultation to review your situation. This guide sits within our federal fraud defense practice.

Quick Answer

Question	Answer
What is healthcare fraud?	Knowingly and willfully executing a scheme to defraud a health care benefit program, or to obtain its money by false pretenses, in connection with health care.
What law makes it a crime?	18 U.S.C. § 1347, the federal healthcare fraud statute, among other statutes.
What must the government prove?	A knowing and willful scheme to defraud a health care benefit program, in connection with the delivery of or payment for health care, with intent to defraud.
What penalties can apply?	Up to 10 years in prison — up to 20 years if the offense causes serious bodily injury, and up to life if it causes death.
What does an initial consultation cost?	Our initial consultation is paid and runs a full hour, focused on your billing records, the posture of the investigation, and next steps.

Key Takeaways

• Healthcare fraud is a federal enforcement priority, investigated with data analytics and dedicated strike forces.
• The healthcare fraud statute reaches schemes against any health care benefit program — public programs like Medicare and Medicaid and private insurers alike.
• The crime requires a knowing and willful scheme to defraud — a deliberate plan, not a billing or coding error.
• Healthcare billing rules are genuinely complex, and the line between an aggressive interpretation and fraud is a central battleground.
• Penalties escalate sharply where the offense causes serious bodily injury or death.
• A criminal case is often paired with a civil False Claims Act action and overlaps with anti-kickback enforcement.

What Is Healthcare Fraud?

Healthcare fraud is the use of deception to obtain money from a health care benefit program. It is most often associated with Medicare and Medicaid, but the federal statute reaches private insurers as well. The conduct can take many forms — billing for services that were never provided, billing at a higher level than the care delivered, ordering medically unnecessary tests, or referring patients in exchange for kickbacks.

What makes healthcare fraud distinctive — and distinctively dangerous for honest providers — is the complexity of the system it polices. Coding rules, coverage criteria, documentation requirements, and program guidance are dense, frequently revised, and often ambiguous. The government increasingly identifies suspects through statistical outliers in billing data. But a billing pattern that looks unusual is not a crime, and an aggressive but defensible interpretation of an ambiguous rule is not fraud. Healthcare fraud requires a knowing, willful scheme to deceive — and that requirement is where a defense begins.

The Healthcare Fraud Statute: 18 U.S.C. § 1347

The principal federal healthcare fraud statute is 18 U.S.C. § 1347. It makes it a crime to knowingly and willfully execute, or attempt to execute, a scheme or artifice to defraud any health care benefit program, or to obtain by means of false or fraudulent pretenses any of the money or property owned by, or under the custody or control of, a health care benefit program, in connection with the delivery of or payment for health care benefits, items, or services.

Two features of the statute matter. First, “health care benefit program” is defined broadly — it includes public programs and private health plans alike, so the statute is not limited to Medicare and Medicaid. Second, the statute provides that a person need not have actual knowledge of § 1347 itself, or a specific intent to violate that particular section, to be convicted. That does not eliminate the intent requirement — the government must still prove a knowing and willful scheme to defraud — but it does shape how the willfulness element is framed. Healthcare fraud is also prosecuted under other statutes, including the criminal False Claims Act and the Anti-Kickback Statute, and is often charged alongside wire fraud.

Common Forms of Healthcare Fraud

Federal healthcare fraud prosecutions tend to involve a recognizable set of billing and practice issues:

• Billing for services not rendered — submitting claims for care that was never provided.
• Upcoding — billing for a more expensive service or a higher level of care than was actually delivered.
• Unbundling — billing separately for services that should be billed together at a lower combined rate.
• Medically unnecessary services — ordering tests, procedures, or equipment that the government contends were not medically necessary.
• Kickback-driven referrals — generating claims through referrals paid for with kickbacks, which implicates anti-kickback law.
• Falsified records — altering documentation to support claims that would otherwise be denied.

Several of these categories — particularly upcoding, unbundling, and medical necessity — are not bright-line concepts. They depend on coding judgment and clinical judgment, and reasonable, qualified people can disagree about them. That ambiguity is exactly why the intent element does so much work in a healthcare fraud case.

Applied insight. The government often builds a healthcare fraud case from billing data and a statistical outlier. But high volume, unusual codes, or a billing profile that differs from peers is not a crime. The defense’s task is to supply the missing half of the picture — the patients, the records, the clinical reasoning — that explains the data in lawful terms.

What the Government Must Prove

To convict of healthcare fraud under § 1347, the government must prove beyond a reasonable doubt that:

• A scheme to defraud. The defendant devised, or knowingly participated in, a scheme to defraud a health care benefit program, or to obtain its money or property by false pretenses.
• Execution. The defendant executed, or attempted to execute, that scheme.
• Connection to health care. The scheme was in connection with the delivery of, or payment for, health care benefits, items, or services.
• Intent to defraud. The defendant acted knowingly and willfully, with the intent to defraud.

Intent is the heart of the case. The government must prove that the defendant set out to deceive — not that the defendant made a mistake, misread a complex coverage rule, relied on a billing service, or took a defensible position on a genuinely uncertain question. A claim can be incorrect without being fraudulent. The distinction between an error and a scheme is the central issue in most healthcare fraud trials.

What Changed in Healthcare Fraud Enforcement (2023–2026)

The law governing federal fraud has moved in ways that matter to healthcare cases. In Ciminelli v. United States, 598 U.S. 306 (2023), the Supreme Court rejected the “right to control” theory, requiring fraud convictions to rest on a scheme aimed at money or property rather than at intangible interests in accurate information. Then, in Kousisis v. United States, 605 U.S. 114 (2025), the Court held that fraudulent inducement remains a viable theory even without net economic loss to the victim — while stressing that materiality is the doctrine’s real limit. Together these decisions frame the modern healthcare fraud fight: the government must tie its theory to payments, and the defense gets to demand proof that any alleged misstatement actually mattered to the payor’s decision.

Enforcement has escalated just as fast. On June 30, 2025, the Department of Justice announced the largest health care fraud takedown in its history: 324 defendants — 96 of them doctors, nurse practitioners, pharmacists, or other licensed professionals — charged across 50 federal districts in schemes alleged to involve more than $14.6 billion in intended loss, more than double the previous record. Agents seized over $245 million in cash, luxury vehicles, and cryptocurrency, and CMS reported stopping more than $4 billion in claims before payment. The centerpiece, Operation Gold Rush, charged a transnational organization that allegedly acquired dozens of durable medical equipment companies through straw owners and billed Medicare $10.6 billion for urinary catheters and other supplies using the stolen identities of over one million Americans.

The 2025 takedown also shows where charging patterns are heading. Forty-nine defendants were charged in telemedicine and genetic-testing schemes involving over $1.17 billion in claims, and DOJ reaffirmed its focus on telehealth-generated orders for DME, genetic tests, and similar services. The Department simultaneously announced a Health Care Fraud Data Fusion Center that will apply artificial intelligence and cross-agency analytics to claims data. The practical lesson for providers is uncomfortable but unavoidable: investigations now start with algorithms, an outlier billing profile can trigger a criminal referral even when every claim is defensible, and the window for shaping the government’s understanding of your billing is early — often before charges are filed.

Penalties for Healthcare Fraud

Healthcare fraud under § 1347 is a felony. The base statutory maximum is 10 years in prison per count. That maximum rises to 20 years if the violation results in serious bodily injury, and to life imprisonment if it results in death. Convictions also carry fines, mandatory restitution to the defrauded programs, and the forfeiture of proceeds. For licensed professionals, a conviction also brings exclusion from federal health care programs and the loss of professional licensure — consequences that can end a career independent of any prison term.

The prison sentence within those limits is set by the United States Sentencing Guidelines, where the loss amount is the dominant factor. Since Amendment 827 took effect on November 1, 2024, the rule that loss means the greater of actual or intended loss sits in the text of § 2B1.1 itself, which strengthens the government’s hand in pressing the full billed amount — not the amount paid — as the figure that drives the offense level. In healthcare cases the loss figure is frequently inflated and frequently contested — the government may treat the full billed amount as loss, when the defensible measure accounts for services actually provided, amounts properly payable, and the difference between billed and allowed charges. Our federal sentencing practice addresses how that calculation is built and challenged.

Applied insight. In a healthcare fraud case, “loss” is rarely the number on the indictment. Care that was actually delivered, claims that were properly payable, and the gap between billed and allowed amounts all reduce the figure that drives the Guidelines. Rebuilding the loss number from the underlying records is often the most valuable work in the case.

Defending a Healthcare Fraud Case

The strongest healthcare fraud defense is usually the absence of fraudulent intent. The statute requires a knowing and willful scheme to defraud, and a great many healthcare fraud cases are, on close examination, billing errors, coding disagreements, or good-faith interpretations of ambiguous rules. A provider who relied on a billing company or a coder, who followed a reasonable reading of unclear guidance, or who exercised honest clinical judgment about medical necessity has not committed fraud — even if the government’s auditors would have coded a claim differently.

The case law marks both the promise and the limits of that defense. In United States v. Paulus, 894 F.3d 267 (6th Cir. 2018), the Sixth Circuit held that a cardiologist’s reading of an angiogram is a fact capable of proof or disproof — a doctor who deliberately inflates what he sees in order to bill a more expensive procedure has lied — while recognizing that an opinion supports fraud liability only when it is not honestly held. That line is the battlefield in medical-necessity prosecutions: the government must prove the clinical judgment was a knowing falsehood, not merely that its reviewers or experts would have decided differently. Where a case involves prescribing, the Supreme Court’s decision in Ruan v. United States, 597 U.S. 450 (2022), reinforces that framing: although Ruan arose under the controlled-substances statute, it held that the government must prove a defendant subjectively knew his conduct was unauthorized, and providers facing healthcare-fraud and diversion counts increasingly press that subjective-knowledge standard. We build medical-necessity defenses on contemporaneous documentation and coherent clinical reasoning, because that is what demonstrates an honest judgment to a jury.

Other defenses target the structure of the case. The defense may show that there was no scheme, that the services were in fact provided and were medically necessary, that the documentation supports the claims, or that the program at issue is not a covered health care benefit program. The reliability of the government’s data extrapolation and its loss calculation are also fair targets. We work through the patient files, the billing records, and the coding in detail, often with clinical and coding expertise, and we coordinate the criminal defense with any parallel civil False Claims Act matter. We make no predictions about results — no honest lawyer does — but no government theory in your case will go untested.

Parallel Civil and Administrative Exposure

A federal healthcare fraud investigation rarely travels alone. The same billing conduct that supports a § 1347 charge can be pursued civilly under the False Claims Act, 31 U.S.C. § 3729, which imposes treble damages and per-claim penalties and lets whistleblowers — often former employees, billers, or competitors — file qui tam suits the government may join. Many criminal healthcare cases begin life as sealed qui tam complaints, which means the government may have been studying your claims data for years before the first subpoena arrives.

Administrative consequences run on a third track. The HHS Office of Inspector General can exclude a provider from federal health care programs, and CMS can suspend payments or revoke billing privileges on credible allegations of fraud — all before any conviction, and sometimes before any charge. Defending these matters means managing every track at once, because a statement made in a civil deposition or an administrative appeal can resurface in the criminal case. We sequence the defense so that nothing said to save the practice today convicts the client tomorrow.

Why Work With Elizabeth Franklin-Best, P.C.

Our firm concentrates on one thing: federal criminal defense and appeals, nationwide. Elizabeth Franklin-Best, our principal attorney, is admitted to the United States Supreme Court and every one of the twelve federal circuit courts of appeals, and she appears in district courts across the country through pro hac vice admission, from Montana to Florida. That practice runs the full arc of a federal case — pre-indictment strategy, trial defense, and a substantial appellate and post-conviction docket — which is the vantage point that catches the materiality and intent arguments healthcare cases turn on. Her work carries two current national recognitions: selection as the 2026 “Best Lawyer” in Appellate Practice by Best Lawyers in America, and a Chambers USA 2026 ranking in Litigation: White-Collar Crime & Government Investigations.

Billing-fraud prosecutions are won in the records — patient files, coding guidance, claims data, and the loss spreadsheet the government will carry into sentencing. Our practice is organized around precisely that document-intensive, element-by-element work, and around defenses built from each client’s actual billing history rather than from a template. This guide belongs to our broader federal fraud defense practice, which covers the related statutes a healthcare indictment typically draws on.

Talk With a Healthcare Fraud Lawyer

A target letter, a civil investigative demand, a payment suspension, or agents appearing at your office means the government is already well ahead of you. Speaking with a healthcare fraud attorney early — before interviews are given and documents are produced — preserves options that disappear quickly. We offer a paid, one-hour initial consultation to walk through the investigation, your billing history, and the realistic paths forward.

Frequently Asked Questions