18 USC 1347 Health Care Fraud: Penalties, Proof, and Defenses

Health care fraud under 18 U.S.C. § 1347 is punishable by up to 10 years in federal prison for a standard conviction, up to 20 years if the fraud causes serious bodily injury, and up to life imprisonment if it causes death. A conviction also brings fines, mandatory forfeiture of fraud proceeds, restitution to the defrauded program, and mandatory exclusion from Medicare, Medicaid, and other federal health care programs for at least five years.¹

Prison Terms Under Section 1347

The statute sets three tiers of maximum imprisonment, keyed to the harm the scheme produces.

Standard conviction: up to 10 years.
Fraud resulting in serious bodily injury to any person: up to 20 years.
Fraud resulting in death: any term of years or life.¹

The enhanced tiers are not theoretical. Pharmacies dispensing counterfeit or diluted drugs to support a billing scheme, or providers ordering unnecessary procedures to generate claims, can push a case from the 10-year tier into the 20-year or life tier when patients are hurt or killed.

Attempts count. A scheme that is intercepted before any payment is made still falls within the statute if the defendant knowingly and willfully set it in motion.¹

Fines

Section 1347 says a defendant “shall be fined under this title,” which routes sentencing to the general federal fine statute. The default felony maximums there are $250,000 for an individual and $500,000 for an organization.² If the offense produced financial gain to the defendant or financial loss to a victim, the court can instead impose a fine of up to twice that gain or loss, which in large schemes far exceeds the standard caps.

Forfeiture, Restitution, and Program Exclusion

Three consequences run alongside prison and fines, and for many defendants they hurt longer.

Criminal Forfeiture

The court is required to order forfeiture of any property that constitutes or is derived from the gross proceeds of the offense.³ Forfeiture is not discretionary. Homes, vehicles, investment accounts, and cryptocurrency traceable to fraud proceeds are all subject to seizure.

Mandatory Restitution

Federal law requires restitution when an offense is committed by fraud or deceit and identifiable victims suffered financial loss.⁴ In a § 1347 case, restitution typically equals the full amount the defrauded program paid out. A restitution order survives bankruptcy and can follow a defendant indefinitely.

Exclusion From Federal Health Care Programs

A felony conviction for health care fraud triggers mandatory exclusion from Medicare, Medicaid, and all other federal health care programs for a minimum of five years. A second offense carries a minimum of ten years. A third conviction results in permanent exclusion.⁵ For most clinicians, billers, and executives, exclusion ends the career. Employers who bill federal programs cannot keep an excluded person on staff.

What the Government Must Prove

Section 1347 reaches two categories of conduct: executing or attempting to execute a scheme to defraud a health care benefit program, and using false or fraudulent pretenses to obtain money or property owned by or under the control of such a program. Either theory requires a connection to the delivery of or payment for health care benefits, items, or services.¹

The statute begins with “Whoever,” a word that under federal definitions includes corporations, partnerships, and other business entities as well as individuals.⁶ A hospital, pharmacy, or DME company can be charged directly, not only its employees.

Health Care Benefit Program

The definition is broad. It covers any public or private plan or contract, affecting commerce, under which medical benefits, items, or services are provided to any individual, and it reaches any person or entity providing a medical benefit for which payment may be made under the plan.⁷ Medicare, Medicaid, TRICARE, the Veterans Health Administration, CHIP, employer-sponsored plans, and marketplace insurance all qualify. The “affecting commerce” language pulls private insurers into federal jurisdiction, because commercial carriers operate across state lines as a matter of course.

Knowing and Willful

The government must prove the defendant acted knowingly and willfully. Negligence is not enough. A billing mistake, even a repeated one, is not fraud unless the person submitting the claim knew it was false and meant to deceive the program.

The statute takes one shortcut off the table for defendants, though: it says a person need not have actual knowledge of § 1347 or a specific intent to violate it.¹ Ignorance of the statute is not a defense. Awareness that the billing itself is dishonest is what matters.

Good Faith

Because willfulness is an element, a defendant who genuinely believed their billing was proper can defeat the charge. Reliance on a reasonable reading of ambiguous codes, or on advice from counsel or a compliance officer, is evidence that the willfulness element is missing. Good faith is not a standalone affirmative defense so much as the flip side of the mental state the prosecution has to prove. That is why these investigations are document-heavy: emails, internal memos, and billing patterns are where the government looks for proof that the defendant knew what was going on.

Charges That Typically Ride Along

Prosecutors rarely bring § 1347 alone. The exposure a defendant actually faces is usually built by stacking related counts on the same conduct.

Conspiracy under 18 U.S.C. § 1349 carries the same penalties as the underlying offense, so someone who helped plan a scheme without personally billing anything can still face up to 10 years.⁸
Wire fraud under 18 U.S.C. § 1343 and mail fraud under 18 U.S.C. § 1341 are common add-ons because nearly every claim is submitted electronically, and each transmission can be a separate count.
The Anti-Kickback Statute, 42 U.S.C. § 1320a-7b, criminalizes offering, paying, soliciting, or receiving anything of value in exchange for referrals paid for by a federal health care program.⁹
The False Claims Act, 31 U.S.C. § 3729, is the civil counterpart. It allows treble damages plus per-claim penalties and often runs in parallel with the criminal case.¹⁰
Money laundering under 18 U.S.C. § 1956 follows whenever fraud proceeds are moved through accounts, shells, or asset purchases to disguise their origin.

Stacked, the statutory maximums can climb into decades. A single count of § 1347 sets the floor for how bad this can get, not the ceiling.

Statute of Limitations

Section 1347 has no special limitations period, so the general five-year federal statute applies. For ongoing schemes, the clock can start from the last act in furtherance of the fraud rather than the first, which is why indictments sometimes reach back several years into earlier conduct.

1
Office of the Law Revision Counsel. 18 U.S. Code 1347 – Health Care Fraud
2
Office of the Law Revision Counsel. 18 U.S. Code 3571 – Sentence of Fine
3
GovInfo. 18 U.S. Code 982 – Criminal Forfeiture
4
GovInfo. 18 U.S. Code 3663A – Mandatory Restitution to Victims of Certain Crimes
5
Office of the Law Revision Counsel. 42 U.S. Code 1320a-7 – Exclusion of Certain Individuals and Entities From Participation in Medicare and State Health Care Programs
6
Office of the Law Revision Counsel. 1 U.S. Code 1 – Words Denoting Number, Gender, and So Forth
7
Office of the Law Revision Counsel. 18 U.S. Code 24 – Definitions Relating to Federal Health Care Offense
8
Office of the Law Revision Counsel. 18 U.S. Code 1349 – Attempt and Conspiracy
9
Office of the Law Revision Counsel. 42 U.S. Code 1320a-7b – Criminal Penalties for Acts Involving Federal Health Care Programs
10
Office of the Law Revision Counsel. 31 U.S. Code 3729 – False Claims