18 USC 1347 — Health Care Fraud: Penalties, Elements & Defenses

18 USC 1347 is the primary federal health care fraud statute. It makes it a crime to knowingly and willfully execute, or attempt to execute, a scheme to defraud a health care benefit program — or to obtain its money or property through false or fraudulent pretenses — in connection with the delivery of or payment for health care benefits, items, or services. A conviction carries up to 10 years in federal prison per count, with higher penalties when the offense causes serious bodily injury or death. Because each fraudulent claim can be charged separately, exposure under this statute can multiply quickly.

This page explains what 18 USC 1347 actually says, the elements the prosecution must prove, the penalties at each level, the related statutes that are commonly charged alongside it, and how these charges are challenged. It is intended as a plain-English legal reference for anyone trying to understand a federal health care fraud charge in California. If you are already under investigation or charged, our overview of how we defend these cases is on our federal health care fraud defense page.

Summary of the Statute

Enacted as part of the Health Insurance Portability and Accountability Act (HIPAA) of 1996, 18 USC 1347 gave federal prosecutors a dedicated tool for charging fraud against health care programs. Before it existed, the government had to rely on general statutes like mail fraud and wire fraud, shoehorning health care schemes into laws written for other purposes. Congress created 1347 to target health care fraud directly, and it has since become the centerpiece of federal health care fraud enforcement nationwide.

In substance, the statute prohibits two related things. First, knowingly and willfully executing or attempting to execute a scheme or artifice to defraud any health care benefit program. Second, using false or fraudulent pretenses, representations, or promises to obtain — by means of the scheme — any of the money or property owned by, or under the custody or control of, such a program. Both forms must be connected to the delivery of, or payment for, health care benefits, items, or services.

The reach of the statute is deliberately broad. A “health care benefit program,” defined in 18 USC 24(b), means any public or private plan or contract, affecting commerce, under which any medical benefit, item, or service is provided to any individual. That covers Medicare, Medicaid, and TRICARE, but it also reaches private insurers — so the statute is not limited to government programs. Congress also built in two features that make 1347 especially potent for prosecutors: a defendant does not need to know that the conduct violates this specific law to be convicted, and the statute expressly reaches attempts, not just completed schemes.

Elements the Government Must Prove

To convict, federal prosecutors must prove four elements beyond a reasonable doubt. The Ninth Circuit — which governs federal prosecutions throughout California, including the Central District where most Los Angeles cases are heard — sets these out in its model criminal jury instructions. Each element is also a potential point of attack for the defense, and understanding them is the key to understanding how these cases are won.

1. A Knowing and Willful Scheme to Defraud

The defendant must have knowingly and willfully executed, or attempted to execute, a scheme or plan either to defraud a health care benefit program or to obtain its money or property by means of materially false or fraudulent pretenses, representations, or promises. “Knowingly” means the act was done voluntarily and intentionally, not by accident or mistake; “willfully” means with knowledge that the conduct was unlawful. The defense can challenge whether any “scheme” existed at all, or whether what the government calls a scheme was simply a billing practice, a coding interpretation, or an administrative arrangement that has been recast as fraud after the fact.

2. Intent to Defraud

This is the heart of nearly every health care fraud case. The defendant must have acted with intent to defraud — a genuine purpose to deceive the program for gain — not merely have made an error. Because intent is rarely proven by direct evidence, the government typically relies on circumstantial proof: billing patterns, internal communications, and the testimony of cooperating witnesses. In some cases prosecutors advance a “deliberate ignorance” or willful blindness theory, arguing the defendant deliberately avoided learning the truth. The Ninth Circuit has addressed the limits of that theory, and it cannot be used to paper over a lack of actual knowledge. Demonstrating good faith — reliance on professional coders, reasonable interpretation of ambiguous rules, or a sincere belief that the billing was proper — directly defeats this element.

3. The Victim Was a Health Care Benefit Program

The target of the scheme must qualify as a health care benefit program under 18 USC 24(b). This element is usually straightforward where Medicare, Medicaid, or a private insurer is involved, but it can still be tested in unusual situations where the payor’s status or the nature of the program is genuinely in question.

4. Connection to the Delivery of or Payment for Health Care

The scheme must have been executed in connection with the delivery of, or payment for, health care benefits, items, or services. The defense can argue that the conduct, even if improper in some respect, was not sufficiently connected to a covered health care transaction to fall within the statute.

Penalties Under 18 USC 1347

Health care fraud is a felony, and the penalties escalate sharply based on the harm caused. The statute also allows each execution of the scheme — for example, each fraudulent claim or each false bill — to be charged as a separate count, so a sustained billing scheme can generate dozens or hundreds of counts. The table below summarizes the statutory structure.

The statutory maximums, however, are only part of the picture. Actual sentences are calculated under the U.S. Sentencing Guidelines, where the single biggest driver is usually the “loss amount” — the dollar figure the government attributes to the scheme. The Guidelines increase the recommended sentence steeply as the loss figure climbs, which means that how the loss is calculated can matter as much as the question of guilt. Prosecutors frequently arrive at large loss figures by extrapolating from a sample of claims; disputing that methodology, and arguing for a narrower, accurate loss number, is one of the most valuable things a defense can accomplish.

Restitution and forfeiture frequently accompany a conviction, requiring the defendant to repay the program and surrender assets traced to the fraud. And for licensed providers, the collateral consequences can be the most devastating of all: a conviction commonly triggers mandatory exclusion from Medicare and Medicaid, the loss of a professional license, and the end of a career. These consequences are explored further on our federal health care fraud defense hub.

Related Federal Statutes

Health care fraud is rarely charged alone. Prosecutors routinely stack 18 USC 1347 with other statutes to broaden liability and increase pressure, each of which we cover in its own reference page:

• 18 USC 1349 (conspiracy and attempt) — allows the same penalties as the underlying fraud for those who agree to participate in a scheme, with no overt act required.
• 42 USC 1320a-7b (Anti-Kickback Statute) — criminalizes paying or receiving anything of value for referrals tied to federal health programs.
• 31 USC 3729 (False Claims Act) — the civil counterpart that drives treble damages and per-claim penalties, often pursued alongside the criminal case.
• 18 USC 1035 (false statements in health care matters) — targets materially false statements made in connection with health care benefits.
• 18 USC 1028A (aggravated identity theft) — adds a mandatory consecutive term where patient or provider identities are misused, though recent Supreme Court law limits when it applies.

How 18 USC 1347 Charges Are Defended

Because intent is the central element, many defenses focus there. Showing that billing reflected honest error, that the provider reasonably relied on coders or outside billing companies, or that the services were medically necessary and properly documented can undercut the government’s theory of knowing, willful fraud. A genuine, good-faith interpretation of an ambiguous Medicare rule is not a crime, and establishing that interpretation — with expert support — is often decisive.

Other defenses attack the government’s proof rather than the defendant’s state of mind. Health care fraud cases are frequently built on statistical sampling, in which the government audits a small number of claims and extrapolates an alleged error rate across thousands more to generate a massive loss figure. A defense statistician and coding expert can expose flaws in that methodology and dramatically shrink the case. Where the government leans on cooperating witnesses — often co-defendants who have negotiated for leniency — challenging their credibility and motives is essential. And where evidence was gathered through an unlawful search or a flawed subpoena, a motion to suppress may remove it from the case entirely.

For a closer look at specific scenarios, see our discussions of how billing for services not rendered cases are built and defended, how upcoding and unbundling allegations turn on coding judgment, and what to expect during an OIG health care investigation. The right approach always depends on the specific facts, the documentary record, and the theory the government is pursuing.

Charged or Investigated Under 18 USC 1347? Contact Us

If you are facing a federal health care fraud charge or have learned you are under investigation, the sooner you involve experienced counsel, the more options you are likely to have. Much of the most valuable defense work happens before charges are filed, when there is still an opportunity to shape the government’s understanding of the facts. KN Law Firm, APLC defends these cases in the U.S. District Court for the Central District of California and before the Ninth Circuit. Call (888) 950-0011 for a free, confidential consultation with attorney Chris Nalchadjian, available 24/7 in English and Spanish.