Medicare fraud charges are federal crimes that arise when someone knowingly submits, or causes the submission of, false claims to the Medicare program to obtain payment. The most common charge is health care fraud under 18 USC 1347, which carries up to 10 years in federal prison per count — and more if a patient is seriously harmed. Medicare fraud cases also routinely involve restitution, heavy fines, asset forfeiture, and exclusion from federal health programs, making them among the most consequential white collar matters a provider can face. The defining issue in nearly every case is intent: the government must prove knowing, willful deception, not a billing mistake.

This post walks through what actually counts as Medicare fraud, how these cases are investigated and charged in federal court, the penalties at stake, and the defenses that apply — including why the line between a crime and an honest error is so often the whole battleground.

What “Medicare Fraud” Actually Means

Medicare fraud is an umbrella term rather than a single offense, and the most important thing to understand about it is the role of intent. The defining feature is that the government must prove the defendant acted knowingly and willfully to obtain money from Medicare through false claims or statements. An honest coding error, a good-faith interpretation of an ambiguous rule, or reasonable reliance on a billing company is not fraud — even if Medicare ends up overpaying as a result.

The government itself draws a line between “fraud” and “abuse.” Fraud involves knowing deception; abuse refers to billing or practice patterns that are improper or wasteful but lack the intent to deceive. That distinction is not academic — it is frequently the entire battleground in a Medicare case, because conduct the government brands as fraud can often be shown to be, at most, a good-faith error or a defensible reading of genuinely confusing rules. Medicare’s rules are notoriously complex and change frequently, and a sincere, supportable interpretation of an unclear requirement is not a crime.

The Most Common Medicare Fraud Theories

Medicare fraud covers many specific theories, and a single indictment often combines several of them into one alleged scheme. The ones we see most often include:

  • Billing for services not rendered. Claiming payment for visits, procedures, tests, or equipment that never happened — covered in detail in our post on billing for services not rendered.
  • Upcoding and unbundling. Using higher-paying codes than the service warrants, or splitting one service into multiple billable parts — see upcoding and unbundling in medical billing.
  • Medically unnecessary services. Providing or billing for care the patient did not need.
  • Kickbacks for referrals. Paying or receiving anything of value to steer Medicare business, explained in our post on health care kickbacks.
  • Program-specific schemes. Fraud unique to hospice, home health, durable medical equipment, laboratory testing, and similar benefits, each with its own rules and vulnerabilities.

That layering is deliberate. A clinic might be accused of upcoding visits, billing for unnecessary tests, and paying kickbacks for referrals all at once, with the whole thing wrapped in a conspiracy charge. Combining theories lets the government tell a broader story of a scheme and increases the pressure on each defendant to resolve the case.

How Medicare Fraud Is Investigated and Charged

Medicare fraud cases are built differently from ordinary crimes, and understanding the process explains why early defense work matters so much. They usually begin with data — Medicare contractors and the HHS Office of Inspector General use sophisticated analytics to spot billing that deviates from a provider’s peers. From there, an investigation may involve audits, subpoenas for records, undercover patients, surveillance, and cooperating witnesses, frequently coordinated by the Medicare Fraud Strike Force, a joint DOJ-HHS effort that has made certain regions, including Los Angeles, national enforcement priorities. We walk through that timeline — from data flag to subpoena to charging decision — in our post on what happens in an OIG health care investigation.

When charges are filed, the centerpiece is typically health care fraud under 18 USC 1347. Prosecutors frequently add a conspiracy charge under 18 USC 1349 to reach everyone involved, Anti-Kickback Statute counts where referrals were paid for, and false statement charges under 18 USC 1035. Many cases also carry a parallel civil action under the False Claims Act, which means a provider can be fighting on two fronts — criminal and civil — at the same time, often over the very same conduct. A step taken to resolve one track can have direct consequences on the other, which is why coordinated strategy is essential from the start.

The Penalties for Medicare Fraud

Under 18 USC 1347, each count carries up to 10 years in federal prison — 20 years if the fraud causes serious bodily injury, and up to life if it results in death. But the headline maximum is only part of the story. Actual sentences are calculated under the federal Sentencing Guidelines, where the single biggest factor is usually the “loss amount” attributed to the scheme. The Guidelines increase the recommended sentence sharply as the loss figure rises, so two defendants charged under the same statute can face very different outcomes depending on how that number is calculated.

This is why challenging the government’s loss figure is often as important as contesting guilt itself. Prosecutors frequently reach large loss numbers by extrapolating from a sample of claims or by counting the entire amount billed rather than the actual loss; pushing back on that math, with expert support, can move a sentence by years. On top of any prison term, a conviction commonly brings restitution to Medicare, fines, forfeiture of assets traceable to the fraud, and mandatory exclusion from federal health programs. For a licensed provider, exclusion alone can be career-ending, even after any sentence is served — and because these are felonies, the collateral consequences reach into licensure, immigration status for non-citizens, and future employment and credentialing.

The Most Effective Defenses in Medicare Fraud Cases

Because intent is the heart of every Medicare fraud case, many defenses focus there, while others attack the government’s proof directly. The most effective strategies include:

  • Good faith and honest error. Demonstrating honest mistakes, reasonable reliance on professional coders or billing services, or a defensible reading of ambiguous Medicare rules defeats the knowing-and-willful element the government must prove.
  • Medical necessity. Establishing that the services billed were reasonable and necessary based on the physician’s judgment and the patient’s condition rebuts a core government theory.
  • Attacking statistical extrapolation. Many Medicare cases rest on auditing a small sample of claims and projecting an error rate across thousands more; a defense statistician and coding expert can expose flaws in that methodology and dramatically shrink the alleged loss.
  • Cooperator credibility. Where the case relies on co-defendants or employees testifying for leniency, cross-examination on their motives and agreements can be decisive.
  • Disputing the loss calculation. Because the Guidelines loss amount drives the sentence, narrowing it through accurate accounting can change the outcome even where some liability exists.
  • Suppression and procedural challenges. Where evidence was gathered through an unlawful search or a defective subpoena, a motion to suppress can remove it from the case.

In our experience, the earlier an attorney is involved — ideally before charges are filed, while the matter is still under investigation — the more opportunities there are to present exculpatory evidence, correct the government’s understanding of the billing, and shape the outcome before positions harden.

People Also Ask: Common Questions About Medicare Fraud

What counts as Medicare fraud?

Medicare fraud means knowingly submitting, or causing the submission of, false claims to Medicare to obtain payment. Common examples include billing for services that were never provided, billing for medically unnecessary care, upcoding to higher-paying codes, unbundling services that should be billed together, and paying or receiving kickbacks for referrals. In every form, the government must prove the provider acted knowingly and willfully — an honest billing error is not fraud.

How much prison time can Medicare fraud carry?

Medicare fraud is usually charged under 18 USC 1347, which carries up to 10 years in federal prison per count, rising to 20 years if the offense causes serious bodily injury and up to life if it results in death. Because each false claim can be a separate count, the theoretical exposure can be very high — but the actual sentence is driven by the Sentencing Guidelines loss amount, which is why disputing that figure is so important.

Is Medicare fraud a felony?

Yes. Federal Medicare fraud charges under 18 USC 1347 are felonies. Even where the dollar amounts are relatively modest, the felony classification carries lasting collateral consequences — loss of professional licensure, immigration consequences for non-citizens, difficulty obtaining future employment or credentialing, and exclusion from federal health programs. This is part of why these cases warrant serious defense from the very beginning.

What is the difference between Medicare fraud and abuse?

Fraud involves knowing deception to obtain payment; abuse refers to billing or practice patterns that are improper or wasteful but lack the intent to deceive. The distinction is critical because criminal Medicare fraud requires proof that the provider acted knowingly and willfully. Conduct the government initially labels “fraud” can often be shown to be, at most, abuse or an honest error — which is not a crime.

What should I do if I receive a Medicare audit or subpoena?

Treat it seriously and contact a federal defense attorney before responding or speaking with investigators. Do not alter or destroy any records, and do not give an unrepresented interview. A Medicare audit, civil investigative demand, or subpoena is frequently the first visible sign of an investigation that has been underway for some time, and what you do in the early stages can shape the entire outcome.

Key Takeaways

  • Medicare fraud requires knowing, willful deception — not just a billing error — and that intent requirement is frequently the whole battleground.
  • The lead charge, 18 USC 1347, carries up to 10 years per count, plus restitution, forfeiture, and exclusion.
  • Cases are built on data analytics and often add conspiracy, kickback, and false-statement counts, with a parallel civil False Claims Act action over the same conduct.
  • The Sentencing Guidelines “loss amount” frequently matters as much as the question of guilt, so disputing it is central.
  • Intent-based defenses and challenges to the government’s data and loss calculation are the core of fighting these charges.
  • Early action — before charges are filed — is the most valuable opportunity to influence the result.

Contact a Medicare Fraud Defense Attorney

A Medicare fraud investigation can move quietly for months before charges ever appear — which is exactly why acting early matters so much. Attorney Chris Nalchadjian of KN Law Firm, APLC defends Medicare and health care fraud clients in the U.S. District Court for the Central District of California and before the Ninth Circuit at every stage — from pre-charge investigation through trial, sentencing, and appeal. To learn more about how the firm handles these matters, visit our Federal Health Care Fraud Defense hub. To schedule a free, confidential consultation, call (888) 950-0011 — available 24/7 in English and Spanish.