Medicare fraud becomes a felony the moment someone knowingly executes or attempts a scheme to defraud a federal healthcare program. Under 18 U.S.C. § 1347, no minimum dollar amount is required, and the base penalty runs up to 10 years in prison. That ceiling rises to 20 years if the fraud causes serious bodily injury and to life if it results in death.1Office of the Law Revision Counsel. 18 USC 1347 – Health Care Fraud The dollar amount, the level of intent, whether patients were harmed, and which statute the prosecutor picks all shape how bad the outcome actually gets.
The Federal Statutes That Make It a Felony
Several overlapping laws let federal prosecutors charge Medicare fraud as a felony. They often stack counts from more than one statute in a single indictment.
18 U.S.C. § 1347 — Healthcare Fraud
This is the broadest tool. Any knowing scheme to defraud a healthcare benefit program qualifies, with no dollar threshold. Ten years is the standard maximum, 20 years if serious bodily injury results, and life if death results.1Office of the Law Revision Counsel. 18 USC 1347 – Health Care Fraud Fines follow the general federal ceiling under 18 U.S.C. § 3571: $250,000 for an individual felony and $500,000 for an organization, or twice the gross gain or loss if that figure is higher.2Office of the Law Revision Counsel. 18 USC 3571 – Sentence of Fine
42 U.S.C. § 1320a-7b — Anti-Kickback Statute
Knowingly paying or receiving anything of value to induce referrals for services covered by a federal healthcare program is a felony with a 10-year maximum and fines up to $100,000. The same statute makes it a felony for a provider to submit false statements tied to services paid by a federal healthcare program. When the false statement comes from someone other than the provider offering the services, the charge drops to a misdemeanor with a one-year cap and a $20,000 fine.3Office of the Law Revision Counsel. 42 USC 1320a-7b – Criminal Penalties for Acts Involving Federal Health Care Programs The government can also pursue civil penalties of up to $50,000 per kickback plus three times the remuneration, without any criminal conviction at all.4U.S. Department of Health and Human Services Office of Inspector General. Fraud and Abuse Laws
18 U.S.C. § 287 — False Claims
Knowingly submitting a false or fraudulent claim to any federal agency is a felony carrying up to five years in prison.5Office of the Law Revision Counsel. 18 USC 287 – False, Fictitious or Fraudulent Claims Because it reaches any false claim against the United States, prosecutors often use it to add counts alongside the healthcare-specific charges.
18 U.S.C. § 1349 — Attempt and Conspiracy
Attempting or conspiring to commit healthcare fraud carries the same penalties as the completed offense.6Office of the Law Revision Counsel. 18 USC 1349 – Attempt and Conspiracy Two people who agree to run a billing scheme each face up to 10 years, even if the scheme is intercepted before any fraudulent claim gets paid. Prosecutors like the conspiracy count because they only need to prove the agreement and one act taken toward carrying it out.
What Kind of Conduct Triggers These Charges
Investigators see the same patterns over and over. Phantom billing charges Medicare for services or supplies never delivered. Upcoding submits billing codes for treatments more complex than what the patient actually received. Unbundling splits services that belong in a single package into separate, higher-cost claims. Kickback arrangements exchange money for patient referrals or for steering business toward Medicare-reimbursed services. Ordering medically unnecessary tests to inflate billings is fraud, and so is stealing a beneficiary’s Medicare number to obtain equipment or services. Any of these can be charged as a felony depending on how prosecutors frame the case.
How the Dollar Amount Shapes the Actual Sentence
The statutes above do not require a minimum dollar amount for felony charges, but the amount involved drives the sentence a judge actually imposes. Federal sentencing guidelines use a loss table under USSG § 2B1.1 that adds offense levels as the fraud total climbs. For healthcare fraud, the total dollar amount of fraudulent bills submitted serves as the starting evidence of intended loss.
Fraud of $6,500 or less adds nothing to the base offense level. Fraud above $9.5 million adds 20 levels, and fraud above $550 million adds 30 levels.7United States Sentencing Commission. USSC Guidelines Loss Table Each added level pushes the recommended prison term higher. In fiscal year 2024, the median loss in healthcare fraud cases was roughly $2.5 million, and more than 42% of cases involved losses above $1 million.8United States Sentencing Commission. Quick Facts on Health Care Fraud Offenses The typical case federal prosecutors pursue involves substantial money and sustained conduct, not isolated billing errors.
What a Felony Conviction Costs Beyond Prison
The prison term is only one piece. A felony fraud conviction triggers a cascade of financial and professional consequences.
Restitution and Criminal Fines
Courts routinely order defendants to repay every dollar fraudulently obtained. Federal fines for a healthcare fraud felony reach $250,000 for an individual and $500,000 for an organization under 18 U.S.C. § 3571, or twice the gross gain or loss when either exceeds those figures.2Office of the Law Revision Counsel. 18 USC 3571 – Sentence of Fine
Civil Monetary Penalties That Stack on Top
The government can pursue civil penalties separately from the criminal case. Under the False Claims Act, each false claim triggers a penalty that, as of 2025, ranges from $14,308 to $28,619 (adjusted annually for inflation), plus up to three times the government’s actual damages.9Office of the Law Revision Counsel. 31 USC 3729 – False Claims For a provider who submitted hundreds of claims, the per-claim total can dwarf the underlying fraud amount. Additional penalties of up to $20,000 per item or service, plus three times the amount claimed, are available under the Civil Monetary Penalties Law.10Office of the Law Revision Counsel. 42 USC 1320a-7a – Civil Monetary Penalties
Mandatory Exclusion From Federal Healthcare Programs
Federal law requires the OIG to exclude anyone convicted of Medicare or Medicaid fraud from all federal healthcare programs. It is mandatory, not discretionary. The same rule applies to felony convictions for other healthcare fraud, patient abuse, and unlawful distribution of controlled substances. For a practicing clinician, no Medicare, Medicaid, or TRICARE reimbursement effectively ends the practice. Even without a conviction, the OIG has discretion to exclude providers for misdemeanor healthcare fraud, unnecessary or substandard services, or kickback arrangements.11U.S. Department of Health and Human Services, Office of Inspector General. Background Information – Exclusions
Corporate Integrity Agreements
Organizations that settle civil fraud claims often must sign a Corporate Integrity Agreement with the OIG. These typically run five years and require a dedicated compliance officer, an independent monitor, employee screening against exclusion lists, and annual compliance reports.12Office of Inspector General. Corporate Integrity Agreements Violating the agreement can trigger the exclusion the provider negotiated to avoid.
Professional License and DEA Consequences
A felony conviction almost always draws state licensing board action. Medical, nursing, and pharmacy boards can suspend or revoke a license independently of the criminal case, and administrative fines can reach $10,000 or more per violation. Providers convicted of felonies involving controlled substances may be asked to surrender their DEA registration, ending their ability to prescribe. Reinstatement of any professional license after a fraud conviction is difficult and sometimes impossible.
The Stark Law Is Not a Criminal Statute
The Stark Law (42 U.S.C. § 1395nn) is often confused with the Anti-Kickback Statute, but it works differently. It bars physicians from referring Medicare patients for certain designated health services to entities where the physician or an immediate family member has a financial relationship, unless an exception applies. It is a strict liability statute, so the government need not prove intent. Stark violations carry civil penalties only: up to $15,000 per service for a claim the provider knew or should have known was prohibited, and up to $100,000 per arrangement designed to circumvent the referral ban.13Office of the Law Revision Counsel. 42 USC 1395nn – Limitation on Certain Physician Referrals No one goes to prison solely for a Stark violation, but claims generated by prohibited referrals often become the basis for False Claims Act cases that can bring both civil penalties and criminal exposure.
How Long the Government Has to Bring Charges
For criminal healthcare fraud, the general federal statute of limitations is five years from the date of the offense. Schemes that continue over time can reset the clock with each new fraudulent act, and courts may apply a discovery rule when the fraud was actively concealed.
Civil False Claims Act deadlines run longer. The government can sue up to six years after the violation, or up to three years after the responsible government official knew or reasonably should have known the relevant facts, whichever is later, with an outer limit of 10 years from the violation.14Office of the Law Revision Counsel. 31 USC 3731 – False Claims Procedure In practice, providers can face civil fraud actions for billing conduct nearly a decade old.