Criminal Prosecutions Expected in 2014 Related to ACA Fraud

Last month’s troubled rollout of, the federal marketplace for online health insurance enrollment under the Affordable Care Act (ACA), resulted in much fanfare by the national media. In the past week, however, the media and federal and state authorities have increasingly pivoted to another issue of concern surrounding the ACA — fraud.

Through major news publications, such as The New York Times, details of the wide range of fraud schemes affecting marketplace consumers have emerged. For example, there are reports of “Medicaid consultants,” who purport to help consumers “navigate” the new benefit system and enrollment website. The “consultants” solicit fees without any intention of providing services and, in so doing, obtain personal identifying information from their victims. Other schemes involve fraudulent websites resembling, which similarly seek to lure personal identifying information from consumers.

Federal and state authorities are undertaking various efforts to prevent, identify and deter fraud related to the ACA. On the front lines is a national call center, where consumer complaints can be received and referred to the Federal Trade Commission (FTC). The FTC maintains a database accessible by state attorneys general and the DOJ, as well as hundreds of other federal, state and local authorities who protect consumers and guard against frauds. In addition, since October, state attorneys general in 36 states have been holding regular conference calls to discuss fraud trends and prevention efforts. Last week, Ohio Attorney General Mike DeWine warned individuals and small businesses shopping for coverage to be “on guard for potential scams and to take steps to protect themselves.”

Consistent with the federal government’s prior efforts to pursue fraud in other major federal programs, it is expected that the government will contribute substantial resources to criminal prosecutions of fraud related to the ACA. Importantly, while we have reported that qualified health plans available on the exchanges are being exempted by HHS from the definition of “federal health care program,” thereby potentially affecting enforcement under the anti-kickback statute, we note that the vast majority of criminal statutes applicable to healthcare fraud do not use that term.

For example, the laws governing healthcare fraud (18 U.S.C. § 1347), as well as false statements relating to healthcare matters (18 U.S.C. § 1035), prohibit certain activities involving a “federal health care benefit program.” Federal law defines a “federal health care benefit program” broadly to include “any public or private plan or contract, affecting commerce, under which any medical benefit, service, or item is provided to any individual.” The exchanges fall under this definition.

Another statute potentially applicable to the above-described activities is aggravated identity theft (18 U.S.C. § 1028A); the statute prohibits the use or possession of a means of identification of a person during and in relation to the commission of a predicate felony, such as healthcare fraud. As previously reported in the HLU, the aggravated identity theft statute is particularly popular among federal prosecutors given its penalty — a two-year prison sentence that must be served consecutive to any sentence imposed for the predicate felony.