Healthcare Fraud Investigations in New Jersey: What Doctors, Practice Owners, and Billers Need to Know

The Federal Laws Behind Most Healthcare Fraud Cases

Healthcare fraud (18 U.S.C. § 1347)

This statute makes it a crime to knowingly carry out a scheme to defraud any healthcare benefit program, public or private. It carries up to 10 years in prison, or 20 years if the scheme causes serious bodily injury. Prosecutors use it for billing for services never provided, upcoding, and billing for medically unnecessary care.

The Anti-Kickback Statute (42 U.S.C. § 1320a-7b(b))

Paying or receiving anything of value to induce referrals of Medicare or Medicaid business is a felony punishable by up to 10 years. “Anything of value” is broad. It can include cash, free rent, lavish meals, sham “consulting” or “marketing” fees, or a salary that tracks referral volume.

EKRA and the Travel Act

Kickbacks involving private insurance can still be federal crimes. The Eliminating Kickbacks in Recovery Act (EKRA) covers labs, recovery homes, and treatment facilities regardless of payer. Prosecutors in New Jersey have also used the federal Travel Act together with New Jersey’s commercial bribery law to charge referral payments involving private insurers.

Related charges

Healthcare cases often add wire fraud, mail fraud, conspiracy, money laundering, and aggravated identity theft. Aggravated identity theft carries a mandatory two years in prison on top of any other sentence.

Civil and Administrative Exposure

A criminal case is not the only risk. The same conduct can lead to a civil False Claims Act lawsuit seeking triple damages and penalties for each claim, exclusion from Medicare and Medicaid by the HHS Office of Inspector General, and action against your professional license. These tracks often move at the same time, and what you say in one can be used in another.

Common Healthcare Fraud Schemes Investigated in New Jersey

• Billing for services, tests, or equipment that were never provided
• Upcoding visits or procedures to higher paying codes
• Paying “marketers” per patient or per prescription
• Lab testing and genetic testing ordered without real medical need
• Telemedicine arrangements where a doctor signs orders for patients they never examined
• Compounded medications and prescription drugs billed at inflated prices
• Medical directorships or consulting agreements that exist mainly to pay for referrals

Warning Signs You May Be Under Investigation

• An HHS OIG subpoena or a grand jury subpoena for patient files or billing records
• A Civil Investigative Demand from the U.S. Attorney’s Office
• Payment suspensions or unusual audit requests from Medicare or a commercial insurer
• Agents interviewing your staff, former employees, or referral sources
• A target letter from the U.S. Attorney’s Office for the District of New Jersey

Investigations frequently start with a whistleblower, often a former employee or biller who files a sealed False Claims Act lawsuit. You may not learn about it until the government has been gathering evidence for a long time.

What to Do If You Are Contacted

Defenses in Healthcare Fraud Cases

Every case depends on its facts, but common defenses include good faith reliance on coding guidance or billing advisors, legitimate medical necessity supported by the records, compliant arrangements that fall within an Anti-Kickback safe harbor, lack of knowledge or intent, and errors in how the government calculated loss. Billing mistakes are not crimes. The government has to prove you acted knowingly and willfully.

Frequently Asked Questions

This article is for general information only and is not legal advice. Reading it does not create an attorney client relationship.