In the Courts

Health Care Fraud Statute Covers More Than Health Care

In a Matter of First Impression, the Second Circuit Holds that the Federal Health Care Fraud Statute Broadly Covers a Wide Range of Conduct and Is Not Restricted to Health Care Providers.

In United States v. Lucien, Nos. 02-1228, 02-1266, 02-1395, 2003 WL 22333062 (2d Cir. Oct. 14, 2003), the defendants appealed their conviction under the health care fraud statute, 18 U.S.C. ' 1347. The defendants had been convicted under 18 U.S.C. ' 1347 for their participation as passengers in staged automobile accidents designed to profit from New York's no-fault automobile insurance program. On appeal, the defendants contended that the federal health care fraud statute only applies to health care professions and that they did not defraud a “health care benefit program,” as prohibited in the statute, by defrauding the New York State no-fault automobile insurance program.

The health care fraud statute, 18 U.S.C. ' 1347, states: “Whoever knowingly and willfully executes, or attempts to execute, a scheme or artifice — (1) to defraud any heath care benefit program; or (2) to obtain, by means of false or fraudulent pretenses, representations, or promises, any of the money or property owned by, or under the custody or control of, any health care benefit program, in connection with the delivery of or payment for health care benefits, items, or services, shall be fined under this title or imprisoned not more than 10 years, or both.” The relevant definition of a “health care benefit program” is set out in 18 U.S.C. ' 24(b), which provides: “As used in this title, the term 'health care benefit program' means any public or private plan or contract, affecting commerce, under which any medical benefit, item, or service is provided to any individual, and includes any individual or entity who is providing a medical benefit, item, or service for which payment may be made under the plan or contract.”

In a matter of first impression, the Second Circuit found that the defendants' argument that the statute only applies to health care professional is at odds with the plain language of the statute that states “[w]hoever knowingly and willfully executes, or attempts to execute a scheme or artifice … to defraud any health care benefit program … ” The court found the common meaning of the term “ whoever” to cover any person. While acknowledging that resort to legislative history was not necessary due to the plain language of the statute, the court also found that the legislative history of the statute supported the court's construction because the defendants' specific conduct was envisioned by Congress when it enacted ' 1347.

Moreover, the court rejected the argument that the health care fraud statute did not apply to their conduct because the New York State no-fault automobile insurance program does not operate nationwide and thus could not constitute a health care benefit program within the meaning of the statute. The court found no such limitation in the statute, which provides simply that “any public or private plan or contract … under which any medical benefit, item, or service is provided to any individual” qualifies as a “health care benefit program” under ' 24(b). Because the defendants received a “medical benefit” as a result of the vehicle owners' no-fault “insurance contracts,” the court held that a health care benefit program is plainly implicated under ' 24(b). Thus, the court affirmed the defendants' convictions under 18 U.S.C. ' 1347 based on their participation as passengers in staged accidents designed to profit from New York's no-fault insurance regime.

Health Care Fraud Statute Covers More Than Health Care

In a Matter of First Impression, the Second Circuit Holds that the Federal Health Care Fraud Statute Broadly Covers a Wide Range of Conduct and Is Not Restricted to Health Care Providers.

In United States v. Lucien, Nos. 02-1228, 02-1266, 02-1395, 2003 WL 22333062 (2d Cir. Oct. 14, 2003), the defendants appealed their conviction under the health care fraud statute, 18 U.S.C. ' 1347. The defendants had been convicted under 18 U.S.C. ' 1347 for their participation as passengers in staged automobile accidents designed to profit from New York's no-fault automobile insurance program. On appeal, the defendants contended that the federal health care fraud statute only applies to health care professions and that they did not defraud a “health care benefit program,” as prohibited in the statute, by defrauding the New York State no-fault automobile insurance program.

The health care fraud statute, 18 U.S.C. ' 1347, states: “Whoever knowingly and willfully executes, or attempts to execute, a scheme or artifice — (1) to defraud any heath care benefit program; or (2) to obtain, by means of false or fraudulent pretenses, representations, or promises, any of the money or property owned by, or under the custody or control of, any health care benefit program, in connection with the delivery of or payment for health care benefits, items, or services, shall be fined under this title or imprisoned not more than 10 years, or both.” The relevant definition of a “health care benefit program” is set out in 18 U.S.C. ' 24(b), which provides: “As used in this title, the term 'health care benefit program' means any public or private plan or contract, affecting commerce, under which any medical benefit, item, or service is provided to any individual, and includes any individual or entity who is providing a medical benefit, item, or service for which payment may be made under the plan or contract.”

In a matter of first impression, the Second Circuit found that the defendants' argument that the statute only applies to health care professional is at odds with the plain language of the statute that states “[w]hoever knowingly and willfully executes, or attempts to execute a scheme or artifice … to defraud any health care benefit program … ” The court found the common meaning of the term “ whoever” to cover any person. While acknowledging that resort to legislative history was not necessary due to the plain language of the statute, the court also found that the legislative history of the statute supported the court's construction because the defendants' specific conduct was envisioned by Congress when it enacted ' 1347.

Moreover, the court rejected the argument that the health care fraud statute did not apply to their conduct because the New York State no-fault automobile insurance program does not operate nationwide and thus could not constitute a health care benefit program within the meaning of the statute. The court found no such limitation in the statute, which provides simply that “any public or private plan or contract … under which any medical benefit, item, or service is provided to any individual” qualifies as a “health care benefit program” under ' 24(b). Because the defendants received a “medical benefit” as a result of the vehicle owners' no-fault “insurance contracts,” the court held that a health care benefit program is plainly implicated under ' 24(b). Thus, the court affirmed the defendants' convictions under 18 U.S.C. ' 1347 based on their participation as passengers in staged accidents designed to profit from New York's no-fault insurance regime.