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Chapter 10 Criminal Law and Medical Profession






Criminal Offenses
Civil Sanctions




This chapter details an aspect of the practice of medicine that involves very few practitioners. Although the figures indicate that insurance fraud is a huge enterprise, only a tiny fraction of physicians are likely to ever be touched by any criminal investigation in this area. Nonetheless, an awareness of the law and the procedures pertaining to a criminal investigation of medical fraud will better help the medical professional to stay abreast of the problem and make the physician more likely to identify potential problem areas in his practice before they escalate into a criminal investigation. This chapter highlights the stages of a criminal investigation and explores current federal and state law involving both insurance fraud and, specifically, Medicare and Medicaid abuse.


The number of criminal investigations involving medical professionals has increased steadily in the past several years. These investigations, distinguished in this chapter from criminal liability based on the quality of medical services, are usually initiated upon complaints by the public or former associates of a medical professional. The following traces a federal criminal investigation of a medical professional from receipt of the complaint through indictment:

  1. a) Initiation and Fact Finding by the Federal Agency

A federal criminal investigation of a medical professional may be initiated by a complaint from a member of the public or of the physicians staff, or by government intermediaries, based on profiling or audits. Once an investigation is initiated, the responsible agency has sole discretion in deciding if, and how far, to pursue the complaint.

Fact finding by the federal agency consists of a preliminary examination, an informal and/or a formal investigation, the issuance of search warrants, and possibly a grand jury subpoena. The preliminary examination involves identification of the parties, finding proof that the transaction alleged actually took place, and contacting other government agencies for information regarding other investigations involving the physician.

In a Medicare investigation, for example, the investigating agency would likely first obtain readily available information about the physician, such as his Medicare Provider Number and associated information. The number and size of all questioned billings would be confirmed with the Medicare intermediary. The state licensing agency and any other relevant local, state, and federal agencies would be contacted for information on the physician and to determine whether any complaints had been filed, or if any investigations had been initiated. The Medicare fraud investigators will likely involve the United States Attorney Generals office at an early stage, and begin working with an Assistant United States Attorney (AUSA).

Assuming doubt still remains as to the propriety of the transactions, the investigation then moves toward attempting to put together a provable case. Investigators will try to find witnesses to the events, as well as witnesses who will agree to assist in further fact-finding. The medical professional may not have been told, even at this late stage, that he is being investigated.

The investigation will then proceed to more open strategies, such as serving search warrants and grand jury subpoenas. A search warrant of the physicians office and home may be obtained. Assuming that the federal fraud suspected is relatively major, the execution of a search warrant may involve dozens of federal agents who appear at a business or home with the intention of securing the greatest number of incriminating documents before the suspect has a chance to dispose of them.

The agents will provide a copy of the warrant to the person whose property will be seized. After gathering the documents they require, the agents will provide a rough summary of the seized evidence to the owner. Do not attempt to interfere with the execution of the warrant in any way, and advise employees not to interfere.

The medical professional should not make any statements to the agents, and should advise his employees not to discuss anything with them. He should seek defense counsel immediately. Although the agents conducting the search will likely not divulge much information to the physicians counsel, they will inform him of the AUSA assigned to the investigation, who may be able to provide more information. The medical professional usually can get access to the seized documents at a later time, when the government will allow them to be photocopied.

The investigating agency may also produce a grand jury subpoena. This generally directs the physician to appear before a federal grand jury, often with required documentation, to answer questions posed by the prosecutor and the grand jury panel members. Although defense counsel is not allowed inside the grand jury room, the medical professional should always retain counsel before responding to or answering any questions related to a grand jury subpoena.

Less frequently used tactics include wire taps and sting operations. Wire taps, in particular, require the agency to meet numerous legal requirements and require much manpower, so these are rarely used except for large operations or when they are critical to the investigation.

  1. b) The Physicians Response

The physicians counsel will likely first conduct an in-house investigation to discover what information is available. Employees will be interviewed and records reviewed. This information will be used, but not necessarily divulged, in meetings with the AUSA. Problem areas in the prosecutions case may be uncovered, and the scope of the investigation may be limited if a thorough review reveals, for example, that only one employee or transaction caused the problem.

A formal pre-indictment conference will likely be held, during which each side attempts to briefly explain the strengths of their case, and set the stage for later negotiations. A realistic assessment of the case is critical before any successful negotiations can begin.

Obviously, by the time an investigation has reached this stage, it is a matter that a physician must consider with the utmost seriousness. Any criminal conviction, or plea of nolo contendere, involving any offense related to the practice of medicine is grounds for denial or revocation of licensure. NRS. 630.301. The possibility of incarceration is very real in serious fraud cases. Other provisions of the Nevada Revised Statutes and Nevada Administrative Code directly prohibit conduct that is also potentially criminal, such as charging for services that were not rendered or documented. NRS. 630.305. At this stage, the physician not only faces criminal sanctions but faces likely disciplinary action from the Board of Medical Examiners, including the revocation of licensure.

In general, a medical professional should not talk with any law enforcement officers unless his attorney is present. Even seemingly-innocent statements can be misconstrued and misreported, and then used against the physician. Further, the investigation should not be discussed with anyone, including third parties, without defense counsels knowledge, and no information or documents should be volunteered. Conversely, no attempt should be made to interfere with an investigation, and documents should never be destroyed.


In 1996, Congress passed the Health Insurance Portability and Accountability Act. The Act greatly enhanced the federal governments ability to identify and curtail health care fraud by giving federal agencies the express authority to investigate potential fraud related to the delivery and payment of health care in the United States, even if the care was provided through a private payor. The Act contains mandatory reporting and information sharing provisions, and also allows government agencies to be reimbursed for the costs of investigating and prosecuting health care fraud.

Federal Prohibitions

1)         Health care fraud is a specific federal offense defined as knowingly or willfully defrauding any health care benefit program or obtaining, by any means of false or fraudulent pretense, any money or property owned by or under the custody and control of any health care program. Penalties for violations involving federal programs include imprisonment and fines. 18 U.S.C. 1347.

2)         False statements related to health care matters are criminal offenses. Any knowing falsification or concealment of a material fact, or the making of a materially false, fictitious, or fraudulent statement in connection with the delivery or payment of health care benefits subjects the practitioner to imprisonment and fines. 18 U.S.C. 1035.

3)         Theft or embezzlement related to health care is a federal criminal offense. 18 U.S.C. 669.

4)         Obstructing a criminal investigation of a health care offense is a separate offense punishable by imprisonment and fines. 18 U.S.C. 1518.

Nevada Law

In general, any charge for services rendered by a physician that were not actually rendered is prohibited. NRS. 630.305.

AMA Ethical Opinions

The AMA Code of Medical Ethics states:

The following guidelines encourage physicians to play a key role in identifying and preventing fraud:

1)         Physicians must renew their commitment to Section II of the AMAs Principles of Medical Ethics which states that a physician shall deal honestly with patients and colleagues, and strive to expose those physicians deficient in character, competence, or who engage in fraud or deception.

2)         Physicians should make no intentional misrepresentations to increase the level of payment they receive or to secure non-covered health benefits for their patients.


Following a once-lax attitude toward Medicare and Medicaid abuse, Congress has recently promulgated a wide variety of laws intended to curb abusive practices. Currently Congress has identified over fifty potential violations that could subject a medical professional to criminal and civil penalties. These recent laws have provided the Office of Inspector General (OIG) with broad powers to penalize physicians or exclude them from participating in any federal or state health care programs.


Exclusion of a physician or medical entity by the OIG means that no federal or state health care program payment will be made for services rendered by the excluded physician. In 1997, over 2,700 persons and entities were excluded from participation in government health care programs. The OIG is expressly authorized to exclude any individual who commits an act that is punishable as either a criminal offense or by a monetary sanction, thus greatly expanding the potential pool of medical professionals who can be excluded. 42 U.S.C. 1320a-7(b)(7). The physician faces some serious procedural disadvantages when faced with an exclusion action, particularly when the proceeding deprives the physician of a large portion of his livelihood.

The main advantage held by the government in pursuing exclusion of a medical professional, rather than pursuing criminal penalties, is that they do not need to follow the full range of criminal procedural steps in order to punish a practitioner. For a criminal prosecution, the physician is afforded full procedural protection, including the right to a full trial with the attendant beyond a reasonable doubt burden of proof imposed upon the government prosecutors. Exclusion, however, is an administrative mechanism. Exclusion carries no such burden severe standard of proof. The OIG may exclude a physician based simply upon a finding that facts exist to support its determination.

Effects of Penalties

Naturally, imprisonment is a severe penalty that generally spells the end of a physicians professional life. However, exclusion may also prevent a physician from continuing a professional practice. Exclusion impacts a physicians ability to maintain medical staff privileges, to contract with managed care plans, to obtain malpractice insurance, and to continue the patterns of practice for the referral of patients. The law prohibits any Medicare provider from billing for any services rendered at the direction or on the prescription of a physician who has been excluded from the Medicare system. 42 U.S.C. 1395y(e).

The law works in two ways. First, for reasons of professional liability, other physicians will likely not refer a patient to a practitioner who is excluded from the Medicare program. Second, hospitals and other physicians will likely not provide services for patients at the direction of an excluded physician because the law prohibits them for receiving payment for those services. An exclusion thus has the potential to quickly destroy a physicians practice.

Creating a Case Against the Physician

OIG investigations are often triggered by complaints from insurance beneficiaries, the physicians employees, or other intermediaries. Whistle blowers are increasingly provided financial incentives by the federal government to report suspected medical fraud. These are known as qui tam actions.

The False Claims Act permits whistle blowers to bring actions, on behalf of the federal government, to recover damages for the submission of false claims. 31 U.S.C. 3729. The act authorizes the whistle blower to recover up to thirty percent of the penalty imposed upon the medical professional or institution. The Act allows the government to collect treble damages for false health care claims. The False Claims Act does not require the government to prove that the medical professional actually intended to defraud the government. Simply having knowledge that the information is false, coupled with either acting in reckless disregard of the truth or falsity of the information, or acting in deliberate ignorance of the truth or falsity of the information is sufficient.

The Department of Justice (DOJ) will likely not pursue a health care provider unless the DOJ first ascertains that the provider had knowledge that he was submitting a false claim. Factors considered when evaluating whether a provider had the requisite knowledge include:

1)         whether the provider was on notice of the rule or policy governing the claim;

2)         the clarity of the rule or policy;

3)         the magnitude or pervasiveness of the claim;

4)         the providers use of and adherence to a compliance plan;

5)         the providers past efforts to remedy the problem;

6)         any advice or guidance received from appropriate government agencies; and

7)         prior audits or notices of the same or similar conduct.

Beneficiaries of Medicare are also entitled to receive financial incentives for reporting fraud. Currently, beneficiaries who meet other criteria may recover ten percent of the amount recovered (limited to $1000) for reporting fraud and abuse. 42 C.F.R. 420.405. Beneficiaries also must receive a notice in each explanation of benefits mailing stating that because Medicare fraud, waste and abuse is a significant problem, beneficiaries should carefully check any explanation of benefits or itemized statement . . . and report any errors or questionable charges. 42 U.S.C. 1395b-2.

Medicare beneficiaries may also request an itemized statement from any physicians who have provided them with services for which payment was made by Medicare. 42 U.S.C. 1395b-7. Physicians have thirty days to furnish a requesting beneficiary an itemized statement describing each item or service provided to the individual. Failure to do so subjects the physician to a civil fine of no more than $100 for each violation. The beneficiary may then request that the supervising government agency review the itemized statement.

HCFA tells beneficiaries what actions should make them suspicious of Medicare fraud. The tips provided to beneficiaries are:

You should be suspicious if the provider tells you that:

The test is free; he only needs your Medicare number for his records.

Medicare wants you to have the item or service.

They know how to get Medicare to pay for it.

The more test they provide the cheaper they are.

The equipment or service is free; it wont cost you anything.

Be suspicious of providers that:

Routinely waive co-payments without checking on your ability to pay.

Advertise free consultations to Medicare beneficiaries.

Claim they represent Medicare

Use pressure or scare tactics to sell you high priced medical services or

diagnostic tests.

Bill Medicare for service you do not recall receiving.

Use telemarketing and door-to-door selling as marketing tools.

Be suspicious of:

Home health providers that offer non-medical transportation services or

housekeeping as Medicare approved services.

Physicians who bill Medicare for telephone calls, conferences with the family, or scheduled but not kept appointments.

Ambulance companies that bill Medicare for routine trips to a doctors office.

Physicians that give the wrong diagnosis on the claim form so Medicare will pay.

Ambulance companies that bill for trips which are not emergency in nature.

Home health providers that bill for patients who are not confined to their             home.

Home health providers that bill for Medicare patients who still drive an automobile.

Suppliers that bill Medicare for medical equipment for beneficiaries in a nursing home.

Hospital providers that bill Medicare for tests you received as an inpatient             or within 72 hours of admission or discharge.

These fraud reporting tips can be found on the HCFA website:


Several federal statutes specifically address fraud and abuse within federal health care programs. In general, violations of these laws may result in felony convictions and are punishable by imprisonment, fines, and exclusion from federal health care programs. Civil penalties include exclusion and monetary penalties. Some of the more important specific offenses, by no means a complete list, appear below.

Criminal Offenses

1) Assignment or Participating Physician Agreement Violations. Any physician who accepts assignment or agrees to be a participating physician in the Medicare program and knowingly, wilfully, and repeatedly violates the term of such assignments or agreements shall be guilty of a misdemeanor and can be fined up to $2000 and imprisoned up to six months, and can be excluded from participation in the Medicare program. 42 U.S.C. 1320a-7b(e).

2) Excessive Charges. It is a felony to knowingly and wilfully charge Medicaid patients for services at a rate in excess of the established rates, or to charge, solicit, accept, or receive in addition to any amount otherwise required to be paid under the Medicaid program, any gift, money, donation or other consideration as a precondition of admitting a patient to a hospital or other facility or as a requirement for the patients continued stay in the facility. 42 U.S.C. 1320a-7b(d).

3) False Claims. False claims fall under five separately identified activities. It is illegal to knowingly and wilfully make any false statement or misrepresentation of a material fact in any claim for benefits or payments from a federal health care program, or for use in determining benefits or payments from a federal health care program. Prohibited conduct includes billing for services not rendered, billing for services not performed by appropriately licensed individuals, misrepresenting the services actually rendered, or falsely certifying that services were medically necessary. 42 U.S.C. 1320a-7b(a)(1).

False claim violations include concealing or failing to disclose any event affecting a persons right to federal health care benefits with the intent to fraudulently secure payments in a greater amount than is due or where no such benefit or payment is authorized. Converting a federal health care benefit received on behalf of one person to the use of another is prohibited, as is claiming that a physician performed the service when the person who actually performed it was not a licensed physician. 42 U.S.C. 1320a-7b(a)(3) to 7b(a)(4).

4) Kickbacks and Rebates. The offer, payment, or receipt of almost any remuneration of value indirectly or directly, in cash or in kind, for the referral of a patient receiving benefits under a federal health care program or for the purchase, lease, order, or arrangement of any item or service paid in whole or in part under a federal health care program is a felony. With very few exceptions, courts have been willing to uphold convictions of physicians convicted under this provision. 42 U.S.C. 1320a-7b(b).

Civil Sanctions

1) Mandatory Exclusion.

Exclusion of a physician or medical entity from participation in any federal health care program has already been discussed in this chapter. Of note, however, are the provisions for mandatory exclusion for certain convictions. The OIG must exclude any physician convicted of:

  1. a criminal offense related to the delivery of an item or service reimbursed by Medicare or Medicaid;
  2. any criminal offense relating to patient abuse or neglect;
  3. any felony offense related to any federal, state, or private health care fraud; or
  4. a felony offense related to controlled substances. 42 U.S.C. 1320a-7(a)(1) to 7(a)(4).

Mandatory exclusions apply for at least five years. The number of years of exclusion rises with each conviction, with a permanent mandatory ban enforced on the third offense. 42 U.S.C. 1320a-7(c).

2) Discretionary Exclusion.

When a physician commits certain offenses, the OIG has been granted discretionary authority to exclude that physician from any federal health care program. The OIG may exclude a physician or entity for the following offenses, among others:

  1. a) Controlling a Sanctioned Entity: Any individual who has a direct or indirect ownership or control interest in a sanctioned entity, and who knows or should know of the action constituting the basis for the sanction, may be excluded, regardless of whether the person participated in the wrongdoing. 42 U.S.C. 1320a-7(b)(15). A sanctioned entity is one that has been convicted of a health care related crime or excluded from the Medicare or Medicaid programs. Physicians may be well advised, therefore, to terminate their relationships with sanctioned entities in order to avoid being excluded themselves.
  2. b)Convictions of Certain Crimes: The OIG may exclude physicians for three basic types of offenses in this category. A conviction under either state or federal law for a misdemeanor criminal offense relating to fraud, theft, embezzlement, breach of a fiduciary duty, or other financial misconduct in connection with the delivery of health care in a program operated by any government agency can result in exclusion. Criminal offenses relating to fraud with respect to a federal non-health care program, or obstruction of any criminal investigation involving Medicare or Medicaid fraud, patient abuse, or almost any other offense; or any criminal offense related to controlled substances can result in an exclusion for a minimum of three years, unless aggravating or mitigating circumstances exist. 42 U.S.C. 1320a-7(c)(3)(D).
  3. c) Entities Controlled by a Sanctioned Individual: An entity may be sanctioned if an officer, director, agent, or managing employee, or a person who has an ownership or controlling interest in the entity: 1) has been convicted of a crime that could result in exclusion; 2) has had a civil monetary penalty imposed upon him or her; or 3) has been excluded from Medicare or Medicaid. 42 U.S.C. 1320a-7(b)(8). If a person facing possible exclusion transfers his interest in the entity to a family member or member of his household, the entity may nonetheless be excluded. 42 U.S.C. 1320a-7(b)(8)(C).
  4. d) Quality of Care: The OIG is authorized to exclude any individual who has furnished health care to any patient (not just Medicare or Medicaid patients) where the care fails to meet the professionally recognized standard or is in excess of the needs of the patient. Similarly, a physician who is found by a peer review organization to have failed in a substantial number of cases to comply with the obligation to provide medically necessary quality care or has flagrantly and grossly violated such obligations may be excluded. 42 U.S.C. 1320c-5(b)(1).
  5. e)Excessive Charges: Any individual who has filed a Medicare or Medicaid claim for charges substantially in excess of the individuals usual (not necessarily customary) charges may be excluded. 42 U.S.C. 1320a-7(b)(6)(A).
  6. f)Failure to Report, Disclose, or Provide Access to Certain Information: An individual or entity who fails to provide documentation requested by the OIG or the state Medicaid agency, as necessary to determine the amount of Medicare or Medicaid payments due, may be excluded. Failure to grant immediate access to certain inspection and fraud control units may also warrant exclusion. 42 U.S.C. 1320a-7(b)(11) to (12).
  7. g) Failure to Take Corrective Action: A hospital that fails to substantially comply with a corrective action plan imposed by the OIG to correct any inappropriate payment or patient admission practices faces exclusion. 42 U.S.C. 1320a-7(b)(13).
  8. h) Student Loan Defaults: An individual who has defaulted on a health education loan or scholarship obligation that was secured, in whole or in part, by the Department of Health and Human Services may be excluded. If however, a state requests that the physician not be excluded and he is the sole community physician or sole source of essential specialized services, the OIG cannot exclude the physician under this provision. 42 U.S.C. 1320a-7(b)(14).

3) Civil Monetary Penalties

In addition to criminal penalties and exclusion, the Inspector General may seek monetary damages against physicians. These civil penalties can be severe, and can potentially destroy a physicians practice. 42 U.S.C. 1320a-7a. The statute of limitations that applies to these civil actions is generally six years from the date of the claim for payment. 42 U.S.C. 1320a-7a(c)(1). The following activities could subject a physician to civil fines of $10,000 for each illegal item or service plus a penalty of up to three times the amount claimed:

  1. a) Anti-Kickback Law Violations: An extremely powerful tool in fighting medical kickbacks, this statute allows fines of $50,000 plus up to three times the amount paid. Any portion of an offer or payment that is implicated will suffice to make the entire transaction subject to these penalties; thus, the treble damage provision applies to all remuneration paid, solicited, offered, or received, even if some or the majority of the remuneration was legal. 42 U.S.C. 1320a-7a(a)(7).
  2. b) Assignment or Participating Physician Agreement Violations: Each item or service contained in a request for payment which is in violation of the terms of an assignment, an agreement with a state agency not to charge in excess of a prescribed amount, or a participating physician agreement subjects a physician to a civil penalty. 42 U.S.C. 1320a-7a(a)(2).
  3. c) Billing for Services which are Not Medically Necessary: The practice of submitting a pattern of claims that a physician knows or should know are not medically necessary will subject him to civil penalties. According to Congress, this provision is not intended to penalize providers because of a professional difference of opinion, but to assure that the need for treatment is established before services are delivered. 42 U.S.C. 1320a-7a(a)(1)(E).
  4. d) Contracts with Excluded Providers: Physicians who contract or arrange for the provision of Medicare services with a person or entity who the physician knows or should know is excluded from participation in a federal health care program face civil monetary penalties. Prudent physicians should therefore question or investigate any person with whom they contract or employ, as to whether they are excluded from such programs. 42 U.S.C. 1320a-7a(6).
  5. e) False or Inappropriate Claims: Physicians face civil penalties for knowingly presenting any claim that:

1)         is for an item or service that the person knows or should know was not provided as claimed;

2)         is for a medical item or other service and the person knows or should know that the claim is false or fraudulent;

3)         is for a physicians service when the service was not provided by a physician. 42 U.S.C. 1320a-7a(a)(1)(A)-(C).

  1. f)False or Misleading Information Resulting from Hospital Discharge Decisions: Knowingly providing false or misleading information that could be reasonably expected to influence a decision of when to discharge a patient from a hospital subjects a physician to a fine of up to $15,000 per Medicare patient. 42 U.S.C. 1320a-7a(a)(3).
  2. g)Improper Home Health Services Certification: A physician who knowingly falsely certifies that the requirements have been met can be liable for a penalty not more than the greater of $5000 or three times the amount of payments made as a result of false certification. 42 U.S.C. 1320a-7a(b)(3).
  3. h)Inducements or Payments to Beneficiaries: A payment or inducement of anything of value that is likely to influence a beneficiary to order or receive items or services payable by Medicare or Medicaid makes the physician liable, in addition to other penalties, to a civil fine. The waiver of coinsurance and deductibles could constitute the prohibited remuneration under this statute, unless certain requirements are met. The physician cannot routinely waive these, and can only waive the coinsurance and deductibles in accordance with regulations issued by the Secretary, such as waiving the amounts after determining in good faith that the individual is in financial need or after making reasonable collection efforts. 42 U.S.C. 1320a-7a(a)(5).
  4. i)Unlawful Physician Incentive Plans: A physician who knowingly accepts a payment made as an inducement to reduce or limit services provided to Medicare or Medicaid beneficiaries faces a civil penalty of up to $2000 for each payment received. 42 U.S.C. 1320a-7a(b)(2).
  5. j)Upcoding: Civil penalties may be imposed for engaging in a practice of billing that results in a greater payment than if the physician were to use the code the physician knows or should know is applicable to the item or service provided. 42 U.S.C. 1320a-7a(a)(1)(A).

4) Miscellaneous Civil Monetary Penalty and Exclusion Laws

A fairly large number of scattered provisions throughout the body of federal statutes subject physicians to monetary sanctions and monetary penalties in relation to federal health care programs. The more common violations and those mandating significant penalties are included below:

  1. a) Inappropriate Advertising: Using the names, symbols, or emblems of the Social Security Administration, Health Care Financing Administration, Medicare or other related terms in a way that gives the false impression that the item being advertised is approved by the federal government may lead to a penalty of $5000 for each violation, and up to $25,000 in the case of a broadcast or telecast. 42 U.S.C. 1320b-10.
  2. b) Violations of Mandatory Assignment Provisions: Civil penalties of up to $2000 per violation may be imposed on a physician who violates the mandatory assignment of claims provision for the services of a registered nurse anesthetist, physicians assistant, nurse practitioner, certified nurse midwife, qualified psychologist, or clinical social worker. Filing Medicare claims for clinical diagnostic laboratory services in violation of the mandatory assignment provisions for such services could cost the physician a fine of $2000.
  3. c)Specific Cataract Surgery Violations: Claiming payment for the services for an assistant at cataract surgery subjects a physician to sanctions, as does charging a patient for an intraocular lens inserted during or subsequent to cataract surgery where the lens is eligible for Medicare payment. 42 U.S.C. 1395u(k) and 1395l(I)(6).
  4. d)Selected Specific Billing Violations: A physician who bills the Medicare program for services provided to a patient also covered under Medicaid must only do so on an assignment-related basis, or face the possibility of exclusion for five years and civil penalties. 42 U.S.C. 1395w-4(g)(3). Even non-participating physicians who violate certain charge restrictions, such as for cataract surgery, are subject to penalties. 42 U.S.C. 1395u(b)(11)(C). Unbundling of hospital out-patient services may subject the hospital and physicians to civil monetary sanctions.
  5. e) Other Miscellaneous Violations: Any mark-up of diagnostic tests; any violation of the disclosure requirements; failure to code; failure to provide an itemized statement; falsifying assessments of a resident of a skilled nursing facility; forewarning a home health agency of a compliance survey; violations of the emergency transfer of patients laws; self-referral for certain goods and services such as radiology and clinical laboratory services; skilled nursing facility resident abuse or neglect or misappropriation of a residents property will all subject a physician to civil monetary sanctions.


Many allegedly criminal acts, particularly common law crimes, must be accompanied by intent in order for the act to be considered criminal. (Caution: some statutory crimes, on the other hand, require no intent at all; the mere performance of the forbidden act is illegal). Thus if a physician did not intend harm by his acts, even if his acts were questionable, this may form a valid defense to some crimes. Physicians who act on the advice of their attorneys may sometimes raise this defense, commonly called the advice of counsel defense.

The advice of counsel defense is based on the argument that, because the physician relied on his attorneys advice, he did not have the necessary bad intent to commit the act. Courts evaluate several factors in considering the advice of counsel defense, including the following:

  1. The Nature of the Legal Advice: The advice rendered by the counsel must be believable. Any obviously unethical or illegal advice that the physician should have known was not believable will be disregarded.
  2. The Timing of the Advice: The advice had to have been given before the act or transaction was begun. Performing an illegal act and then receiving legal advice that the act was likely legal will not constitute a defense.
  3. Level of Client Disclosure: The legal advice must be based on all the facts and circumstances of the transaction. It must set forth the relevant facts upon which it is based. Therefore if a physician holds back any information when testing the legality of a transaction, or if an attorney does not use all relevant information in making his determination, the advice will not stand.
  4. Clarity of Legal Advice: The advice rendered must clearly state that the proposed transaction if legal. Any hedging by the attorney will work against the physician attempting to use the defense.

The defense, unfortunately, does not come without its own problems. First, it is not a complete defense, in that the judge or jury could still find that the government has proven its case, despite the claim of lack of intent based on the advice of counsel. Second, raising the defense constitutes a waiver of the attorney-client privilege. Any documentation used in forwarding this defense may be investigated by the government agency and may be used against the proffering physician. Therefore, it is critical to fully weigh the potential benefits of this limited defense before attempting to use it. See Adler v. Nevada, 95 Nev. 339, 594 P.2d 725 (Nev. 1979).