Section 1347 Elements
Section summaryThe government must prove (1) a knowing and willful scheme or artifice to defraud, (2) execution or attempted execution of the scheme, and (3) connection to a healthcare benefit program.
18 U.S.C. § 1347 has two alternative theories:
- Scheme to defraud. A scheme to defraud any healthcare benefit program.
- False representation. A scheme 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 healthcare benefit program.
Each theory requires:
- Knowing and willful execution.
- Execution or attempted execution of the scheme.
- Connection to a healthcare benefit program.
Conviction does not require proof that the program actually paid out. Attempted execution is sufficient. The scheme need not have succeeded.
Penalty structure:
- Up to 10 years imprisonment generally.
- Up to 20 years if the violation results in serious bodily injury.
- Up to life imprisonment if the violation results in death.
- Fines under standard federal sentencing.
Program Reach
Section summary"Healthcare benefit program" is defined broadly. It includes federal programs (Medicare, Medicaid, TRICARE, CHAMPVA) and many private payers. The broad definition gives the statute substantial scope.
The statute defines healthcare benefit program broadly. Coverage includes:
- Medicare. The federal program for elderly and disabled beneficiaries.
- Medicaid. The federal-state program for low-income beneficiaries.
- TRICARE. The military health system.
- CHAMPVA. The veterans' dependents program.
- Federal Employee Health Benefits. The federal employee insurance system.
- Private payers. Many private insurance plans that provide healthcare benefits.
The private-payer reach distinguishes § 1347 from several other federal healthcare fraud statutes that apply only to federal programs. A scheme targeting only private insurers can still be prosecuted under § 1347.
The court's analysis of program reach typically considers whether the entity provides or pays for healthcare benefits, regardless of the program's funding source.
Intent to Defraud
Section summaryThe scheme must be executed knowingly and willfully. The government must prove the defendant's mental state — knowledge of the scheme's fraudulent character and intent to defraud the program.
Section 1347 has a heightened mental state: knowing and willful. Willfulness in this context generally requires:
- Knowledge that the conduct is unlawful, or
- Deliberate ignorance of unlawfulness, depending on circuit.
Section 1347(b), added by the Affordable Care Act, provides that proof of actual knowledge or specific intent to violate the statute is not required to convict. This addresses some of the prior mental state debate but does not eliminate the requirement to prove knowledge and willfulness.
Common evidentiary issues:
- Good faith. A defendant who acted in good faith reliance on professional advice, billing practices, or program guidance has a defense.
- Mistake. Genuine mistakes about billing codes, medical necessity, or compliance can negate willfulness.
- Reliance on counsel. Documented reliance on legal advice can support good-faith arguments.
- Knowledge of program rules. Sophisticated providers face higher inferences of knowledge than newcomers.
False Claims Act Civil Parallel
Section summaryThe False Claims Act under 31 U.S.C. § 3729 provides civil liability with treble damages for false claims against federal programs. The Act includes qui tam standing — private relators can sue on behalf of the government and share in recovery.
The False Claims Act (FCA) creates civil liability for knowingly presenting or causing to be presented a false claim for payment to the federal government, or making or using a false record material to a false claim.
Civil consequences:
- Treble damages — three times the actual damage to the government.
- Civil penalties per false claim, adjusted annually.
- Attorney fees and costs to the government or relator.
Qui tam provisions permit private parties (relators) to file suit on behalf of the government. The government can intervene and take over the case, or decline and permit the relator to proceed. Relators share in recovery, typically 15-30 percent.
Parallel proceedings are common. The same conduct can produce both a § 1347 criminal prosecution and an FCA civil action. The two tracks have different burdens of proof, different remedies, and different procedural rules. Coordination between criminal and civil track is a significant defense consideration.
FCA scienter is "actual knowledge," "deliberate ignorance," or "reckless disregard." These standards are lower than § 1347's "knowing and willful" but still require culpable mental state.
Anti-Kickback Statute
Section summaryThe Anti-Kickback Statute under 42 U.S.C. § 1320a-7b criminalizes knowing and willful solicitation, receipt, offer, or payment of remuneration to induce or reward referrals for federal healthcare program business.
The Anti-Kickback Statute (AKS) criminalizes:
- Solicitation or receipt of remuneration in return for referrals.
- Offer or payment of remuneration to induce referrals.
- Solicitation, receipt, offer, or payment in return for purchasing, leasing, ordering, or recommending federal program items or services.
"Remuneration" is broadly defined and includes cash, gifts, in-kind benefits, and many other forms of value. The statute reaches both sides of the transaction — the offeror and the recipient.
Penalties:
- Up to 10 years imprisonment per violation.
- Fines up to $100,000 per violation under the statutory maximum.
- Civil monetary penalties.
- Exclusion from federal healthcare programs.
Safe harbors regulations specify arrangements that, if structured according to defined requirements, do not violate the statute. Common safe harbors include investment interests, space rental, equipment rental, personal services and management contracts, and group purchasing organizations. Compliance with a safe harbor is a defense.
AKS scienter requires knowing and willful conduct. The Affordable Care Act added clarification that a violation under the Anti-Kickback Statute constitutes a false claim under the FCA, linking the two regimes.
Stark Law
Section summaryThe Stark Law under 42 U.S.C. § 1395nn prohibits physician self-referral to entities with which the physician (or immediate family member) has a financial relationship, for designated health services payable by Medicare.
The Stark Law prohibits physician self-referral. A physician may not refer Medicare patients to an entity for designated health services if the physician (or immediate family member) has a financial relationship with the entity, unless an exception applies.
Key features:
- Civil, not criminal. Stark is a strict-liability civil statute. Intent is not required for the underlying violation.
- Designated health services. The prohibition applies to specified service categories — clinical laboratory, imaging, physical therapy, durable medical equipment, and others.
- Financial relationship. Direct or indirect ownership, investment, or compensation relationships qualify.
- Exceptions. Many exceptions exist for properly structured arrangements (in-office ancillary services, bona fide employment, personal services, fair-market-value compensation, others).
Consequences include:
- Denial of payment for referred services.
- Refund obligation for amounts already paid.
- Civil monetary penalties for knowing violations.
- Potential FCA liability for claims submitted in violation of Stark.
Stark interacts with the AKS and FCA. A Stark violation can support FCA liability if the entity submitted claims to Medicare for services provided pursuant to a prohibited referral. The three statutes — § 1347, AKS, FCA, and Stark — together create a multi-track exposure framework that defines healthcare regulatory risk.
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Call (972) 370-5060 →The federal healthcare fraud statute framework
Federal healthcare fraud is prosecuted under 18 U.S.C. Section 1347, which criminalizes schemes to defraud healthcare benefit programs or to obtain money or property from healthcare benefit programs through false or fraudulent pretenses. The statute reaches both private and public healthcare programs including Medicare, Medicaid, TRICARE, and private insurance. The penalty structure includes up to 10 years of imprisonment for the base offense, with enhancement to 20 years for offenses resulting in serious bodily injury and to life imprisonment for offenses resulting in death.
The healthcare benefit program definition under Section 24(b) is broad and includes any public or private plan or contract affecting commerce under which any medical benefit, item, or service is provided to any individual. The definition reaches virtually all healthcare programs and ensures comprehensive coverage of healthcare fraud schemes. The breadth of the definition supports prosecution of fraud schemes across the healthcare industry.
The scheme to defraud element under Section 1347 reaches a broad range of fraudulent conduct including billing for services not provided, billing for services at higher levels than provided, billing for services provided to patients who did not need them, and various other forms of healthcare fraud. The scheme element provides substantial flexibility for prosecution decisions and reaches the diverse forms of fraud that occur in healthcare programs.
The Anti-Kickback Statute and the Stark Law overlap
The Anti-Kickback Statute at 42 U.S.C. Section 1320a-7b prohibits payments intended to induce referrals for items or services payable by federal healthcare programs. The Stark Law at 42 U.S.C. Section 1395nn prohibits physician self-referrals to entities with which the physician has financial relationships. The two laws overlap with Section 1347 in cases involving kickback or self-referral schemes that produce fraudulent billing.
The Anti-Kickback Statute violations can be prosecuted criminally as Section 1347 predicates or as standalone criminal offenses under the Anti-Kickback Statute itself. The cumulative prosecution exposure can be substantial and can produce penalty exposure exceeding the exposure under any single statute. The defense should evaluate the specific charging structure and should address each charge separately while developing comprehensive case strategy.
The civil remedies under both the Anti-Kickback Statute and Stark Law include treble damages, civil monetary penalties, and exclusion from federal healthcare programs. The exclusion remedy can be devastating for healthcare providers because it forecloses participation in Medicare, Medicaid, and other federal programs that constitute the majority of healthcare revenue. The defense should consider the exclusion exposure carefully when evaluating case strategy.
The qui tam framework and the parallel False Claims Act litigation
The False Claims Act at 31 U.S.C. Sections 3729-3733 provides civil remedies for false claims to federal programs including healthcare programs. The Act includes a qui tam provision that allows private relators to bring actions on behalf of the government and to receive a share of any recovery. The qui tam framework has produced substantial healthcare fraud litigation and frequently produces parallel criminal proceedings.
The interaction between criminal Section 1347 proceedings and civil False Claims Act litigation can be complex. The civil litigation can produce discovery that affects the criminal case. The criminal prosecution can produce evidence that affects the civil litigation. The defense should coordinate the criminal and civil defenses to ensure consistent positions and to address the cumulative implications of both proceedings.
The cooperation considerations in healthcare fraud cases can include cooperation against other healthcare providers, hospital systems, or other actors in the broader healthcare network. The cooperation can produce substantial sentence reductions in the criminal case and can affect the civil litigation positions. The defense should evaluate cooperation prospects carefully and should consider how cooperation may affect both the criminal and civil exposure.
Defense strategies and the comprehensive case planning
The defense strategies in healthcare fraud cases include substantive challenges to the alleged scheme, challenges to the specific billing or service allegations, and tactical considerations about the broader case posture. The substantive defenses can include legitimate business explanations for the alleged conduct, the absence of fraudulent intent, and various other specific defenses.
The expert witness engagement is particularly important in healthcare fraud cases because the cases often involve complex billing rules, medical necessity standards, and various other technical matters that require expert understanding. The defense should engage qualified experts in healthcare billing, medical practice, and various other relevant fields. The expert testimony can substantially affect the case dynamics and can support both substantive defenses and sentencing arguments.
The collateral consequences for healthcare providers can be devastating beyond the immediate criminal exposure. The license revocation, the exclusion from federal healthcare programs, the loss of hospital privileges, and the various other consequences can effectively end the provider career in healthcare. The defense should counsel healthcare provider defendants about the comprehensive implications and should help with the broader career planning that the cases sometimes require. The cumulative considerations can substantially affect the strategic decisions and the realistic case outcomes.
Frequently Asked Questions
Does Section 1347 apply only to Medicare and Medicaid?
Can the same conduct lead to both criminal and civil cases?
What is a qui tam case?
Are safe harbors a guarantee against Anti-Kickback prosecution?
Is Stark Law a criminal statute?
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Cite this guide
Bluebook: Reggie London & Njeri London, Federal Healthcare Fraud 1347, L&L Law Group (May 30, 2026), https://landllawgroup.com/insights/federal-healthcare-fraud-1347/.
APA: London, R., & London, N. (2026, May 30). Federal Healthcare Fraud 1347. L&L Law Group.