Fraud, Waste, and Abuse Penalties Explained: Federal Fines, Jail, Exclusions

Fraud, waste, and abuse in federal health care programs carry real consequences: steep fines, prison time, and exclusion from Medicare, Medicaid, and other federal benefits. This guide explains how the Health Care Fraud Statute, the False Claims Act, the Civil Monetary Penalties Law, and the Anti-Kickback Statute work together to impose Federal Health Care Program Sanctions—and what those sanctions mean for you.

You’ll see how criminal and civil exposure differs, where Exclusion from Federal Programs fits in, and the enforcement trends that keep providers, executives, and vendors on the government’s radar.

Health Care Fraud Statute Penalties

What the Health Care Fraud Statute covers

The Health Care Fraud Statute (18 U.S.C. § 1347) targets schemes to defraud any health care benefit program or obtain money by false pretenses connected to health care items or services. It is the government’s primary tool for Criminal Health Care Fraud Charges when the conduct is intentional and tied to a benefit program such as Medicare, Medicaid, TRICARE, or private plans.

Potential prison and fines

Conviction can bring up to 10 years in federal prison per count, up to 20 years if serious bodily injury results, and up to life if a patient’s death results. Courts may impose fines “under Title 18,” commonly up to $250,000 per felony count for an individual (higher for organizations) or, where applicable, up to twice the gross gain or loss—whichever amount is greater.

Additional consequences beyond sentencing

• Restitution and forfeiture of proceeds, often alongside asset seizure.
• Supervised release and compliance conditions after imprisonment.
• Professional licensing action at the state level.
• Exposure to parallel civil remedies (False Claims Act) and Exclusion from Federal Programs.

Common risk areas

• Billing for medically unnecessary services or upcoding.
• Telehealth or DME orders without legitimate patient relationships.
• Kickback-fueled referral schemes disguised as consulting or marketing.

False Claims Act Civil Liabilities

Core liability standard

The False Claims Act (FCA) imposes civil liability for knowingly submitting false claims or causing their submission to federal programs. “Knowingly” includes actual knowledge, deliberate ignorance, or reckless disregard—so poor oversight can still trigger liability even without explicit intent to defraud.

Treble damages and per-claim penalties

Courts award treble damages (three times the government’s loss) plus a civil penalty for each false claim. The per-claim penalty is adjusted annually for inflation and typically falls in the five-figure range, which can multiply rapidly when claims are numerous.

Qui tam suits and whistleblower impact

Private whistleblowers (relators) can sue in the government’s name and receive a share of any recovery. The FCA also provides anti-retaliation protections for employees who lawfully report or object to fraud. As a result, internal reporting channels and prompt investigations are critical.

How FCA intersects with other laws

• Anti-Kickback Statute violations can render every tainted claim “false,” anchoring FCA liability.
• Risk-adjustment submissions in Medicare Advantage, medical necessity, and upcoding are frequent FCA targets.
• Failure to identify, report, and repay known overpayments can create “reverse false claims” exposure.

Mitigation strategies

• Rapid response to audit findings and credible allegations.
• Overpayment governance with deadlines, documentation, and repayment.
• Use of voluntary disclosures when appropriate to reduce penalties.

Civil Monetary Penalties Law Sanctions

Administrative enforcement by OIG

Under the Civil Monetary Penalties Law (CMPL), the Department of Health and Human Services Office of Inspector General (OIG) can impose administrative penalties, assessments, and exclusions separate from criminal or FCA cases. CMPL is a flexible tool for Federal Health Care Program Sanctions even when conduct does not rise to criminal prosecution.

What conduct triggers CMPL penalties

• Submitting or causing the submission of false or fraudulent claims.
• Offering improper patient inducements or kickbacks.
• Employing or contracting with excluded individuals or entities.
• Failing to grant OIG timely access to records or to return known overpayments.

Penalty amounts and assessments

CMPL allows per-violation civil penalties (inflation-adjusted) and assessments of up to three times the amount claimed, plus potential Exclusion from Federal Programs. Because penalties apply per item or service, exposure can scale quickly.

Process and potential relief

OIG typically issues a notice, after which you may respond or contest before an administrative law judge. Self-disclosure through OIG protocols, robust remediation, and cooperation often reduce the penalty calculus.

Anti-Kickback Statute Consequences

What counts as a kickback

The Anti-Kickback Statute (AKS) prohibits knowingly and willfully offering, paying, soliciting, or receiving remuneration to induce or reward referrals for items or services paid by federal health care programs. “Remuneration” is broad and can include cash, free goods, inflated consulting payments, or below-market office space.

Criminal and civil exposure

• Criminal: up to 10 years’ imprisonment and substantial fines per violation, with forfeiture in appropriate cases.
• Civil/administrative: AKS violations can support FCA liability, CMPL penalties (including five-figure per-violation amounts), assessments up to three times the remuneration, and exclusion.

Safe harbors and compliance

Regulatory safe harbors protect narrowly defined arrangements (for example, certain personal services, employment, or discounts) if all criteria are met. You should structure agreements to fit a safe harbor where possible, document commercial reasonableness, and avoid paying for volume or value of referrals.

Red flags regulators watch

• Marketing agreements tied to paid leads or conversion rates.
• Free staff or equipment placed in referral sources’ offices.
• “Consulting” or “medical director” fees not aligned with fair market value.

Exclusion from Federal Health Care Programs

Mandatory and permissive exclusion

OIG must impose mandatory exclusion (minimum five years) for certain offenses, including felony health care fraud, patient abuse or neglect, and some drug-related felonies. OIG may impose permissive exclusion for other misconduct, such as kickbacks, quality-of-care failures, or defaulting on federal education loans.

Scope and impact

Exclusion from Federal Programs bars payment by Medicare, Medicaid, and other federal health care programs for items or services furnished, ordered, or prescribed by the excluded party. You cannot bill, be paid indirectly, or work in roles payable by federal funds—even if you do not personally submit claims.

Hiring and contracting risks

Employing or contracting with an excluded person can trigger CMPL penalties and repayments, even if the employer did not realize the person was excluded. Routine screening of employees, contractors, owners, and referring physicians against the OIG exclusion list is essential.

Reinstatement and compliance obligations

After the exclusion period, reinstatement is not automatic; you must apply and demonstrate rehabilitation and compliance. Many settlements also require compliance program enhancements or Corporate Integrity Agreements with oversight and reporting duties.

Recent Enforcement Actions in Health Care Fraud

Coordinated takedowns and data-driven targeting

Federal and state teams—DOJ, OIG, FBI, CMS, and Medicaid Fraud Control Units—routinely conduct nationwide actions targeting telemedicine schemes, durable medical equipment orders, toxicology and genetic testing labs, and pharmacy compounding where claims data show anomalies.

Persistent focus areas

• Kickback-fueled referral networks using sham marketing or consulting deals.
• Medicare Advantage risk-adjustment submissions that inflate patient acuity.
• Remote patient monitoring and telehealth billing without established medical necessity.
• Opioid and controlled-substance prescribing supported by fraudulent documentation.

Individual accountability and corporate remedies

Prosecutors continue to charge physicians, executives, marketers, and owners individually while pursuing civil resolutions against organizations. Remedies often include restitution, treble damages, corporate integrity agreements, and Exclusion from Federal Health Care Programs for recidivists or egregious conduct.

Key takeaways

• Criminal Health Care Fraud Charges bring prison exposure and high fines when intent is proven.
• Civil remedies—FCA and CMPL—multiply financial risk even without criminal charges.
• AKS and related kickback theories can convert routine claims into False Claims Act liability.
• Exclusion from Federal Programs is a powerful sanction with career-long consequences if not addressed.

FAQs.

What are the maximum fines for health care fraud?

For the Health Care Fraud Statute, courts may impose up to $250,000 per felony count on individuals (higher for organizations) or up to twice the gross gain or loss, whichever is greater, along with imprisonment of up to 10 years—20 years for serious bodily injury and life if a death results. The Anti-Kickback Statute adds criminal fines per violation and up to 10 years in prison. Civilly, the False Claims Act imposes treble damages plus inflation-adjusted penalties for each false claim, and the Civil Monetary Penalties Law adds per-violation penalties and assessments up to three times the amount involved.

How does the False Claims Act penalize offenders?

The False Claims Act imposes treble damages and a separate civil penalty for each false claim submitted, which is adjusted annually for inflation. It also enables whistleblowers to file qui tam suits and share in recoveries, and it protects them from retaliation. Settlements may include compliance obligations such as corporate integrity agreements and rigorous auditing.

What is the role of the Office of Inspector General in imposing penalties?

OIG investigates fraud, waste, and abuse; imposes Civil Monetary Penalties Law sanctions; and administers exclusions from federal health care programs. It negotiates corporate integrity agreements to drive long-term compliance and may reduce penalties when entities self-disclose, cooperate, and remediate.

Can individuals be excluded from federal health care programs?

Yes. OIG must impose mandatory exclusion for certain offenses (with a minimum five-year term) and may impose permissive exclusion for other misconduct. Excluded individuals and entities cannot bill or be paid by Medicare, Medicaid, or other covered programs, and organizations that knowingly or unknowingly employ them risk additional CMPL penalties.

What recent actions have been taken against health care fraud schemes?

Enforcement teams continue nationwide operations against telemedicine-driven DME and lab schemes, risk-adjustment fraud in Medicare Advantage, inducement-based referral networks, and controlled-substance prescribing abuses. These actions combine criminal charges, civil False Claims Act cases, CMPL penalties, restitution, and, where warranted, Exclusion from Federal Health Care Programs.