Healthcare Fraud, Waste, and Abuse Laws: Federal Requirements and Enforcement Guide

Healthcare fraud, waste, and abuse laws set the rules that protect federal health programs and the patients they serve. This guide explains core federal requirements, how cases are enforced, and what you can do to prevent issues or report concerns under statutes such as the False Claims Act and the Anti-Kickback Statute. You will also see the roles of the Office of Inspector General and the Health Care Fraud and Abuse Control Program in federal oversight.

Federal Laws Addressing Healthcare Fraud Waste and Abuse

False Claims Act (FCA)

The FCA prohibits knowingly submitting, or causing the submission of, false or fraudulent claims for payment to the federal government. In healthcare, this includes billing for services not rendered, upcoding, unbundling, or misrepresenting medical necessity. The FCA also allows private whistleblowers (relators) to file qui tam actions on the government’s behalf.

Anti-Kickback Statute (AKS)

The AKS is a criminal law that bans knowingly offering, paying, soliciting, or receiving anything of value to induce or reward referrals for items or services reimbursable by federal healthcare programs. Violations can also trigger liability under the FCA when claims are tainted by kickbacks. Safe harbors outline narrowly defined arrangements that are not treated as offenses if all conditions are met.

Physician Self-Referral Law (Stark Law)

Stark is a strict-liability civil statute that prohibits physicians from referring Medicare or Medicaid patients for certain “designated health services” to entities with which they (or immediate family) have a financial relationship, unless an exception applies. Claims resulting from prohibited referrals may be overpayments and can give rise to FCA exposure.

Health Care Fraud Statute (18 U.S.C. § 1347)

This federal criminal statute targets schemes to defraud any healthcare benefit program or to obtain money or property by false or fraudulent pretenses in connection with the delivery of or payment for healthcare benefits, items, or services. It is often charged alongside conspiracy and other financial crimes.

Civil Monetary Penalties Law (CMPL)

Under the CMPL, the Department of Health and Human Services can impose civil penalties and assessments for a range of misconduct, including false or improper claims, beneficiary inducements, and arranging for services from excluded individuals or entities.

Exclusion Authorities

Federal law authorizes the exclusion of individuals and entities from participation in Medicare, Medicaid, and other federal health programs for certain convictions, licensure actions, or other misconduct. Submitting claims during an exclusion can lead to additional liability.

Fraud Enforcement and Recovery Act (FERA)

FERA strengthened the government’s antifraud toolset, including amendments that broadened the FCA’s reach by clarifying what constitutes a “claim” and an “obligation,” and by addressing retention of improperly received federal funds.

Health Care Fraud and Abuse Control Program (HCFAC)

HCFAC is a joint HHS–DOJ program that coordinates resources for preventing, detecting, and prosecuting healthcare fraud and abuse across federal agencies. It funds investigations, audits, and data analytics that support enforcement priorities nationwide.

Penalties for Violations

Civil Penalties

Civil exposure can include treble damages under the False Claims Act, per-claim penalties that are adjusted for inflation, and assessments under the Civil Monetary Penalties Law. Courts may also order restitution and prejudgment interest. Civil settlements frequently require corporate integrity agreements to ensure future compliance.

Criminal Prosecution

Criminal liability may involve fines and significant terms of imprisonment for offenses such as healthcare fraud, conspiracy, wire or mail fraud, and Anti-Kickback Statute violations. Convictions can also result in forfeiture of proceeds traceable to the offense and debarment consequences in related programs.

Administrative Remedies

Administrative actions include exclusion from federal healthcare programs, payment suspensions, recoupments, and corrective action plans. Even absent a criminal conviction, agencies may pursue these remedies to protect program integrity and beneficiaries.

Enforcement Agencies

Department of Justice (DOJ)

DOJ leads civil and criminal enforcement, including FCA litigation and criminal prosecutions. It partners with U.S. Attorneys’ Offices and national components to investigate complex fraud schemes affecting federal health programs.

Office of Inspector General (OIG), U.S. Department of Health and Human Services

The OIG conducts audits, evaluations, and investigations; issues Special Fraud Alerts and Advisory Opinions; negotiates corporate integrity agreements; and exercises exclusion authority. It is a central actor in the Health Care Fraud and Abuse Control Program.

Federal Bureau of Investigation (FBI) and Other Federal Partners

The FBI supports criminal investigations with specialized healthcare fraud squads. Other partners can include the U.S. Postal Inspection Service, Defense Criminal Investigative Service, and IRS Criminal Investigation when schemes touch multiple jurisdictions or financial crimes.

Centers for Medicare & Medicaid Services (CMS) and Contractors

CMS and its program integrity contractors conduct audits, data analysis, medical reviews, and pre- or post-payment edits. They refer suspicious billing to law enforcement and implement administrative actions to prevent improper payments.

State Medicaid Fraud Control Units (MFCUs)

MFCUs investigate and prosecute Medicaid provider fraud and patient abuse or neglect in healthcare facilities, often coordinating with federal partners on joint cases and parallel proceedings.

Compliance Resources

Elements of an Effective Compliance Program

• Governance and oversight: designate a compliance officer, empower a compliance committee, and ensure board-level visibility.
• Written standards: adopt clear policies on billing, coding, documentation, referral arrangements, and interactions with beneficiaries.
• Education and training: tailor content by role, refresh annually, and reinforce high-risk topics like the False Claims Act and Anti-Kickback Statute.
• Monitoring and auditing: use data analytics, risk-based sampling, and independent reviews to validate claims accuracy and medical necessity.
• Reporting and response: maintain confidential reporting channels, protect against retaliation, investigate promptly, and remediate root causes.
• Enforcement and discipline: apply consistent consequences and track corrective actions to closure.
• Third-party and referral risk management: vet contractors, vendors, and referral relationships; screen for exclusions; align contracts with safe harbors or Stark exceptions where applicable.

Guidance and Program Tools

You can leverage publicly available compliance program guidance, special fraud alerts, advisory opinions, audit protocols, and evaluation frameworks issued by federal agencies. Map these resources to your risk assessment and incorporate controls into daily operations.

Self-Disclosure Pathways

When you identify potential violations, structured self-disclosure protocols provide a route to report, remediate, and potentially mitigate penalties. Prepare a thorough internal investigation, quantify overpayments, and implement corrective actions before disclosure.

Reporting Mechanisms

Internal Reporting First

Encourage employees and contractors to report concerns through internal hotlines, compliance emails, or open-door policies. Prompt triage, legal review, and documentation show a strong culture of compliance and can reduce downstream risk.

External Reporting Options

• HHS OIG hotline and online portal for suspected fraud, waste, and abuse affecting federal health programs.
• Department of Justice and FBI for criminal schemes, large-scale conspiracies, or multi-state conduct.
• State Medicaid Fraud Control Units for Medicaid-related concerns within a state’s jurisdiction.
• Medicare and Medicaid contractors for billing irregularities, overpayments, or provider enrollment issues.

Whistleblower (Qui Tam) Actions Under the FCA

Individuals with non-public information about fraud against federal healthcare programs may file qui tam suits under the FCA and, if successful, receive a portion of the recovery. Legal counsel is essential because filings are under seal and subject to specific procedural rules.

Practical Tips When Reporting

• Document who, what, when, where, and how; preserve original records without altering them.
• Avoid accessing data you are not authorized to view; maintain patient privacy and security requirements.
• Do not alert suspected wrongdoers; coordinate with compliance or counsel to prevent spoliation.
• If overpayments are found, calculate, report, and return them promptly consistent with federal requirements.

Conclusion

Federal healthcare fraud, waste, and abuse laws work together to protect patients and programs through civil penalties, criminal prosecution, and administrative remedies. By understanding the False Claims Act, Anti-Kickback Statute, and related authorities—and by leveraging OIG guidance and HCFAC coordination—you can build strong controls, respond effectively to risks, and report concerns through appropriate channels.

FAQs

What federal laws prohibit healthcare fraud waste and abuse?

Core authorities include the False Claims Act, the Anti-Kickback Statute, the Physician Self-Referral Law (Stark), the Health Care Fraud Statute, the Civil Monetary Penalties Law, exclusion authorities, and enhancements from the Fraud Enforcement and Recovery Act. The Health Care Fraud and Abuse Control Program coordinates federal enforcement across agencies.

What are the penalties for violating healthcare fraud laws?

Penalties vary by statute and can include treble damages and per-claim civil penalties under the FCA, criminal fines and imprisonment for fraud and kickback offenses, and administrative measures such as exclusion, payment suspensions, recoupments, and corporate integrity agreements.

Which agencies enforce healthcare fraud and abuse laws?

The Department of Justice leads civil and criminal cases; the HHS Office of Inspector General conducts audits, investigations, exclusions, and compliance oversight; the FBI and other federal partners pursue criminal schemes; CMS and its contractors manage program integrity; and State Medicaid Fraud Control Units address Medicaid provider fraud and related abuse.

How can individuals report suspected healthcare fraud?

You can report internally to your organization’s compliance program and externally to the HHS OIG hotline, DOJ or FBI, State Medicaid Fraud Control Units, or relevant Medicare and Medicaid contractors. Provide specific facts, preserve records, and consider legal counsel if you are contemplating a qui tam action under the False Claims Act.