I

104TH CONGRESS

2D SESSION H. R. 2866

To amend title 18, United States Code, with respect to health care fraud,

and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

JANUARY 23, 1996

Mr. SCHUMER introduced the following bill; which was referred to the

Committee on the Judiciary

A BILL

To amend title 18, United States Code, with respect to

health care fraud, and for other purposes.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘Health Care Fraud

5 Prosecution Act of 1996’’.

6 SEC. 2. INCREASED PENALTIES FOR HEALTH CARE FRAUD.

7 (a) OFFENSE.—Part I of title 18, United States

8 Code, is amended by inserting after chapter 50A the fol9 lowing:
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1 ‘‘CHAPTER 50B—HEALTH CARE FRAUD

‘‘Sec.

‘‘1101. Health care fraud.

‘‘1102. Illegal remunerations.

‘‘1103. Civil Action.

‘‘1104. Definitions.

2 ‘‘§ 1101. Health care fraud

3 ‘‘(a) IN GENERAL.—Whoever, in or affecting inter4 state commerce, knowingly—

5 ‘‘(1) executes, or attempts to execute, a scheme

6 or artifice to defraud to obtain a health care pay7 ment; or

8 ‘‘(2) presents to any person any statement as

9 part of, or in support of, a claim for a health care

10 payment, knowing that such statement contains any

11 false or misleading information concerning any fact

12 or thing material to such claim;

13 shall be fined under this title or imprisoned not more than

14 10 years, or both.

15 ‘‘(b) AGGRAVATED OFFENSES.—In an offense under

16 subsection (a) of this section—

17 ‘‘(1) if the offender knowingly or recklessly

18 causes serious bodily injury to an individual or

19 knowingly or recklessly endangers the life of a per20 son, the offender shall be fined under this title or

21 imprisoned not more than 20 years, or both; and

22 ‘‘(2) if the offender knowingly or recklessly

23 causes the death of an individual, the offender shall
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1 be fined under this title or imprisoned any term or

2 years or for life, or both.

3 ‘‘§ 1102. Illegal remunerations

4 ‘‘Whoever, in or affecting interstate commerce, know5 ingly solicits, receives, offers, or provides anything of

6 value—

7 ‘‘(1) for the referral of an individual to a per8 son for the furnishing of any item or service for

9 which a health care payment may be paid by a third

10 party payer;

11 ‘‘(2) for recommending, or arranging for, the

12 furnishing of any item or service for which a health

13 care payment may be paid by a third party payer;

14 or

15 ‘‘(3) which in effect reduces the cost of an item

16 or service for which a health care payment may be

17 paid by a third party payer, and then seeks that

18 health care payment from the third party payer;

19 without informing the third party payer fully about having

20 done so and reflecting the amount of the thing of value

21 in the claim for the health care payment, shall be fined

22 under this title or imprisoned not more than 5 years, or

23 both.
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1 ‘‘§ 1103. Civil action

2 ‘‘Any person injured in business or property by a vio3 lation of this chapter may in a civil action recover treble

4 damages. The court may award the prevailing party a rea5 sonable attorney’s fee as a part of the costs.

6 ‘‘§ 1104. Definitions

7 ‘‘As used in this chapter—

8 ‘‘(1) the term ‘health care payment’ means a

9 payment for health care services or health care prod10 ucts, or the right to have a payment made by a third

11 party payer for specified health care services or

12 products; and

13 ‘‘(2) the term ‘third party payer’ means any

14 person, public or private, who undertakes to indem15 nify another against loss arising from a contingent

16 or unknown event.’’.

17 (b) CLERICAL AMENDMENT.—The table of chapters

18 at the beginning of part I of title 18, United States Code,

19 is amended by inserting after the item relating to chapter

20 50A the following new item:

‘‘50B. Health care fraud .................................................................. 1101.’’.

21 SEC. 3. INJUNCTIONS FOR HEALTH CARE FRAUD.

22 Section 1345(a) of title 18, United States Code, is

23 amended—

24 (1) in paragraph (1)(A), by striking ‘‘or 1001’’

25 and inserting ‘‘1001, 1101, or 1102’’; and
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1 (2) in paragraph (a)(2), by inserting ‘‘a viola2 tion of section 1101 or 1102 of this title or’’ after

3 ‘‘as a result of’’.

4 SEC. 4. CRIMINAL FORFEITURE OF FRAUD PROCEEDS.

5 Section 982(a)(2)(B) of title 18, United States Code,

6 is amended—

7 (1) by inserting ‘‘1101, 1102,’’ after ‘‘844,’’;

8 and

9 (2) by striking ‘‘or 1030’’ and inserting ‘‘1030,

10 or 1347’’.

11 SEC. 5. REWARDS FOR INFORMATION LEADING TO PROS12 ECUTION AND CONVICTION.

13 Section 3059 of title 18, United States Code, is

14 amended by adding at the end the following:

15 ‘‘(d)(1) The Attorney General may pay a reward of—

16 ‘‘(A) an amount determined under paragraph

17 (2) of this subsection, in the case of an offense in

18 which the United States is a victim and restitution

19 or a civil recovery is obtained by the United States;

20 or

21 ‘‘(B) not more than $100,000, in any other

22 case;

23 to any person who furnishes information or services that

24 lead to a conviction under section 1101 or 1102 of this

25 title.
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1 ‘‘(2) The amount referred to in paragraph (1)(A) of

2 this subsection is an amount equal to—

3 ‘‘(A) not more than 30 percent of the first

4 $1,000,000 of the recovery;

5 ‘‘(B) not more than 20 percent of the next

6 $4,000,000; and

7 ‘‘(C) not more than 5 percent of the remaining

8 portion of the recovery.

9 ‘‘(3) An officer or employee of the United States or

10 of a State or local government who furnishes information

11 or renders services in the performance of official duty is

12 ineligible for a payment under this subsection with respect

13 to such information or services.’’.

14 SEC. 6. HEALTH CARE FRAUD TASK FORCES.

15 (a) IN GENERAL.—The Attorney General, in con16 sultation with the Secretary of Health and Human Serv17 ices, shall establish regional health care fraud task forces

18 (hereinafter in this section referred to as ‘‘task forces’’).

19 (b) PURPOSE.—The purpose of the task forces is to

20 ensure that adequate resources are made available to iden21 tify, investigate, and prosecute health care fraud and to

22 recover the proceeds of such fraud and other criminal ac23 tivity against health insurers.
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1 (c) DUTIES.—Each such task force shall coordinate

2 the investigative and prosecutorial efforts within their re3 gion, as determined by the Attorney General.

4 (d) PARTICIPANTS.—The Federal agencies that shall

5 participate in the task forces are—

6 (1) the Department of Justice (including the

7 Federal Bureau of Investigation);

8 (2) the Department of Health and Human

9 Services (including the Food and Drug Administra10 tion and the Office of the Inspector General);

11 (3) the Internal Revenue Service;

12 (4) the United States Postal Inspection Service;

13 and

14 (5) the Department of Veterans Affairs.

15 (e) LOCATIONS.—The task forces shall be established

16 in such cities as the Attorney General deems appropriate.

17 (f) OBJECTIVES.—The objective of each task force

18 shall be—

19 (1) to target, investigate, and prosecute individ20 uals who organize, direct, finance, or are otherwise

21 engaged in health care fraud;

22 (2) to promote a coordinated health care fraud

23 enforcement effort in each task force region, and to

24 encourage maximum cooperation among all Federal

25 agencies;
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1 (3) to work fully and effectively with State and

2 local law enforcement agencies; and

3 (4) to make full use of financial investigative

4 techniques, on behalf of both public and private enti5 ties, to maximize recovery of proceeds of unlawful

6 activities from persons who have committed health

7 care fraud crimes or have engaged in other criminal

8 activity in or against the health insurance industry.

9 (g) STANDARDS FOR TASK FORCE CASES.—Each

10 task force should focus upon significant investigations of

11 major health care fraud cases, or organizations engaging

12 in health care fraud, that warrant the involvement of more

13 than one investigative agency or that require significant

14 resources during the investigative stage.

15 (h) ADMINISTRATION.—The administrative functions

16 of the national task force program will be performed by

17 an executive office to be established within the Depart18 ment of Justice in Washington, D.C. It shall be supervised

19 by a Director, and the staff shall consist of professional

20 and support staff deemed necessary for the performance

21 of management and administrative functions.

22 (i) OVERSIGHT.—An Executive Review Board shall

23 oversee the task force program. It shall be composed of

24 ranking officials from each of the participating Federal

25 agencies and the Advisory Committee of the United States
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1 Attorneys. Its role shall be to articulate policy, review allo2 cation of resources and coordinate the development and

3 maintenance of the task force program. The Board shall

4 also be responsible for resolving policy disputes that can5 not be resolved within or among the regional task forces

6 or the participating agencies. The Board shall meet no less

7 frequently than quarterly.

8 (j) GUIDELINES.—The Attorney General shall, in

9 consultation with the Executive Review Board, establish

10 guidelines for the operation and management of the task

11 force program.

12 SEC. 7. NATIONAL HEALTH CARE FRAUD AND ABUSE DATA

13 BASE.

14 (a) IN GENERAL.—The Attorney General, in con15 sultation with the Secretary of Health and Human Serv16 ices, shall establish a data base for the reporting of final

17 adverse actions against health care providers, suppliers,

18 or practitioners, in order to provide a central repository

19 of such information to assist in the prevention, detection,

20 and prosecution of health care fraud and abuse.

21 (b) REPORTING OF INFORMATION.—

22 (1) IN GENERAL.—Each government agency

23 and health care plan shall report any final adverse

24 action taken against a health care provider, supplier,

25 or practitioner.
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1 (2) INFORMATION TO BE REPORTED.—The in2 formation to be reported under paragraph (1) in3 cludes the following:

4 (A) The name of any health care provider,

5 supplier, or practitioner who is the subject of a

6 final adverse action.

7 (B) The name (if known) of any health

8 care entity with which a health care provider,

9 supplier, or practitioner is affiliated or associ10 ated.

11 (C) The nature of the final adverse action.

12 (D) A description of the acts or omissions

13 and injuries upon which the final adverse action

14 was based, and such other information as re15 quired by the Attorney General.

16 (3) CONFIDENTIALITY.—The Attorney General

17 shall establish procedures to assure that the privacy

18 of individuals receiving health care services is appro19 priately protected.

20 (4) FORM AND MANNER OF REPORTING.—The

21 information required to be reported under this sub22 section shall be reported on a monthly basis and in

23 such form and manner as determined by the Attor24 ney General. Such information shall first be required
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1 to be reported on a date specified by the Attorney

2 General.

3 (5) TO WHOM REPORTED.—The information re4 quired to be reported under this subsection shall be

5 reported to the Attorney General or such person or

6 persons designated by the Attorney General.

7 (c) CORRECTION OF ERRONEOUS INFORMATION.—

8 (1) DISCLOSURE AND CORRECTION.—The At9 torney General shall provide for a procedure through

10 which a person, to whom information within the

11 data base established under this section pertains,

12 may review that information and obtain the correc13 tion of errors pertaining to that person.

14 (2) OTHER CORRECTIONS.—Each Government

15 agency and health care plan shall report corrections

16 of information already reported about any final ad17 verse action taken against a health care provider,

18 supplier, or practitioner, in such form and manner

19 as required by the Attorney General.

20 (d) ACCESS TO REPORTED INFORMATION.—

21 (1) AVAILABILITY.—The information in this

22 data base shall be available to the public, Federal

23 and State government agencies, and health care

24 plans pursuant to procedures established by the

25 Attorney General.
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1 (2) FEES.—The Attorney General may estab2 lish reasonable fees for the disclosure of information

3 in this data base.

4 (e) PROTECTION FROM LIABILITY FOR REPORT5 ING.—No person or entity shall be held liable in any civil

6 action with respect to any report made as required by this

7 section, without knowledge of the falsity of the informa8 tion contained in the report.

9 (f) DEFINITIONS AND SPECIAL RULES.—For pur10 poses of this section:

11 (1) The term ‘‘final adverse action’’ includes

12 the following:

13 (A) Civil judgments in Federal or State

14 court related to the delivery of a health care

15 item or service.

16 (B) Federal or State criminal convictions

17 related to the delivery of a health care item or

18 service.

19 (C) Actions by State or Federal agencies

20 responsible for the licensing and certification of

21 health care providers, suppliers, and licensed

22 health care practitioners, including—

23 (i) formal or official actions, such as

24 revocation or suspension of a license (and
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1 the length of any such suspension), rep2 rimand, censure or probation,

3 (ii) any other loss of license of the

4 provider, supplier, or practitioner, whether

5 by operation of law, voluntary surrender or

6 otherwise, or

7 (iii) any other negative action or find8 ing by such State or Federal agency that

9 is publicly available information.

10 (D) Exclusion from participation in Fed11 eral or State health care programs.

12 (E) Any other actions as required by the

13 Attorney General.

14 (2) The terms ‘‘licensed health care practi15 tioner’’, ‘‘licensed practitioner’’, and ‘‘practitioner’’

16 mean, with respect to a State, an individual who is

17 licensed or otherwise authorized by the State to pro18 vide health care services (or any individual who,

19 without authority holds himself or herself out to be

20 so licensed or authorized).

21 (3) The term ‘‘health care provider’’ means a

22 provider of services as defined in section 1861(u) of

23 the Social Security Act, and any entity, including a

24 health maintenance organization, group medical
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1 practice, or any other entity listed by the Secretary

2 in regulation, that provides health care services.

3 (4) The term ‘‘supplier’’ means a supplier of

4 health care items and services described in sections

5 1819 (a) and (b), and section 1861 of the Social Se6 curity Act.

7 (5) The term ‘‘Government agency’’ includes—

8 (A) The Department of Justice.

9 (B) The Department of Health and

10 Human Services.

11 (C) Any other Federal agency that either

12 administers or provides payment for the deliv13 ery of health care services, including, but not

14 limited to the Departments of Defense and Vet15 erans Affairs.

16 (D) State law enforcement agencies.

17 (E) State Medicaid fraud and abuse units.

18 (F) State or Federal agencies responsible

19 for the licensing and certification of health care

20 providers and licensed health care practitioners.

21 (6) The term ‘‘health care plan’’ has the mean22 ing given to such term by section 1128(i) of the

23 Social Security Act.

24 (7) For purposes of paragraph (2), the exist25 ence of a conviction shall be determined under para-
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1 graph (4) of section 1128(j) of the Social Security

2 Act.

3 SEC. 8. NATIONAL HEALTH CARE FRAUD AND ABUSE HOT4 LINE.

5 The Attorney General shall—

6 (1) establish a national, toll-free health care

7 fraud and abuse hotline to enable all persons, includ8 ing health care consumers, providers, and insurers,

9 to report (anonymously, if so desired) suspected in10 stances of health care fraud or abuse;

11 (2) provide for the appropriate referral of all in12 formation that is obtained through the hot line; and

13 (3) assure that the public is provided adequate

14 publicity about the existence and capabilities of the

15 hotline.

16 SEC. 9. AUTHORIZATION OF APPROPRIATIONS.

17 There are authorized to be appropriated for fiscal

18 year 1997 for the purposes of carrying out this Act and

19 the amendments made by this Act—

20 (1) $23,000,000 for the Federal Bureau of In21 vestigation to hire, equip, and train no fewer than

22 225 special agents and support staff to investigate

23 health-care fraud cases;
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1 (2) $5,000,000 to hire, equip, and train no

2 fewer than 50 assistant United States Attorneys and

3 support staff to prosecute health-care fraud cases;

4 (3) $6,000,000 to hire, equip, and train no

5 fewer than 50 investigators in the Office of Inspec6 tor General, Department of Health and Human

7 Services, to be devoted exclusively to health-care

8 fraud cases;

9 (4) $2,000,000 to establish, operate, and ad10 minister health-care fraud task forces;

11 (5) $2,000,000 to establish, operate, publicize,

12 and administer the national health-care fraud and

13 abuse data base; and

14 (6) $2,000,000 to establish, operate, publicize,

15 and administer the national health-care fraud and

16 abuse hotline.

17 SEC. 10. SCHEMES AND DEVICES RELATING TO EXPRESS

18 AND OTHER COMMERCIAL CARRIER SERV19 ICES.

20 (a) IN GENERAL.—Chapter 63 of title 18, United

21 States Code, is amended by adding at the end the follow22 ing:

23 ‘‘§ 1347. Express company fraud

24 ‘‘Whoever engages in any conduct with respect to a

25 private or commercial interstate carrier which, were that
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1 conduct engaged in with respect to the Postal Service,

2 would be a violation of section 1341 or 1342 of this title,

3 shall be punished as is provided under such section for

4 such violation.’’.

5 (b) CLERICAL AMENDMENT.—The table of sections

6 at the beginning of chapter 63 of title 18, United States

7 Code, is amended by adding at the end the following new

8 item:

‘‘1347. Express company fraud.’’.

9 SEC. 11. LAUNDERING OF MONETARY INSTRUMENTS.

10 Section 1956(c)(7)(D) of title 18, United States

11 Code, is amended—

12 (1) by inserting ‘‘section 1101 or 1002 (relating

13 to health care fraud),’’ after ‘‘875 (relating to inter14 state communications),’’; and

15 (2) by inserting ‘‘section 1347 (relating to ex16 press company fraud),’’ after ‘‘1203 (relating to hos17 tage taking),’’.

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