I

104TH CONGRESS

1ST SESSION H. R. 1758

To provide a Federal response to fraud in connection with the provision

of or receipt of payment for health care services, and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

JUNE 7, 1995

Ms. DELAURO (for herself, Mr. BEVILL, Mr. BARRETT of Wisconsin, and Mr.

DURBIN) introduced the following bill; which was referred to the Committee on the Judiciary, and in addition to the Committee on Commerce, for

a period to be subsequently determined by the Speaker, in each case for

consideration of such provisions as fall within the jurisdiction of the committee concerned

A BILL

To provide a Federal response to fraud in connection with

the provision of or receipt of payment for health care

services, 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 TITLE I—HEALTH CARE FRAUD

4 PROSECUTION

5 SEC. 101. SHORT TITLE.

6 This title may be cited as the ‘‘Health Care Fraud

7 Prosecution Act of 1995’’.
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1 SEC. 102. INCREASED PENALTIES FOR HEALTH CARE

2 FRAUD.

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

4 Code, is amended by inserting after chapter 50A the fol5 lowing new chapter:

6 ‘‘CHAPTER 50B—HEALTH CARE FRAUD

‘‘Sec.

‘‘1101. Health care fraud.

‘‘1102. Penalties.

‘‘1103. Restitution.

7 ‘‘§ 1101. Health care fraud

8 ‘‘(a) DEFINITION.—In this section, the term ‘health

9 care provider’ means—

10 ‘‘(1) a physician, nurse, dentist, therapist, phar11 macist, or other professional provider of health care;

12 and

13 ‘‘(2) a hospital, health maintenance organiza14 tion, pharmacy, laboratory, clinic, or other health

15 care facility or a provider of medical services, medi16 cal devices, medical equipment, or other medical sup17 plies.

18 ‘‘(b) OFFENSE.—A health care provider that engages

19 in conduct constituting an offense under section 1341 or

20 1343 of this title for the purpose of or in connection with

21 the provision of health care services or supplies or the pay22 ment therefor or reimbursement of the costs thereof,

23 when—
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1 ‘‘(1) the amount of loss caused by the fraudu2 lent conduct exceeds $10,000; or

3 ‘‘(2) the offender had previously been convicted

4 of fraud in Federal or State court,

5 shall be fined under this title, imprisoned in accordance

6 with section 1102 of this title, or both.

7 ‘‘§ 1102. Penalties

8 ‘‘(a) IN GENERAL.—In the case of an offense under

9 section 1101 of this title not described in subsection (b)

10 or (c) of this section, the offender shall be sentenced to

11 a term of imprisonment of not more than 10 years.

12 ‘‘(b) SERIOUS PHYSICAL INJURY OR

13 ENDANGERMENT OF LIFE OF PATIENT.—In the case of

14 an offense under section 1101 of this title that—

15 ‘‘(1) caused serious physical injury to a patient;

16 or

17 ‘‘(2) endangered the life of a patient,

18 the offender shall be sentenced to a term of imprisonment

19 of not more than 20 years.

20 ‘‘(c) DEATH OF PATIENT.—In the case of an offense

21 under section 1101 of this title that caused the death of

22 a patient, the offender shall be sentenced to a term of im23 prisonment of not more than life.
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1 ‘‘§ 1103. Restitution

2 ‘‘(a) IN GENERAL.—In sentencing a person convicted

3 of an offense under section 1101 of this title, the court

4 shall order the offender to pay restitution to the patient

5 and any payor, such as an insurer, employer health benefit

6 plan, or government program, for economic loss sustained

7 as a result of the offense.

8 ‘‘(b) RESTITUTION PROCEDURE.—Except to the ex9 tent inconsistent with this section, sections 3363 and 3364

10 of this title apply to restitution made under this section.’’.

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

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

13 is amended by inserting after the item relating to chapter

14 50A the following new item:

‘‘50B. Health care fraud.’’.

15 SEC. 103. CRIMINAL FORFEITURE OF HEALTH CARE FRAUD

16 PROCEEDS.

17 Section 982(a) of title 18, United States Code, is

18 amended by adding at the end the following new para19 graph:

20 ‘‘(6) The court, in imposing sentence on a person con21 victed of an offense under section 1101 of this title, shall

22 order that the offender forfeit to the United States any

23 real or personal property constituting or derived from pro24 ceeds that the offender obtained directly or indirectly as

25 the result of the offense.’’.
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1 SEC. 104. REWARDS FOR INFORMATION LEADING TO PROS2 ECUTION AND CONVICTION.

3 Section 3059(c)(1) of title 18, United States Code,

4 is amended by inserting ‘‘1101 or’’ before ‘‘2326’’.

5 SEC. 105. AUTHORIZATION OF APPROPRIATIONS.

6 There are authorized to be appropriated for the pur7 poses of carrying out the amendments made by this title—

8 (1) for fiscal year 1996—

9 (A) $25,000,000 for the Federal Bureau of

10 Investigation to hire, equip, and train no fewer

11 than 250 special agents and support staff to in12 vestigate health-care fraud cases;

13 (B) $5,000,000 to hire, equip, and train

14 no fewer than 50 assistant United States Attor15 neys and support staff to prosecute health-care

16 fraud cases; and

17 (C) $5,000,000 to hire, equip, and train no

18 fewer than 50 investigators in the Office of In19 spector General, Department of Health and

20 Human Services, to be devoted exclusively to

21 health-care fraud cases; and

22 (2) for each fiscal year thereafter, such sums as

23 may be necessary.
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1 TITLE II—HEALTH CARE FRAUD

2 AND ABUSE COMMISSION

3 SEC. 201. SHORT TITLE.

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

5 and Abuse Commission Act of 1995’’.

6 SEC. 202. ESTABLISHMENT OF HEALTH CARE FRAUD AND

7 ABUSE COMMISSION.

8 (a) IN GENERAL.—There is established a commission

9 to be known as the ‘‘Health Care Fraud and Abuse Com10 mission’’ (in this title referred to as the ‘‘Commission’’).

11 (b) COMPOSITION.—The Commission shall be com12 posed of 18 members as follows:

13 (1) OFFICIALS.—

14 (A) The Secretary of Health and Human

15 Services (or the Secretary’s designee).

16 (B) The Inspector General of the Depart17 ment of Health and Human Services (or the In18 spector General’s designee).

19 (C) The Attorney General (or the Attorney

20 General’s designee).

21 (D) The Director of the Federal Bureau of

22 Investigation (or the Director’s designee).

23 (E) The Administrator of the Health Care

24 Financing Administration (or the Administra25 tor’s designee).
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1 (2) PUBLIC MEMBERS.—Thirteen members, ap2 pointed by the President, of which—

3 (A) one shall be an Attorney General of a

4 State;

5 (B) one shall be a representative of State

6 medicaid fraud control programs;

7 (C) one shall be a State official directly re8 sponsible for regulation of health insurance;

9 (D) one shall be a representative of physi10 cians;

11 (E) one shall be a representative of hos12 pital administrators;

13 (F) one shall be a representative of health

14 insurance companies;

15 (G) one shall be a representative of em16 ployers who self-fund employee health benefit

17 plans;

18 (H) one shall be a representative of em19 ployers who purchase a health benefit plan from

20 a health insurance company;

21 (I) one shall be a representative of medi22 care carriers;

23 (J) one shall be a representative of medi24 care peer review organizations;
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1 (K) one shall be a representative of health

2 care consumers;

3 (L) one shall be a representative of medi4 care beneficiaries; and

5 (M) one shall be a representative of labor

6 unions.

7 In making appointments under this paragraph of an

8 individual who is a representative of persons or or9 ganizations, the President shall consider the rec10 ommendations of national organizations that rep11 resent such persons or organizations. The President

12 shall report to Congress, within 90 days after the

13 date of the enactment of this Act, the names of the

14 members appointed under this paragraph.

15 (c) TERMS.—Each member shall be appointed for the

16 life of the Commission. A vacancy in the Commission shall

17 be filled in the manner in which the original appointment

18 was made.

19 SEC. 203. FUNCTIONS OF COMMISSION.

20 (a) IN GENERAL.—The Commission shall—

21 (1) investigate the nature, magnitude, and cost

22 of health care fraud and abuse in the United States,

23 and

24 (2) identify and develop the most effective

25 methods of preventing, detecting, and prosecuting or
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1 litigating such fraud and abuse, with particular em2 phasis on coordinating public and private prevention,

3 detection, and enforcement efforts.

4 (b) PARTICULARS.—Among other items, the Commis5 sion shall examine at least the following:

6 (1) Mechanisms to provide greater standardiza7 tion of claims administration in order to accommo8 date fraud prevention and detection.

9 (2) Mechanisms to allow more freedom of

10 health benefit plans to exchange information for co11 ordinating case development and prosecution or liti12 gation efforts, without undermining patient and pro13 vider privacy protections or violating anti-trust laws.

14 (3) The extension to private health insurers of

15 administrative remedies currently available to public

16 insurers.

17 (4) Mechanisms for private insurers to organize

18 and finance investigation and litigation efforts when

19 more than one insurer may have received fraudulent

20 claims from a provider.

21 (5) Creating a model State statute for estab22 lishing State insurance fraud units and State laws to

23 strengthen insurers’ ability to pursue and recover

24 from fraudulent providers.
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1 (6) The need for regulation of new types of

2 health care providers.

3 (7) Criteria for physician referrals to facilities

4 in which they (or family members) have a financial

5 interest.

6 (8) The availability of resources to law enforce7 ment authorities to combat health care fraud and

8 abuse.

9 (c) REPORT.—After approval by a majority vote, a

10 quorum being present, the Commission shall transmit to

11 Congress a report on its activities. The report shall be

12 transmitted not later than 18 months after the date that

13 a majority of the public members of the Commission have

14 been appointed. The report shall contain a detailed state15 ment of the Commission’s findings, together with such rec16 ommendations as the Commission considers appropriate.

17 SEC. 204. ORGANIZATION AND COMPENSATION.

18 (a) ORGANIZATION.—

19 (1) QUORUM.—A majority of the members of

20 the Commission shall constitute a quorum but a

21 lesser number may hold hearings.

22 (2) CHAIRMAN.—The Commission shall elect

23 one of its members to serve as chairman of the Com24 mission.
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1 (3) MEETINGS.—The Commission shall meet at

2 the call of the chairman or a majority of its mem3 bers. Meetings of the Commission are open to the

4 public under section 10(a)(10) of the Federal Advi5 sory Committee Act, except that the Commission

6 may conduct meetings in executive session but only

7 if a majority of the members of the Commission (a

8 quorum being present) approve going into executive

9 session.

10 (b) COMPENSATION OF MEMBERS.—Members of the

11 Commission shall serve without compensation, but shall

12 be reimbursed for travel, subsistence, and other necessary

13 expenses incurred in the performance of their duties as

14 members of the Commission.

15 SEC. 205. STAFF OF COMMISSION.

16 (a) IN GENERAL.—The Commission may appoint and

17 fix the compensation of a staff director and such other

18 additional personnel as may be necessary to enable the

19 Commission to carry out its functions, without regard to

20 the laws, rules, and regulations governing appointment

21 and compensation and other conditions of service in the

22 competitive service.

23 (b) DETAIL OF FEDERAL EMPLOYEES.—Upon re24 quest of the chairman, any Federal employee who is sub25 ject to such laws, rules, and regulations, may be detailed
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1 to the Commission to assist it in carrying out its functions

2 under this title, and such detail shall be without interrup3 tion or loss of civil service status or privilege.

4 (c) EXPERTS AND CONSULTANTS.—The Commission

5 may procure temporary and intermittent services under

6 section 3109(b) of title 5, United States Code, but at rates

7 for individuals not to exceed the daily equivalent of 120

8 percent of the maximum annual rate of basic pay payable

9 for GS–15 of the General Schedule.

10 SEC. 206. AUTHORITY OF COMMISSION.

11 (a) HEARINGS AND SESSIONS.—The Commission

12 may, for the purpose of carrying out this title, hold hear13 ings, sit and act at times and places, take testimony, and

14 receive evidence as the Commission considers appropriate.

15 The Commission may administer oaths or affirmations to

16 witnesses appearing before it.

17 (b) OBTAINING OFFICIAL DATA.—

18 (1) IN GENERAL.—The Commission may secure

19 directly from any department or agency of the

20 United States information necessary to enable it to

21 carry out this title. Upon request of the chairman of

22 the Commission, the head of that department or

23 agency shall furnish that information to the Com24 mission.
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1 (2) ACCESS TO INFORMATION.—Information ob2 tained by the Commission is available to the public

3 in the same manner in which information may be

4 made available under sections 552 and 552a of title

5 5, United States Code.

6 (c) GIFTS, BEQUESTS, AND DEVISES.—The Commis7 sion may accept, use, and dispose of gifts, bequests, or

8 devises of services or property for the purpose of aiding

9 or facilitating the work of the Commission.

10 (d) MAILS.—The Commission may use the United

11 States mails in the same manner and under the same con12 ditions as other departments and agencies of the United

13 States.

14 (e) ADMINISTRATIVE SUPPORT SERVICES.—Upon

15 the request of the Commission, the Administrator of Gen16 eral Services shall provide to the Commission, on a reim17 bursable basis, the administrative support services nec18 essary for the Commission to carry out its responsibilities

19 under this title.

20 (f) SUBPOENA POWER.—

21 (1) IN GENERAL.—The Commission may issue

22 subpoenas requiring the attendance and testimony of

23 witnesses and the production of any evidence relat24 ing to any matter which the Commission is author25 ized to investigate under this title. The attendance
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1 of witnesses and the production of evidence may be

2 required from any place within the United States at

3 any designated place of hearing within the United

4 States.

5 (2) FAILURE TO OBEY A SUBPOENA.—If a per6 son refuses to obey a subpoena issued under para7 graph (1), the Commission may apply to a United

8 States district court for an order requiring that per9 son to appear before the Commission to give testi10 mony, produce evidence, or both, relating to the

11 matter under investigation. The application may be

12 made within the judicial district where the hearing

13 is conducted or where that person is found, resides,

14 or transacts business. Any failure to obey the order

15 of the court may be punished by the court as civil

16 contempt.

17 (3) SERVICE OF SUBPOENAS.—The subpoenas

18 of the Commission shall be served in the manner

19 provided for subpoenas issued by a United States

20 district court under the Federal Rules of Civil Pro21 cedure for the United States district courts.

22 (4) SERVICE OF PROCESS.—All process of any

23 court to which application is to be made under para24 graph (2) may be served in the judicial district in
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1 which the person required to be served resides or

2 may be found.

3 SEC. 207. TERMINATION.

4 The Commission shall terminate 90 days after the

5 date the report is submitted under section 203(c).

6 SEC. 208. AUTHORIZATION OF APPROPRIATIONS.

7 There are authorized to be appropriated to the Com8 mission such sums as are necessary to carry out its func9 tions, to remain available until expended.

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