Calendar No. 405

103D CONGRESS

2D SESSION S. 1944

A BILL

To increase and extend criminal and other penalties

purposes.for health care fraud and abuse, and for other

APRIL 11, 1994

Read the second time and placed on the calendar
II

Calendar No. 405

103D CONGRESS

2D SESSION S. 1944

To increase and extend criminal and other penalties for health care fraud

and abuse, and for other purposes.

IN THE SENATE OF THE UNITED STATES

MARCH 17 (legislative day, FEBRUARY 22), 1994

Mr. KOHL introduced the following bill; which was read the first time

APRIL 11, 1994

Read the second time and placed on the calendar

A BILL

To increase and extend criminal and other penalties for

health care fraud and abuse, 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 and Abuse Act of 1994’’.
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1 SEC. 2. EXPANSION OF CIVIL AND CRIMINAL MONETARY

2 SANCTIONS.

3 (a) CIVIL SANCTIONS.—Section 1128A of the Social

4 Security Act (42 U.S.C. 1320a–7a) is amended—

5 (1) in subsections (a) and (b), by striking

6 ‘‘$2,000’’ each place it appears and inserting

7 ‘‘$5,000’’,

8 (2) in the second sentence of subsection (a), by

9 striking ‘‘not more than twice’’ and inserting ‘‘not

10 more than three times’’, and

11 (3) by adding at the end the following new sub12 section:

13 ‘‘(m)(1) The maximum civil monetary penalty

14 amounts specified in subsections (a) and (b) shall be ad15 justed for inflation as provided in this subsection.

16 ‘‘(2) Not later than December 1, 1999, and Decem17 ber 1 of each fifth calendar year thereafter, the Secretary

18 shall prescribe and publish in the Federal Register a

19 schedule of maximum authorized penalties that shall apply

20 for violations that occur after January 1 of the year imme21 diately following such publication.

22 ‘‘(3) The schedule of maximum authorized penalties

23 shall be prescribed by increasing each of the amounts

24 specified in subsections (a) and (b) by the cost-of-living

25 adjustment for the preceding five years. Any increase de-
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1 termined under the preceding sentence shall be rounded

2 to the nearest multiple of $1,000.

3 ‘‘(4) For purposes of this subsection:

4 ‘‘(A) The term ‘cost-of-living adjustment

5 for the preceding five years’ means the percent6 age by which—

7 ‘‘(i) the Consumer Price Index for the

8 month of June of the calendar year preced9 ing the adjustment, exceeds

10 ‘‘(ii) the Consumer Price Index for

11 the month of June preceding the date on

12 which the maximum authorized penalty

13 was last adjusted under this subsection.

14 ‘‘(B) The term ‘Consumer Price Index’

15 means the Consumer Price Index for all urban

16 consumers published by the Department of

17 Labor.’’.

18 (b) TREBLE DAMAGES FOR CRIMINAL SANCTIONS.—

19 Section 1128B of the Social Security Act (42 U.S.C.

20 1320a–7b) is amended by adding at the end the following

21 new subsection:

22 ‘‘(f) In addition to the fines that may be imposed

23 under subsection (a), (b), or (c), any individual found to

24 have violated the provisions of any of such subsections

25 may be subject to treble damages.’’.
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1 (c) EFFECTIVE DATE.—The amendments made by

2 this section shall take effect on January 1, 1995.

3 SEC. 3. APPLICATION OF FEDERAL HEALTH ANTI-FRAUD

4 AND ABUSE SANCTIONS TO ALL FRAUD AND

5 ABUSE AGAINST ANY HEALTH BENEFIT PLAN.

6 (a) CIVIL MONETARY PENALTIES.—Section 1128A

7 of the Social Security Act (42 U.S.C. 1320a–7a) is amend8 ed as follows:

9 (1) In subsection (a)(1), in the matter before

10 subparagraph (A), by inserting ‘‘or of any health

11 benefit plan,’’ after ‘‘subsection (i)(1)),’’.

12 (2) In subsection (b)(1)(A), by inserting ‘‘or

13 under a health benefit plan’’ after ‘‘title XIX’’.

14 (3) In subsection (f)—

15 (A) by redesignating paragraph (3) as

16 paragraph (4); and

17 (B) by inserting after paragraph (2) the

18 following new paragraph:

19 ‘‘(3) With respect to amounts recovered arising

20 out of a claim under a health benefit plan, the por21 tion of such amounts as is determined to have been

22 paid by the plan shall be repaid to the plan.’’.

23 (4) In subsection (i)—
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1 (A) in paragraph (2), by inserting ‘‘or

2 under a health benefit plan’’ before the period

3 at the end, and

4 (B) in paragraph (5), by inserting ‘‘or

5 under a health benefit plan’’ after ‘‘or XX’’.

6 (b) CRIMES.—Section 1128B of the Social Security

7 Act (42 U.S.C. 1320a–7b) is amended as follows:

8 (1) In the heading, by adding at the end the

9 following: ‘‘OR HEALTH BENEFIT PLANS’’.

10 (2) In subsection (a)(1)—

11 (A) by striking ‘‘title XVIII or’’ and insert12 ing ‘‘title XVIII,’’, and

13 (B) by adding at the end the following: ‘‘or

14 a health benefit plan (as defined in section

15 1128(i)),’’.

16 (3) In subsection (a)(5), by striking ‘‘title

17 XVIII or a State health care program’’ and inserting

18 ‘‘title XVIII, a State health care program, or a

19 health benefit plan’’.

20 (4) In the second sentence of subsection (a)—

21 (A) by inserting after ‘‘title XIX’’ the fol22 lowing: ‘‘or a health benefit plan’’, and

23 (B) by inserting after ‘‘the State’’ the fol24 lowing: ‘‘or the plan’’.
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1 (5) In subsection (b)(1), by striking ‘‘title

2 XVIII or a State health care program’’ each place

3 it appears and inserting ‘‘title XVIII, a State health

4 care program, or a health benefit plan’’.

5 (6) In subsection (b)(2), by striking ‘‘title

6 XVIII or a State health care program’’ each place

7 it appears and inserting ‘‘title XVIII, a State health

8 care program, or a health benefit plan’’.

9 (7) In subsection (b)(3), by striking ‘‘title

10 XVIII or a State health care program’’ each place

11 it appears in subparagraphs (A) and (C) and insert12 ing ‘‘title XVIII, a State health care program, or a

13 health benefit plan’’.

14 (8) In subsection (d)(2)—

15 (A) by striking ‘‘title XIX,’’ and inserting

16 ‘‘title XIX or under a health benefit plan,’’, and

17 (B) by striking ‘‘State plan,’’ and inserting

18 ‘‘State plan or the health benefit plan,’’.

19 (c) HEALTH BENEFIT PLAN DEFINED.—Section

20 1128 of the Social Security Act (42 U.S.C. 1320a–7) is

21 amended by redesignating subsection (i) as subsection (j)

22 and by inserting after subsection (h) the following new

23 subsection:

24 ‘‘(i) HEALTH BENEFIT PLAN DEFINED.—For pur25 poses of sections 1128A and 1128B, the term ‘health ben-
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1 efit plan’ means a health benefit program other than the

2 medicare program, the medicaid program, or a State

3 health care program.’’.

4 (d) CONFORMING AMENDMENT.—Section

5 1128(b)(8)(B)(ii) of the Social Security Act (42 U.S.C.

6 1320a–7(b)(8)(B)(ii)) is amended by striking ‘‘1128A’’

7 and inserting ‘‘1128A (other than a penalty arising from

8 a health benefit plan, as defined in subsection (i))’’.

9 (e) EFFECTIVE DATE.—The amendments made by

10 this section shall take effect January 1, 1995.

11 SEC. 4. CIVIL MONETARY PENALTIES INCLUDED IN ANTI12 KICKBACK SANCTIONS.

13 (a) IN GENERAL.—Section 1128A(a) of the Social

14 Security Act (42 U.S.C. 1320a–7a(a)), as amended by sec15 tion 2(a), is amended—

16 (1) by striking ‘‘or’’ at the end of paragraph

17 (1)(D);

18 (2) by striking ‘‘, or’’ at the end of paragraph

19 (2) and inserting a semicolon;

20 (3) by striking the semicolon at the end of

21 paragraph (3) and inserting ‘‘; or’’;

22 (4) by inserting after paragraph (3) the follow23 ing new paragraph:

24 ‘‘(4) carries out any activity in violation of

25 paragraph (1) or (2) of section 1128B(b);’’;
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1 (5) by striking ‘‘than $5,000’’ and all that fol2 lows through the period and inserting ‘‘than, in

3 cases under paragraph (1) or (2), $5,000 for each

4 item or service, in cases under paragraph (3),

5 $15,000 for each individual with respect to whom

6 false or misleading information is given, and in cases

7 under paragraph (4), $10,000 for each violation.’’;

8 and

9 (6) by striking ‘‘than three times’’ and all that

10 follows through the period and inserting ‘‘than, in

11 cases under paragraph (1) or (2), three times the

12 amount claimed for each such item or service in lieu

13 of damages sustained by the United States or a

14 State agency because of such claim, and in cases

15 under paragraph (4), twice the total amount of the

16 remuneration offered, paid, solicited, or received in

17 violation of paragraph (1) or (2) of section

18 1128B(b).’’.

19 (b) EFFECTIVE DATE.—The amendments made by

20 subsection (a) shall take effect January 1, 1995.

21 SEC. 5. VOLUNTARY DISCLOSURE PROGRAM.

22 In consultation with the Attorney General of the

23 United States, the Secretary of Health and Human Serv24 ices shall publish proposed regulations no later than 9

25 months after the date of the enactment of this Act, and
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1 final regulations no later than 18 months after such date

2 of enactment, establishing a program of voluntary disclo3 sure that would facilitate enforcement of sections 1128A

4 and 1128B of the Social Security Act (42 U.S.C. 1320a–

5 7a and 1320a–7b) and other relevant provisions of Fed6 eral law relating to health care fraud and abuse. Such pro7 gram should promote and provide incentives for disclo8 sures of potential violations of such sections and provi9 sions by providing that, under certain circumstances, the

10 voluntary disclosure of wrongdoing would result in the im11 position of penalties and punishments less substantial

12 than those that would be assessed for the same wrong13 doing if voluntary disclosure did not occur.

14 SEC. 6. EXPANSION OF HEALTH CARE FRAUD INVESTIGA15 TIVE RESOURCES.

16 There are authorized to be appropriated for the hir17 ing of additional personnel in the Department of Health

18 and Human Services Office of the Inspector General

19 $25,000,000 for each of fiscal years 1994, 1995, 1996,

20 and 1997 to sustain and expand the investigation of health

21 care fraud.