I

103D CONGRESS

1ST SESSION H. R. 1884

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

APRIL 28, 1993

Ms. DELAURO (for herself, Mr. DURBIN, Mr. SHAYS, and Mr. BACCHUS of

Florida) introduced the following bill; which was referred jointly to the

Committees on the Judiciary and Energy and Commerce

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 ACT OF 1993

5 SEC. 101. SHORT TITLE.

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

7 Prosecution Act of 1993’’.
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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 ‘‘(5) 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 of title 18, United States Code, is

4 amended by adding at the end the following new sub5 section:

6 ‘‘(c)(1) In special circumstances and in the Attorney

7 General’s sole discretion, the Attorney General may make

8 a payment of up to $10,000 to a person who furnishes

9 information unknown to the Government relating to a pos10 sible prosecution under section 1101 of this title.

11 ‘‘(2) A person is not eligible for a payment under

12 paragraph (1) if—

13 ‘‘(A) the person is a current or former officer

14 or employee of a Federal or State government agen15 cy or instrumentality who furnishes information dis16 covered or gathered in the course of government em17 ployment;

18 ‘‘(B) the person knowingly participated in the

19 offense;

20 ‘‘(C) the information furnished by the person

21 consists of allegations or transactions that have been

22 disclosed to the public—

23 ‘‘(i) in a criminal, civil, or administrative

24 proceeding;
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1 ‘‘(ii) in a congressional, administrative or

2 General Accounting Office report, hearing,

3 audit, or investigation; or

4 ‘‘(iii) by the news media, unless the person

5 is the original source of the information; or

6 ‘‘(D) when, in the judgment of the Attorney

7 General, it appears that a person whose illegal ac8 tivities are being prosecuted or investigated could

9 benefit from the award.

10 ‘‘(3) For the purposes of paragraph (2)(C)(iii), the

11 term ‘original source’ means a person who has direct and

12 independent knowledge of the information that is fur13 nished and has voluntarily provided the information to the

14 Government prior to disclosure by the news media.

15 ‘‘(4) Neither the failure of the Attorney General to

16 authorize a payment under paragraph (1) nor the amount

17 authorized shall be subject to judicial review.’’.

18 SEC. 105. AUTHORIZATION OF APPROPRIATIONS.

19 There are authorized to be appropriated in fiscal year

20 1993 for the purposes of carrying out the purposes of this

21 title and the amendments made by this title—

22 (1) $25,000,000 for the Federal Bureau of In23 vestigation to hire, equip, and train no fewer than

24 250 special agents and support staff to investigate

25 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 and

5 (3) $5,000,000 to hire, equip, and train no

6 fewer than 50 investigators in the Office of Inspec7 tor General, Department of Health and Human

8 Services, to be devoted exclusively to health-care

9 fraud cases.

10 SEC. 106. BROADENING APPLICATION OF MAIL FRAUD

11 STATUTE.

12 Section 1341 of title 18, United States Code, is

13 amended—

14 (1) by inserting ‘‘or deposits or causes to be de15 posited any matter or thing whatever to be sent or

16 delivered by any private or commercial interstate

17 carrier,’’ after ‘‘Postal Service,’’; and

18 (2) by inserting ‘‘or such carrier’’ after ‘‘causes

19 to be delivered by mail’’.

20 TITLE II—HEALTH CARE FRAUD

21 AND ABUSE COMMISSION ACT

22 OF 1993

23 SEC. 201. SHORT TITLE.

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

25 and Abuse Commission Act of 1993’’.
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1 SEC. 202. ESTABLISHMENT OF HEALTH CARE FRAUD AND

2 ABUSE COMMISSION.

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

4 to be known as the ‘‘Health Care Fraud and Abuse Com5 mission’’ (in this title referred to as the ‘‘Commission’’).

6 (b) COMPOSITION.—The Commission shall be com7 posed of 18 members as follows:

8 (1) OFFICIALS.—

9 (A) The Secretary of Health and Human

10 Services (or the Secretary’s designee).

11 (B) The Inspector General of the Depart12 ment of Health and Human Services (or the In13 spector General’s designee).

14 (C) The Attorney General (or the Attorney

15 General’s designee).

16 (D) The Director of the Federal Bureau of

17 Investigation (or the Director’s designee).

18 (E) The Administrator of the Health Care

19 Financing Administration (or the Administra20 tor’s designee).

21 (2) PUBLIC MEMBERS.—Thirteen members, ap22 pointed by the President, of which—

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

24 State;

25 (B) one shall be a representative of State

26 medicaid fraud control programs;
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1 (C) one shall be a State official directly re2 sponsible for regulation of health insurance;

3 (D) one shall be a representative of physi4 cians;

5 (E) one shall be a representative of hos6 pital administrators;

7 (F) one shall be a representative of health

8 insurance companies;

9 (G) one shall be a representative of em10 ployers who self-fund employee health benefit

11 plans;

12 (H) one shall be a representative of em13 ployers who purchase a health benefit plan from

14 a health insurance company;

15 (I) one shall be a representative of medi16 care carriers;

17 (J) one shall be a representative of medi18 care peer review organizations;

19 (K) one shall be a representative of health

20 care consumers;

21 (L) one shall be a representative of medi22 care beneficiaries; and

23 (M) one shall be a representative of labor

24 unions.
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1 In making appointments under this paragraph of an

2 individual who is a representative of persons or or3 ganizations, the President shall consider the rec4 ommendations of national organizations that rep5 resent such persons or organizations. The President

6 shall report to Congress, within 90 days after the

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

8 members appointed under this paragraph.

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

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

11 be filled in the manner in which the original appointment

12 was made.

13 SEC. 203. FUNCTIONS OF COMMISSION.

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

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

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

17 and

18 (2) identify and develop the most effective

19 methods of preventing, detecting, and prosecuting or

20 litigating such fraud and abuse, with particular em21 phasis on coordinating public and private prevention,

22 detection, and enforcement efforts.

23 (b) PARTICULARS.—Among other items, the Commis24 sion shall examine at least the following:
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1 (1) Mechanisms to provide greater standardiza2 tion of claims administration in order to accommo3 date fraud prevention and detection.

4 (2) Mechanisms to allow more freedom of

5 health benefit plans to exchange information for co6 ordinating case development and prosecution or liti7 gation efforts, without undermining patient and pro8 vider privacy protections or violating anti-trust laws.

9 (3) The extension to private health insurers of

10 administrative remedies currently available to public

11 insurers.

12 (4) Mechanisms for private insurers to organize

13 and finance investigation and litigation efforts when

14 more than one insurer may have received fraudulent

15 claims from a provider.

16 (5) Creating a model State statute for estab17 lishing State insurance fraud units and State laws to

18 strengthen insurers’ ability to pursue and recover

19 from fraudulent providers.

20 (6) The need for regulation of new types of

21 health care providers.

22 (7) Criteria for physician referrals to facilities

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

24 interest.
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1 (8) The availability of resources to law enforce2 ment authorities to combat health care fraud and

3 abuse.

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

5 quorum being present, the Commission shall transmit to

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

7 transmitted not later than 18 months after the date that

8 a majority of the public members of the Commission have

9 been appointed. The report shall contain a detailed state10 ment of the Commission’s findings, together with such rec11 ommendations as the Commission considers appropriate.

12 SEC. 204. ORGANIZATION AND COMPENSATION.

13 (a) ORGANIZATION.—

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

15 the Commission shall constitute a quorum but a

16 lesser number may hold hearings.

17 (2) CHAIRMAN.—The Commission shall elect

18 one of its members to serve as chairman of the Com19 mission.

20 (3) MEETINGS.—The Commission shall meet at

21 the call of the chairman or a majority of its mem22 bers. Meetings of the Commission are open to the

23 public under section 10(a)(10) of the Federal Advi24 sory Committee Act, except that the Commission

25 may conduct meetings in executive session but only
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1 if a majority of the members of the Commission (a

2 quorum being present) approve going into executive

3 session.

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

5 Commission shall serve without compensation, but shall

6 be reimbursed for travel, subsistence, and other necessary

7 expenses incurred in the performance of their duties as

8 members of the Commission.

9 SEC. 205. STAFF OF COMMISSION.

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

11 fix the compensation of a staff director and such other

12 additional personnel as may be necessary to enable the

13 Commission to carry out its functions, without regard to

14 the laws, rules, and regulations governing appointment

15 and compensation and other conditions of service in the

16 competitive service.

17 (b) DETAIL OF FEDERAL EMPLOYEES.—Upon re18 quest of the chairman, any Federal employee who is sub19 ject to such laws, rules, and regulations, may be detailed

20 to the Commission to assist it in carrying out its functions

21 under this title, and such detail shall be without interrup22 tion or loss of civil service status or privilege.

23 (c) EXPERTS AND CONSULTANTS.—The Commission

24 may procure temporary and intermittent services under

25 section 3109(b) of title 5, United States Code, but at rates
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1 for individuals not to exceed the daily equivalent of 120

2 percent of the maximum annual rate of basic pay payable

3 for GS–15 of the General Schedule.

4 SEC. 206. AUTHORITY OF COMMISSION.

5 (a) HEARINGS AND SESSIONS.—The Commission

6 may, for the purpose of carrying out this title, hold hear7 ings, sit and act at times and places, take testimony, and

8 receive evidence as the Commission considers appropriate.

9 The Commission may administer oaths or affirmations to

10 witnesses appearing before it.

11 (b) OBTAINING OFFICIAL DATA.—

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

13 directly from any department or agency of the

14 United States information necessary to enable it to

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

16 the Commission, the head of that department or

17 agency shall furnish that information to the Com18 mission.

19 (2) ACCESS TO INFORMATION.—Information ob20 tained by the Commission is available to the public

21 in the same manner in which information may be

22 made available under sections 552 and 552a of title

23 5, United States Code.

24 (c) GIFTS, BEQUESTS, AND DEVISES.—The Commis25 sion may accept, use, and dispose of gifts, bequests, or
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1 devises of services or property for the purpose of aiding

2 or facilitating the work of the Commission.

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

4 States mails in the same manner and under the same con5 ditions as other departments and agencies of the United

6 States.

7 (e) ADMINISTRATIVE SUPPORT SERVICES.—Upon

8 the request of the Commission, the Administrator of Gen9 eral Services shall provide to the Commission, on a reim10 bursable basis, the administrative support services nec11 essary for the Commission to carry out its responsibilities

12 under this title.

13 (f) SUBPOENA POWER.—

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

15 subpoenas requiring the attendance and testimony of

16 witnesses and the production of any evidence relat17 ing to any matter which the Commission is author18 ized to investigate under this title. The attendance

19 of witnesses and the production of evidence may be

20 required from any place within the United States at

21 any designated place of hearing within the United

22 States.

23 (2) FAILURE TO OBEY A SUBPOENA.—If a per24 son refuses to obey a subpoena issued under para25 graph (1), the Commission may apply to a United
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1 States district court for an order requiring that per2 son to appear before the Commission to give testi3 mony, produce evidence, or both, relating to the

4 matter under investigation. The application may be

5 made within the judicial district where the hearing

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

7 or transacts business. Any failure to obey the order

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

9 contempt.

10 (3) SERVICE OF SUBPOENAS.—The subpoenas

11 of the Commission shall be served in the manner

12 provided for subpoenas issued by a United States

13 district court under the Federal Rules of Civil Pro14 cedure for the United States district courts.

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

16 court to which application is to be made under para17 graph (2) may be served in the judicial district in

18 which the person required to be served resides or

19 may be found.

20 SEC. 207. TERMINATION.

21 The Commission shall terminate 90 days after the

22 date the report is submitted under section 203(c).
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1 SEC. 208. AUTHORIZATION OF APPROPRIATIONS.

2 There are authorized to be appropriated to the Com3 mission such sums as are necessary to carry out its func4 tions, to remain available until expended.

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