No, really: Is it the amount that was paid out to you or the amount that you billed for, even if all of it wasn’t paid?
By way of background, the main driver of sentencing in most healthcare fraud cases (as in other fraud cases) is the dollar amount of the loss. In federal cases, the general rule is that you are responsible for the greater of the actual loss or your intended loss. Plus, under the sentencing guidelines, if the intended loss is the bigger number, you may be responsible for that amount even if the loss would’ve been “impossible or unlikely to occur.” This could be the case if the whole thing was a government sting, for example, or in an insurance case, if your fraudulent claim exceeded the policy limits. So what if we’re talking about Medicare, which pays out according to a fixed fee schedule? If everyone knows that Medicare pays per schedule and not a dollar more, what is the proper measure of intended loss?
Yesterday, the Ninth Circuit Court of Appeals published a decision that addressed the question for California and eight other states. In such cases, the rule is that the amount billed constitutes prima facie evidence of the intended loss for sentencing purposes, but the parties may introduce additional evidence to show that the bill overestimates or understates the defendant’s intent. The court’s decision came in a case where the defendants had billed Medicare upward of $2 million; the maximum fee-schedule amount was closer to $1 million; and Medicare had paid out less than that: around $750,000. The trial court sentenced the defendants based on a $2 million intended loss, but the court of appeals reversed. The court noted that the Second, Fourth, and Fifth Circuits had already adopted a burden-shifting framework, and the sentencing guidelines themselves had been amended in 2011 to reflect it as well.
So basically, in healthcare fraud cases, the amount of the bill is the starting measure of a defendant’s intended loss, and if it’s not rebutted by other evidence, it can be sufficient to establish the intended loss, but a defendant may introduce further evidence to show that the bill overestimates his or her intent (just as the government may introduce evidence to show the opposite).