A federal healthcare fraud indictment forces a decision most physicians and practice owners never expected to face: plead guilty under a negotiated plea agreement, or take the case to trial. That written agreement identifies the counts of conviction, can stipulate loss and restitution facts for sentencing, which the court is not bound to accept, and can waive appeal rights and set cooperation obligations. Its consequences do not end in the courtroom: a conviction can trigger mandatory exclusion from Medicare and Medicaid and, under rules such as the Texas Medical Board's, state licensing board reporting, regardless of the sentence imposed.
The Counts a Plea Agreement Names
A plea agreement identifies the counts a defendant will plead guilty to, and the government may agree not to bring, or to move to dismiss, other charges. In a healthcare case the counts can be brought under the healthcare fraud statute, 18 U.S.C. 1347, or the anti-kickback statute, whose violation is a felony. The Stark Law self-referral provisions carry different sanctions: denial of payment, refunds and civil money penalties. A count can also charge aggravated identity theft, which the Supreme Court held in Dubin v. United States is violated when the misuse of another person's means of identification is at the crux of what makes the underlying offense criminal, not merely an ancillary feature of a billing method. A kickback count can turn on whether the arrangement fit one of the statute's safe harbors. The agreement may be accompanied by a written stipulation of facts relevant to sentencing, and before entering judgment on a guilty plea the court must determine that there is a factual basis for it. Dismissing a count does not by itself take its conduct out of the sentencing calculation: under the federal Sentencing Guidelines, a plea agreement that dismisses a charge does not preclude the court from considering the conduct underlying that charge as relevant conduct.
Stipulations on Loss and Restitution
A plea agreement may be accompanied by a written stipulation of facts relevant to sentencing, including the loss amount. The court is not bound by the stipulation and may determine the facts relevant to sentencing with the aid of the presentence report. Where the parties disagree about a fact relevant to sentencing, the stipulation is to identify the facts in dispute. Restitution is a separate matter: in each restitution order the court must order restitution to each victim, which can include the United States, in the full amount of that victim's losses as the court determines them, and a plea agreement can extend restitution to persons other than the victim of the offense. A stipulated loss figure and a restitution order answer different questions: guideline loss is the greater of actual loss or intended loss, while restitution is measured by each victim's losses.
Appeal Waivers and Cooperation Terms
A federal plea agreement can include an appeal waiver: a provision waiving the right to appeal or to collaterally attack the sentence, whose terms the court must confirm the defendant understands before accepting the plea. Justice Department policy tells prosecutors not to seek a waiver of claims of ineffective assistance of counsel. Where the case grew out of a search warrant at the practice, a grand jury subpoena, or a related civil investigative demand, the agreement may also include cooperation terms: providing truthful information or testimony in the investigation or prosecution of another person, assistance that can continue after sentencing.
Program Exclusion Follows the Conviction, Not the Sentence
A guilty plea to specific federal offenses triggers mandatory exclusion from Medicare, Medicaid, and other federal healthcare programs under 42 U.S.C. 1320a-7(a), for program-related crimes, patient abuse or neglect, felony healthcare fraud, and felony offenses relating to the unlawful manufacture, distribution, prescription, or dispensing of a controlled substance. The minimum exclusion period is five years for a first qualifying conviction, ten years for a second, and permanent exclusion for a third. Exclusion is a separate administrative action by the HHS Office of Inspector General, not a court-imposed term, and the five-year minimum applies whatever sentence the court imposes. With limited exceptions in the regulation, such as certain emergency items or services, no payment will be made by any federal health care program for items or services an excluded individual furnishes, orders, or prescribes.
State Licensing Boards Review the Same Conviction Separately
A conviction also triggers reporting outside the criminal case. Federal and state prosecutors must report criminal convictions related to the delivery of a health care item or service to the National Practitioner Data Bank within 30 days. Some state boards separately require the licensee to self-report; the Texas Medical Board's rule, for example, requires a physician to report a felony conviction within 10 business days of the event. The deadline for another state or license type is in that board's own rules. A state licensing authority can then revoke, suspend or otherwise restrict a license in its own proceeding, separate from the sentence and from any program exclusion.
A plea agreement settles the criminal case. Program exclusion and a state licensing board's review of the same conviction proceed on their own separate tracks.
Why Early Legal Counsel Is Critical
It is critical that a physician or practice owner facing a federal healthcare fraud charge retain experienced healthcare defense counsel before deciding whether to plead. Early legal involvement can shape the counts a plea agreement ultimately names, test the loss calculation before it becomes a stipulation, and identify the exclusion and licensure exposure tied to each count under consideration. Delaying representation can mean signing an agreement without those consequences ever weighed alongside it.
How Health Law Alliance Can Help
Health Law Alliance defends healthcare professionals and companies under federal investigation, before indictment, after indictment, and through trial. The firm has represented 2,500+ clients, with 25+ years of experience. If you are weighing a plea, contact our healthcare fraud defense attorneys for a free, confidential consultation.
