A healthcare fraud conviction, reached by trial verdict or guilty plea, does not end with a prison sentence. Federal courts routinely impose two separate financial penalties at sentencing: restitution and forfeiture. Providers often treat the two as the same demand under different names, but they run through different statutes and can both apply to the same defendant in full. Restitution compensates the victim, typically Medicare, Medicaid, or a private payor, for its actual pecuniary loss. Forfeiture strips the defendant of the gross proceeds the offense generated, whether or not a victim's loss is ever calculated. A provider whose case began with a grand jury subpoena or a civil investigative demand needs to understand both exposures before a plea agreement is on the table.
Restitution Compensates the Victim's Loss
Restitution in a federal healthcare fraud case is governed by the Mandatory Victims Restitution Act, codified at 18 U.S.C. Section 3663A. The statute makes restitution mandatory for an offense against property under Title 18, including any offense committed by fraud or deceit, once an identifiable victim has suffered a pecuniary loss. Healthcare fraud under 18 U.S.C. Section 1347 fits that definition, so restitution is not left to the court's discretion once a payor's loss is established. Discretionary restitution remains available under 18 U.S.C. Section 3663 for related Title 18 offenses that fall outside the mandatory statute. Where more than one defendant contributed to the same loss, 18 U.S.C. Section 3664(h) lets the court hold each defendant liable for the full amount rather than dividing it proportionally.
Forfeiture Targets the Proceeds of the Offense
Forfeiture serves a different function. Under 18 U.S.C. Section 982(a)(7), a defendant convicted of a federal health care offense, a category defined at 18 U.S.C. Section 24 to include healthcare fraud and criminal violations of the anti-kickback statute, must forfeit property traceable to the gross proceeds of the offense. The forfeiture amount is not tied to any victim's documented loss; it is measured by what the scheme generated, and it goes to the government, not the victim payor. Stark Law is a civil, strict-liability rule that typically drives False Claims Act exposure rather than the criminal restitution and forfeiture track described here.
Restitution compensates the victim's loss. Forfeiture strips the defendant of the offense's proceeds. Federal courts routinely order both against the same defendant in full, with no dollar-for-dollar credit between the two.
Personal Liability Differs Sharply Between the Two
The two penalties also diverge on who owes what among co-defendants. Restitution can be ordered on a joint and several basis under Section 3664(h), so one defendant can be liable for the full loss regardless of individual gain. Forfeiture cannot. In Honeycutt v. United States, the Supreme Court held in 2017 that criminal forfeiture is limited to property a defendant personally acquired from the crime, eliminating joint and several forfeiture liability among co-conspirators. A physician who received a modest kickback within a larger scheme can face full joint restitution liability for the scheme's total loss while forfeiting only the proceeds personally received.
Forfeiture Follows a Separate Procedural Track
Forfeiture is determined under Federal Rule of Criminal Procedure 32.2, not as part of the ordinary sentencing calculation. The court enters a preliminary order of forfeiture after conviction, based on trial evidence, the plea agreement, or additional submissions, and finalizes the order at sentencing, with a separate ancillary proceeding for any third party's claim to the property. Restitution, by comparison, is calculated and imposed directly as part of the sentence. A victim payor seeking access to forfeited funds rather than a restitution order can petition for remission under 28 C.F.R. Part 9, but that relief is discretionary and capped at the victim's documented loss.
A restitution and forfeiture order rarely closes the matter. The same conduct often supports OIG program exclusion and a parallel civil case running on its own timeline.
Why Early Legal Counsel Is Critical
It is critical that healthcare providers promptly retain experienced healthcare defense counsel upon learning that a matter may result in restitution or forfeiture, whether the case is at the subpoena stage, the plea negotiation stage, or already past conviction. Early legal intervention can shape how the government calculates a loss amount and contest the scope of property alleged to be traceable to the offense before a preliminary forfeiture order issues. Delaying representation until sentencing narrows these options and can increase the eventual exposure.
How Health Law Alliance Can Help
Health Law Alliance has handled 5,000+ matters across healthcare regulatory and fraud defense over 25+ years, including matters where restitution and forfeiture were negotiated as part of a plea agreement or contested at sentencing. If your practice is facing a healthcare fraud investigation or a sentencing exposure that includes restitution or forfeiture, contact Health Law Alliance's healthcare fraud defense attorneys for a free, confidential consultation.
