But did I commit fraud?

Dr. Derm takes this advice and assumes that, since she is not charging more than the original $45 fee, there cannot be a problem. Unfortunately, her "level of care" documentation is abysmal. In one year, she bills 1,000 patients in this manner. She continues to provide impeccable care, but unfortunately, she receives a Medicare audit that suggests fraud on her part. She is convinced that she is innocent. After all, she is still charging the same $45. She knows that if she had better documentation, she could charge higher fees. Is this really fraud?

Only violent crime ranks higher than the white-collar crime of healthcare fraud, according to the Department of Justice. Ten percent of the Department of Justice's (DOJ) financial resources are directed to healthcare fraud. The General Accounting Office claims 10 percent of the trillion-dollar healthcare industry is lost to fraudulent provider claims.

There are eight major theories of fraud under which a healthcare provider can be prosecuted: 1) treatment by fraud (violations of statutes regulating controlled substances, 2) billing for services not provided, 3) misrepresenting the nature of services provided; 4) auto accident scams, 5) quackery (misrepresenting credentials or remedies), 6) false cost reports, 7) illegal remunerations, and 8) providing unnecessary or substandard health services.

HCFA's Web site notes that the most common forms of fraud include billing for services not provided; misrepresenting the diagnosis to justify payment; soliciting, offering or receiving a kickback; unbundling or "exploding" charges; falsifying plans of treatment and medical records to justify payment; and billing for a service not furnished as billed - so-called "upcoding."

Both civil and criminal statutes deal with such false claims. The Medicaid and Medicare fraud and abuse laws make it a felony to misrepresent the nature of services rendered, and provide for imprisonment as well as fines. The False Claims Act (FCA) allows the government to recover three times the amount of damage to the government as well as fines up to $10,000 per claim.

The FCA also allows private citizens to bring actions in their own name and the name of the government. A person bringing such an action, known as a qui tam action, is entitled to share in the proceeds of any recoveries which result from the action. The financial rewards to a qui tam plaintiff can run in the millions of dollars. There have been more than $1 billion in such qui tam recoveries since 1986.