Billing a Medicare Advantage Plan Is Still Federal Health Care Fraud: What Florida DME and Telehealth Operators Get Wrong About 18 U.S.C. 1347

A durable medical equipment company bills a private insurer. No CMS claim number, no Medicare administrative contractor, no check drawn on the Treasury. The operator assumes the worst case is a plan audit or a contract fight. That assumption is the most expensive misreading of federal health care fraud law I see in DME and telehealth matters, and a guilty plea entered this month in the Northern District of California shows why.

A claim submitted to a private Medicare Advantage organization carries the same federal criminal exposure as a claim submitted to traditional Medicare. The definition in 18 U.S.C. 24(b) is what closes the gap.

Key Takeaways

• Medicare Advantage plans are private companies, but billing one falsely is still a federal crime under 18 U.S.C. 1347.
• 18 U.S.C. 24(b) defines a health care benefit program to include any private plan, which is what puts Medicare Advantage claims squarely inside federal jurisdiction.
• A Northern District of California plea this month rested on roughly $137 million billed to Medicare Advantage organizations against about $2.8 million actually paid.
• Guideline loss is the greater of actual or intended loss, so the amount billed usually drives the sentence, not the amount collected.
• Florida carries one of the highest Medicare Advantage penetration rates in the country, which makes South Florida a primary venue for these prosecutions.

What Happened: A $137 Million Claim Run Against Private Medicare Plans

Earlier this month a defendant pleaded guilty to three counts of health care fraud over a scheme that billed Medicare Advantage organizations for wound dressings and orthotic braces. The charging announcement and the HHS-OIG enforcement entry describe a familiar pattern. A durable medical equipment company was registered, thousands of claims went out for beneficiaries who never ordered the equipment, and no treating provider authorized them.

Two numbers matter. The claims sought at least $137 million. The company collected about $2.8 million, most of it wired offshore.

Thousands of claims went out for beneficiaries who never ordered the equipment, and no treating provider authorized them. The volume is what triggers the referral, and the volume is also what builds the loss figure the government will argue at sentencing.

Note what is absent. No traditional Medicare claim, no government payer. Every dollar went to a private insurer administering a Medicare Advantage contract, and the defendant still pleaded to federal health care fraud.

Why a Private Plan Is a Federal Victim: 18 U.S.C. 24(b)

This is the provision operators, and some defense lawyers, miss. 18 U.S.C. 1347 criminalizes a scheme to defraud any health care benefit program. The definition sits one statute over. 18 U.S.C. 24(b) defines that term as any public or private plan or contract under which a medical benefit is provided.

Public or private. A Medicare Advantage organization is a private company and a health care benefit program. So is a commercial PPO, a Medicaid managed care plan, a union welfare fund, and a self-funded employer plan. The statute requires no federal dollar and no federal contract. It requires a scheme, a plan affecting commerce, and a knowing execution.

That definition is why the argument that a company only billed private insurance does not survive a motion to dismiss, and why a payer special investigations unit referral can end in a federal indictment rather than a recoupment letter.

What the Government Is Building Right Now

Medicare Advantage now covers more than half of all Medicare beneficiaries nationally, and Florida sits near the top of the penetration table at roughly sixty percent. That concentration is why South Florida healthcare fraud defense work keeps moving toward private plan claims.

Medicare Advantage organizations run their own analytics and refer outliers to agents directly. A supplier that appears from nowhere and submits thousands of claims in a quarter draws a referral before any beneficiary complains.

Two features of the current posture matter if you run a DME, telehealth, or billing operation in Florida.

First, plan-side data is a charging input. Medicare Advantage organizations run their own analytics and refer outliers to agents directly. A supplier that appears from nowhere and submits thousands of claims in a quarter draws a referral before any beneficiary complains.

Second, the 2026 national takedown confirmed prosecutors charge the full chain. Owners, marketers, billing companies, and whoever moved money through the accounts are charged together, and an offshore transfer becomes its own laundering count.

Exposure and Charges

A private plan billing case of this type generally carries:

• Health care fraud under 18 U.S.C. 1347, ten years per count. Each claim can be charged as a separate execution, which is how one scheme becomes a twenty-count indictment.
• Conspiracy under 18 U.S.C. 1349, same maximum as the substantive offense, no overt act required.
• Aggravated identity theft under 18 U.S.C. 1028A, a mandatory consecutive two years whenever beneficiary identifiers were used without authorization. This count, not the fraud count, usually drives the plea posture.
• Money laundering under 18 U.S.C. 1956, with criminal forfeiture under 18 U.S.C. 982 reaching proceeds and substitute assets.
• Where marketing fees or per-patient payments are in the file, the Anti-Kickback Statute is charged alongside the fraud counts. Medicare Advantage is a federal health care program for kickback purposes.

The Loss Number Is the Case, and the Table Changes November 1

The charging documents get the headlines. The loss calculation gets the sentence.

Guideline loss under Section 2B1.1 of the Guidelines Manual is the greater of actual loss or intended loss. The court starts from roughly $137 million billed, not the $2.8 million collected. A defendant who never saw more than a fraction of the money can face a range built on the full submission. Every loss amount dispute in a DME fraud case turns on that rule.

"The court starts from roughly $137 million billed, not the $2.8 million collected. A defendant who never saw more than a fraction of the money can face a range built on the full submission."— Aaron M. Cohen, AMC Defense Law

There is an opening here, and it is time-limited. The Sentencing Commission adopted amendments effective November 1, 2026 that collapse the Section 2B1.1 loss table from sixteen tiers to eight and reduce the enhancement at several breakpoints. Whether a client benefits turns on charge date, plea timing, sentencing date, and the guideline stipulations in the plea agreement.

Critical Mistakes People Make Early

• Explaining the billing to agents. The first interview is where the government establishes knowledge. A billing walkthrough given without counsel becomes the intent evidence at trial.
• Treating a search warrant executed at your business as an IT problem. Consenting to access beyond the warrant, or letting employees be interviewed on the spot, gives away suppression arguments. Recreating orders or deleting messages after the fact adds obstruction counts.
• Assuming a payer audit is only a payer audit. A plan referral and a federal grand jury subpoena often arrive months apart in the same matter. Anyone who has received a target letter, or learned they are a subject of a federal investigation, is past that stage.

Strategic Defense Approach and Why Timing Matters

Early intervention accomplishes three specific things.

It separates the client from the scheme. Most DME and telemedicine fraud investigations involve a marketing layer, a billing layer, and an ownership layer, and the government initially treats them as one. A pre-charge submission documenting what a participant knew and controlled can move someone from lead defendant to a narrower count.

It fixes the loss number before it hardens. Once a guideline stipulation is in a plea agreement the attribution fight is over, so the alternative calculation and the PSR objections get built during pre-charge negotiation with the AUSA.

It protects assets. Seizure warrants land early, and asset forfeiture defense work runs on its own deadlines.

By the time a target letter arrives, the investigation is mature.

Common Questions

Under Investigation for Billing a Medicare Advantage or Commercial Plan?

AMC Defense Law represents clients in federal health care fraud investigations and prosecutions involving durable medical equipment, telemedicine, laboratory billing, and Anti-Kickback Statute allegations, in the Southern District of Florida and nationwide. If agents have contacted you, if a payer has referred your claims, or if you have received a grand jury subpoena or a target letter, that conversation is worth having before charges are filed.

Aaron M. Cohen, founder of AMC Defense Law, represents clients in federal health care fraud investigations and prosecutions in the Southern District of Florida and nationwide.

Consultations are confidential. Call 561.542.5494 or contact the firm through amcdefenselaw.com.

If you or your loved ones have been arrested, are under federal investigation, or have received a target letter, call Aaron M. Cohen, 24 hours a day to get help.