What Constitutes Healthcare Fraud Under Federal and California Law?
Healthcare fraud is a serious offense that carries significant civil and criminal penalties under both federal and California law. For healthcare providers, understanding what actions can be considered fraudulent is essential not only to maintain compliance but also to safeguard a career and livelihood built on patient care. Unfortunately, providers can find themselves facing fraud investigations based on unintentional errors, misunderstood billing practices, or the actions of employees or third-party contractors. Knowing the legal definitions and standards for healthcare fraud is the first step in protecting your practice. Read on for a discussion of this vital topic, and contact the Law Offices of Art Kalantar in Los Angeles if you need to speak with a skilled and experienced California healthcare criminal defense lawyer.
Defining Healthcare Fraud
At its core, healthcare fraud involves the intentional deception or misrepresentation of facts to obtain unauthorized benefits from a healthcare program. Fraud can occur in connection with any public or private healthcare benefit program, including Medicare, Medi-Cal, and private insurance plans. While mistakes and overbilling may result in audits or repayment demands, fraud requires a deliberate act or a reckless disregard for the truth.
Federal and California laws define healthcare fraud broadly, allowing prosecutors to pursue a wide range of conduct. This means even relatively minor or technical violations can escalate into fraud investigations if there is evidence of intent to deceive or a pattern of suspicious behavior.
Common Forms of Healthcare Fraud
Healthcare fraud can take many forms. Some of the most commonly prosecuted schemes include:
- Billing for services not rendered: Submitting claims for procedures, tests, or visits that never took place.
- Upcoding: Billing for a more expensive service than was actually provided.
- Unbundling: Separately billing for procedures that are normally billed together at a reduced rate.
- Kickbacks and illegal referrals: Receiving or paying financial incentives in exchange for patient referrals, in violation of the federal Anti-Kickback Statute or California’s similar prohibitions.
- False diagnoses: Documenting a diagnosis to justify medically unnecessary services.
- Fraudulent cost reports: Misrepresenting expenses or financial information in reports submitted to government programs.
- Billing under another provider’s name: Submitting claims using the credentials of another licensed provider who did not perform the service.
Federal Law: The False Claims Act and Other Statutes
The primary federal statute used to prosecute healthcare fraud is the False Claims Act (FCA). The FCA prohibits submitting false or fraudulent claims for payment to a federal program, such as Medicare. Violations can result in significant penalties, including treble damages and civil fines per false claim. Whistleblowers, often former employees or business partners, may file lawsuits on behalf of the government under the FCA and share in any recovery.
Another major federal law is the Anti-Kickback Statute (AKS), which prohibits offering, paying, soliciting, or receiving anything of value in exchange for referrals for services covered by federal healthcare programs. Unlike the FCA, AKS violations are criminal offenses and can result in prison time, loss of licensure, and exclusion from participation in government programs.
The Department of Justice (DOJ) often issues Civil Investigative Demands to further investigate alleged FCA violations. It is very important to retain a knowledgeable attorney to assist providers in responding to the CIDs.
The Health Care Fraud Statute (18 U.S.C. §1347) is also frequently used in prosecutions. It makes it a crime to knowingly and willfully execute, or attempt to execute, a scheme to defraud a healthcare benefit program. Convictions can lead to fines and imprisonment for up to 10 years per offense, or more if the fraud results in serious bodily injury.
California Law: State-Specific Healthcare Fraud Offenses
In California, healthcare fraud is prosecuted under various sections of the California Penal Code, Insurance Code, and Welfare and Institutions Code.
One of the most commonly used provisions is California Penal Code §550, which makes it a crime to submit false claims to any insurance company, including Medi-Cal. This includes presenting false statements, billing for services not rendered, or preparing false records to support fraudulent claims. A conviction under this statute can result in imprisonment, fines, and restitution.
California also enforces its version of the False Claims Act under the California Government Code §12600 et seq., which mirrors the federal FCA but applies to state and local government programs. The state also allows whistleblowers to file qui tam lawsuits and share in any recovery.
Additionally, California Welfare and Institutions Code §14100 et seq. addresses Medi-Cal fraud specifically. Violations may result in both civil penalties and criminal prosecution. Providers found guilty can be barred from participating in Medi-Cal and other public programs.
Civil vs. Criminal Healthcare Fraud Cases
Not all healthcare fraud cases lead to criminal prosecution. Many begin as civil matters, such as overpayment audits or administrative penalties. However, if investigators discover evidence of willful misconduct or patterns suggesting intent to defraud, a case can escalate into criminal charges.
Civil penalties may include restitution, treble damages, and program exclusion. Criminal penalties, on the other hand, may involve jail time, probation, asset forfeiture, and long-term reputational harm. Both federal and California prosecutors have discretion in deciding whether to pursue a case civilly or criminally, based in part on the nature and severity of the alleged misconduct.
Defending Against Healthcare Fraud Allegations in California
Defending in a healthcare fraud case requires a deep understanding of both the medical and legal issues involved. Key defenses may include demonstrating that any billing discrepancies were unintentional, showing that services were medically necessary, or proving that any claims were submitted based on reasonable reliance on third-party billing staff or consultants.
An experienced healthcare fraud defense attorney can help by examining the government’s evidence, challenging the intent element of the case, negotiating settlements, and protecting your rights throughout the investigation. Timely legal representation is critical, especially when facing subpoenas, Civil Investigative Demands, audits, or interviews by investigators.
Contact California Healthcare Criminal Defense Lawyer Art Kalantar Today
Healthcare fraud is aggressively investigated and prosecuted at both the federal and state levels, particularly in California, where both Medicare and Medi-Cal claims are under close scrutiny. Providers must be aware of what constitutes fraud under the law and take proactive steps to ensure their billing and compliance practices are sound. If you are under investigation or concerned about potential exposure to fraud allegations, contact the Law Offices of Art Kalantar today. Our firm offers strategic, experienced representation for healthcare providers facing fraud audits, administrative sanctions, or criminal charges.
