Medicaid Fraud Investigation: The Process & Penalties

While Medicaid is funded at the federal level, it is a state-administered program. Forty-nine states including the District of Columbia have Medicaid Fraud Control Units. These MFCUs are state law enforcement agencies and are typically a part of the state’s attorney general’s office. MFCUs are separate entities from state Medicaid programs. Still, these two entities will work together when investigating claims in order to combat Medicaid fraud.

It is through these MFCUs that investigations take place when violations of state and federal law as it applies to Medicaid take place. Along with investigating possible abuse of the program, MFCUs have the ability to prosecute violators as well. Medicaid programs, on the other hand, do not have the authority to prosecute violations. Investigations that will always take place under MFCUs include the following:

• Medicaid billing fraud
• Mistreatment including abuse and neglect of residents in facilities that receive Medicaid payments
• Misuse of patient funds by health care facilities

Who Do MFCUs Investigate?

MFCUs investigate healthcare providers when there is suspicion and/or evidence that Medicaid fraud is taking place. Patients who receive Medicaid are generally not investigated unless they conspired with the healthcare provider to allow the fraud to take place. Providers that can be investigated will typically include:

• Doctors
• Dentists
• Nurses
• Pharmacies
• Counselors
• Hospitals and other treatment facilities

What are Penalties and Crimes of Medicaid Fraud?

Each state has its own statutes regarding Medicaid fraud. Some states enact a variety of statutes that apply to health care providers while other states have laws that apply to specific types of medical facilities or providers.

Medicaid fraud cases can yield both criminal and civil penalties. On the criminal side, there must be proof beyond a reasonable doubt of the intent to commit fraud. On the civil side, however, less proof is required when it comes to intent. Instead, there needs to be demonstrated through the weight of the evidence that a provider was reckless when submitting false claims to Medicaid.

Criminal and Civil Proceedings

Cases investigated by MFCUs can result in both criminal prosecutions as well as civil lawsuits. The main primary fraud laws that apply to Medicaid providers include the False Claims Act, the Anti-Kickback Statute, and Stark Law.

The False Claims Act

Under the False Claims Act, it is a federal offense to submit a “false or fraudulent” claim to the government. Violations of this law often occur through Medicaid overbilling. Violations of the False Claims Act can result in the following civil penalties:

• Fines of $21,000 per false claim
• Treble damages (three times the actual losses sustained by the government)
• Recovery of overbilled amounts
• Action taken against a healthcare provider’s license
• Exclusion from Medicaid and other health care benefit programs

Criminal penalties can also result under the False Claims Act. These penalties can include the following:

• Fines of up to $250,000
• Recoupment
• Action taken against a healthcare provider’s license
• Up to five years of federal incarceration for each violation.

The Anti-Kickback Statute

Under the federal Anti-Kickback Statute, providers cannot solicit, provide payment, or receive any form of compensation to reward referrals that are then reimbursed by Medicaid. Both civil and criminal penalties can ensue following a violation of the Anti-Kickback Statute. Civil penalties may include the following:

• False Claims Act liability
• Recoupments
• Treble damages
• Civil monetary penalties (CMP)
• Exclusion from Medicaid or other health benefits programs

Criminal penalties can include the following:

• Fines of up to nearly $75,000 per violation
• Up to five years of federal incarceration per violation

Stark Law

Under the Stark law, healthcare providers are prohibited from making referrals to health services that are then reimbursed by Medicaid. Entities that received those prohibited referrals can also be in violation of the Stark Law. The civil penalties can include the following:

• False Claims Act liability
• Recoupments
• Treble damages
• Civil monetary penalties
• Program exclusion

Federal Prosecution

While state laws differ in the way they prosecute Medicaid fraud, a case can also be prosecuted at the federal level. Many times, cases prosecuted at the federal level will also involve other agencies including the FBI, the DEA, and the U.S. Attorneys’ Offices.

Seeking Experienced Legal Representation

Medicaid fraud can be a difficult and complicated situation to navigate through. Having an experienced attorney on your side who is well versed in healthcare law can be an invaluable asset to have on your side. Kalantar Law can help you navigate the complexities of Medicaid law. Reach out today for a free consultation to discuss your options.