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State of California Medical Fraud Investigations

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State of California Medical Fraud Investigations

The California Attorney General leads medical fraud investigations with much of the work done through its “Division of Medi-Cal Fraud & Elder Abuse” focuses its investigations on medical providers who they contend abuse the system. The Attorney General focuses on doctors and medical groups that are providing services to people who are are not easily able to see that fraud is being committed. This would include children and the elderly. Usually the fraud does not cost these victims money but they may be given substandard care or subjected to excessive treatments in order to drive up billings.

These are not the private insurance frauds but often a Medi-Cal fraud investigation will team with private insurance investigations as well.  This section is highly incentivized to prosecute as Medi-Cal receives reimbursement from sums recovered during the investigation.

The division’s website indicates that the focus on the following areas of potential fraud:

1. Doctors and other providers ordering unnecessary lab tests, and allowing untrained, uncertified assistants to provide medical treatment to patients;

2. Pharmaceutical corporations and other entities within drug supply chains engaging in unlawful practices to increase sales or reimbursement at the state’s expense;

3. Dentists performing unnecessary teeth extractions on both adults and children;

4. Medical supply companies billing for equipment and products that were neither ordered nor delivered;

5. Nursing homes allowing their patients to suffer from bedsores, malnutrition and dehydration;

6. Nurse assistants physically and financially abusing elderly and dependent adult patients who are entrusted to their care.

Prosecuting entities focus. They specialize. Areas of “interest” become areas of expertise and you can spot trends of investigation and prosecution as the past does presage the future.

There are numerous crimes that can be charged by the Attorney General. We list most of them here with a *** next to the counts that we most often see.

(False Declaration as to Eligibility)
This relates to a person receiving or encouraging another to receive health care for which he or she was not eligible. It is not frequently charged.

The penalty is up to six months county jail and/or $1,000 fine (Misdemeanor) or if a Felony - 16 months, 2 or 3 years in county jail.

(Fraudulent Claims)
Present a false claim for payment. This is often not charged and a Penal Code section 550 count is charged instead. As a misdemeanor the person faces six months county jail and/or $1,000 fine. As a Felony it is 2, 3, or 5 years state prison and/or fine not exceeding three times the amount of fraud or improper reimbursement or value of scheme.

The sentence can be enhanced if it is found that the crime was committed under circumstances likely to cause or that do cause two or more persons great or serious bodily injury, an additional, consecutive term of four years shall be imposed for each person so injured.

(Kickbacks, Bribes or Rebates - Solicitation)

This is a more common charge as it relates to kickbacks, bribes or rebates in return for referring clients/patients or making a promise to refer in exchange for something of value. This can include situations where a surgery center refers patients to doctors as a long as the doctors use their center for the surgery. It can includes doctors referring to each other.

This is a dangerous area because genuine and legitimate referrals can be deemed “a scheme” for kickbacks.

As a misdemeanor it is a one year county jail and/or $10,000 fine case. As a felony, it is a 16 months, 2 or 3 years in county jail and/or $10,000 fine

(Grand Theft)

This is rarely charged as it carries relatively light penalties. It deems the “fraud” as a simple wrongful obtaining of money. It is a one year county jail sentence as a misdemeanor and up to 3 years (served in the county jail) as a felony.

PENAL CODE § 550 ***   View Our Webpage dedicated to PC 550 violations and our More Detailed Blog on PC 550
(False Claims)

This is the most commonly used statute. We have a separate webpage just on this. Basically any claim for payment that is in any manner false, improper, deceptive can be charged as a felony false claim.

As a Felony it is a 2, 3, or 5 years in county jail potential term plus $50,000 fine or double the amount of fraud, whichever is greater.

Insurance companies have seminars on fraud prevention where they teach their versions of the law to law enforcement attendees. The insurance companies hire retired law enforcement entities who will contact patients, review medical files, claims files and interact with state and federal related organizations to target certain conduct and certain medical entities for investigation.  While insurance companies do not target Medi-Cal fraud, their private insurance investigations often spill over into the Medi-Cal fraud arena.

We recently won a fraud case based upon Worker's Compensation fraud and claimed violations of Penal Code section 550.    You can read the Motion to Dismiss (Demurrer) Here.

If you are a physician facing medical fraud charges our website has specialized information (CLICK HERE for our PHYSICIAN DEFENSE Website)

If you have any indication that you are under investigation for medical fraud, early intervention is important. Our lawyers are expert in defending medical fraud cases and we can help.