State of California Medical Fraud Investigations
California Attorney General’s Role in Medical Fraud Investigations
The California Attorney General leads medical fraud investigations through its Division of Medi-Cal Fraud & Elder Abuse. This division focuses on medical providers who abuse the system, particularly targeting doctors and medical groups providing services to vulnerable populations such as children and the elderly. While these victims may not lose money directly, they often receive substandard care or excessive treatments to inflate billings.
These investigations are not limited to private insurance fraud but often involve collaboration with private insurance investigations. The Division of Medi-Cal Fraud & Elder Abuse is highly incentivized to prosecute, as Medi-Cal receives reimbursement from sums recovered during the investigation3.
Areas of Potential Medical Fraud
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.
Common Crimes Charged by the California Attorney General
The California Attorney General can charge numerous crimes, particularly in the realm of healthcare fraud.
Welfare & Institutions Code § 14014
(False Declaration as to Eligibility)
This charge involves a person receiving or encouraging another to receive healthcare for which they are not eligible. It is not frequently charged.
- Penalty: Up to six months in county jail and/or a $1,000 fine (Misdemeanor) or, if a Felony, 16 months, 2 or 3 years in county jail.
Welfare & Institutions Code § 14107*
(Fraudulent Claims)
This charge involves presenting a false claim for payment. Often, a Penal Code section 550 count is charged instead.
- Penalty: As a misdemeanor, six months in county jail and/or a $1,000 fine. As a Felony, 2, 3, or 5 years in state prison and/or a fine not exceeding three times the amount of fraud or improper reimbursement or value of the scheme.
- Enhancement: If the crime causes or is likely to cause great or serious bodily injury to two or more persons, an additional consecutive term of four years shall be imposed for each person so injured.
Welfare & Institutions Code § 14107.2(a)*
Welfare & Institutions Code § 14107.2(b)*
(Kickbacks, Bribes, or Rebates - Solicitation)
This common charge involves kickbacks, bribes, or rebates in return for referring clients/patients or promising to refer in exchange for something of value. This can include situations where a surgery center refers patients to doctors as long as the doctors use their center for the surgery. It can also include 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
PENAL CODE § 487
(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 and Fraud Prevention
Insurance companies conduct seminars on fraud prevention, teaching their interpretations of the law to law enforcement attendees. They hire retired law enforcement personnel to contact patients, review medical files, claims files, and interact with state and federal organizations to target specific conduct and medical entities for investigation. While insurance companies do not specifically target Medi-Cal fraud, their private insurance investigations often spill over into the Medi-Cal fraud arena.
We recently won a fraud case based on Worker’s Compensation fraud and claimed violations of Penal Code section 550.
You can read the Motion to Dismiss (Demurrer) Here.
Expert Defense for Physicians Facing Medical Fraud Charges
If you are a physician facing medical fraud charges, our website offers specialized information. CLICK HERE for our PHYSICIAN DEFENSE Website.
If you suspect you are under investigation for medical fraud, early intervention is crucial. Our lawyers are experts in defending medical fraud cases and can provide the assistance you need. For more information on healthcare fraud, visit the California Department of Justice and the U.S. Department of Justice.