PHYSICIAN BOND (Bail Bonds and Release)
The first issue is the release of the physician on bond. There are four ways to be released which we discuss in our physician bail bond article. A client who is in custody cannot participate in his/her defense. In medical cases the client's participation is critical.
Next we assess the universe of fraud and “fraud related” crimes charged. Is it simple medical fraud? Are there specific Medi-Cal, forgery, elder abuse or other more specific allegations included?
What Crimes are Charged?
In California there are no common law crimes. (See: People v. Whipple 100 CA 261 (1929)) If the crime is not listed in a statute – it is not a crime. The medical field is so littered with state rules and regulations, federal rules and regulations, worker's compensation rules, insurance rules, rules on rules - it becomes difficult to know what business conduct related to the medical field - is or is not prohibited.
Penal Code section 550 is a catch-all and vague statute takes conduct that is not listed in any other statute and makes it a crime. Anything that the prosecution claims is a “false representation” to an insurance company. CPT coding disputes, patient complaints that “he never did that treatment”, referrals to or from your office, relationships with personal injury or workers compensation attorneys can trigger a 550 filing. We are expert in fighting Penal Code Section 550 charges for physicians and lawyers.
Federal agencies often participate in medical fraud investigations. If Medicare is one of the alleged victims federal charges may be filed. There are numerous federal fraud statutes and the Department of Justice often charges money laundering and wire fraud as well.
Federal Exclusion Statute
Exclusion Statute [42 U.S.C. § 1320a-7]
If you are convicted of a health care fraud, the Office of the Inspector General (OIG) is required under the exclusion statute to exclude you from all Federal health care programs. The class of offenses implicated are:
(1) Medicare or Medicaid fraud, as well as any other offenses related to the delivery of items or services under Medicare or Medicaid;
2) patient abuse or neglect;
(3) felony convictions for other health-care-related fraud, theft, or other financial misconduct;
(4) felony convictions for unlawful manufacture, distribution, prescription, or dispensing of controlled substances.
Mandatory Exclusion by the OIG
The Office of Inspector General (OIG) is legally obligated to exclude individuals and entities convicted of specific criminal offenses. These offenses include Medicare or Medicaid fraud, patient abuse or neglect, and felony convictions related to health care fraud or financial misconduct
Additional Grounds: Beyond mandatory exclusions, OIG has discretion to exclude based on other factors. These include misdemeanor convictions related to health care fraud (excluding Medicare or Medicaid fraud), suspension or revocation of a health care license, provision of unnecessary or substandard services, submission of false claims, unlawful kickback arrangements, and defaulting on health education loans or scholarships.
Medical Fraud Issues
Major Medical Fraud Prosecution Areas (2023)
What are Examples of Medical Fraud Cases?
Is there an Exception to the Peer Review Privilege in a Criminal Case?
Dr. Dinh's $ 250 Million COVID Fraud Charges
DME Fraud - A Federal Hot Button Issue
Basics of Medical Fraud Defense (Part 1)
Basics of Medical Fraud Defense (Part 2)
Basics of Medical Fraud Defense (Part 3)
Stark Law Cases
The Federal “Exclusion” Statute
False Claims Act
What is Wire Fraud?
When Does a Physician Have to Self Report an Arrest?
Does the Department of Justice Health Care Unit Use AI to Investigate Doctors?
Does a Physician Have to Self Report an Arrest?
Free Bail - The Property Bond Option (Video)
Evidence Code Section 1157 - Does it Apply In Criminal Cases?
State of California Medical Fraud Investigations Explained
Our Dedicated Physician Defense Legal Team
Daniel Horowitz is dedicated to the individual doctor and small-medium sized medical groups. Our main office is in Lafayette, California (Contra Costa County). We represent doctors throughout the state of California and in federal courts nationwide. We recently obtained a complete dismissal of workers compensation fraud charges in Orange County. Read San Francisco Chronicle article on Daniel Horowitz.
WORKERS COMPENSATION FRAUD PENALTIES
Each Count up to 5 years
Each count of conviction is individually punishable by either imprisonment in county jail for over one year, or in a state prison for two to five years. A fine may also be imposed not exceeding $150,000, or double the amount of the fraud, whichever is greater. California sentencing is complicated and multiple acts of fraud (let’s say 10) do not multiply the potential prison time by that same amount (in the example 10). Still with multiple counts most Workers Compensation fraud cases have potential prison exposure of over 10 years.
Do you Go to Prison for Worker’s Compensation Fraud?
The Criminal Justice Realignment Act eliminates prison as a sentence option for various felonies. There is no limit to the amount of time that may be served in county jail if the conviction is for a felony punishable by imprisonment in county jail.
An advantage of serving time in “jail” is that people released from county jailare not subject to automatic parole or postrelease supervision. However this rule is not absolute. The court will be authorized to impose a sentence that includes a period of county jail time less than the maximum allowed by law, and a subsequent period of mandatory supervision, for a total period not to exceed that of the maximum sentence allowed by law.
(Pen. Code § 1170(h))
Restitution
A conviction for Workers Compensation fraud will require paying the victims restitution. A person convicted of workers’ compensation fraud may be charged the costs of the investigation and is ineligible to receive or retain any compensation, where that compensation was owed or received as a result of workers’ compensation fraud.
Examples of Employer Fraud Leading to High Restitution and Fine Amounts
An insurance premium depends on job classifications. These classifications help show the amount of risk the insurance company believes each worker faces. Likewise when reporting payroll, an employer must include any overtime payments employees receive.
Misrepresenting the type of work an employee performs or the number of hours worked can reduce a premium. Over time, this amounts add up and can lead to massive fines and restitution awards.
If an employer reports an “employee” as a independent contractor there may be a failure to pay for insurance covering that employee. This can be fraud but with a lesser penalty. Failing to have workers’ compensation insurance when required by law is a crime punishable by up to one year in jail and at least $10,000.
EXAMPLES OF MEDICAL BILLING FRAUD (SEPARATE FROM WORKERS COMPENSATION FRAUD)
Unbundling as an Example
Under Medicare and other billing guidelines, certain procedures are meant to be bundled together for purposes of billing. Each task may be individually billable but there is also a way to bill as a package. Just like buying in bulk at Costco, bundled services usually cost less than unbundled. When the billing structure (e.g. Medicare) requires bundled billing, the deliberate, repeated unbundling may be a crime. How often can an unbundling error be considered “just a mistake” ? Many medical practices employ outside billing services which charge as their fee, a % of the total amount received from insurers. If the biller unbundles, is the medical practice or individual physician responsible ? Again, knowledge, implied knowledge and intent are key. And you can imagine, informants, disgruntled employees especially, are often key prosecution witnesses.
DURABLE MEDICAL EQUIPMENT FRAUD - PROSECUTION OF PHYSICIANS
There has been a major focus by the Department of Justice on DME fraud. Individual physicians and small practice groups are being charged or fined. Learn more about Individual Physician DME Fraud.
Criminal Defense of Medical Fraud
You've seen real crime dramas on television but medical fraud has its own set of key elements. Medical Fraud cases are paperwork intensive but the paperwork is often not the real focus of a fraud defense. Mental state also called state of mind is the true focus of a physician fraud defense.
Unlike a standard criminal case, medical fraud cases deal with lots of government regulations and the interpretation of those regulations. We all know the rule “Thow Shalt Not Kill” but not everyone knows the rule “Tho Shalt Not Refer a Patient for an MRI without Disclosure of an Indirect Ownership Interest”. Disagreements as to interpretation of rules are often the genesis of a criminal prosecution. Understand early whether your client has invented a deliberate scheme or has fallen into legislative quicksand. For examples of deliberate buse, the ACFE (American Certified Fraud Examiners) website lists <<Common Health Fraud Schemes>>
With medicine increasingly controlled by Medicare and insurance companies, physicians are turning to marketing and value added products for income. If you refer a client for physicial therapy and charge rent to a PT office in a building you own, is that fraud? If the physicial therapist provides a covered service, but also provides a complimentary massage, is that billing fraud ?
Understand the Politics
The “big picture” is often the “small picture”. On July 13, 2017, the New York Times headline figuratively screamed !
“U.S. Charges 412, Including Doctors, in $1.3 Billion Health Fraud”.
For those who work in this area, the nature of the charges drew our attention. About 1/3 of the charges were narcotics related.
There is a lot of abuse in this area but “pain medicine” has a lot of built in defenses as well. You may have a moral dilemma here because people who are guilty of being drug dealers with an “M.D.” behind their name, can get off on technical defenses because the area of pain medicine has a great deal of “judgment” involved. Another areas involved “kickbacks” where even legitimate referrals to the “best” diagnostic centers became a crime when a kickback was involved. A cash kickback is hard to defend but cross referrals, advertising sharing and gifts (e.g. paid vacations), are not necessarily “kickbacks”, although they are often charged that way.
If you are in the cross hairs of a politically popular type of offense, the chances of an excellent negotiated resolution drop like a rock in a pond.
Understand THEIR Investigative Process
The Inspector General for Health and Human Services, is the go to place for Medicare fraud investigations. They are a “tip” based operation and a lot of cases start with a phone call to the Centers for Medicare and Medicaid Services (CMS). Look here for more information. <<OIG Fraud Reporting Site>>
Competitors, employees and potential civil litigants (Qui Tam litigators) will often make the call. A CMS screener reviews the initial accusation/claim and they have access to a database of prior claims. If the claim seems valid, and especially if the claim is one of many (of the same type), the case will be escalated. The FBI will often take over the investigation at this point. The National Law Journal has published an good article by attorney Jonathan Tycko, titled “Top 10 Tips for Qui Tam Whistleblowers”. If you are defending a medical practice, the article is worth reading. Click Here
Tracking the investigation requires some push on your part. In a federal (Medicare) case, there is less disclosure of the investigative process than in a state case. And yet, that very process may reveal bias on the part of witnesses since the initial complainants may in fact be witnesses in the criminal fraud case.
To understand financial motivations for reporting alleged fraud, consider the Federal Exclusion Statute which provides a way for the government to deprive a medical group of any federal reimbursements. There is an excellent primer on the False Claims Act which is a civil/money tool used against medical practices. This guide is published by the Department of Justice <<Click for Primer>>
