Healthcare Fraud in California

The magnitude of healthcare fraud in California is alarming, with millions of dollars lost annually.

Businesses often find themselves in multifaceted legal situations involving overbilling, kickbacks, or coding errors. There are many real-world examples, illustrating how companies have faced substantial financial penalties and severe reputational damage due to such accusations.

As insurance companies have tightened the belt on doctors and healthcare providers, there has been an increase in the number of doctors being suspected of criminal prosecution for healthcare fraud in their billing. Private insurance companies pay investigators to review medical claims to determine if the claims contain any fraud.

Legal Risks and Consequences

California’s healthcare fraud laws are among the most stringent in the United States, reflecting the state’s commitment to combating fraudulent activities in healthcare. These laws cover a wide range of fraudulent activities, including but not limited to overbilling Medicare or Medicaid, prescribing unnecessary treatments, kickback schemes, and falsifying patient records to increase reimbursements.

The penalties for violating these laws are severe and designed to serve as a strong deterrent.

Our team’s expertise extends through every stage of the legal process. We emphasize skilled negotiation and litigation capabilities, committed to achieving the best possible outcome for your business.

For companies and employers accused of healthcare fraud, the repercussions can include:

• Fines
• Exclusion from Federal Healthcare Programs
• Restitution Payments
• Criminal Charges
• Civil Lawsuits

Healthcare Fraud Investigations

During a federal healthcare fraud investigation, various steps are taken, such as reviewing the complaint, conducting background analyses, data analysis of claims, interviewing beneficiaries, and reviewing a sample of medical claims.

The definition of the “target” of a federal investigation is that the government believes sufficient evidence exists to convene a grand jury and seek an indictment.

Healthcare fraud investigations often begin due to audits identifying unusual billing patterns (such as double billing, upcoding, billing for services not rendered), whistleblower lawsuits, or patient complaints. These red flags are then turned over to fraud investigators.

Defending a federal healthcare fraud case requires your defense counsel to convince the government that it will not be able to prove the elements to a jury, which can result in a dismissal.

Novain & Novian – Your Healthcare Fraud Defense Lawyers

Our legal approach to healthcare law emphasizes aggressive, proactive defense strategies. Each defense is tailored to your company’s unique situation, ensuring that financial loss and reputational damage are minimized. We understand the nuances of high-stakes scenarios and craft our defense accordingly.

Proactive Defense Strategies, Prevention and Compliance

A proactive legal approach safeguards the company not just legally, but also financially and reputationally. Companies can avoid the costs associated with lengthy legal battles and the public relations fallout from legal disputes.

An aggressive defense strategy involves thorough preparation, a detailed understanding of the law, and proactive measures to counter potential allegations. Anticipating and addressing issues before they escalate, minimizing the chance of litigation.

Customizing defense tactics to suit the specific context of your business is essential. This could involve deep dives into the company’s operations to identify potential vulnerabilities and tailor a defense strategy that aligns with the company’s specific risks and business model.

California’s Healthcare Fraud Laws

The most common types of healthcare fraud investigation include billing for unnecessary services, kickback schemes, billing for services not rendered, upcoding, misuse of staff for medical procedures, unbundling, double billing, and misrepresenting non-covered treatments.

Laws under Penal Code 550 PC, relating to healthcare and insurance fraud are designed to combat fraudulent activities in the healthcare system, which can range from individual claimants to third-party businesses.

Highlights of Welfare and Institutions Fraud Laws

False Declaration as to Eligibility Code 14014 PC: A person receiving or encouraging another to receive health care, for which he or she was not eligible, based on false declarations may lead to anything from a misdemeanor to six months in county jail and/or $1,000 fine; or a felony from 16 months, 2 or 3 years in county jail.

Fraudulent Claims as to Eligibility Code 14107 PC: If an individual presents a false claim for payment for goods or services, with intent to defraud, or knowingly submit false information, to obtain greater compensation than legally entitled or to obtain authorization to provide goods or services or knowingly engage in a scheme to defraud the Medical program;

They may face penalties such as a misdemeanor to six months in county jail and/or a $1,000 fine up to a felony charge of 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.

If 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/Offer as to Eligibility Code 14107.2(a),(b):

It is unlawful for any person to solicit or receive, or offer or pay any form of remuneration, commit healthcare fraud for kickbacks, bribes, or rebates, in any form (cash or valuable consideration) for:

The referral or promise of referral of an individual to any entity for healthcare services or products, the purchasing, leasing, ordering, or recommending of any goods, services, or merchandise in healthcare for which payment may be made under specific healthcare chapters. The previously mentioned may be punishable by imprisonment in a county jail for no more than one year or imprisonment as per Penal Code Section 1170, or a fine not exceeding $10,000, or both.

California Penal Code Sections 487, 548, 549, 550, and 551 cover different aspects of health insurance fraud, such as the illegal disposal of property for fraudulent claims, illegal referrals for insurance claims, signing insurance documents containing false information, and commissions for insurance-based referrals.

To convict someone of healthcare fraud under California Penal Code Section 550, the prosecution must prove that the defendant knew the claim was fraudulent or duplicated and truly intended to commit fraud.

Contact Novain & Novian as your fraud defense Lawyer.

Impact of Fraud, Waste, and Abuse (FWA)

FWA in healthcare can significantly increase costs in the healthcare system. Common examples of FWA include billing for services not received or rendered, inflated billing, accepting kickbacks for patient referrals, and billing for non-existent prescriptions or prescription drug fraud. These practices can lead to substantial financial losses in the healthcare industry.

Recent Examples of Healthcare Fraud Cases

Southern California Enforcement Action: In 2019, a healthcare fraud enforcement action resulted in charges against 25 defendants in Southern California. The defendants, including 14 doctors and medical professionals, were allegedly involved in healthcare fraud schemes that fraudulently sought over $150 million from Medicare and Medicaid programs, as well as private insurers and union health benefit plans.

Pacific Hospital Scheme: In a 2022 large-scale fraud case, George William Hammer, the former chief financial officer of Pacific Hospital’s physician management arm, agreed to plead guilty to tax charges related to the fraudulent classification of illegal kickbacks. This was part of a broader spinal surgery kickback scheme that involved several individuals, including chiropractors and orthopedic surgeons, who received illegal kickbacks to refer patients for spinal surgeries at Pacific Hospital. The scheme resulted in claims totaling more than $950 million over a 15-year period.

If convicted, healthcare fraud can lead to severe penalties. A skilled attorney works to mitigate these penalties, which could include fines, restitution, or even imprisonment.

Your Business Deserves Elite Defense

The right legal team can make all the difference in your healthcare fraud defense. Proactively safeguarding your business with Novian & Novian, where our expertise in the healthcare industry is your peace of mind.

Contact us today for a free consultation.