All About Medicaid Fraud Defense, from Our National Healthcare Criminal Lawyers

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Surviving a Medicaid Investigation and All That Comes After

As a healthcare provider who is reimbursed under the federal government, you are obligated to know and abide by the rules for Medicaid. Why? Because straying from the regulations in place — such as paying kickbacks for business, overbilling for services, or charging for unprovided or unnecessary services — can put you in the crosshairs of federal Medicaid fraud prosecutors.

Medicaid fraud audits have the potential to evolve into criminal indictments, as well as civil recovery actions and state professional licensing complaints. You will be facing jail time, tens of thousands of dollars in overpayment demands, professional license suspension — even full revocation — and Medicaid exclusion.

Our national healthcare fraud lawyers have everything you need to know about Medicaid fraud investigations and audits — and why allegations should be taken seriously.

What is Healthcare Fraud?

Before learning about Medicaid fraud, it is important to understand exactly what healthcare fraud is. Healthcare fraud is a general term that applies to any scheme to commit fraud against a health care insurance program.

Fraud is largely defined is a material misrepresentation designed and intended to result in financial gain. In terms of healthcare, the misrepresentation is typically a claim submitted to an insurance company such as Medicare, Medicaid, Tricare, UnitedHealthcare, and the likes.

When a claim is submitted for reimbursement for services that were either not medically necessary, not conducted, overbilled, or not allowable, the person and entity that caused the bill to be submitted can be prosecuted for fraud.

What Are Common Medicaid Fraud Examples?

The more frequent Medicaid fraud instances involve:

Billing matters: A physician is committing fraud when he bills for services he did not carry out, for goods he did not provide, or for more costly service than he performed. In addition, if a medical specialist bills for a covered service when she had actually provided a noncovered one, or she bills duplicate times for one service, she’s engaging in Medicaid fraud.

Falsification: This could be providing false diagnosis, altering certificates of medical necessity, or fabricating plans of treatment or medical records to justify Medicaid payments. Also, forging receipts and invoicing separately for services that should be included in single-service fees count as fraud.

Misrepresentation: A healthcare provider is carrying out Medicaid fraud and abuse when he isn’t forthcoming on diagnoses or procedures when seeking payments; is ordering excessive or inappropriate tests; or is prescribing medicines that are not medically necessary or for use by people other than the patient.

Kickbacks: This involves using any kind of compensation to coax a patient to use a medical practice; to persuade another medical provider to refer patients to that practice or medical facility; or accepting kickbacks for patient referrals.

How Does the Medicaid Fraud Investigation Process Unfold?

Typically, investigations begin by way of Medicaid audits. These are conducted by state agencies (Medicaid is administered by the states, with federal funding and oversight), for purposes of determining compliance, potential overpayments, and to look for possible evidence of fraud that a physician may have committed. Often audits are conducted in response to a complaint received by the state from a patient, a whistleblower (Qui Tam), or a Medicaid plan.

Auditors may conduct an onsite audit or an offsite records audit (also called a desk audit). Auditors use several different fraud and overpayment detection methods. Common methods include data mining, where state analysts sort claims through statistical models to identify outliers. Other methods include evaluating a provider’s claims against similar providers within the same geographic region.

Be aware, however, that allegations of Medicaid fraud also can be investigated and, subsequently, prosecuted by federal agencies (FBI, DEA, U.S. Attorneys’ Offices, HHS-OIG). In our experience as healthcare fraud defense attorneys, we have found that these kinds of cases usually involve other kinds of healthcare fraud — including private insurance fraud, drug diversion, and Medicare fraud.

How Do I Know If I’m Being Investigated by Medicaid for Healthcare Fraud?

There are several indications that you or your practice could be under investigation for Medicare fraud:

    • Search Warrant and/or Grand Jury Target Letter: If a search warrant is executed against you or your practice, or you receive a grand jury target letter, you are practically guaranteed to be the target of an investigation.
    • Grand Jury Subject Letter or Grand Jury Witness Letter: You might receive a letter from the Department of Justice or a federal prosecutor, contending that you are the “subject” of or “witness” to a federal Medicaid fraud investigation. In this situation, federal prosecutors are pushing for an indictment against you and/or your healthcare entity, yet they don’t have enough evidence to convene a grand jury.
    • Grand Jury Subpoena: With this subpoena, the government aims to obtain information from healthcare entities and providers so as to investigate Medicaid fraud.
    • Active Investigation Signs: You could be under investigation for healthcare fraud upon learning that employees, patients, and other possible witnesses are being investigated or they say there are surveillance signs.
    • Increased Audits: If you are getting an increase in record requests and audits from Medicaid, you could be suspected of Medicaid fraud. Also, compliance departments from commercial insurance carriers will normally report any allegations of healthcare fraud to state and federal law enforcement.

If state auditors suspect fraud, they will refer the matter to one of the Medicaid Fraud Control Units (MFCU). These are state law enforcement agencies; 49 states and the District of Columbia have MFCUs, many of which are part of each state’s Attorney General’s office.

What Do Medicaid Fraud Investigators from the MFCU Do?

MFCUs have authority under their respective state and federal laws to investigate and prosecute violations of all applicable state laws pertaining to the provision of medical assistance and the activities of providers under state Medicaid plans. Although each state statute is slightly different, MFCU investigations always involve:

    • billing fraud involving the Medicaid program;
    • abuse and neglect of residents within facilities that receive Medicaid payments; and
    • misappropriation of patient funds by such health care facilities.

MFCUs investigate providers such as doctors, nurses, pharmacies, DME companies, dentists, counselors, hospitals, home health agencies and others. Patients are not investigated, except in circumstances where the patient and provider conspired or collaborated to commit Medicaid fraud.

Each MFCU employs a team of attorneys, investigators, and auditors. The MFCU is not a part of the state Medicaid program, and the state program has no authority concerning these prosecutions. In fact, the MFCU has the authority to investigate and prosecute fraud within the administration of the state Medicaid program itself.

Although the MFCU and state Medicaid are separate by design, they work closely to accomplish the common goal of combating fraud and recovering money. In particular, the MFCU collaborates with the state Medicaid program integrity offices (the people who conduct audits to identify and recoup overpayments).

While both the MFCU and state program may investigate similar conduct regarding improper billing, the state program must refer all cases of suspected fraud to the MFCU.

How Long Does a Medicaid Fraud Investigation Take?

Although circumstances for each instance of Medicaid fraud suspicion can differ, an investigation can take several weeks or months.

Is Medicaid Fraud a Felony?

Whether an instance of Medicaid fraud is considered a felony depends on the state law. Medicaid provider fraud prosecuted at the state level can be a felony or misdemeanor, as contingent by what the state statute governs. In some states, Medicaid fraud is a felony regardless of the amount involved. (If you have retained a Medicaid audit defense lawyer, they will advise on whether your state is one of them.)

However, all states have their own criminal statute that makes the knowing or purposeful submission of false or fraudulent claims to Medicaid — sometimes called “Provider Fraud” or “Medicaid Fraud” — a criminal action. MFCUs also are able to charge any state crime as is proper under the circumstances (for example, theft or computer crime).

What Entities Can Be Found Legally Guilty of Medicaid Fraud?

Healthcare entities and providers, according to CMS, are defined as individuals or entities that receive Medicaid funds in exchange for providing a service. Among them:

    • Medicaid managed care organizations (MCOs)
    • Contractors
    • Subcontractors
    • State employees
    • Medicaid beneficiary/Medicaid managed care enrollees

Any of these can commit — and be proven guilty of committing — Medicaid fraud.

What Penalty, Jail Time, or Other Punishment is There for Medicaid Fraud?

As with Medicare fraud, the federal healthcare system has three primary laws in place for Medicaid fraud matters, and each has its own criminal and/or civil penalties: the False Claims Act, the Anti-Kickback statute, and Stark Law (physician self-referral). In addition, many U.S. states have their own parallel Medicaid fraud-related statutes.

Penalties for Medicaid Fraud Under the False Claims Act

The False Claims Act states that “any person who knowingly presents, or causes to be presented, a false or fraudulent claim for payment or approval,” and “any person who knowingly makes, uses or causes to be made a false record or statement that is material to a false or fraudulent claim,” is in violation of the act (31 USC § 3729).

FCA-related criminal and civil penalties include:

    • Criminal fines up to $250,000
    • Up to five years in prison per claim
    • Civil financial penalties ranging from $10,781-$21,563
    • Treble damages, which means the government’s civil damages are tripled
    • Reimbursement of attorney costs/fees
    • Recoupment of the amounts that were overbilled
    • Medicaid exclusion, as well as possible exclusion from other healthcare programs
    • State professional license action, including suspension

Penalties for Medicaid Fraud Under the Anti-Kickback Statute

The Federal Anti-Kickback Statute (42 U.S.C. § 1320a-7b(b)) prohibits health care providers from:

“[K]nowingly and willfully solicit[ing] or receiv[ing] any remuneration (including any kickback, bribe, or rebate) directly or indirectly, overtly or covertly, in cash or in kind … in return for referring an individual to a person for the furnishing or arranging for the furnishing of any item or service for which payment may be made in whole or in part under a Federal health care program, or … in return for purchasing, leasing, ordering, or arranging for or recommending purchasing, leasing, or ordering any good, facility, service, or item for which payment may be made in whole or in part under a Federal health care program, …”

The Office of Inspector General (OIG) states that AKS violations can carry criminal, civil, and administrative sanctions, including:

    • Civil fines of up to $50,000 per violation
    • Treble damages (three times the amount of the kickback)
    • Recoupment
    • Up to five years in prison
    • Exclusion from Medicaid and other healthcare programs

Penalties for Medicaid Fraud Under Stark Laws

The Stark Laws (42 U.S.C. § 1395nn) are in place to prevent physicians from referring patients to entities in which they have a financial interest. Their penalties are solely civil, and they include:

    • Payment denial for the designated health service provided
    • Civil penalties of up to $15,000 for each service that a person “knows or should know” was provided in violation of the Stark Law and three times the amount of improper payment the entity received from the Medicare program
    • Refund of monies received by physicians and facilities for amounts collected
    • Fines of up to $100,000 for each circumvention scheme
    • Exclusion from Medicaid and other healthcare programs

Is there a Medicaid Fraud Statute of Limitations?

Yes, but only to an extent. A recent U.S. Supreme Court ruling over federal False Claims procedure (31 U.S.C. § 3731) clarifies that for most whistleblower/Qui Tam actions,

A civil action under section 3730 may not be brought—

(1) more than 6 years after the date on which the violation of section 3729 is committed, or

(2) more than 3 years after the date when facts material to the right of action are known or reasonably should have been known by the official of the United States charged with responsibility to act in the circumstances, but in no event more than 10 years after the date on which the violation is committed,

whichever occurs last.

What Does a Medicaid Fraud Lawyer Do That a Regular Fraud or Criminal Attorney Doesn’t?

At Chapman Law Group, our national Medicaid fraud defense attorneys are keenly aware of the negative impact a criminal indictment will have on your career. Your license is affected, along with your standing with your employer, your reputation with your peers, and your continued inclusion in the Medicaid and Medicare programs.

These are aspects that lawyers who handle “general” fraud and criminal law matters don’t take into consideration — putting your livelihood at risk of irreparable damage.

But our law firm is different. Our Medicaid fraud defense lawyers work together with our other practice groups — including Medicaid compliance specialists and regulatory/licensing lawyers. We will be on your side for any subsequent credentialing/peer review, CMS enrollment, Medicaid exclusion, and asset protection issues that may arise from fraud allegations.

Our Medicaid audit attorneys and Medicaid claims compliance specialists will work with you to prepare for any audit or investigation and protect your interests. This includes partnering with you to ensure you submit sufficient information to support your claims and reimbursement to help avoid overpayment demands.

Why Should I Turn to the National Medicaid Fraud Defense Attorneys at Chapman Law Group?

Because experience matters. Often, Medicaid fraud cases are assigned to special prosecutors who specialize in fraud and abuse laws. Therefore, providers accused of Medicaid fraud should retain an attorney who is exceptionally qualified in handling Medicaid fraud matters and do so at the earliest opportunity.

At Chapman Law Group, our team of healthcare defense attorneys includes a former Medicaid fraud prosecutor who is exceptionally experienced in both criminal and civil health care fraud matters. We assist providers with Medicaid audits, investigations, overpayment actions, and civil and criminal actions related to Medicaid fraud.

In addition, our extensive network of experts represent nearly every sector of medicine — from board-certified pain management doctors to retired DEA drug diversion agents and private investigators — as well billing and coding specialists.

Depending on the facts of the case, we may be able to prevent criminal charges from being filed, avoid licensing action or overpayment action, or have the case dismissed entirely. Should the evidence be against you, our lawyers will work to achieve a favorable settlement and limit the impact on your career.

We represent licensed healthcare professionals across the U.S., from physicians, chiropractors, and mental health professionals, to pain management specialists, pharmacists and dentists.

Our national Medicaid/health care fraud and healthcare-based criminal defense law offices are in Miami and Sarasota, Florida; Detroit, Michigan; and Los Angeles/Southern California. We serve healthcare providers across the U.S., from Chicago to Houston, and from Philadelphia to San Francisco. Contact us today for more information.

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