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Understanding Texas Healthcare Fraud Laws

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Healthcare fraud is considered a subcategory of standard fraud. If convicted of healthcare fraud, the defendant faces a wide range of penalties. Although healthcare fraud is considered a single type of fraud, there are various types of healthcare fraud, including health insurance fraud (such as private insurers, Medicare or Medicaid fraud), drug fraud, and medical fraud.

Healthcare fraud is said to occur when an individual or business defrauds a government healthcare program, equivalent state program, or an insurance company.

If you or someone you care about is facing healthcare fraud charges, gaining a greater understanding about the legal aspects could help your defense. It’s important to contact an experienced healthcare fraud attorney as soon as possible to protect your legal rights.

Are you or your business facing healthcare fraud charges?
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Intentional Misrepresentation and/or Deception in Healthcare Fraud

State and federal laws say that healthcare fraud occurs when an individual or company intentionally misrepresents or deceives the healthcare provider to obtain benefits—or any benefit in any way. For instance:

  • If an individual or business provides false information to the insurance company or provider when applying for health insurance or when filing a claim, this is healthcare fraud.
  • If an individual or business entity intends to defraud the insurer, it’s also possible to be charged with healthcare fraud. If the individual or business solicits, pays, offers, or receives benefits from a processed claim or derives any financial benefit from it, it’s possible to face healthcare fraud charges.

Like other types of fraud, healthcare fraud is considered a form of white collar crime. If convicted, the defendant faces significant penalties.

Commonly, an individual lies on an insurance claim to obtain the maximum benefits allowed by the policy. Since there are many other examples of healthcare fraud—from altering receipts or bills to invoicing a provider for services the provider didn’t provide—let’s review some of the types of healthcare fraud seen in Texas.

Healthcare Fraud in Texas

Many healthcare fraud examples fall into provider or consumer fraud categories:

The most common types of provider healthcare fraud include 1) “unbundling,” 2) “upcoding,” and 3) kickbacks:

  • Unbundling describes the act of separately billing parts of a single procedure. Treatments and procedures are often bundled by physicians and hospitals to save patients money. Unbundling the procedure might mean increased profits to the provider.
  • Upcoding occurs when a patient is billed for more expensive service(s) rather than the service he or she actually received from a provider.
  • Kickbacks usually refer to the provider’s paying another party for new patient referrals.

The most common types of consumer healthcare fraud include 1) forging medical bills, 2) filing claims for services or medicines that the patient didn’t receive, 3) using another individual’s insurance card to obtain healthcare services or goods, 4) receiving medicines with the intent to resell them for profit, and 5) stealing another person’s medical identity (“medical identity theft”).

If you or someone you care about is facing healthcare fraud charges, it’s important to consult with an experienced healthcare fraud lawyer. There are possible defense strategies, such as:

  • The defendant had no intent to defraud or deceive the insurance company, or
  • Mistaken identity may have occurred (e.g., the individual who committed the fraud isn’t the person facing healthcare fraud accusations)

It’s possible to be arrested for healthcare fraud in the state of Texas without the benefit of solid evidence. A defendant may have improperly provided erroneous information on a claim or incorrectly filled out an insurance application or claim form. A partial false claim may be presented as a defense. In that scenario, the defendant retains his or her liability for presenting an invalid partial claim—but not the valid portion.

Defending against Healthcare Fraud Charges in Texas

It’s important for individuals or businesses facing healthcare fraud charges to consult with a healthcare fraud attorney as soon as possible. Any target of a healthcare fraud investigation should not answer questions until he or she speaks with a knowledgeable healthcare fraud lawyer.

Penalties for Texas Healthcare Fraud

Chapter 35 of the Texas Penal Code describes the punishments for defendants convicted of healthcare fraud. In general, the potential consequences reflect the nature of the incident. For instance:

  • Making false statements to an insurance company could mean a maximum five-year prison term and $10,000 in fines.
  • If the offender is a repeat violator, he or she faces a maximum 10-year prison sentence.
  • In the instance of pharmaceutical fraud, the individual recipient may also face drug trafficking charges and a longer possible prison sentence.

In addition to significant fines and criminal sanctions, the medical worker offender faces the loss of his or her professional healthcare license. What’s more, a business convicted of pharmacy fraud may be deemed ineligible for Medicare or Medicaid participation in the future.

Texas Healthcare Fraud Punishments and Penalties

Individuals and businesses facing healthcare fraud charges in Texas face a wide range of punishments and penalties if convicted. In Texas, a healthcare fraud conviction can range from a misdemeanor to a felony offense.

In some scenarios, a type of healthcare fraud automatically calls for a state jail felony. For example, if the offender’s claim is greater than $2,500 but less than $30,000, he or she faces 180 days – two years in a state jail and/or a maximum $10,000 fine. Greater claims may result in third-degree, second-degree, or first-degree felony punishments and penalties. For instance, if the individual’s claim was greater than $300,000, or if his or her actions resulted in harm/death to another individual, he or she faces first-degree felony punishments of five – 99 years in a Texas prison and maximum $10,000 fines.

In others, the offender’s potential penalties reflect the financial impact of the crime. For instance:

  • If the offender’s claim is less than $100, he or she faces a Class C misdemeanor carrying a maximum $500 fine.
  • If the offender’s claim is greater than $100 but less than $2,500, he or she faces a Class B or Class A misdemeanor charge.

Engaging an experienced Texas criminal defense attorney can help the defendant bring potential penalties down.

Contact The Law Office of Brett Podolsky today to protect your legal rights >>

Criminal Medicaid Fraud

Medicaid is a Texas state and federal medical cost-sharing program that helps low income people to pay for healthcare. The Texas Health and Human Services Commission is the Medicaid program administrator.

Millions of people in Texas are Medicaid-eligible. Almost 60,000 Texas providers offer services to these beneficiaries. Under the law, a Medicaid provider may be 1) a person, 2) group of persons, or 3) a healthcare facility providing services to Medicaid beneficiaries. Providers may be physicians, case management centers, adult day care centers, dentists, podiatrists, hospitals, nursing homes, pharmacies, ambulance businesses, licensed counselors, clinics, medical equipment providers, and others.

Medicaid Fraud in Texas

Medicaid fraud examples include:

  • Submitting bills to Texas Health and Human Services commission for procedures, lab tests, x-rays, and other procedures that the provider didn’t perform or falsifying the Medicaid recipient’s diagnosis to support unneeded tests and/or services;
  • Billing for brand name prescription medicines when the patient received a generic version;
  • Providing a motorized scooter to the recipient but submitting a bill for a more expensive electric wheelchair;
  • Sending bills for care that wasn’t given, or submitting bills for deceased or ineligible patients (or those transferred to other providers’ care);
  • Transporting the beneficiary by ambulance (without medical necessity);
  • Requiring the business’ vendors to rebate (or kickback) some of the money received for services provided to beneficiaries, e.g. merchandise or vacations;
  • Sending multiple bills to patients for services Medicaid has already paid.

Medicaid violations are extremely serious. If convicted of Medicaid fraud, the offender faces incarceration and significant fines as well as loss of status as a Medicaid provider.

The Medicaid Fraud Control Unit in Texas (MFCU) was formed in 1979 as part of the Office of the Attorney General. MCFU investigates civil and criminal fraud by providers, investigates criminal neglect and/or criminal abuse of patients in Medicaid-licensed healthcare facilities (Texas Department of Aging and Disability Services’ homes and nursing homes). It prosecutes criminal fraud and assists federal, state, and local authorities in prosecuting alleged offenders. MCFU doesn’t investigate suspected Medicaid recipient fraud.

Texas Healthcare Fraud Defense Attorney

Title 18 U.S.C. §1347 states that healthcare fraud is a federal offense. Prosecuting alleged healthcare fraud focuses on whether or not a provider “knowingly” defrauded the healthcare insurer or benefits program by submitting false claims for products or services that it didn’t provider or that weren’t medically necessary.

Texas state and federal agencies often act together to investigate healthcare fraud claims submitted by clinics, physicians, hospitals, and others who do business with insurers. A large percentage of alleged healthcare fraud violations concern Medicare (a federal health and medical program) and Medicaid (a Texas state-administered program).

An administrative audit by Medicare or Medicaid may prompt criminal prosecution of the provider. For instance, a Medicare auditor may review a sample of the provider’s patients and note that treatments billed were medically unnecessary. A review of the provider can result in additional inquiry, the appeal process, suspension/loss of the provider’s Medicaid or Medicare account, or required reimbursement for losses to Medicare or Medicaid.


If your practice or business has received an audit letter, or you are facing a healthcare fraud indictment, you need an experienced healthcare fraud lawyer immediately. You may face millions in potential damages, forfeiture of assets, and/or years in prison if indicted for or convicted or healthcare fraud.

Contact the Law Office of Brett A. Podolsky in Houston to schedule a confidential initial case evaluation at 713-227-0087.

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