If you’re a medical professional in New York, a single letter from the Office of Inspector General can change your future. One moment, you’re focused on patient care, managing your practice, and building your career. Next, you’re reading about allegations of Medicaid fraud that threaten everything you’ve worked for. These investigations cast long shadows over medical practices, affecting not just the accused providers but their employees, patients, and families.
The stakes in Medicaid fraud cases reach far beyond monetary penalties. Medical professionals face the prospect of criminal charges, civil lawsuits, and administrative actions, each carrying its own set of consequences. A conviction can result in prison time while a civil judgment can drain decades of savings.
At ZMO Law PLLC in New York, we’ve watched skilled physicians struggle to maintain their practices after fraud allegations and stepped in to help. We’ve worked on both sides of these cases. ZMO Law’s lead health care attorney, Tess Cohen, worked as a prosecutor on Medicaid cases while all of our attorneys have years of experience on the defense side. We understand what law enforcement and government regulators focus on, and how to fight allegations of Medicaid fraud.
This guide provides an overview of the penalties associated with Medicaid fraud in federal and New York State courts and outlines practical steps for protecting your rights. If you are currently under investigation, worried about compliance, or simply want to better understand the risks, this information can help you make the right decisions for your practice.
Understanding Medicaid Fraud
Medicaid fraud covers a wide range of activities, from simple billing errors to elaborate schemes. While some cases stem from honest mistakes, others involve intentional deception. Because the government treats these cases seriously, it uses vast resources to investigate and prosecute suspected fraud.
Below is an overview of the common types of Medicaid fraud cases we handle:
- Phantom Billing: Billing for services never provided is a criminal offense. For example, a provider might submit claims for patient visits that never occurred, perhaps taking advantage of a patient’s valid Medicaid number to bill for fake appointments. Some medical providers have even billed for services they claim to have provided after a patient’s death.
- Upcoding: Upcoding occurs when providers bill for more expensive services than what they delivered. A physician might perform a basic office visit but bill it as a detailed examination, which carries a higher reimbursement rate. Similarly, a provider could bill for a specialist consultation when only a general practitioner saw the patient.
- Unbundling Services: Another scheme involves unbundling services, where providers separately bill for procedures that should be charged together under a single code.
- Kickbacks: Kickback arrangements constitute another serious form of fraud. A laboratory might pay doctors for patient referrals and disguise these payments as consulting fees or rent for office space. These arrangements can lead to unnecessary tests and procedures, driving up healthcare costs while potentially harming patients.
- Double Billing: A provider might bill both Medicaid and a private insurer for the same service, or charge a patient’s family while also submitting a Medicaid claim. Some providers even bill Medicaid multiple times for a single service.
- Prescription Drug Fraud: Some providers engage in prescription drug fraud by writing unnecessary prescriptions or billing for medications never dispensed. For example, a pharmacy might refill prescriptions without a patient’s request or knowingly fill fraudulent prescriptions while billing Medicaid. In extreme cases, they might prescribe medications that patients sell on the black market, with the provider and patient sharing the profits.
- Patient Identity Theft: Patient identity theft represents a growing concern in Medicaid fraud. Providers might steal patient information to submit false claims or allow others to use a patient’s Medicaid number for services. Patient identity theft not only defrauds the system but can create dangerous situations when false information enters a patient’s medical records. Identity theft carries enhanced penalties in federal court.
- Claiming Medical Necessity: Some providers falsify medical necessity to justify services or equipment. A doctor might document non-existent symptoms to justify ordering expensive tests, or a medical equipment supplier might falsify prescriptions for unnecessary equipment. These schemes not only waste resources but can lead to unnecessary services.
- Misrepresenting Qualifications: A more subtle form of fraud involves misrepresenting provider qualifications. A clinic might bill for services as if they were performed by a physician when actually delivered by a nurse or medical assistant. Similarly, some providers bill for services despite having expired licenses or operating without required certifications.
Understanding these fraud types helps providers maintain compliance and assists investigators in identifying suspicious patterns. However, it’s important to note that not all billing errors indicate fraud – sometimes honest mistakes occur in our complicated healthcare system. The distinction often lies in the provider’s intent and pattern of behavior.
Federal Criminal Penalties for Medicaid Fraud
Federal government prosecutors can pursue charges under multiple statutes, creating a web of potential consequences. The Health Care Fraud Act (18 U.S.C. § 1347) serves as their main tool for pursuing Medicaid fraud cases. Under this law, violations can result in prison sentences extending to ten years, with criminal fines reaching $250,000 for individual defendants. Courts may also order asset forfeiture and restitution.
When fraud leads to patient harm, the penalties increase dramatically. Cases involving serious bodily injury can bring prison terms of up to 20 years, while fraud resulting in patient death may lead to life sentences. These federal offense cases invariably include enhanced fines and mandatory restitution orders.
The Anti-Kickback Statute imposes its own set of severe penalties. This law prohibits paying or receiving anything of value to influence referrals. Violations can result in prison terms of up to 10 years and fines reaching $100,000.
New York State Criminal Penalties
New York maintains some of the nation’s strictest Medicaid fraud laws, with state prosecutors actively pursuing cases through specialized units. Below is an overview of state charges a medical provider can potentially face:
- First-Degree Healthcare Fraud: First-degree Healthcare fraud, which involves amounts exceeding $1,000,000, is classified as a Class B felony. These felony convictions carry a mandatory prison sentence of 1 to 3 years in state prison, with maximum sentences of 8 1/3 to 25 years in prison, along with fines reaching twice the illegal gain. Courts consistently order mandatory restitution and asset forfeiture in these cases.
- Second-Degree Healthcare Fraud: Second-degree charges apply to cases involving $50,000 to $1,000,000. As a Class C felony, this level carries a maximum 5 to 15 year prison term and fines up to twice the fraudulent amount.
- Third-Degree Healthcare Fraud: Third-degree fraud, involving amounts between $10,000 and $50,000, brings Class D felony charges with prison terms of up to 2 1/3 to 7 years.
Even smaller cases carry serious consequences. Healthcare fraud between $3,000 and $10,000 results in Class E felony charges, while amounts under $3,000 may bring misdemeanor charges. Regardless of the amount involved, these convictions often trigger professional license reviews and program exclusions, which is why you should retain a New York Medicaid fraud defense lawyer to help you address the charges.
Civil Monetary Penalties
Beyond criminal prosecution, civil penalties create lasting financial burdens. Federal authorities can impose fines up to triple damages, which generally total three times the fraudulent amount.
New York state authorities have similar powers to pursue civil penalties, including seeking double or triple damages.
Administrative Consequences
The impact of Medicaid fraud charges extends far beyond fines and potential jail time. Mandatory program exclusion applies to certain violations, which can lead to a minimum 5-year exclusion from Medicare and Medicaid participation. Some cases result in permanent program bans. State-level program restrictions often follow federal exclusions, and private insurance companies typically terminate provider contracts upon conviction.
Professional licensing boards take fraud seriously. Medical licenses face suspension or revocation, and boards frequently impose practice restrictions. Healthcare providers may also face mandatory supervision requirements and enhanced reporting obligations.
Professional and Personal Impact
When you’re accused of Medicaid fraud, the effects can ripple through every aspect of your professional life. Hospitals typically revoke privileges upon conviction, while practice sales become nearly impossible. Insurance company contracts terminate automatically, and employment restrictions or license revocations can last years beyond sentence completion or even be permanent. Professional reputations, built over decades, often suffer irreparable damage.
Financial consequences extend beyond direct penalties. Civil judgments and settlements create long-term payment obligations. During investigations, authorities often freeze assets, while business loans become impossible to obtain. Credit ratings suffer, and bankruptcy becomes a real possibility for many providers.
Personal effects can prove equally severe. Families experience intense stress throughout the investigation and prosecution. Community standing diminishes, affecting personal relationships and future opportunities. Many providers experience mental health challenges requiring professional support. For non-citizen providers, immigration status complications may arise, along with international travel restrictions.
What to Do If You Are Accused of Medicaid Fraud
When allegations arise, you need to take action quickly. The moment you get that letter from the Office of Inspector General, you should stop any questioned billing practices and secure all relevant records. While staff cooperation is important, you should not speak directly to law enforcement or regulators, and instead ensure all communications are through your lawyer to protect your rights.
Different defense strategies can apply in different situations, and the decision of how to respond should be made with the help of a competent attorney. For example:
- Technical defenses focus on medical billing and coding. For instance, if prosecutors allege improper billing for a specific procedure, a Medicaid fraud attorney might bring in experts to demonstrate that the selected billing code accurately reflected the service provided. These experts can explain how a single medical procedure might reasonably fall under multiple billing codes, making the provider’s choice legitimate even if different from common practice.
- Statistical sampling challenges can undermine the prosecution’s case. When investigating years of billing records, investigators typically review a sample of claims and extrapolate their findings. Defense attorneys might demonstrate that the sample size was too small to be reliable, that the selection process was biased, or that the extrapolation method failed to account for important variables.
- Regulatory interpretation creates another avenue for defense. Healthcare regulations are notoriously complicated and sometimes ambiguous. What might appear as fraud to investigators could represent a reasonable interpretation of unclear guidelines. A Medicaid fraud attorney might demonstrate how different Medicare Administrative Contractors (MACs) interpret the same regulation differently, or how CMS guidance has evolved over time.
- Intent-based defenses often prove effective, particularly when evidence shows good faith errors rather than intentional fraud. In many cases, billing errors result from misunderstanding rather than intentional deception. A defense attorney might present evidence of the provider’s efforts to maintain compliance, such as attendance at coding seminars, consultation with billing experts, or investment in compliance software.
How ZMO Law PLLC Can Help
At ZMO Law, our criminal defense attorneys bring years of experience to Medicaid fraud cases. Our defense representation includes thorough charge evaluation, evidence analysis, and trial preparation when necessary. We also assist clients throughout the resolution process, whether through settlement discussions, plea considerations, or administrative hearings. Our experience with licensing matters helps protect professional credentials even in challenging cases.
If you’re facing Medicaid fraud concerns, time matters. Contact ZMO Law PLLC at (212) 685-0999 or fill out our online form to discuss your situation and develop an appropriate response strategy. We offer focused representation aimed at protecting your future, so call us to get started today.