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How to Report Medi-Cal Fraud in California?

January 18, 2024

With one of the most extensive healthcare budgets, California also has some of the most robust anti-fraud healthcare statutes that rewards whistleblowers who blow the whistle on fraud against the government’s healthcare programs as well as private insurance. With California’s creative private healthcare fraud whistleblower statute individuals could receive as much as 50% as a whistleblower. California is the largest state in the country, with a population of over 40 million. It also includes major cities like Los Angeles, San Francisco, Sacramento, and San Diego, all of which are concentrated hubs of commercial business and government spending. While California’s size and resources are routinely considered a strength, those factors also leave it disproportionately vulnerable to fraud of all kinds since the more bloated the budget is, the more fraud that generally occurs. Given California’s prioritization of taxpayer funded public services, the state also finds itself acutely burdened by healthcare fraud. While the state certainly is robbed by healthcare fraudsters often, it also is very proactive in its efforts to sue those criminals and recover the stolen funds. The state can do so because of the reports made by whistleblowers, which provide invaluable insight into the fraud and enables the state to make a recovery. In exchange, the state provides whistleblowers a substantive portion of the recovered funds, if successful. In short, whistleblowers in California are of crucial importance to the maintenance of public interest and must therefore be well informed of the best practices by which they may report that fraud, and the enforceable protections that govern that reporting.

California Fraud Occurrence Statistics

California allots a great deal of its taxpayer funds to provide medical services in the form of its state insurance program, known as Medi-Cal.  According to the state figures, “overall Medi-Cal spending across all fund sources is estimated to be $135 billion in 2022-23.”[1] This towering figure is the largest of any state insurance program in the country. Unsurprisingly, California is also victim to the largest amount of total fraud across the country. Forbes reported that “In the first quarter of 2023, California ranked first in terms of total fraud reports, with a count of roughly 47,000. Relative to population, it came in 18th place, with 244 reports for every 100,000 residents. In terms of financial damage, California secured the top position with total losses of $249 million, while also ranking third for median loss: $700 per victim.” [2]

California Fraud Recovery Statistics

These figures also mean that California fraud whistleblowers are at a unique advantage with regard to reporting California healthcare fraud. Since the fraud is so prevalent, the state is forced to make it a priority to recovery the stolen funds. In other words, California has built out intelligent infrastructure to address this fraud, meaning California healthcare whistleblowers, with the right whistleblower law firm, can proceed upon a route to  a recovery award. Indeed, the California Department of Justice reported that 101 California healthcare fraud cases were tried in 2020, resulting in 85 convictions and nearly $40 million in recovery. [3] However, while there is certainly great opportunity for healthcare whistleblowers in California, these cases still must be carefully and persuasively presented—if a whistleblower presents their case without the assistance of experienced counsel, often the reporting will never lead to a recovery and further, to fully invoke the benefits of all the available California whistleblower statutes, you are required to retain a False Claims Act law firm, as certain statutes can’t be invoked pro se, that is, without an attorney

Types of Medi-Cal Fraud

California healthcare fraud can take a number of forms, and it’s important to know the general makeup of the fraud to properly detect it. According to the California Attorney General, “Medi-Cal fraud is generally defined as the billing of the Medi-Cal program for services, drugs, or supplies that are: Unnecessary; Not performed; More costly than those actually performed. Medi-Cal fraud also refers to paying and/or receiving kickbacks for Medi-Cal billing referrals, and violations of the California False Claims Act and other related state laws. Based on government and private studies, and on the hundreds of millions of dollars of fraud the Division of Medi-Cal Fraud and Elder Abuse frequently recovers in a single year, the amount stolen from Californians by Medi-Cal fraud could reach billions of dollars annually.”[4] So, Medi-Cal fraud can range from improper pharmacy billing procedure, illegal kickbacks offered to doctors from medical service providers, failure to provide services that were billed to Medi-Cal, and so on. As a general advisory, the FBI notes that most healthcare fraud, including Medi-Cal fraud, can be broken down into the following categories:

Medical Provider Fraud

This type of fraud generally involves Double billing, which involves multiple claims being submitted for the same service, Phantom billing, which involves “Billing for a service visit or supplies the patient never received,” Unbundling, which involves “Submitting multiple bills for the same service,” and Upcoding, which involves “Billing for a more expensive service than the patient actually received.[5]

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Patient Fraud

This category of healthcare fraud generally involves the following. “Bogus marketing: Convincing people to provide their health insurance identification number and other personal information to bill for non-rendered services, steal their identity, or enroll them in a fake benefit plan. Identity theft/identity swapping: Using another person’s health insurance or allowing another person to use your insurance. Impersonating a health care professional: Providing or billing for health services or equipment without a license.”[6]

Prescription Fraud

This category of healthcare fraud generally involves the following. “Forgery: Creating or using forged prescriptions. Diversion: Diverting legal prescriptions for illegal uses, such as selling your prescription medication. Doctor shopping: Visiting multiple providers to get prescriptions for controlled substances or getting prescriptions from medical offices that engage in unethical practices.”[7]

Reporting California Healthcare Fraud

If a whistleblower suspects that healthcare fraud is taking place, or has a firm understanding that healthcare fraud is indeed taking place, it’s of crucial importance to seek counsel that has experience handling cases related to California Medi-Cal fraud. This is of vital importance for several reasons. Firstly, the process of reporting and filing these cases is extremely intensive. It requires the upmost attention to detail, sophisticated knowledge of local, state, and federal laws, nuanced understanding of qui tam lawsuit procedure, and the ability to concisely and persuasively present a case to the government such that it smoothly translates to an eventual recovery and award. The False Claims Act, which undergirds most qui tam lawsuits, allows the whistleblower to receive up to 30% of the total recovery. The False Claims act, and other local and state laws regarding healthcare whistleblower law, require precise steps to properly file and try a case. Indeed, while the False Claims Act allows for the relator to receive a portion of the recovery, this recovery award will never find its way to a whistleblower if the case is rejected, or is effectively dismissed during any of the numerous steps between filing and recovery. If a whistleblower has a compelling healthcare fraud case, that whistleblower does their case a disservice by failing to find sophisticated and experienced counsel to doggedly pursue it. The first step to reporting is awareness and oftentimes with fraud you may not even know what you know and other times it may be right in your face, that is why if you’re thinking about reporting Medi-Cal fraud in California you should avail yourself of a free, confidential whistleblower consultation and look for the best whistleblower law firm that haa been through it before to understand your rights.

[1] https://lao.ca.gov/Publications/Report/4810

[2] https://www.forbes.com/advisor/credit-cards/most-scammed-states-in-america/

[3] https://oag.ca.gov/dmfea/medical

[4] https://oag.ca.gov/dmfea/medical

[5] https://www.fbi.gov/investigate/white-collar-crime/health-care-fraud

[6] https://www.fbi.gov/investigate/white-collar-crime/health-care-fraud

[7] https://www.fbi.gov/investigate/white-collar-crime/health-care-fraud