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What is Medi-Cal Fraud?

September 15, 2023

Medi-Cal fraud entails a broad range of deceptive actions centered around inappropriate billing practices within the Medi-Cal program, which is the name for the State of California’s Medicaid program.  Medi-Cal fraud can occur in a variety of ways, and it can be remedied and reported through the False Claims Act with a Medi-Cal whistleblower eligible for up to 30% of what the government recovers as a False Claims Act whistleblower reward.  In addition, where there’s smoke there’s generally a lot of fire, and if the fraud extends to other programs the False Claims Act also tackled Medicare fraud and further California has an exception statute that enables whistleblowers to disclose systemic fraud against private insurance and recover up to 50% of the recovery as a whistleblower award.  

Echoing any other type of fraud against an insurance company, Medi-Cal fraud is defined as submitting claims for reimbursements for services, medications, and/or supplies that are false.  Some examples of false claims under Medi-Cal include:

  1. Unnecessary Services or Supplies: Charging Medi-Cal for services, drugs, or supplies that are not crucial or relevant to the patient’s medical needs.
  2. Services Not Rendered: Falsely claiming compensation for medical procedures or interventions that were never actually performed.
  3. Upcoding Practices: Billing an encounter for more time or for more complexity than it actually was to receive a higher level of reimbursement. Oftentimes, providers that engage in this type of fraud reflexively bill with upcoding practices.

Moreover, Medi-Cal fraud extends to illicit practices such as facilitating and receiving kickbacks in exchange for referrals related to Medi-Cal billing, which is prohibited under the Anti-Kickback Statute (AKS)

Magnitude of Medi-Cal Fraud

Inappropriate billing practices are a major cause for concern. Government and independent studies, along with substantial recoveries made by the Division of Medi-Cal Fraud and Elder Abuse, illuminate the staggering extent of Medi-Cal fraud. The illicit practices result in the potential misappropriation of billions of dollars annually from taxpayers. 

The impact of Medi-Cal fraud is acutely felt by those dependent on healthcare services. Such fraudulent activities deprive individuals of vital financial resources that could be channeled towards essential medical treatments. Additionally, the consequences ripple through public health, as unscrupulous practices like reusing syringes, unnecessary medical procedures, or assigning unqualified personnel to administer treatment pose direct health risks to the community.

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Federal False Claims Act and California False Claims Act with Whistleblower Involvement

Under the provisions of the Federal False Claims Act and the California False Claims Act, whistleblowers are empowered to initiate legal actions aimed at recovering funds for the state. Medi-Cal funds may be viewed as both state and federal funds as the money flows from the federal government for the state and thus both statutes may be invoked, although classically the vehicle for recovery of fraud against the taxpayers for Medicaid is the federal False Claims Act which has recovered billions of dollars for the taxpayers and hundreds of millions of dollars of whistleblower rewards.  The legal process involves filing a lawsuit confidentiality under seal, enabling government investigative bodies to assess the case’s merits. This ensures that the whistleblower’s identity remains confidential during the sealed period which can last many years

Should the government decide to intervene in the case, the whistleblower stands to gain between 15% and 25% of the proceeds of any recovery as a whistleblower reward and up to 30% as a whistleblower award if the government does not intervene. This percentage is contingent on the extent of the whistleblower’s and their legal team’s contributions to the prosecution. Altern

Retaliation Protection and Legal Protections

While no legislation can guarantee immunity from employer retaliation, California has established a robust framework designed to discourage such actions. Notably, the California False Claims Act includes protective measures, further fortified by the state’s Whistleblower Statute (Cal. Labor Code §§ 1102.5-1105) and the California Health and Safety Code § 1278, et seq., which shields medical personnel from retaliation when reporting activities that compromise patient care and safety.  In addition, the False Claims Act federally has a strident anti-retaliation provision. 

Diverse Forms of Fraudulent Conduct

Medi-Cal fraud manifests in various forms, limited only by the creativity and determination of those seeking to exploit the program. Common fraudulent schemes include:

  1. False Billing: Charging for medical services or procedures never rendered to the patient.
  2. Upcoding: Billing for higher-priced services than those provided (upcoding).
  3. Double Billing: Charging both government healthcare programs and private insurance for the same claim.
  4. Unnecessary Services: Providing and billing for unnecessary services, leading to financial fraud and potential patient harm.
  5. Misrepresentation of Goods: Delivering goods that deviate from their claimed specifications.
  6. Overcharging for Supplies: Charging inflated prices to government healthcare programs for medical devices or supplies.

Moreover, additional statutes and regulations govern illegal payments and incentives meant to solicit patients or contracts covered by government healthcare programs which are known as kickbacks. They also regulate referrals to entities with financial stakes held by healthcare providers which is handled by the Stark Law which deals with self-dealing

Reporting and Seeking Legal Assistance

Reporting Medicare fraud is vital in ensuring the integrity of the healthcare system and protecting the taxpayers funds.

If you encounter suspicious activities or are coerced into providing inappropriate care or billing, consulting a qui tam lawyer is prudent. Such whistleblower professionals can assess the observed conduct and help evaluate if it’s potentially  fraudulent in  nature and if so what route to proceed on, if any. If evidence of fraud against the government is discovered, significant rewards and legal protections for whistleblowers are available under both state and federal laws. 

Brown, LLC’s whistleblower attorneys are renowned for their experience in whistleblower actions and can provide guidance through a confidential consultation, accessible online or via phone at (877) 561-0000. Your action could play a vital role in protecting Medi-Cal’s integrity and preserving California’s healthcare resources.