Medi-Cal Fraud: Who Can Be Charged?

“Medi-Cal fraud” is a fraud that is committed in connection with California’s Medi-Cal program.

Medi-Cal is a state program that provides free or low-cost health coverage to children and adults with limited income and assets.¹ Medi-Cal fraud has elements of both health care fraud and welfare fraud.

Acts by individuals that can lead to California Medi-Cal fraud charges include:

• Receiving Medi-Cal benefits for which you are not eligible based on false declarations, or making false declarations about another person’s eligibility for Medi-Cal;²
• Knowingly making a false or fraudulent claim for payment of a Medi-Cal benefit; and
• Knowingly submitting a claim for a Medi-Cal benefit that was not actually used by the claimant.³

And health care providers (usually doctors) may be charged with Medi-Cal fraud for doing any of the following:

• Presenting any false or fraudulent claim to the Medi-Cal program for furnishing services or merchandise, with intent to defraud;
• Knowingly submitting false information for the purpose of obtaining a greater compensation than that to which they are entitled from the Medi-Cal program;
• Knowingly submitting false information for the purpose of obtaining authorization to provide health care services to Medi-Cal patients;
• Knowingly executing or attempting to execute a scheme to defraud the Medi-Cal program, or using fraud or false representations to obtain money or property from the Medi-Cal program;⁴ or
• Soliciting, receiving, offering or giving any commercial bribe or kickback in return for referrals for services or purchasing of goods covered by Medi-Cal.⁵

Examples

Here are some examples of situations that could give rise to Medi-Cal fraud charges:

• A man applies for Medi-Cal benefits. On the application, he does not mention tens of thousands of dollars that he earns every year from doing handyman work under the table.
• A dentist performs unnecessary tooth extractions on Medi-Cal patients and bills Medi-Cal for the cost.
• A Medi-Cal recipient submits false receipts for reimbursement, for medicines s/he did not actually buy or use.

Penalties

Most forms of Medi-Cal fraud are wobblers. This means that they may be charged as either misdemeanors or felonies in California law.⁶

The potential felony prison sentence for most forms of Medi-Cal fraud is anywhere from sixteen (16) months to five (5) years. Felony fines can go

• Up to fifty thousand dollars ($50,000), or
• Double or triple the amount of the fraud.⁷

In most cases, Medi-Cal fraud as a misdemeanor carries a potential county jail sentence of up to one (1) year.⁸

Legal defenses

If you are charged with Medi-Cal fraud in California, you may be able to get the charges reduced or dismissed by arguing one of the following common legal defenses:

• You did not act knowingly or with fraudulent intent; and/or
• There is insufficient evidence to support the charges.

In this article, our California criminal defense attorneys⁹ will explain the following:

• 1. What is the legal definition of Medi-Cal fraud in California?
  • 1.1. Welfare & Institutions Code 14014
  • 1.2. Welfare & Institutions Code 14107
  • 1.3. Welfare & Institutions Code 14107.2
  • 1.4. Penal Code 550 PC
• 2. What are the penalties for Medi-Cal fraud in California?
  • 2.1. Welfare & Institutions Code 14014 penalties
  • 2.2. Welfare & Institutions Code 14107 penalties
  • 2.3. Welfare & Institutions Code 14107.2 penalties
  • 2.4. Penal Code 550 Penalties
  • 2.5. Medi-Cal fraud and professional discipline in California
• 3. What are defenses to Medi-Cal fraud charges?
• 4. Related Offenses to Medi-Cal Fraud
  • 4.1. Elder abuse
  • 4.2. Forgery
  • 4.3. Perjury

If, after reading this article, you would like more information, we invite you to contact us at Shouse Law Group.

1. What is the legal definition of Medi-Cal fraud in California?

Simply put, Medi-Cal fraud is any instance of California insurance fraud that has California’s Medi-Cal program as a “victim.”

Medi-Cal is a program of free or low-cost health coverage for Californians. Groups that may receive Medi-Cal benefits include:

• Low-income adults;
• Families with children;
• Seniors;
• People with disabilities;
• Children in foster care; and
• Pregnant women.¹⁰

Medi-Cal fraud can be prosecuted under several different California statutes. These include:

1.1. Welfare & Institutions Code 14014

Welfare & Institutions Code 14014 prohibits the following forms of Medi-Cal fraud:

1. Receiving Medi-Cal benefits for which you were not eligible based on false declarations about your eligibility; and
2. Making false declarations as to the eligibility of any other person who receives Medi-Cal benefits for which s/he was not eligible.¹¹

Example: Carla applies for Medi-Cal for her son Jacob and reports only her own small income, not Jacob’s large trust fund. Carla is guilty of Medi-Cal fraud for making false declarations, as a result of which Jacob received benefits for years that he should not have received.

It is important to note that you cannot be prosecuted under Welfare & Institutions Code 14014 merely for making false declarations on a Medi-Cal application. This Medi-Cal fraud law only applies if:

1. You (or someone else) receive benefits as a result of the false declarations; and
2. You (or the other person) actually were not eligible for those benefits.¹²

Example: Rose, who is unemployed, applies for Medi-Cal benefits, claiming she has no income and no assets. She does not mention her live-in boyfriend/co-parent’s income (he works part-time at a factory).

Although Rose made a false declarations on a Medi-Cal application, she is not guilty under WIC 14014 because her boyfriend’s income is low enough that she would have qualified for Medi-Cal anyway. Though she may be guilty of perjury (Penal Code 118 PC) for lying on the application.¹³

1.2. Welfare & Institutions Code 14107

Welfare & Institutions Code 14107 focuses on Medi-Cal fraud committed by medical practitioners (such as doctors, psychotherapists, physical therapists, pharmacists, etc.).

This Medi-Cal fraud statute makes it a crime to do any of the following:

• Present for payment any false or fraudulent claim for furnishing services or merchandise covered by Medi-Cal, with intent to defraud;
• Knowingly submit false information for the purpose of obtaining a greater compensation than that to which the provider is legally entitled under Medi-Cal;
• Knowingly submit false information for the purpose of obtaining authorization to provide health care services or merchandise to Medi-Cal patients; or
• Knowingly and willfully execute a scheme or artifice either to: 1) defraud the Medi-Cal program, or 2) use false or fraudulent pretenses to obtain money or property owned or controlled by the Medi-Cal program, in connection with the delivery of or payment for health care services or goods.¹⁴

Example: Samantha, a doctor, lets her unlicensed medical assistant to diagnose and treat patients when she is out of the office. Samantha then bills Medi-Cal for the cost of a visit with her (a physician) rather than for the cost of a visit with an assistant.

Samantha is guilty of Medi-Cal fraud, for submitting false information in order to get paid at a higher rate by Medi-Cal than she should.¹⁵

1.3. Welfare & Institutions Code 14107.2

Welfare & Institutions Code 14107.2 Medi-Cal fraud is also usually charged against providers of medical services or supplies.

This law makes it a crime to offer, pay, solicit or receive any sort of compensation (such as kickbacks, bribes or rebates) either:

1. To refer a patient to a service provider for medical services covered under Medi-Cal; or
2. To purchase, lease or order any goods, services or merchandise covered under Medi-Cal.¹⁶

Example: Martin, a toothpaste distributor, pays Isabel, a dentist, 30% of the price of each tube of a special fluoride toothpaste she prescribes to all her patients whether they need it or not. Medicare pays for the toothpaste, and Martin and Isabel share the profits.

Both Martin and Isabel are guilty of Medi-Cal fraud under WIC 14107.2.

1.4. Penal Code 550 PC

Medi-Cal fraud could also be prosecuted under Penal Code 550 PC, a more general insurance fraud law. This statute makes it a crime to do any of the following:

• Knowingly make or cause to be made any false or fraudulent claim for payment of a Medi-Cal benefit; or
• Knowingly submit a claim for a Medi-Cal benefit that was not used by the claimant.¹⁷

This form of Medi-Cal fraud can be committed by either Medi-Cal recipients or Medi-Cal providers (doctors, etc.).

Example: A physical therapist and a patient claim to Medi-Cal that the patient sees the therapist weekly when in fact it is only monthly. They then split the Medi-Cal money.

Rachel and Eli could both be prosecuted under California Penal Code 550, for knowingly submitting claims for Medi-Cal benefits that were not used by the patient.

2. What are the penalties for Medi-Cal fraud in California?

The penalties for Medi-Cal fraud depend on:

1. The specific statute the defendant is alleged to have violated; and
2. In many cases, the amount of money alleged to have been involved in the fraud.

2.1. Welfare & Institutions Code 14014 penalties

Medi-Cal fraud under Welfare & Institutions Code 14014 is punished in the same way as either petty theft or grand theft in California law.¹⁸

Fraud worth $950 or less

This means that, if the amount of benefits paid by Medi-Cal due to the defendant’s fraud was nine hundred fifty dollars ($950) or less, the defendant will be charged with WIC 14014 Medi-Cal fraud as a misdemeanor.¹⁹

The potential penalties in this case will be:

• Misdemeanor (summary) probation;
• Up to six (6) months in county jail;
• A fine of up to one thousand dollars ($1,000); and/or
• Repayment of any fraudulently-received benefits to the California Department of Health Care Services, which administers Medi-Cal.²⁰

Fraud worth more than $950

But if the amount of benefits fraudulently obtained is alleged to be more than nine hundred fifty dollars ($950), then this form of Medi-Cal fraud becomes a wobbler. This means it is a crime that may be charged as either a misdemeanor or a felony, depending on:

• The circumstances of the charges; and
• The defendant’s criminal history.²¹

Charged as a misdemeanor, wobbler Medi-Cal fraud under WIC 14014 carries the same penalties just described—except the maximum jail sentence rises to one (1) year.²²

When it is charged as a felony, the potential penalties are:

• Felony (formal) probation;
• Sixteen (16) months, two (2) years or three (3) years served in the county jail under California’s realignment program;
• A fine of up to ten thousand dollars ($10,00); and/or
• Repayment of any fraudulently-received benefits to the California Department of Health Care Services.²³

2.2. Welfare & Institutions Code 14107 penalties

Medi-Cal fraud by medical providers under Welfare & Institutions Code 14107 is also a California wobbler.²⁴

When it is charged as a misdemeanor, the potential penalties are:

• Misdemeanor probation;
• Up to one (1) year in county jail; and/or
• A fine of up to three (3) times the amount of the fraud or improper reimbursement.²⁵

When WIC 14107 Medi-Cal fraud is charged as a felony, the penalties are:

• Felony probation;
• Two (2), three (3) or five (5) years in California state prison; and/or
• A fine of up to three (3) times the amount of the fraud or improper reimbursement.²⁶

Sentence enhancements

The sentence for WIC 14107 Medi-Cal fraud increases under certain circumstances.

If you are charged with this crime for participating in a scheme to defraud Medi-Cal, and that scheme is committed under circumstances likely to cause or that do cause great bodily injury or serious bodily injury to two (2) or more people—then you will face an additional four (4) years in prison for every person who suffers great bodily injury or serious bodily injury as a result.²⁷

Example: A doctor, Samantha, lets her unlicensed medical assistant treat a Medi-Cal patient’s broken ankle. The assistant misdiagnoses the patient and causes permanent injuries.

Samantha is charged with Medi-Cal fraud under WIC 14107 as a felony and receives a base sentence of 5 years in prison. Though since the patient was left with serious bodily injuries—and Samantha was likely to cause serious bodily injury to at least 2 people given the dangers of allowing an unlicensed assistant to treat patients—she receives an additional sentence of 4 years.

Medi-Cal fraud and the felony-murder rule

In some cases, Medi-Cal fraud defendants who are medical providers can even be charged with California murder.²⁸

Specifically, if you accidentally kill someone while committing WIC 14107 Medi-Cal fraud in an inherently dangerous way, you could be guilty of second-degree murder under California’s “felony-murder rule.“²⁹

Second-degree murder is punishable by fifteen (15) years to life in state prison.³⁰

2.3. Welfare & Institutions Code 14107.2 penalties

WIC 14017.2 (bribes or kickbacks for referrals of Medi-Cal business) is a wobbler for a first offense. Though if you have a prior conviction for this form of Medi-Cal fraud, then it will always be a felony.³¹

It carries a potential county jail sentence of one (1) year if charged as a misdemeanor, and a potential county jail sentence of

• Sixteen (16) months,
• Two (2) years or
• Three (3) years

if charged as a felony.³²

2.4. Penal Code 550 Penalties

Medi-Cal fraud under Penal Code 550 is also a wobbler. The potential misdemeanor penalties under this law are:

• Misdemeanor probation;
• Up to one (1) year in county jail; and/or
• A fine of up to ten thousand dollars ($10,000).³³

And the felony penalties for this form of Medi-Cal fraud include:

• Felony probation;
• Two (2), three (3) or five (5) years in county jail; and/or
• A fine of up to fifty thousand dollars ($50,000) or double the amount of the fraud, whichever is greater.³⁴

The exception is if the total amount of the fraud is nine hundred fifty dollars ($950) or less (this includes the aggregate of multiple claims over a period of twelve (12) consecutive months).

In that case, PC 550 Medi-Cal fraud is always a misdemeanor. The potential penalties are

• Up to six (6) months in county jail, and/or
• A fine of up to one thousand dollars ($1,000).³⁵

2.5. Medi-Cal fraud and professional discipline in California

California doctors, nurses and pharmacists who are accused of being involved in Medi-Cal fraud also need to be concerned about professional discipline.

For California doctors, any criminal conviction for an offense that is “substantially related” to the qualifications, functions, or duties of a physician can trigger doctor discipline, including potentially the loss of their medical license.³⁶ Medi-Cal fraud certainly can be deemed to fall into this category.

Nurses can also face nurse discipline and license revocation (in some cases) as a result of a Medi-Cal fraud conviction.³⁷

Pharmacists are yet another group of medical professionals that need to worry about the effect of a Medi-Cal fraud conviction on their professional license.³⁸

3. What are defenses to Medi-Cal fraud charges?

Medi-Cal is a taxpayer-funded program that consumes a large share of the California state budget. Nationally, between 3% and 10% of state-funded health care programs’ budgets are lost to fraud.³⁹

This explains why the California Office of the Attorney General is very motivated to investigate and prosecute Medi-Cal fraud cases. In fact, the Attorney General has established a specialized Bureau of Medi-Cal Fraud and Elder Abuse.

But as San Bernardino criminal defense attorney Michael Scafiddi⁴⁰ puts it:

“Of course, this kind of vigilant—and often politically-motivated—law enforcement has an unfortunate side effect: it can lead to innocent people being wrongfully accused.”

If you are charged with California Medi-Cal fraud, you and your criminal defense attorney may want to consider the following legal defenses:

You did not act with knowledge or fraudulent intent

You are not guilty of Medi-Cal fraud unless you acted with either:

• Knowledge that a particular statement or behavior was false or fraudulent; or
• Fraudulent intent.⁴¹

Many times a careless mistake on your part will be flagged as potential fraud by someone involved in California Medi-Cal fraud enforcement.

The burden is on the prosecution to prove, beyond a reasonable doubt, that you knew you were submitting a false or fraudulent statement and did not simply make a mistake.

A skilled criminal defense attorney may be able to cast enough doubt on this assertion to lead to charges being dropped—or a not-guilty verdict in a jury trial.

There is insufficient evidence that you committed Medi-Cal fraud

It is not uncommon for Medi-Cal fraud cases to revolve around a highly complex set of facts, which could include:

• Arcane details of a defendant’s personal finances;
• Highly technical and sometimes conflicting medical diagnoses; and/or
• Scientific evidence about various medical conditions and the treatments for them.

Prosecutors may try to take advantage of this complexity and ambiguity to convict someone unjustly. So you need a good criminal defense attorney on your side—someone who understands the technicalities involved and can help present them clearly to a jury.

4. Related Offenses to Medi-Cal Fraud

Other California offenses that may be charged along with or instead of Medi-Cal fraud include:

4.1. Elder abuse

Penal Code 368 PC, California’s elder abuse law, makes it a crime to willfully or negligently impose unjustifiable physical pain and/or mental suffering on a person who is 65 or older.⁴²

This offense is a wobbler, carrying

• A potential state prison sentence of two (2), three (3) or (4) years, and
• A fine of up to six thousand dollars ($6,000)

if it is charged as a felony.⁴³

It is common for Medi-Cal fraud cases to involve nursing homes, or agencies providing in-home care for the elderly, which serve a large number of Medi-Cal recipients.

If a nursing home bills Medi-Cal for care by doctors or licensed nurses while instead providing care by unlicensed assistants—and an elderly patient is injured while under their care—then the prosecutor may build a case against the home’s owners or managers for both

• Medi-Cal fraud and
• Elder abuse.

4.2. Forgery

Penal Code 470 PC California forgery is the act of doing any of the following with intent to commit fraud:

• Signing someone else’s name;
• Faking a seal or someone else’s handwriting;
• Changing or falsifying a legal document; or
• Faking, altering or presenting as genuine a false financial document.⁴⁴

So, for example, if you fake a doctor’s signature on a report about an injury and use that report to obtain Medi-Cal reimbursement, you may be charged with both

• Medi-Cal fraud and
• Forgery.

Forgery is a wobbler and carries the same potential sentence as grand theft.⁴⁵

4.3. Perjury

You commit Penal Code 118 PC perjury when you deliberately give false information while under oath.⁴⁶

You could be charged with both perjury and Medi-Cal fraud in a variety of situations—for example, if you deliberately misstate your income or assets on a Medi-Cal application.

Perjury is always a felony and carries a potential sentence of

• Two (2) years,
• Three (3) years, or
• Four (4) years.⁴⁷

Call us for help…

For questions about California’s Medi-Cal fraud laws, or to discuss your case confidentially with one of our California criminal defense attorneys, do not hesitate to contact us at Shouse Law Group.

We have local criminal law offices in and around Los Angeles, San Diego, Orange County, Riverside, San Bernardino, Ventura, San Jose, Oakland, the San Francisco Bay area, and several nearby cities.

For more information on Nevada “health care fraud” laws, please see our page on Nevada “health care fraud” laws.

Additional Resources:

California Office of the Attorney General: Medi-Cal Fraud Complaint Form

California Department of Health Care Services: Medi-Cal Eligibility and Enrollment

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