Defending Your Healthcare Practice Against Fraudulent Medical Billing Allegations

Fraudulent Medical Billing Allegations

The electronic health records mandate and the advancement in data analytic platforms have facilitated a more aggressive pursuit against fraudulent medical billing allegations by government authorities. Billing data can be mined and examined for anomalies using artificial intelligence, with suspicious activity targeted for further investigation. The majority of physicians and healthcare organizations investigated will be exonerated by providing the necessary information to authorities to back their claims. But if you are notified of any investigation into your medical billing practices, you need to take it seriously from the onset. 

Fraudulent Medical Billing Practices 

The Department of Justice (DOJ) and other government agencies routinely pursue litigation against healthcare organizations for alleged fraud against the Medicare and Medicaid programs. Fraudulent practices may include the following:

  • Billing for services not delivered (phantom billing)
  • Falsification of patient records
  • Unbundling (billing for separate services that are required to be combined in a single billing event)
  • Double billing
  • Kickback fraud
  • Physician self-referrals (referring patients to facilities where the referring physician or his immediate family has a financial interest)
  • Upcoding (exaggeration of services rendered)
  • Falsification of cost reports
  • Off-label marketing of pharmaceuticals (use of non-FDA approved medications)

False Claims Act

The False Claims Act (FCA) is the primary tool used by the DOJ to combat fraud against government programs. The FCA imposes civil liability on any person who knowingly submits or causes the submission of a false or fraudulent claim to the federal government. Actual knowledge of the falsity of the information or deliberate ignorance or reckless disregard for the truth of the information related to the claim is required to be found in violation of the civil FCA, but no specific intent to defraud is necessary. 

In fiscal 2020, the DOJ recovered $2.2 billion in FCA claims, the vast majority of which – more than $1.8 billion – involved healthcare fraud perpetrated against government programs by hospitals, physicians, pharmacies, hospice organizations, medical device manufacturers, and others. While the DOJ initiates many claims itself, most are brought by whistleblowers, such as former employees, who receive a share of 15 to 30 percent of any recovery and are thus highly incentivized to initiate FCA claims on behalf of the government. 

Other Statutes

Medicare and Medicaid fraud is also prosecuted under other statutes, including the Anti-Kickback Statute and the Stark Law, while states routinely pursue medical billing fraud actions under state-level anti-fraud statutes.

The Anti-Kickback Statute makes it a crime to knowingly or willfully offer, pay, solicit or receive any compensation directly or indirectly to induce or reward patient or business referrals for services reimbursable by a federal healthcare program. 

Under the Stark Law, a physician cannot refer patients for healthcare services payable by Medicare or Medicaid to an entity with which the physician or the physician’s immediate family member has a financial relationship. 

Medical Billing Fraud Settlements

In fiscal 2020, 922 FCA claims were initiated, and, among other recent outcomes, Sutter Health and affiliates paid $90 million, Geisinger Community Health Services paid $18.5 million and the University of Miami paid $22 million to settle allegations related to fraudulent medical billing matters. Private physicians have paid as much as $50 million in FCA settlements.

If you are notified of an investigation into your medical billing practices, seek legal representation immediately. Physicians and healthcare organizations who are prosecuted face a very difficult and expensive process, which compromises both their reputation and their bottom line, and puts their livelihood at risk. Defending yourself in billing fraud actions requires knowledgeable counsel with expertise in healthcare fraud defense, which includes relationships with relevant expert witnesses to combat the fraudulent billing claims. 

If your medical billing practices are being investigated by the government, or those practices are being investigated by an insurance company, or an insurance has commenced a legal proceeding alleging illegal billing practices, give us a call. 

If you have any questions concerning a bad faith case, or any other questions about insurance coverage, please contact us.



Evan S. Schwartz
Founder of Schwartz, Conroy & Hack