| Read Time: 4 minutes | Healthcare Business Law
healthcare practice fraud laws

As the American population gets older and sicker and healthcare gets more expensive, healthcare fraud has become more prevalent across all levels and types of care.

Preventing healthcare fraud and abuse has thus become a top priority for regulators and law enforcement officials at all levels of government.

Healthcare fraud is more difficult to combat than other types of fraud because it includes conduct as varied as health insurance fraud (such as fraud on private insurers, Medicare, or Medicaid), drug fraud, and medical fraud.

In this blog post, we will discuss the definition of healthcare fraud, as well as guide you through the healthcare fraud laws in Texas.

The Austin, Texas healthcare lawyers at Massingill will help you understand how to spot healthcare fraud and what to do if you or your organization becomes a victim.

If you have questions, please contact us today. 

What Is Healthcare Fraud?

The broad definition of healthcare fraud is that it is a fraud perpetrated against the government by over-billing state or federal insurance programs like Medicare or Medicaid.

This can be committed by healthcare providers, facilities, and even patients themselves.

Examples of healthcare fraud include:

  • Misrepresenting insurance claims,
  • Deliberately miscoding procedures as more lucrative ones,
  • Performing medically unnecessary procedures for the sole purpose of increasing billings,
  • Stealing or swapping patient identities for purposes of treatment,
  • Making fraudulent misrepresentations by or to a hospital or other healthcare facility,
  • Accepting kickbacks for patient referrals to a healthcare facility, and
  • Misleading product and device claims made by a drug company or device manufacturer.

This is not an exhaustive list of potentially fraudulent acts, and healthcare fraud is often dependent on the facts of the case and the intent of the parties.

State and federal laws say that healthcare fraud takes place when an individual, provider, or company intentionally misrepresents a claim in order to obtain benefits—or to benefit in any way. 

Since there are many types of healthcare fraud—from altering receipts or bills to invoicing a patient or provider for services that were not provided—we will review some Texas laws against healthcare fraud.

Texas Healthcare Fraud Laws

Just like the federal laws governing healthcare fraud, Texas laws require healthcare providers to abide by a complex set of healthcare regulations.

Texas laws and policies governing healthcare fraud include:

  • Texas Patient Solicitation Act: This state law is often known as Texas’ version of the federal Anti-Kickback Act, and it regulates physician referrals at the state level. However, the state statute is criminal in nature only, does not take the value of remuneration obtained into account, and adheres to a lower “knowingly” intent requirement than the federal statute.
  • Prohibition on Corporate Practice of Medicine: Texas law prohibits the corporate practice of medicine, which generally means physicians are not to be employed by individuals or corporations who are not professionally licensed to practice medicine.
  • Texas False Claims Act (FCA): This statute holds individuals and entities liable for submitting false or fraudulent claims paid by the government. The Texas FCA is similar to the federal FCA, but allows for penalties if claims are submitted by an unlicensed provider and further differs from federal law by imposing enhanced civil penalties when misconduct results in harm to the elderly, disabled individuals, or minors.
  • Texas Medicaid Fraud Prevention Act: This Texas law is designed to prevent abuse and fraud within the Texas Medicaid program and makes it illegal to file fraudulent documentation or claims to be paid by the state Medicaid program.
  • Improper Billing Practices: The Texas Medical Board has the regulatory authority to discipline practitioners for improper billing practices and fraudulent billing conduct. This includes improper bills or claims submitted to patients or third-party payers, provided the physician knew the claim was improper. Violations of this policy can result in substantial sanctions and medical license suspension.

Just like in the federal context, Texas has strict laws against healthcare fraud.

If you are a patient who believes you may have been defrauded or are a healthcare practitioner who has concerns about fraud within your practice, contact a knowledgeable Texas healthcare fraud attorney as soon as possible.

Examples of Healthcare Fraud in Texas

In Texas, the most common types of provider healthcare fraud include unbundling, upcoding, and kickbacks.

Unbundling describes the act of issuing separate bills for parts of a single procedure. This can greatly increase billing fees, since bundled procedures are designed to save patients and facilities money.

Upcoding occurs when a patient is billed for more expensive services instead of the service they received from a provider.

Finally, kickbacks occur when a provider pays another party for new patient referrals. Texas law prohibits all of these types of healthcare fraud.

Penalties for Healthcare Fraud

In Texas, healthcare fraud can be a criminal offense. Chapter 35 of the Texas Penal Code describes the punishments for defendants convicted of healthcare fraud.

Some examples of the consequences of healthcare fraud include:

  • A maximum five-year prison term and $10,000 in fines for making false statements to an insurance company, including Medicaid;
  • A maximum 10-year prison sentence for repeat healthcare fraud offenders; and
  • In the instance of pharmaceutical fraud, drug trafficking charges may also apply, carrying a longer possible prison sentence under state and federal drug trafficking laws.

Again, these are only some of the possible punishments for healthcare fraud. In addition to significant fines and criminal sanctions, fraud perpetrators face the loss of their professional healthcare license.

Moreover, businesses convicted of pharmacy or medical device fraud may be deemed ineligible for Medicare or Medicaid participation in the future.

How a Texas Healthcare Lawyer at Massingill Can Help

Massingill represents healthcare clients across the State of Texas.

From business formation to integration and anti-fraud compliance, our team of experienced healthcare lawyers can help your practice at every stage of the medical practice lifecycle.

Our Texas healthcare attorneys work closely with clients to provide a custom-tailored strategy to strengthen your business and resolve compliance issues from the outset.

We work with clients across the healthcare spectrum, from providers to medical facilities to group practices.

Contact us today to schedule a consultation.

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