Penal Code Section 550

Recently, we wrote a blog about the biggest national health care fraud sweep, which resulted in 301 people charged and over $900 million dollars in fraudulent billings. The Medicare fraud strike force was responsible for uncovering this fraud and having over 300 individuals charged in almost every state in the nation. In California, 22 individuals were charged. The scheme involved billing and procedures that were not necessary and compounding crèmes.

One Physician charged, Dr. Donald Woo Lee is accused of performing unnecessary procedures for varicose veins when the patients had no sign of varicose veins.

The majority of losses in California stem from cases involving compounding pharmacies. Compounding medications are primarily used for pain relief and found in a topical crime. They are supposed to be made from various ingredients and tailored to the individual patient. The schemes involving compounding medications usually arise when there is a “marketer” or “capper” who may recruit patients, doctors and pharmacists. The fraud typically involves some type of incentive or “kickback” for using, prescribing or filling prescription for compounding medications. Often the patients are part of “pay to play” incentive. Insurance companies were reimbursing the doctors and pharmacists for the compounding medication, which were often not needed or requested from the patient. The reimbursements were outrageous, at times more than $15,000 for a single prescription.

The area of health care fraud specifically involving overbilling and use of “cappers” related to compounding medications is at the forefront of criminal prosecutions and undercover operations at this time in California. These cases may be prosecuted in state court or federal court. Focusing in state court, the charges are usually a violation of Penal Code Section 550, insurance fraud and related subsections. The punishment for a felony conviction under PC § 550 is 2, 3 or 5 years in prison. Additionally, enhancements are often added to the underlying charge. A typical enhancement added to medical insurance fraud type cases is violation of Penal Code Section 186.11. This is known as an enhancement for aggravated white-collar crimes, which health insurance fraud type cases fall under. The enhancement adds additional punishment to the underlying offense and is affixed based on the amount of loss the prosecution is claiming. For instance, if the prosecution is claiming that an individual received over $500,000.00 from medical insurance fraud, the additional punishment that could be added is another 2, 3 or 5 years in state prison. Therefore, it is conceivable that a conviction of one count of insurance fraud could be up to 10 years in state prison.

In California, Medi-Cal, Medicare and workers’ compensation insurance fraud are being heavily investigated. These cases require attorneys who have knowledge in this specific area, and have been successful in defending these cases. At Pilchman & Kay, we have the knowledge in this area, and have had substantial experience and success in this area of law. If you are being investigated for any type of medical insurance fraud or have been charged with medical fraud, contact the attorneys at Pilchman & Kay.

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