As the Department of Justice’s annual False Claims Act report shows, Medicaid fraud comprises a significant portion of all the frauds against the federal government each year. In fiscal year 2023, the DOJ reported $2.68 billion in FCA settlements and judgments. Almost half that, $1.2 billion, was recovered from Medicaid provider fraud and patient abuse or neglect.

And because California’s Medicaid program, Medi-Cal, is exponentially larger than in most other states, it’s a big target for fraud. California accounts for $1.30 of every $9 in Medicaid spending: Of the nearly $900 billion in Medicaid expenditures in FY 2023, $130 billion was spent by Medi-Cal to provide health benefits to nearly 15 million low-income Californians.

More spending means more opportunities for fraud: California accounted for $362.8 million of the $1.2 billion recovered last fiscal year from Medicaid provider fraud and patient abuse or neglect. But with $130 billion being spent on Medi-Cal annually, the amount of fraud occurring in the program is likely much higher than the $360 million-plus recovered last year, possibly in the billions.

The Federal Medical Assistance Percentage dictates how much of Medicaid is paid by the federal government, and how much by the state running the program. In California, Medi-Cal is paid with 70% federal funds and 30% from state and local sources, so fraud and wasteful spending in the program puts a higher burden on the state to maintain health insurance premiums and taxes for this and other social programs 

According to California’s Attorney General, Medi-Cal fraud is generally defined as the billing of the Medi-Cal program for services, drugs, or supplies that are:

• Unnecessary;
• Not performed;
• More costly than those actually performed.

Medi-Cal fraud also refers to paying and/or receiving kickbacks for Medi-Cal billing referrals, and violations of the California False Claims Act and other related state laws.

“Medi-Cal supports millions of Californians by providing for the critical healthcare they rely on every day,” California Attorney General Robert Bonta said. “When providers misuse Medi-Cal funding, they siphon away much-needed resources from vulnerable, deserving patients.”

When state and federal prosecutors can’t ferret out Medi-Cal fraud on their own, they often rely on whistleblowers with first-hand knowledge of illegal schemes to recover misused funds.

Last year, a whistleblower received more than $14 million after his information led to five settlements that resolved claims brought under the False Claims Act against multiple Medi-Cal providers.

In June, the Justice Department announced that a health system, hospital network, outpatient clinic and community health center agreed to pay a total of $68 million to resolve allegations that they violated the False Claims Act and the California False Claims Act. The four companies allegedly submitted false claims to Medi-Cal for “Enhanced Services” that were either not “allowed medical expenses,” did not reflect the fair market value of any Enhanced Services provided, and/or were duplicative of services already required to be rendered. In August, another health care provider agreed to pay $5 million to settle similar claims alleged by the same whistleblower, whose information also helped lead to a $22.9 million settlement in 2022.

Keller Grover has experience representing whistleblowers who work in healthcare and have information about fraud. Among other cases, we represented the whistleblower whose information led to a $90 million False Claims Act settlement by Sutter Health in 2021, one of the largest settlements ever involving a Medicare Advantage provider. 

If you suspect Medicaid fraud, including fraud in the Medi-Cal program, we provide confidential, free consultations and can help you determine the best path forward from the very beginning, helping you minimize the impact of reporting, protect your rights and achieve the best possible outcome for your situation.