Complete Guide to Medi-Cal Fraud Laws in California

Medi-Cal, California’s Medicaid program, provides healthcare coverage to millions of low-income residents, seniors, and people with disabilities. Because of the size of the program and the public money involved, Medi-Cal fraud is investigated and prosecuted by state and federal authorities. Allegations can arise from billing errors, documentation problems, eligibility questions, or intentional misconduct.

This guide explains what Medi-Cal fraud is, who investigates it, the California statutes that apply, the penalties and time limits, and common defenses. If you are already under investigation, see our Medi-Cal fraud defense attorney page or call (619) 525-7005.

What Is Medi-Cal Fraud?

In general terms, Medi-Cal fraud means knowingly using false information, or a scheme to defraud, to obtain Medi-Cal payments, authorizations, or benefits. The main criminal statute, Welfare and Institutions Code § 14107, applies to any person, including applicants, providers, and billing agents, who:

• with intent to defraud, presents a false or fraudulent claim for furnishing services or merchandise under Medi-Cal;
• knowingly submits false information to obtain greater compensation than the person is legally entitled to;
• knowingly submits false information to obtain authorization to furnish services or merchandise; or
• knowingly and willfully executes, or attempts to execute, a scheme or artifice to defraud Medi-Cal (or another health care program administered by the Department of Health Care Services), or to obtain its money or property by false or fraudulent pretenses, representations, or promises.

Fraud can be alleged against providers, billing staff, third-party vendors, and beneficiaries. The required mental state (intent to defraud, or knowing and willful conduct) is what separates a crime from a billing error.

Who Investigates Medi-Cal Fraud in California?

Medi-Cal provider fraud is investigated and prosecuted primarily by the California Attorney General’s Division of Medi-Cal Fraud and Elder Abuse (DMFEA), which operates as California’s Medicaid Fraud Control Unit. According to the Attorney General’s Office, Medi-Cal is administered by the Centers for Medicare & Medicaid Services and the California Department of Health Care Services (DHCS).

By statute, the Attorney General may convene a grand jury to investigate and indict for Medi-Cal fraud under Welfare and Institutions Code § 14107(g). Because Medi-Cal is funded with both state and federal money, federal agencies such as HHS-OIG and the FBI, and the U.S. Attorney’s Office for the Southern District of California, can also become involved, and a case can be charged in state court, federal court, or both.

In practice, cases may begin with a DHCS audit or payment review, a data flag, a complaint from an employee or competitor, or a referral from another agency. Counsel can often learn which agency is involved, and at what stage, before anyone responds.

Common Types of Medi-Cal Fraud

Billing for Services Not Rendered

Submitting claims for visits, procedures, tests, or equipment that were not provided.

Upcoding and Unbundling

Billing for a more expensive service than the one provided, or splitting a single procedure into separately billed components.

Double Billing

Billing Medi-Cal and another payer for the same service, or billing the same service twice.

Kickbacks and Referral Payments

Offering, paying, soliciting, or receiving remuneration for Medi-Cal referrals or orders, which is separately criminalized by Welfare and Institutions Code § 14107.2 and, for federal program business, by the federal Anti-Kickback Statute.

Eligibility Fraud by Beneficiaries

Allegations that a beneficiary concealed income, assets, household members, or residency to obtain or keep coverage.

Prescription Fraud

Billing for medications that were unnecessary or never dispensed, or diverting prescribed drugs.

Laws Governing Medi-Cal Fraud in California

Welfare and Institutions Code § 14107

The core Medi-Cal fraud statute, described above. It reaches false claims, false information submitted for higher payment or authorization, and schemes to defraud Medi-Cal.

Welfare and Institutions Code § 14107.2

California’s Medi-Cal anti-kickback law. It covers soliciting, receiving, offering, or paying remuneration for referrals, or for purchasing, ordering, or recommending goods or services paid for by Medi-Cal, subject to listed exceptions such as bona fide employment compensation and properly disclosed discounts.

Penal Code § 550

Penal Code § 550 is usually described as an insurance fraud statute, but paragraphs (a)(6) through (a)(9) also make it unlawful to knowingly make a false or fraudulent claim for payment of a health care benefit, to submit a claim for a benefit not used by the claimant, or to present multiple claims for the same health care benefit with intent to defraud. Prosecutors sometimes charge it alongside, or instead of, § 14107.

Federal Statutes

Federal charges can include health care fraud under 18 U.S.C. § 1347, the Anti-Kickback Statute, wire fraud, and conspiracy. Civil liability under the federal False Claims Act can run alongside a criminal case. See our healthcare fraud defense page for the federal side.

Potential Penalties and Consequences

• Imprisonment. A violation of § 14107 is punishable by imprisonment in county jail, or in state prison for two, three, or five years (§ 14107(c)).
• Fines. A fine of up to three times the amount of the fraud or improper reimbursement, or the value of the scheme, in addition to or instead of imprisonment (§ 14107(a)).
• Injury enhancements. If a scheme under § 14107(b)(4) is committed under circumstances likely to cause, or that do cause, great bodily injury or serious bodily injury to two or more people, an additional consecutive four-year term applies for each injured person, if pleaded and proved (§ 14107(d)).
• Asset forfeiture. Persons who engage in conduct covered by § 14107 are subject to California’s criminal profiteering asset forfeiture provisions (§ 14107(f)).
• Kickbacks. A first conviction under § 14107.2 is punishable by up to one year in county jail or imprisonment under Penal Code § 1170(h), a fine of up to $10,000, or both; a second or subsequent conviction is punishable by imprisonment under § 1170(h).
• Program consequences. Medi-Cal suspension (automatic after a conviction for fraud or abuse of Medi-Cal; Welf. & Inst. Code § 14123), exclusion from federal health care programs after certain convictions (42 U.S.C. § 1320a-7), and professional licensing consequences.

Under § 14107(h), the same act cannot be punished under more than one statute; Penal Code § 654 governs which penalty applies.

How Long Does the State Have to File Medi-Cal Fraud Charges?

Felony Medi-Cal fraud under § 14107 is one of the offenses listed in Penal Code § 803(c), so the limitation period does not begin to run until the offense is discovered. Under Penal Code § 801.5, prosecution must begin within four years after discovery or four years after completion of the offense, whichever is later. Felony insurance fraud under Penal Code § 550 is also listed in § 803(c). Federal limitation periods are different.

How Investigations Typically Begin

• Audits or payment reviews of billing records
• Complaints from employees, patients, or competitors
• Data analysis showing unusual billing patterns
• Referrals from other agencies, payers, or pharmacies

Once an investigation begins, investigators may subpoena records, interview staff and patients, and execute search warrants. Statements made during this phase can later be used as evidence, which is why it helps to speak with counsel before responding.

Key Defense Strategies in Medi-Cal Fraud Cases

Lack of Intent

Most Medi-Cal fraud theories require intent to defraud or knowing and willful conduct. Evidence that errors came from complex billing rules, software problems, or staff mistakes, and not from a plan to deceive, goes to the heart of the case.

Insufficient or Unreliable Evidence

Audit samples, extrapolations, and claims data should be tested against the underlying medical records.

Compliance Efforts

A functioning compliance program, training, and prompt correction of errors can support the argument that problems were not intentional.

Statute of Limitations

The discovery rule in Penal Code § 803(c) is not unlimited. When the offense was discovered, and by whom, can be contested.

Illegal Search or Seizure

Evidence obtained in violation of constitutional rights may be suppressed. See motions to suppress under Penal Code § 1538.5.

Why Legal Representation Matters

Medi-Cal fraud cases combine criminal law, program rules, and financial analysis. For many years, Vikas Bajaj has worked with clients before charges are filed, with the goal of keeping a case from being filed at all. In federal matters that work can include coordinating with the investigating agents and the Department of Justice prosecutors before an indictment; in California matters, with state law enforcement and the prosecutor before a charging decision. No particular result can be promised, but pre-charge advocacy is only possible if counsel is involved before that decision is made.

Providers vs. Beneficiaries: Different Risks

Healthcare Providers

Physicians, clinics, pharmacies, and billing companies face risk from coding practices, documentation gaps, referral arrangements, and the conduct of employees and vendors.

Beneficiaries

Beneficiaries can face allegations of misreporting income, household size, or residency. Many do not realize that failing to update eligibility information can be treated as fraud.

Civil vs. Criminal Medi-Cal Fraud Cases

Not every matter becomes a criminal case. Some are resolved through administrative action, repayment, or civil settlement. When investigators believe conduct was intentional, or the amounts are large, criminal charges become more likely. Early counsel can help assess which track a matter is on, and keep statements made in an audit from becoming evidence in a prosecution.

Frequently Asked Questions (FAQs)

Q: Who investigates Medi-Cal fraud in California?

A: Provider fraud is investigated and prosecuted primarily by the California Attorney General’s Division of Medi-Cal Fraud and Elder Abuse, California’s Medicaid Fraud Control Unit. Federal agencies and the U.S. Attorney’s Office can also be involved because Medi-Cal is jointly funded.

Q: Is Medi-Cal fraud a felony?

A: It can be. Welfare and Institutions Code § 14107 allows either county jail or state prison for two, three, or five years, plus a fine of up to three times the amount of the fraud. How it is charged depends on the facts and the prosecutor’s decision.

Q: How long does the state have to file Medi-Cal fraud charges?

A: For felony Medi-Cal fraud under § 14107, Penal Code §§ 801.5 and 803(c) allow prosecution within four years after the offense is discovered or completed, whichever is later.

Q: Can a billing error be prosecuted as Medi-Cal fraud?

A: An honest error is not a crime, because the statutes require intent to defraud or knowing conduct. But billing errors can trigger audits, and explanations given without counsel can be used later.

Q: Can Medi-Cal fraud lead to exclusion from Medicare?

A: Yes. Certain convictions trigger mandatory exclusion from all federal health care programs generally for at least five years (42 U.S.C. § 1320a-7(a), (c)(3)(B)).

Q: Should I talk to a DMFEA investigator or DHCS auditor?

A: Speak with counsel first. A lawyer can find out the scope of the inquiry and advise on how to respond without creating new evidence.

Speak With a San Diego Medi-Cal Fraud Defense Attorney

If you are a provider or beneficiary facing a Medi-Cal investigation, contact the Law Office of Vikas Bajaj, APC. Call (619) 525-7005 or request a confidential consultation. For representation details, see our Medi-Cal fraud defense page.

This article is attorney advertising and provides general information only. It is not legal advice and does not create an attorney-client relationship. Every case turns on its own facts, and no particular outcome can be promised. Consult qualified counsel about your specific situation.