What counts as health care fraud in Texas?
Knowingly making a false statement of a material fact to obtain a payment or benefit from a health care program. Texas charges it under Tex. Penal Code §35A.02, where the grade runs from a Class C misdemeanor to a first degree felony depending on the amount claimed. The federal charge, 18 U.S.C. §1347, carries up to 10 years, 20 if the offense results in serious bodily injury, and up to life if it results in death.
- The Texas offense is graded by the amount, from under $100 to $300,000 and above.
- Claim count can drive the grade on its own: more than 25 fraudulent claims, or 50 or more, each raise it a level.
- Federal prosecutors can charge the same conduct under section 1347, and often add false statements and kickback counts.
- Paying or taking anything of value for a referral is its own felony carrying up to 10 years.
- For a licensed professional, the licence and the exclusion list are a separate fight from the criminal case.
Health care fraud cases rarely begin with an arrest. They begin with an audit letter, a records request, or a payer pulling a run of claims. What starts as a billing dispute becomes a criminal case when the government reads the pattern as intent. Peter M. Barrett has been licensed in Texas since 1994, has tried more than 150 jury trials, and is a Past President of the Dallas Criminal Defense Lawyers Association (2005). See our Dallas white collar crime defense page.
The Texas offense, section 35A.02
The statute lists a number of ways to commit the offense. The ones charged most often are knowingly making or causing a false statement or misrepresentation of a material fact to get a benefit or payment that is not authorised or is larger than the one allowed, and concealing or failing to disclose information that affects the right to a payment.
The grade follows the money. Section 35A.02(b) sets it by the amount of the payment, benefit or claim:
- less than $100: Class C misdemeanor
- $100 to less than $750: Class B misdemeanor
- $750 to less than $2,500: Class A misdemeanor
- $2,500 to less than $30,000: state jail felony
- $30,000 to less than $150,000: third degree felony
- $150,000 to less than $300,000: second degree felony
- $300,000 or more: first degree felony
Two things in that ladder catch people out. The statute also makes it a state jail felony when the amount cannot reasonably be ascertained at trial, so a messy record does not help. And the number of claims can set the grade without any amount being proved: more than 25 but fewer than 50 fraudulent claims makes it a third degree felony, and 50 or more makes it a second degree felony.
What those grades mean in years is set out in our guide to Texas misdemeanors and felonies. Section 35A.02(c) also says that if the same conduct is an offense under another law, the State can charge it under either or both.
The federal charges
Health care fraud, 18 U.S.C. §1347. Knowingly and willfully executing, or attempting to execute, a scheme to defraud a health care benefit program, or to obtain its money or property by false pretences, in connection with the delivery of or payment for health care benefits, items or services. It carries a fine, up to 10 years, or both. That rises to 20 years if the violation results in serious bodily injury, and to any term of years or life if it results in death. The statute adds that a person does not need actual knowledge of the section itself to violate it.
False statements, 18 U.S.C. §1035. Falsifying or concealing a material fact, or making a materially false statement or writing, in connection with the delivery of or payment for health care benefits. Up to 5 years.
Kickbacks, 42 U.S.C. §1320a-7b(b). Knowingly and willfully soliciting, receiving, offering or paying any remuneration, in cash or in kind, directly or indirectly, to induce a referral or the purchase or ordering of anything paid for by a federal health care program. It is a felony carrying a fine of up to $100,000, up to 10 years, or both. Marketing arrangements, medical directorships and rent that does not match market value are where these counts usually come from.
Federal cases also arrive with parallel civil exposure under the False Claims Act, and prosecutors frequently add mail fraud, wire fraud, aggravated identity theft or money laundering counts built on the same billing records. A conviction means supervised release after any prison term.
What the government points to
The conduct behind these cases is ordinary until it is characterised. The usual list:
- billing more than once for the same service;
- billing for a service, item or piece of equipment that was never provided;
- coding a service to a higher paying level than the one delivered, often called upcoding;
- separating a bundled service into parts to bill each one, often called unbundling;
- billing for services that were not medically necessary;
- billing under another provider's number, or letting someone else use a patient's number;
- paying or receiving anything of value for referrals;
- altering a record after the fact.
Notice how many of these turn on judgement rather than on an invented patient. Medical necessity, the level of service, and whether a code fit the documentation are matters clinicians disagree about in good faith. That gap between a coding dispute and a criminal intent is where most of these cases are actually fought.
What a defense looks at
- Intent. Both the Texas and federal statutes require a knowing act. A billing manager's error, a vendor's software default, or guidance that changed mid-year is not that.
- The guidance in force at the time. Payer policies change. What the rule said on the date of service matters more than what it says now.
- The sample. Loss is often extrapolated from a small sample of claims across a whole period. How that sample was chosen and scaled is contestable, and it usually decides the grade and the guideline range.
- The records. The chart, not the claim form, shows what was done. Reconstructing that is slow work and it is where cases are won.
- Who knew what. In a practice with staff, coders and a billing company, the government still has to tie the knowledge to a person.
A subpoena, a civil investigative demand or an unannounced visit from agents is the point to call a lawyer, not the point to start explaining. Do not alter, delete or reorganise records once you know there is an inquiry, because that turns a defensible billing case into an obstruction case. Read about your right to remain silent before you talk to anyone.
Common questions
Is health care fraud a felony in Texas?
It depends on the amount. Under Texas Penal Code section 35A.02(b) it is a misdemeanor below $2,500 and a felony at $2,500 or more, rising to a first degree felony at $300,000. The number of fraudulent claims can also set the grade on its own.
How much prison time does federal health care fraud carry?
Up to 10 years under 18 U.S.C. section 1347. That becomes up to 20 years if the violation results in serious bodily injury, and any term of years or life if it results in death. The sentence actually imposed is calculated from the guidelines, where the loss figure usually matters more than the statutory maximum.
Can a patient be charged with health care fraud?
Yes. The Texas statute reaches anyone who knowingly makes a false statement to obtain a benefit, which includes letting someone else use a member number or using one that is not yours. Most cases involve providers, but the offense is not limited to them.
Does paying for referrals break the law even if the billing was correct?
It can. The federal anti-kickback statute at 42 U.S.C. section 1320a-7b(b) makes it a felony to knowingly and willfully pay or receive anything of value to induce a referral or an order paid for by a federal health care program, whatever the underlying service was worth. It carries up to 10 years and a fine of up to $100,000.
What happens to my licence while the case is open?
The licensing board and the criminal court move separately, and so does exclusion from federal programs. Decisions made early in the criminal case, including how a plea is worded, can decide the licensing outcome. Those consequences belong in the strategy from the first meeting, not at the end.
The law this article describes, at the source. Every figure above can be checked against it.
This article is general legal information about Texas and federal law, not legal advice about your case, and it is not billing or compliance advice. Reading it does not create an attorney-client relationship. Laws and payer rules change, so confirm the current rule with a licensed criminal defense attorney about your specific facts. Request a free, confidential case review.