Texas Medicaid fraud defense

What counts as Medicaid fraud in Texas?

Medicaid fraud in Texas is the offense of Health Care Fraud under Penal Code § 35A.02: knowingly making a false statement, concealing a fact that affects payment, billing for services never provided or not medically necessary, or paying or taking kickbacks tied to program-funded care. It is a Health Care Fraud offense graded from a Class C misdemeanor to a first-degree felony.

Knowingly — § 6.03(b)

The word that does the heavy lifting in Chapter 35A is “knowingly.” A clinic that codes a visit wrong, an agency whose software double-submits, a billing manager who misreads a prior-authorization rule — none of that is a crime by itself. What turns a billing problem into a § 35A.02 charge is proof that the person knew the statement was false and made it anyway. That single line, between an honest error and a knowing lie, is where most Medicaid defenses are won or lost.

The unlawful acts — § 35A.02(a)

Chapter 35A defines its own terms in § 35A.01 and lists the unlawful acts and their grades in § 35A.02 — making or causing a false statement or misrepresentation of material fact, concealing or failing to disclose information that affects a payment, obtaining a benefit or payment that is not authorized, and the related kickback and conspiracy provisions. A Medicaid case lives or dies on that one chapter far more than on the general theft statute.

What it is not

Medicaid fraud is not the same as ordinary theft under Chapter 31, even though prosecutors sometimes plead theft in the alternative for a Medicare or contractor angle. It is not the federal False Claims Act, which is civil. And it is not automatically a felony — small-dollar cases sit in misdemeanor territory. Getting the charge framed correctly, early, can be the difference between a county-court misdemeanor and an indicted felony heard in a district court.

Connection to a health care program

The conduct has to involve a benefit, payment, or claim under a covered health care program. For state cases this is Texas Medicaid, including the managed-care organizations that actually process and pay the claims. That program nexus is an element the State must establish, not a given.

Most people picture a doctor or clinic owner when they hear “Medicaid fraud,” but the statute reaches a much wider circle — providers and their billing staff, recipients accused of misstating eligibility, and frontline home-health attendants whose electronic visit-verification entries drive the billing. The defense looks different for each group, but every § 35A.02 case starts in the same place: separating an honest billing problem from a knowing lie, and pinning down exactly which subsection of the statute the State says was violated.

What does the State have to prove?

To convict under § 35A.02, the State must prove beyond a reasonable doubt a knowing false statement, omission, or unauthorized claim; a connection to a health care program; and the value or claim count that sets the grade. Bermudez v. State lays out the four-part skeleton for the 50-claim variant.

A culpable mental state — “knowingly”

The defendant acted with knowledge of the falsity, not by accident or mistake. This is the element prosecutors most often try to prove circumstantially, through training records, signed provider agreements, repayment history, and patterns in the billing data over time.

A false statement, omission, or unauthorized claim

A material misrepresentation, a concealed fact that affects payment, or a claim for a service that was not rendered, not authorized, or not eligible. The statement has to matter to the program’s payment decision — immaterial paperwork glitches do not qualify.

Connection to a health care program

The conduct involved a benefit, payment, or claim under a covered health care program. For state cases this is Texas Medicaid, including its managed-care organizations that actually process and pay the claims.

Value or claim count — the grading facts

The amount of the payment or benefit obtained, or the number of false claims. These are not just sentencing details — they define the grade of the offense, so the State has to prove them, and the defense gets to contest them.

That last element is where a Texas appellate decision sharpens the picture. In Bermudez v. State, the El Paso court of appeals laid out the elements of § 35A.02(a)(1) as a person who “(1) submits 50 or more claims, (2) by knowingly making or causing to be made (3) a false statement or representation of material fact, or by knowingly concealing or failing to disclose information, (4) in order to permit another person to receive a benefit or payment under the Medicaid program that is not authorized or that is greater than the benefit or payment that is authorized.” Bermudez v. State, No. 08-23-00349-CR (Tex. App.—El Paso Jan. 27, 2025, no pet.). That four-part skeleton is the map we use to find the State’s weakest element in any given case.

What are the penalties for Medicaid fraud in Texas?

Punishment under § 35A.02(b) climbs on two parallel ladders — the value of payments obtained and the number of false claims — from a fine-only Class C misdemeanor to a first-degree felony carrying 5–99 years or life. The State gets to pick whichever produces the higher grade.

One ladder is built on dollars — the value of the payments or benefits obtained, aggregated across the whole scheme. The other ladder is built on the number of false claims, and it can convert a small-dollar case into a felony on count alone. The State gets to pick whichever produces the higher grade, which is exactly why the math matters so much to the defense.

Two wrinkles deserve a flag. First, if the value of the payments “cannot be reasonably ascertained,” § 35A.02(b) defaults the offense to a state jail felony — the Legislature made disorganized books a floor, not a discount, which is why we never let the State treat sloppy records as proof of large-scale theft. Second, when the defendant is a director, officer, or employee whose conduct may be assumed to represent the provider’s policy, a conviction can be punished one category higher under § 35A.02(e). The grade is rarely fixed; it is a fact question we fight.

Who actually gets charged — providers, recipients, and attendants?

The statute reaches a wide circle: providers and their billing staff (document-heavy, aggregation-driven cases), recipients accused of misstating eligibility, and home-health attendants whose EVV entries drive the billing. Under Bermudez, an attendant can be the person who “submitted” the claim.

Providers and their staff. Physicians, dentists, home-health agencies, behavioral-health clinics, pharmacies, DME suppliers, and the billing managers and coders who work for them. Provider cases tend to be document-heavy and aggregation-driven: the State pulls years of claims data, builds a summary chart, and argues a pattern. The defense is usually about intent and about the integrity of that chart.

Recipients. Individuals accused of misstating income, household size, or eligibility to obtain or keep benefits. These cases are smaller in dollars but carry the same felony exposure once the aggregated amount crosses a threshold, and they often arrive through an eligibility-fraud referral rather than a provider audit.

Attendants and frontline workers. This is the group people least expect, and it is where Texas law has gotten sharp. In Bermudez, an in-home attendant kept logging electronic visit-verification (EVV) entries after the client had died, and his agency billed Medicaid based on those entries. The El Paso court held that the unique EVV codes were a “signature” by “computer impulse,” and — critically — that the attendant himself “submitted” the claims even though the agency physically transmitted them, because the agency “was a conduit” whose claims “necessarily relied upon the truth of [his] EVV inputs.” Bermudez v. State, No. 08-23-00349-CR (Tex. App.—El Paso Jan. 27, 2025, no pet.). The same opinion rejected the argument that the attendant should only answer for what he personally pocketed: because the agency was the “person” that received the unauthorized payment, the relevant figure for grading was the full amount reimbursed to the agency, not the worker’s net pay.

How do HHSC-OIG and the MFCU build a case?

Texas Medicaid fraud runs on two tracks: HHSC-OIG handles the administrative side (audits, subpoenas, payment holds), and the Attorney General’s Medicaid Fraud Control Unit handles the criminal side under § 35A.02. Both lean on the provider certification to prove the knowing element.

The administrative track belongs to the Health and Human Services Commission Office of Inspector General (HHSC-OIG). OIG audits claims, issues records subpoenas, and can place a payment hold that freezes a provider’s Medicaid reimbursements on a credible allegation of fraud — often long before, or instead of, any criminal charge. A hold can choke a practice’s cash flow within weeks, which is why it should be treated as the opening move of a legal fight, not as routine paperwork to sort out later.

The criminal track belongs to the Medicaid Fraud Control Unit (MFCU), a law-enforcement division inside the Texas Attorney General’s office that investigates provider-side fraud and abuse or neglect in Medicaid-funded facilities. MFCU agents and auditors assemble cases from the same claims data, subpoenaed records, and witness interviews, and under § 35A.02(f) the Attorney General can prosecute directly with the consent of the local district or county attorney. That means in a Medicaid case the prosecutor across the table may be a specialized AG attorney rather than the line ADA you would expect — a structural detail that shapes how the case is negotiated.

The most common way both agencies try to prove the knowing element is by walking backward from a signed promise. As one Texas court described the Medicaid Provider Manual, when submitting a claim “the provider certifies” that “the information on the claim form is true, accurate, and complete” and that the treatment is medically necessary. Nazari v. State, 497 S.W.3d 169 (Tex. App.—Austin 2016, pet. denied). Prosecutors lean on that certification, plus the manual’s warnings, to argue a provider knew the rules and broke them anyway. Part of our job is to show the gap between agreeing to a manual and knowingly lying on a specific claim.

How does L and L Law Group defend a Texas Medicaid fraud charge?

We build § 35A.02 defenses around the statute’s own pressure points — intent, the dollar math, the claim count, and the paper trail. The recurring strategies are knowledge-not-error, auditing the aggregation, contesting the claim count, attacking the summary evidence, medical necessity, and suppression.

• Knowledge, not error. The whole case turns on “knowingly.” We separate genuine billing mistakes, coding disagreements, and software failures from intentional fraud, and we build the record that a reasonable provider could have made the same call in good faith. This matters because Texas later amended the companion civil statute to make clear it “does not include unintentional technical, clerical, or administrative errors” — a recognition, in the program’s own enforcement law, that mistakes and fraud are different animals. See Tex. Health & Human Servs. Comm’n v. Antoine Dental Center, 487 S.W.3d 776 (Tex. App.—Austin 2016, no pet.).
• Audit the aggregation. Because grade depends on value, we go through the State’s loss calculation line by line — testing for double-counted claims, services that were actually rendered, extrapolations dressed up as actual loss, and amounts that simply cannot be reasonably ascertained. Shrinking the number can drop a felony a full degree or push it out of felony range entirely.
• Contest the claim count. When the State charges on volume rather than dollars, every claim it cannot prove was both false and knowingly submitted is a claim that moves the count below the 50-claim and 25-claim thresholds. Count cases are won one claim at a time.
• Attack the summary evidence. Medicaid trials run on auditor charts and data summaries. We challenge the foundation, the methodology, and the chain from raw claims to the demonstrative the jury sees, and we keep unreliable extrapolation away from the verdict.
• Medical necessity and documentation. Many “fraud” allegations are really disputes about whether care was necessary or adequately documented. Treating-provider testimony and the patient records can convert a fraud narrative back into a clinical-judgment question.
• Suppress what was unlawfully obtained. Subpoenas, searches of an office, and custodial interviews all have rules. Where investigators overstepped, we move to suppress and to keep tainted records and statements out of evidence.

A clearly hypothetical example shows how the count ladder bites. Imagine a home-health attendant who keeps logging daily EVV visits during the three weeks her client is in a rehabilitation hospital. Twenty-one false entries at roughly $40 each is under $900 in dollars — misdemeanor territory on value. But it is also 21 claims, and if the pattern stretches past 25, the State can charge a third-degree felony on count alone. In a scenario like that, the dollars stop mattering at claim 26, and the defense has to be aimed at the count, not the total. This example is illustrative only and is not based on any client’s case.

What about the civil case and my professional license?

A Medicaid fraud charge rarely travels alone. The same billing can trigger a civil action under the Texas Medicaid Fraud Prevention Act on a broader knowing standard, plus board discipline and program exclusion. A program-related conviction triggers mandatory federal exclusion under 42 U.S.C. § 1320a-7(a).

The same billing can trigger a civil enforcement action under the Texas Medicaid Fraud Prevention Act (TMFPA), Human Resources Code Chapter 36. The TMFPA mirrors many of § 35A.02’s unlawful acts, but the State — or a private whistleblower suing qui tam — seeks money rather than prison: repayment of the claims, per-act civil penalties, fees, and exclusion from the program. Its “knowing” standard is broader than the criminal one, reaching conscious indifference and reckless disregard, so an acquittal on the criminal side does not automatically end the civil case.

Texas courts treat that civil action as the State flexing its police power, not acting like a private plaintiff. As the Austin court put it, when the State pursues a TMFPA enforcement action “it is not acting as an ordinary or private litigant… but is instead acting in its sovereign capacity and exercising its police powers.” Nazari v. State, 497 S.W.3d 169 (Tex. App.—Austin 2016, pet. denied). The practical takeaway: the civil track has its own rules and its own leverage, and a defense that ignores it can win the criminal case while losing the practice.

Then there is your license. Physicians, nurses, dentists, pharmacists, and counselors should expect a parallel board matter that moves on lower proof standards than a criminal trial, and HHSC-OIG can independently exclude a provider from Texas Medicaid. A program-related conviction triggers mandatory exclusion from federal health care programs under 42 U.S.C. § 1320a-7(a). Because these consequences are driven by how the criminal case resolves, we coordinate the criminal defense, the civil exposure, and the licensing track from the start rather than letting them collide.

County practice notes — Collin, Dallas, Denton, and Tarrant

Felony health care fraud is indicted by the grand jury in the county of prosecution and tried in that county’s district courts; misdemeanor-band cases go to the county courts at law. Across DFW, that means knowing the building and the routing in each county.

Where a Texas Medicaid case is heard shapes how it is handled. Felony health care fraud is indicted by the grand jury in the county of prosecution and tried in that county’s district courts; misdemeanor-band cases go to the county courts at law. We defend Medicaid cases across all nine DFW counties we serve from our Frisco office.

Collin County: felony cases are indicted by the Collin County grand jury and heard in the district courts at the Collin County Courthouse, 2100 Bloomdale Road, McKinney. When the MFCU prosecutes under § 35A.02(f), its attorneys appear with the consent of the Collin County District Attorney.

Dallas County: felony matters are handled through the criminal district courts at the Frank Crowley Courts Building, 133 N. Riverfront Boulevard, Dallas. Dallas’s large managed-care footprint makes provider and home-health cases especially common here.

Denton County: cases proceed in the district and county courts at the Denton County Courts Building in Denton, with the rapid growth of the I-35 corridor feeding both provider and recipient cases.

Tarrant County: felony cases are heard at the Tim Curry Criminal Justice Center, 401 W. Belknap Street, Fort Worth. We defend Tarrant County Medicaid cases from our Frisco office, the same way we cover all nine DFW counties we serve.