Defending Federal Medical Upcoding Charges

Medical upcoding occurs when healthcare providers submit inflated insurance billing codes to receive higher reimbursements, a practice federal prosecutors frequently charge as health care fraud under 18 U.S.C. § 1347. 

Because upcoding is one of the most common forms of health care fraud, federal prosecutors routinely monitor and audit these submissions and aggressively prosecute suspected cases. A conviction can result in up to 10 years in prison.

While honest mistakes and administrative errors don't qualify as criminal behavior, they can raise suspicions with federal prosecutors.

Even in the early stages of a case, an investigation or indictment can attract unwanted publicity and reputational damage.

At Eisner Gorin, LLP, our seasoned federal criminal defense attorneys take a methodical approach to challenging the government's evidence and dismantling their flawed audit methodologies to protect your reputation and minimize your legal exposure.

What Is Medical Upcoding Under Federal Law?

Medical upcoding is the practice of submitting billing codes for medical services that are more expensive or complex than the services actually provided, executed with the intent to secure higher payments.

Upcoding is considered a form of health care fraud under 18 U.S.C. § 1347, which is defined as knowingly and willfully executing a scheme to defraud a health care benefit program. 

To convict you of a crime, the government must prove that you knew your billing submission was false and that you submitted it with the intention to obtain improper payment.

Common examples of prosecutable upcoding practices include:

• Billing for a higher-level office visit: Coding a routine follow-up as a Level 4 or 5 evaluation and management (E/M) service.
• Reporting complex procedures: Billing for a comprehensive diagnostic procedure, such as a full cardiac workup, when only a basic screening was conducted.
• Inflating time-based services: Submitting claims for 60-minute psychotherapy or consultation sessions when the actual interaction lasted only 20 to 30 minutes.
• Unbundling combined services: Separating procedures that should be billed together under Current Procedural Terminology (CPT) rules to increase total reimbursement.
• Misrepresenting medical necessity: Assigning diagnosis codes to justify higher-paying treatments that were not clinically necessary.

How Do Federal Agencies Detect Possible Instances of Upcoding?

Federal investigators typically begin scrutinizing activities and records when data analytics reveal billing anomalies or when internal staff members report suspicious practices to authorities.

Common examples of investigation triggers include:

• Data Mining: Medicare and Medicaid rely on algorithms to monitor billing data. These systems compare a provider's billing patterns against peer averages within the same specialty. If a medical practice statistically outliers its peers—such as billing significantly more high-level codes—it automatically flags the system for review.
• Whistleblower Reports: Current or former employees, billing staff, or even patients can file qui tam lawsuits under the False Claims Act. These whistleblowers are particularly incentivized to report alleged fraud to the government because they may be entitled to a percentage of the recovered funds.
• Routine Audits: Discrepancies are frequently discovered during standard reviews conducted by Medicare Administrative Contractors (MACs), Zone Program Integrity Contractors (ZPICs), or similar oversight bodies. What begins as a routine request for medical records can quickly escalate into a criminal investigation if auditors believe the errors represent a willful pattern.

What Are the Penalties for a Conviction Under 18 U.S.C. § 1347?

A health care fraud conviction for upcoding under 18 U.S.C. § 1347 can include up to 10 years in federal prison per count, along with substantial financial penalties and collateral professional damage.

The specific consequences of being convicted of health care fraud include:

• Incarceration: Standard violations carry a penalty of up to 10 years in federal prison for each count. The sentencing may vary dramatically based on the outcome of the fraud. If the violation results in serious bodily injury to a patient, the maximum sentence increases to 20 years. If the violation results in death, the defendant may face life imprisonment.
• Financial Penalties: Defendants face massive fines and mandatory restitution. Restitution requires the defendant to repay the exact amount of money the government or private insurer overpaid due to the fraudulent billing.

In addition to these consequences, a federal health care fraud conviction almost always triggers collateral administrative actions.

This may include the permanent revocation of the provider's medical license and mandatory exclusion from participating in any federal healthcare programs, effectively ending a medical career.

Title 18 U.S.C. 669 criminalizes theft, embezzlement, or intentional misapplication of funds from a healthcare benefit program.

A related law, the Eliminating Kickbacks in Recovery Act (EKRA), has substantially increased the risks for many healthcare providers and broadened the scope for violations and prosecutions.

Frequently Asked Questions

What is considered upcoding under federal law?

Upcoding involves billing for services more complex or expensive than those actually performed under 18 U.S.C. § 1347.

Can honest billing mistakes lead to criminal charges?

Not necessarily. However, repeated errors may trigger investigations.

How do federal investigators detect fraud?

They use data analytics, audits, and whistleblower reports.

What penalties can I face?

Penalties may include prison time, fines, restitution, and loss of your medical license.

Can charges be dismissed?

Yes, particularly if prosecutors cannot prove intent or rely on flawed audit methods.

Should I speak with federal investigators?

No. You should consult a defense attorney before speaking with any federal agency.

Why Hire a Federal Criminal Defense Lawyer?

Federal healthcare fraud cases involve complex billing systems, medical documentation, and aggressive prosecution. An experienced federal defense attorney can challenge the government's assumptions, protect your rights, and fight to preserve your career.

How Can a Legal Team Challenge Federal Upcoding Charges?

To combat upcoding allegations, a good defense attorney will focus on strategies like proving a lack of criminal intent, exposing methodological errors in government audits, or demonstrating that the billing was clinically justified.

When defending against federal upcoding charges, the legal team of Eisner Gorin, LLP typically employs several core strategies, which may include:

• Lack of Intent (Mistake vs. Fraud): The government must prove beyond a reasonable doubt that you acted knowingly and willfully. We meticulously review billing records and correspondence to demonstrate that discrepancies resulted from administrative errors, misunderstandings of complex coding rules, or electronic health record (EHR) software glitches—not a calculated scheme to defraud.
• Flawed Auditing Methods: Federal investigators often use statistical sampling and extrapolation to calculate alleged fraud. They review a small sample of claims, estimate an error rate, and apply it to the entire practice. We challenge the validity of these samples, proving that the methodology is statistically invalid and cannot support criminal charges.
• Reliance on External Counsel or Billing Professionals: Many providers outsource their coding to third-party billing companies. If a provider relied in good faith on the advice and actions of independent billing professionals, it may serve as a valid defense.

Hypothetical Case Study

To illustrate how these defense strategies can play out in a case setting, consider the following hypothetical scenario:

A double-board-certified surgeon is targeted by federal investigators after a Medicare contractor audit reveals that his practice consistently bills for "complex" consultations.

The government alleges that the EHR data support only "standard" visits, suggesting the surgeon is deliberately upcoding services to inflate reimbursements.

Our Response

Once we're retained, our legal team intervenes immediately, communicating directly with federal investigators to seek to prevent an immediate indictment.

The first step is to secure all EHR data and clinical notes before they can be misinterpreted. We then bring in independent medical coding auditors to perform a forensic review of the patient files.

Our lawyers demonstrate that the surgeon's highly specialized field requires comprehensive patient evaluations.

The clinical reality of the visits met the criteria for complex billing, but the pre-populated templates in the hospital's newly implemented EHR system were rigid and failed to accurately capture the full scope of patient interactions.

By presenting this evidence, we can establish a clear lack of criminal intent.

The government's fraud allegations are successfully dismantled, leading to the criminal charges being dropped and the matter being resolved as a routine administrative correction with no loss of medical license.

Why Early Intervention Matters in Upcoding Cases

In cases of health care fraud, federal investigators usually have a strong case built against you by the time an indictment is issued.

Early intervention during an investigation allows our attorneys to frame the narrative, challenge evidence before charges are formally filed, and protect your rights from the outset, improving your chances of avoiding the worst outcomes.

At Eisner Gorin, LLP, our federal criminal defense attorneys take a comprehensive approach to cases like these, taking an active role at every stage of the case, from pre-indictment intervention to pre-trial motions to aggressive defense if the matter does go to trial.

We also offer a multi-lawyer review for second and third opinions to ensure your legal defense strategy is tailored for the best possible outcome. Schedule your consultation by calling (818) 781-1570 or using the contact form.