NY Penal Law § 177.20: Health Care Fraud in the Second Degree

Healthcare fraud is a kind of white collar crime that entails putting in false medical claims in order to get payments from a health plan. Pursuant to the statute, the term “health plan” is defined as any health insurance, managed care plan or contract under which a health care product or service may be provided and paid for. For example, Medicaid is included in this definition. Health care fraud commonly takes the form of a doctor, dentist, chiropractor or other medical specialist sending claims to insurance companies for services, items or medications that were not actually given to any patients. Another example is if a pharmacist submits claims to a health plan for medications that they never provided or for medications provided to someone other than the individual whose name is on the claim.

Five offenses related to health care fraud exist in the New York criminal code. They are health care fraud in the first, second, third, fourth and fifth degrees. The specific charge that you could be looking at depends on the amount of money you received as a result of the fraud in a single year. You could be charged with health care fraud in the second degree under New York Penal Code § 177.20 if you knowingly submitted falsified health insurance claims and, as a result, you received payments to which you were not entitled. For this charge to be valid, the amount of the payments you received fraudulently must be more than $50,000 but less than $1,000,000 in a single year.

For Example

Dr. Prince Jackson had a practice as an orthopedic surgeon. In looking for ways to boost his income, he began performing unnecessary surgeries on patients and billing the insurance companies for the surgeries. After several complaints were filed against Dr. Jackson for botched surgeries, investigators started to look into Dr. Jackson’s practice. They discovered that he was carrying out unnecessary procedures. If the quantity of money that he brought in from the insurance companies for those unnecessary procedures totaled more than $50,000, but was under $1,000,000, then Dr. Jackson could be prosecuted for health care fraud in the second degree.

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Legal Scenario: What Would You Do?

Scenario

A medical billing specialist at a busy dermatology practice discovers that the office manager has been systematically upcoding routine skin checks as complex surgical consultations when submitting claims to Blue Cross and several Medicaid managed care plans. The billing specialist is now worried about personal criminal exposure after processing hundreds of these inflated claims over the past two years.

Can I be charged with health care fraud in the second degree even though I wasn't the one who decided to upcode the claims?

Attorney's Answer

Under NY Penal Law § 177.20, health care fraud in the second degree is a Class C felony that applies when a person knowingly and willfully provides materially false information or omissions to a health plan for the purpose of defrauding the plan, and the total value of the fraudulent payments exceeds $50,000. As someone who processed these claims, prosecutors could argue you acted with the requisite knowledge if evidence shows you were aware the codes didn't match the services actually rendered. Your potential exposure is serious — a Class C felony carries up to 15 years in prison — but a strong defense would focus on whether you had actual knowledge of the fraud versus simply performing clerical duties as instructed. You should immediately consult with a criminal defense attorney before speaking with investigators, as your cooperation and the specific facts around what you knew and when could significantly affect the outcome of your case.

This is general information only. Contact us for advice specific to your situation.

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