By Graham Norris

A single billing error on a Medicare claim can spiral into a federal investigation that threatens everything you’ve worked to build. In Texas, healthcare fraud cases often begin not with criminal masterminds, but with dedicated healthcare providers who made documentation mistakes, billing errors, or judgment calls that prosecutors later view through a different lens.

The line between an honest mistake and criminal fraud can be surprisingly thin, and the consequences—including hefty fines, prison time, and loss of professional licenses—are anything but minor. Knowing Texas healthcare fraud laws isn’t just about staying compliant; it’s about protecting your practice, your reputation, and your future when complex regulations meet real-world healthcare delivery.

What Is Healthcare Fraud in Texas – Definition and Common Types

Healthcare fraud in Texas is defined under Chapter 35A of the Texas Penal Code as knowingly making false statements or misrepresentations to receive unauthorized payments from health care programs. While the legal definition sounds straightforward, the reality is that many healthcare fraud cases arise from billing complexities, documentation issues, or business practices that seemed legitimate at the time but later attract scrutiny from investigators.

Common types of healthcare fraud prosecuted in Texas include:

• Billing for services not provided – Submitting claims for procedures, treatments, or consultations that never occurred
• Double-billing – Charging both insurance companies and patients for the same service, or billing multiple insurers for a single treatment
• Medicaid and Medicare fraud – Any fraudulent activity involving federal healthcare programs, which often triggers federal prosecution
• Upcoding – Billing for more expensive procedures than what was actually performed to increase reimbursement
• Kickback schemes – Receiving or paying illegal compensation for patient referrals or medical equipment purchases
• False documentation – Creating or altering medical records to support fraudulent claims
• Identity theft in healthcare – Using another person’s insurance information to obtain medical services or submit claims

The penalties for healthcare fraud in Texas scale dramatically based on the dollar amount involved. Cases involving less than $100 are Class C misdemeanors, while fraud exceeding $300,000 becomes a first-degree felony carrying up to life in prison and substantial fines.

Preventing Healthcare Fraud: Compliance Best Practices

The best defense against healthcare fraud allegations is a robust compliance program that prevents billing errors and documentation gaps before they attract investigator attention. Most healthcare fraud cases could be avoided with proper systems, training, and oversight that ensure billing practices align with complex state and federal regulations.

Essential compliance measures for Texas healthcare providers include:

• Accurate documentation – Maintain detailed, contemporaneous records that support every service billed, including time spent, procedures performed, and medical necessity
• Regular staff training – Ensure billing staff comprehend current Medicare, Medicaid, and insurance requirements, including proper coding procedures and documentation standards
• Internal audit systems – Conduct periodic reviews of billing patterns, claim denials, and payment discrepancies to identify potential compliance issues early
• Clear billing policies – Establish written procedures for handling complex billing situations, patient refunds, and insurance claim corrections
• Proper supervision – Implement oversight systems where experienced staff review billing decisions and unusual claim patterns
• Prompt error correction – Address billing mistakes immediately through proper refund procedures rather than allowing problems to compound
• Legal consultation – Seek experienced legal counsel when facing unusual billing situations, compliance questions, or any contact from investigators
• Regular compliance updates – Stay current with changing regulations through continuing education and professional associations

How Healthcare Fraud Cases Are Investigated and Prosecuted

Healthcare fraud investigations are complex processes that can involve multiple agencies working simultaneously at different levels of government. Learning how these investigations unfold can help healthcare providers recognize when they might be under scrutiny and respond appropriately.

State-Level Investigations

Most Texas healthcare fraud cases begin at the state level through local District Attorney offices. These investigations often start with internal audits, employee reports, banking irregularities, or routine compliance checks that reveal suspicious billing patterns. State investigators focus on cases confined to Texas that involve smaller dollar amounts, typically under $500,000.

Federal Involvement

Federal agencies including the FBI, IRS, and Secret Service become involved when healthcare fraud cases meet certain criteria. Federal prosecution is likely when the fraudulent activity crosses state lines, involves large sums of money (typically over $500,000), affects federal programs like Medicare or Medicaid, or involves multiple jurisdictions. Federal cases carry more severe penalties and involve longer, more intensive investigations.

In 2025, federal authorities charged 324 defendants nationwide in healthcare fraud schemes involving over $14.6 billion in fraudulent activity, representing the largest health care fraud takedown in U.S. Department of Justice history. Texas healthcare providers were among those charged in these coordinated enforcement actions.

The Investigation Process

Healthcare fraud investigations typically begin long before providers become aware they’re under scrutiny. Investigators conduct detailed audits of billing records, review patient files for inconsistencies, interview staff members and patients, and analyze financial transactions. Electronic health records and billing software create extensive digital trails that investigators can follow to build their cases.

Defense Strategies and Real Case Outcomes

Intent plays a crucial role in healthcare fraud cases under Texas law. Prosecutors must prove that defendants knowingly and intentionally engaged in fraudulent conduct, not that they simply made mistakes or used poor judgment.

Many successful defenses focus on demonstrating lack of criminal intent. Healthcare providers often face charges when business practices that seemed legitimate become viewed as fraudulent by investigators who don’t grasp the complexities of medical practice and billing.

Early legal intervention can make the difference between criminal charges and administrative resolution. Experienced attorneys can often work with investigators to resolve matters through compliance agreements, restitution, and improved procedures rather than criminal prosecution.

Cooperation with investigators, when done strategically with legal counsel, can lead to favorable outcomes. In one recent case, a healthcare provider facing federal Medicaid billing charges worked with experienced defense attorneys to conduct a detailed audit of billing procedures, cooperate with investigators, and implement new compliance procedures. The result was a favorable resolution with minimal impact on business operations.

The key insight many healthcare providers miss is that fraud cases often stem from misperceptions about billing requirements rather than intentional criminal conduct. Documentation gaps, staff training issues, or simple billing errors can escalate into serious criminal allegations when not addressed properly from the beginning.

According to the National Health Care Anti-Fraud Association, healthcare fraud costs between 3% and 10% of total health care expenditures annually, which could represent more than $300 billion nationwide. This massive financial impact explains why both state and federal authorities prioritize healthcare fraud prosecution.

Protect Your Practice and Your Future

Healthcare fraud allegations can destroy everything you’ve built—your practice, your professional license, your reputation, and your freedom. The complex web of federal and state regulations means that even well-intentioned healthcare providers can find themselves facing serious criminal charges that threaten their livelihood and legacy.

Norris Legal Group brings over 3,600 cases of experience to healthcare fraud defense, with a track record that includes more than 400 dismissals and 60 client no-bills. Founded on the principles of Dignity, Trust, and Fight, the firm combines prosecutorial insight with powerful defense strategies to protect healthcare providers facing both state and federal charges. Don’t let billing complexities or regulatory errors derail your career—contact Norris Legal Group today for a confidential consultation and discover how experienced legal representation can help you work through these challenging waters while protecting your professional future.