Federal Medicaid fraud investigations in Dallas typically run for one to three years before a target ever receives formal notice. By the time a physician gets a Target Letter from the U.S. Attorney’s Office for the Northern District of Texas, or a home health agency owner finds OIG (Office of Inspector General) agents at their door with a subpoena, the government has already reviewed years of billing records, interviewed employees, and built a detailed picture of alleged fraud.
The investigation is not starting. It’s ending.
The Law Offices of Richard C. McConathy defends Medicaid fraud charges in federal court and Texas state court across Dallas, Tarrant, Denton, and Collin counties. Richard McConathy is admitted to the U.S. District Court for the Northern District of Texas and has appeared in federal court on criminal defense matters for over 35 years. Our firm has handled over 6,000 cases with over 1,000 dismissals. He handles every case personally.
Call 972-233-5700 now. Retaining counsel before a formal charge is filed changes what your defense team has access to and how early it can act.
What Is Medicaid Fraud Under Texas and Federal Law?
Medicaid fraud in Texas is prosecuted under two parallel legal frameworks, and a defendant facing investigation may face charges under both simultaneously. Federal Medicaid fraud charges arise under the federal Anti-Kickback Statute (AKS), 42 U.S.C. Section 1320a-7b, and the False Claims Act (FCA), 31 U.S.C. Section 3729. State Medicaid fraud charges in Texas primarily arise under the Texas Human Resources Code Chapter 36.
Federal prosecutors in the Northern District of Texas pursue Medicaid fraud cases involving the following billing patterns:
- Billing for services not rendered: Submitting claims for patient visits, procedures, or equipment that were never provided to the Medicaid beneficiary
- Upcoding: Billing for a higher-complexity service or more expensive procedure than was actually performed or medically necessary
- Unbundling: Splitting a single procedure into multiple billing codes to collect higher reimbursement than the bundled rate allows
- Kickback arrangements: Paying or receiving remuneration in exchange for referrals of Medicaid patients, including arrangements disguised as consulting fees, marketing agreements, or space rental
- False documentation: Creating or altering medical records to support claims that would otherwise not qualify for Medicaid reimbursement
Each category carries its own evidentiary profile and its own defense approach. A case built on upcoding requires a different analysis than one built on kickback allegations. Understanding which pattern the government is alleging shapes every decision the defense makes from the first document review forward.
Who Investigates Medicaid Fraud in Dallas?
Three separate agencies investigate Medicaid fraud in Texas, and they coordinate their efforts through shared data, joint task forces, and parallel proceedings. A defendant under investigation by one agency is often simultaneously under review by the others, even if only one has made contact.
The agencies operating in Dallas-area Medicaid fraud investigations are the following:
- HHS-OIG (U.S. Department of Health and Human Services Office of Inspector General): The primary federal investigative agency for Medicaid and Medicare fraud. HHS-OIG special agents conduct surveillance, execute search warrants, and build criminal referrals to the U.S. Attorney’s Office for the Northern District of Texas.
- Texas OIG (Texas Health and Human Services Office of Inspector General): The state-level investigative body that audits Medicaid billing records, issues Civil Investigative Demands (CIDs), and refers cases for state prosecution.
- MFCU (Texas Medicaid Fraud Control Unit): A division of the Texas Attorney General’s office that prosecutes state criminal Medicaid fraud charges under Texas Human Resources Code Chapter 36.
What Are the Penalties for Medicaid Fraud in Texas?
Medicaid fraud penalties in Texas depend on whether the charges are federal or state, the total dollar amount at issue, and whether the defendant is a healthcare provider, an owner, or an employee who participated in the scheme. Federal and state penalties operate independently and may both apply to the same underlying conduct.
Federal Medicaid fraud penalties under the Anti-Kickback Statute carry up to ten years in federal prison per violation, fines up to $100,000 per violation, and exclusion from all federal healthcare programs including Medicaid and Medicare. A healthcare provider excluded from federal programs cannot bill Medicaid or Medicare for any patient, which effectively ends most medical practices regardless of whether a prison sentence is imposed.
State Medicaid Fraud Penalties Under Texas Law
Texas Human Resources Code Chapter 36 creates a tiered penalty structure based on the amount of the fraudulent claims. State Medicaid fraud charges in Texas are classified as follows:
| Amount of Fraudulent Claim | Offense Level | Potential Penalty |
| Less than $100 | Class C misdemeanor | Fine only |
| $100 to less than $750 | Class B misdemeanor | Up to 180 days in county jail |
| $750 to less than $2,500 | Class A misdemeanor | Up to one year in county jail |
| $2,500 to less than $30,000 | State jail felony | 180 days to two years in a state jail facility |
| $30,000 to less than $150,000 | Third-degree felony | Two to ten years in state prison |
| $150,000 or more | Second-degree felony | Two to twenty years in state prison |
Civil False Claims Act Liability in Texas Medicaid Cases
The False Claims Act creates civil liability separate from and in addition to any criminal charges. Under 31 U.S.C. Section 3729, a defendant who submits false claims to a federal healthcare program faces civil penalties of approximately $13,000 to $27,000 per false claim, plus three times the amount of the fraudulent billing.
False Claims Act cases may be filed by the government directly or by a whistleblower, called a relator, under the qui tam provisions of the statute. A qui tam lawsuit is filed under seal initially, meaning the defendant does not know it exists. When the government decides to intervene and unseal the case, the defendant’s first notice is often a simultaneous criminal referral and civil complaint.
What Does a Medicaid Fraud Defense Look Like in Dallas?
Defending a Medicaid fraud case in the Northern District of Texas starts with the billing records themselves, not with the government’s characterization of them. Federal prosecutors present billing patterns as evidence of fraud. Defense counsel presents the same billing patterns as evidence of coding practices, documentation habits, or billing software behavior that does not constitute fraudulent intent.
Intent is the hinge point in most Medicaid fraud cases. The federal Anti-Kickback Statute and the False Claims Act both require proof that the defendant acted knowingly or willfully. A billing error, a documentation deficiency, or a compliance failure is not automatically Medicaid fraud. The defense builds the record that distinguishes between a systemic billing pattern with a fraudulent purpose and a practice that made errors without criminal intent.
Target Letters and What They Mean for Your Defense
A Target Letter from the U.S. Attorney’s Office for the Northern District of Texas informs you that you are a target of a federal grand jury investigation, meaning the government believes it has sufficient evidence to seek an indictment. Receiving a Target Letter does not mean charges have been filed. It means the investigation is in its final stages and the prosecution is preparing to present the case to a grand jury.
Search Warrants and Document Subpoenas in Medicaid Fraud Investigations
A federal search warrant executed at a medical practice, pharmacy, or billing office in Dallas signals that the investigation has crossed from the audit stage into the criminal stage. Agents from HHS-OIG execute search warrants, seize computers, billing systems, patient records, and financial documents, and conduct on-site interviews with staff. What employees say to federal agents during a search warrant execution, without counsel present, becomes part of the government’s evidence.
Ask McConathy Law
A: Yes. A letter from the Texas OIG requesting billing records is a Civil Investigative Demand or precursor to one, and it means the state has already flagged your Medicaid billing as potentially fraudulent. Retaining an attorney before you respond determines what records you produce, how you produce them, and what you say in any accompanying correspondence.
A: Yes, Medicaid fraud charges in Texas get dismissed when the evidence does not support the element of fraudulent intent, when billing errors are attributable to software, staff, or documentation deficiencies rather than deliberate misconduct, or when the government's evidence was obtained through procedurally defective warrants or subpoenas.
A: A Medicaid audit and a criminal investigation are different proceedings, but one frequently leads to the other. An audit by the Texas OIG or a Medicaid managed care organization reviews billing records for compliance and seeks repayment of amounts it determines were overbilled. A criminal investigation by HHS-OIG or the MFCU seeks to build a case for prosecution. The same billing records that generate a repayment demand in an audit may simultaneously be under review by federal agents for criminal referral. An attorney who understands both tracks protects you in both simultaneously.
FAQ for Dallas Medicaid Fraud Lawyers
Exclusion from federal healthcare programs following a Medicaid fraud conviction or civil settlement bars a provider from submitting any claim to Medicaid, Medicare, or any other federal healthcare program for the duration of the exclusion. Mandatory exclusion under 42 U.S.C. Section 1320a-7 applies automatically upon conviction for certain offenses. For most healthcare providers, exclusion ends the practice regardless of whether a prison sentence is imposed. Challenging or negotiating the scope and duration of exclusion is a separate proceeding from the criminal case itself.
No. A Medicaid fraud investigation does not always result in criminal charges. Many investigations resolve through civil settlement, repayment agreements, or corporate integrity agreements without any criminal prosecution. The government's decision to pursue criminal versus civil resolution depends on the evidence of intent, the dollar amount at issue, the defendant's cooperation, and prosecutorial discretion. An attorney who engages with the prosecution early in the process, before an indictment is sought, preserves options that disappear after charges are filed.
Yes, employees may face Medicaid fraud charges in Texas even when following employer instructions, if the government proves they acted knowingly. The "I was just doing my job" defense does not automatically shield an employee who submitted false claims, falsified documentation, or participated in kickback arrangements at a supervisor's direction. Individual employees, billing coders, and office managers have each faced federal prosecution in Northern District of Texas Medicaid fraud cases. The level of an employee's knowledge and participation determines their individual exposure.
A Corporate Integrity Agreement (CIA) is a compliance agreement between a healthcare provider and the U.S. Department of Health and Human Services OIG that resolves a Medicaid fraud investigation through enhanced oversight rather than exclusion. A CIA requires the provider to implement specific compliance programs, submit to independent monitoring, and report compliance data to the OIG for a set number of years. CIAs are negotiated as part of civil settlement agreements and are not available in all cases. Violating a CIA after signing it exposes the provider to immediate exclusion and potential additional liability.
Get a Medicaid Fraud Attorney to Review Your Case
Richard MConathy is admitted to the U.S. District Court for the Northern District of Texas and has defended federal criminal cases in Dallas for over 35 years.
He handles Medicaid fraud defense personally, reviews billing records and documentation directly, and coordinates with forensic accountants and healthcare compliance consultants as the case requires.
If you received a Target Letter, a Civil Investigative Demand, or a visit from HHS-OIG or Texas OIG investigators, call 972-233-5700. The conversation is confidential. What you say to us stays with us.