Health Care Fraud: Texas Penal Code §35A.02

The Texas Health Care Fraud law gives police the right to arrest you if they believe you engaged in any of the twelve fraudulent behaviors listed in the statute.

The Texas legislature codified this criminal offense in Texas Penal Code Section 35A.02. The law was not amended in 2023. The law was most recently amended in 2019 by changing the name from Medicaid Fraud to its current name, Healthcare Fraud.

The legislature thought the original Medicaid Fraud law was too narrow and did not adequately address other types of fraudulent conduct committed against governmental health care programs. No further changes were made to this law in 2021 or 2023.

Interestingly, the Healthcare Fraud law is given its own chapter in the Texas Penal Code. The law applies to both individuals and managed care organizations.

The Penal Code classifies the Texas Healthcare Fraud law under Title 7 “Offenses Against Property,” Chapter 35A “Healthcare Fraud.” Learn more about the Texas offense of Health Care Fraud below.

What is the current Texas law about Health Care Fraud?

Texas law currently defines the offense of Health Care Fraud in Penal Code Section §35A.02 as follows:^[1]

(a) A person commits an offense if the person:

(1) knowingly makes or causes to be made a false statement or misrepresentation of a material fact to permit a person to receive a benefit or payment under a health care program that is not authorized or that is greater than the benefit or payment that is authorized;

(2) knowingly conceals or fails to disclose information that permits a person to receive a benefit or payment under a health care program that is not authorized or that is greater than the benefit or payment that is authorized;

(3) knowingly applies for and receives a benefit or payment on behalf of another person under a health care program and converts any part of the benefit or payment to a use other than for the benefit of the person on whose behalf it was received;

(4) knowingly makes, causes to be made, induces, or seeks to induce the making of a false statement or misrepresentation of material fact concerning:

(A) the conditions or operation of a facility in order that the facility may qualify for certification or recertification under a health care program; or

(B) information required to be provided by a federal or state law, rule, regulation, or provider agreement pertaining to a health care program;

(5) except as authorized under a health care program, knowingly pays, charges, solicits, accepts, or receives, in addition to an amount paid under the health care program, a gift, money, donation, or other consideration as a condition to the provision of a service or product or the continued provision of a service or product if the cost of the service or product is paid for, in whole or in part, under a health care program;

(6) knowingly presents or causes to be presented a claim for payment under a health care program for a product provided or a service rendered by a person who:

(A) is not licensed to provide the product or render the service, if a license is required; or

(B) is not licensed in the manner claimed;

(7) knowingly makes or causes to be made a claim under a health care program for:

(A) a service or product that has not been approved or acquiesced in by a treating physician or health care practitioner;

(B) a service or product that is substantially inadequate or inappropriate when compared to generally recognized standards within the particular discipline or within the health care industry; or

(C) a product that has been adulterated, debased, mislabeled, or that is otherwise inappropriate;

(8) makes a claim under a health care program and knowingly fails to indicate the type of license and the identification number of the licensed health care practitioner who actually provided the service;

(9) knowingly enters into an agreement, combination, or conspiracy to defraud the state or federal government by obtaining or aiding another person in obtaining an unauthorized payment or benefit from a health care program or fiscal agent;

(10) is a managed care organization that contracts with the Health and Human Services Commission, another state agency, or the federal government to provide or arrange to provide health care benefits or services to individuals eligible under a health care program and knowingly:

(A) fails to provide to an individual a health care benefit or service that the organization is required to provide under the contract;

(B) fails to provide or falsifies information required to be provided by law, rule, or contractual provision; or

(C) engages in a fraudulent activity in connection with the enrollment of an individual eligible under a health care program in the organization’s managed care plan or in connection with marketing the organization’s services to an individual eligible under a health care program;

(11) knowingly obstructs an investigation by the attorney general of an alleged unlawful act under this section or under Section 32.039, 32.0391, or 36.002, Human Resources Code; or

(12) knowingly makes, uses, or causes the making or use of a false record or statement to conceal, avoid, or decrease an obligation to pay or transmit money or property to this state or the federal government under a health care program.

How can I be charged with a Healthcare Fraud offense in Texas?

You can be charged with Healthcare Fraud in Texas if the state’s attorneys believe that you committed any of the twelve fraudulent activies listed in 35A.02(b), as described in the section above, related to healthcare.

What is the statute of limitation for Healthcare Fraud in Texas?

Health Care Fraud has a seven year limitations period under Texas law.^[2]

What is the penalty for a Texas Healthcare Fraud offense?

The penalty range for a Healthcare Fraud conviction ranges from a Class C misdemeanor to a felony of the first degree, depending on several factors.^[3]

(b) An offense under this section is:

(1) a Class C misdemeanor if the amount of any payment or the value of any monetary or in-kind benefit provided or claim for payment made under a health care program, directly or indirectly, as a result of the conduct is less than $100;

(2) a Class B misdemeanor if the amount of any payment or the value of any monetary or in-kind benefit provided or claim for payment made under a health care program, directly or indirectly, as a result of the conduct is $100 or more but less than $750;

(3) a Class A misdemeanor if the amount of any payment or the value of any monetary or in-kind benefit provided or claim for payment made under a health care program, directly or indirectly, as a result of the conduct is $750 or more but less than $2,500;

(4) a state jail felony if:

(A) the amount of any payment or the value of any monetary or in-kind benefit provided or claim for payment made under a health care program, directly or indirectly, as a result of the conduct is $2,500 or more but less than $30,000;

(B) the offense is committed under Subsection (a)(11); or

(C) it is shown on the trial of the offense that the amount of the payment or value of the benefit described by this subsection cannot be reasonably ascertained;

(5) a felony of the third degree if:

(A) the amount of any payment or the value of any monetary or in-kind benefit provided or claim for payment made under a health care program, directly or indirectly, as a result of the conduct is $30,000 or more but less than $150,000; or

(B) it is shown on the trial of the offense that the defendant submitted more than 25 but fewer than 50 fraudulent claims under a health care program and the submission of each claim constitutes conduct prohibited by Subsection (a);

(6) a felony of the second degree if:

(A) the amount of any payment or the value of any monetary or in-kind benefit provided or claim for payment made under a health care program, directly or indirectly, as a result of the conduct is $150,000 or more but less than $300,000; or

(B) it is shown on the trial of the offense that the defendant submitted 50 or more fraudulent claims under a health care program and the submission of each claim constitutes conduct prohibited by Subsection (a); or

(7) a felony of the first degree if the amount of any payment or the value of any monetary or in-kind benefit provided or claim for payment made under a health care program, directly or indirectly, as a result of the conduct is $300,000 or more.

However, when multiple payments or monetary or in-kind benefits are provided under one or more health care programs as a result of one scheme or continuing course of conduct, the conduct may be considered as one offense and the amounts of the payments or monetary or in-kind benefits aggregated in determining the grade of the offense.^[4]

In addition, the punishment (other than the punishment prescribed by Subsection (b)(7)) can be increased to the punishment prescribed for the next highest category of offense if the state’s attorneys can prove beyond a reasonable doubt on the trial of the offense that the actor was a provider or high managerial agent at the time of the offense.^[5]

Can you get probation for Healthcare Fraud in Texas?

The Texas Code of Criminal Procedure allows both judges and juries to grant probation for Healthcare Fraud, and judges are also allowed to accept deferred adjudication plea deals.^[6]

Note, however, that no matter the offense, neither judges nor juries may recommend community supervision for any suspended sentence of over 10 years.^[7] Also, judges may not grant community supervision after a conviction if (1) the defendant used or exhibited a deadly weapon during the commission of the felony or immediate flight thereafter and (2) the defendant used or exhibited the deadly weapon himself or was a party to the offense and knew that a deadly weapon would be used or exhibited.^[8]

What level of crime is Healthcare Fraud in Texas?

The Penal Code classification of the punishment for Healthcare Fraud ranges from a Class C misdemeanor to a first degree felony, depending on the circumstances.

Learn more about the penalty range for this offense in the section above.

---

Legal References:

^1. Texas Penal Code §35A.02. This law is current as of 2024.^2. Code of Criminal Procedure 12.01(3)(I)^3. Texas Penal Code §35A.02(b)^4. Texas Penal Code §35A.02(d)^5. Texas Penal Code §35A.02(e)^6. See Chapter 42, Texas Code of Criminal Procedure, Art. 42A.054, Art. 42A.056, Art. 42A.102^7. Art. 42A.053(c), Texas Code of Criminal Procedure^8. Art. 42A.054(b), Texas Code of Criminal Procedure