What is Penal Code Section 550

In California, Penal Code section 550 is used as a catch-all provision for health fraud by physicians, providers of ancillary services and even attorneys representing injured workers. It is used anytime information relating to a claim for payment is deemed deliberately false. The false information need not be something specified in a statute. A medical diagnosis of “acne” instead of “pimple” can be a fraud if the term “acne” creates a billing cascade or upcode. Lawyers have been arrested for referring clients to doctors who are known to overbill in order to blow up the size of car accident claims. Doctors and chiropractors who refer car accident cases to physical therapy offices and get referrals back may face federal AKS charges or state Penal Code 550 charges.

California Penal Code section 550(a)(1) requires a finding that the defendant “[k]nowingly present[ed] or cause[ed] to be presented any false or fraudulent claim for the payment of a loss or injury.”32 Similarly, California Insurance Code section 1871.4(a)(1) requires a finding that the defendant “[m]a[d]e or cause[d] to be made a knowingly false or fraudulent material statement or material representation for the purpose of obtaining or denying any compensation.”.

This section is often used in very creative and aggressive ways.  Minor violations and billing disputes are rocketed into a felony charge (PC 550) because any error or minor infraction can be deemed a “false claim” once it is put in the form of a bill sent to an insurance company.

Chiropractors forming medical corporations with physicians are often charged with this section and with practicing medicine without a license.  Physicians and chiropractors may see this charge filed in the context of anti-kickback or self referral charges made more serious by being charged under this felony section.  Physicians operating physical therapy centers and chiropractors who do more than simple adjustments are the targets of special scruitiny.

California Penal Code Section 550  is similar as a “catch-all” to 18 USC 1347, the Federal Health Care Fraud statute. Again this statute takes a wide variety of conduct and criminalizes it as a generic health care fraud.

Attorney Daniel Horowitz is a criminal defense specialist. His expertise is certified by the State Bar of California, Board of Legal Specialization. Only approximately 300 lawyers in the State of California are allowed to designate themselves as criminal defense specialists. For more information on medical criminal defense see our Healthcare Fraud website. Healthcare Fraud – Law Office of Daniel Horowitz (whitecollar.us)