Medical billing fraud involves a wide range of illegal practices and can occur in many different settings. At its most basic level, medical billing fraud involves a healthcare provider billing for services it did not provide. Billing fraud is also the most common form of Medicare fraud. However, this improper billing can take many different forms, making it more difficult to identify. Two prevalent — and increasingly common — methods of perpetrating billing fraud are known as “Upcoding” and “Unbundling.”

Americans spent over $3.5 trillion on healthcare in 2017, and fraudulent medical billing practices may account for as much as 3% of that spending, according to the National Healthcare Anti-Fraud Association. The United States Attorney General has estimated that Medicare fraud amounted to between $60 and $90 billion per year, with similar levels of fraud affecting Medicare. Given that fraudulent medical billing occurs on such a broad scale and is difficult to identify and prevent, taxpayers often bear the enormous burden of this fraud.

Whistleblowers are crucial to the important mission of uncovering and stopping unethical medical billing practices. According to Acting Assistant Attorney General Chad Readler, “because those who defraud the government often hide their misconduct from public view, whistleblowers are often essential to uncovering the truth.” The False Claims Act (FCA) allows whistleblowers to bring cases alleging fraud on behalf of the government and entitles whistleblowers to between 15 and 25% of the money collected from a favorable verdict or settlement. In 2017, nearly $3.4 billion of the $3.7 billion recovered by the government under the FCA was the result of cases reported by whistleblowers.

If you are aware of any illegal medical billing practices, contact a medical billing fraud attorney today for a confidential, free consultation.

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“Upcoding” refers to the practice of using an inaccurate billing code to obtain a higher reimbursement for a medical treatment or procedure. In other words, the provider is charging for a higher level of a similar service than the one actually performed by the healthcare provider. By upcoding the treatment as more serious or complex, the medical provider fraudulently obtains a higher reimbursement.

For example, a provider might code a patient with acute bronchitis as being treated for chronic bronchitis, or code the excision of a small skin lesion as the excision of a larger, more complicated excision—this often results in a cost difference and increased profit for the provider.

Companies found guilty of medical upcoding can expect to face serious fines and penalties. In 2018, Prime Healthcare, a California hospital system, agreed to pay $65 million to the federal government in settlement of upcoding claims resulting in billing fraud. Prime Healthcare allegedly directed its staff to upcode by exaggerating certain conditions. The whistleblower in this case received $17,225,000 as a result of the government’s favorable settlement.

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“Unbundling” is a form of medical billing fraud that is similar to upcoding. In unbundling, medical providers bill complex, multi-step procedures separately, instead of as one coded procedure. Billing the steps individually allows the provider to recover more reimbursement for the same services. Unbundling is also known as “fragmentation,” i.e, the provider is taking a medical procedure that could be billed with one code and “fragmenting” it into multiple codes, to add up to a higher reimbursement.

Unbundling often occurs in medical coding. For example, on a routine surgical procedure, a provider engaging in unbundling might enter separate codes for incision and suturing, rather than using the standard billing code. This significantly increases a provider’s reimbursement.

Duke University’s 2014 settlement is a well-known example of unbundling fraud. Duke paid $1,000,000 after it was accused of unbundling cardiac and anesthesia services. The Department of Justice said the hospital at Duke was applying a modifier to the codes so they could unbundle services that were typically billed together — in this case, anesthesia in a cardiac procedure.

Thanks to a whistleblower who served as a billing coder and auditor at Duke, the government recovered $1,000,000. The whistleblower was entitled to between 15 and 25%.


Studies of medical billing fraud make it clear that upcoding fraud and unbundling fraud don’t happen in a vacuum. Instead, they often occur alongside other illegal, unethical, or fraudulent billing practices. Other types of medical billing fraud include:

  • Double billing
    • This occurs when a provider intentionally bills Medicare/Medicaid and a private insurance company or patient for the same treatment.
    • If two providers try to bill for services provided to the same patient for the same procedures on the same date, it’s called double billing.
    • Double billing also happens when providers bill for the same procedure first using an individual code and then as a bundled code.
  • Bill padding
    • Bill padding occurs when providers add unnecessary costs to a bill in the form of consults, medicine administered and more. For example, if a provider calls in unnecessary physician consults or procedures, he or she may be trying to pad the bill.
  • Charging for services never provided
    • Bills can also include line items for texts, medicine or visits that were never provided.

Whistleblowers play a critical role in helping identify what are often interconnected, widespread fraudulent schemes and an experienced attorney for medical billing issues can help.

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The FCA makes it illegal to submit a false claim for payment to the government by a government contractor. This includes healthcare providers reimbursed through government healthcare programs like Medicare and Medicaid.

Penalties under the FCA can be both civil and criminal, resulting in costly fines and even a prison sentence.

The FCA protects and rewards whistleblowers who bring a claim against a provider or organization that is defrauding the government. Whistleblowers are entitled to financial reward between 15 and 25% of the total recovery.

The FCA also protects whistleblowers from the risk of employer retaliation. If a whistleblower faces demotion, harassment or discrimination for bringing attention to medical billing fraud, they are entitled to all relief necessary. Such relief may include:

  • Reinstatement
  • Double back pay
  • Compensation for any special damages including litigation costs and reasonable attorneys’ fees.


While the FCA offers rewards and protections for whistleblowers, it’s important for a whistleblower reporting medical billing fraud to consult an experienced attorney before taking action. The legal issues surrounding whistleblower protections are complicated, and obtaining relief for discharge, demotion, or discrimination as a result of whistleblowing involves knowing how to navigate relevant federal and state laws. Many states have employment laws that may provide other remedies for wrongful discharge or other such discrimination. The deadline to file these cases varies, so whistleblowers should consult a medical billing attorney to ensure that they’re well-protected in the event their employer chooses to retaliate against them.

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If whistleblowers are not backed by attorneys who know the law, and who know how to handle FCA cases, they can face severe personal and professional harm. The attorneys at Price Armstrong have experience in successfully representing whistleblowers in FCA cases. If you have information about upcoding, unbundling, or other medical billing fraud, our medical billing attorneys are available for a free consultation regarding your options.


If you have information about medical billing fraud, contact the attorneys at Price Armstrong. We can help you seek justice and protect your rights throughout the process. We represent clients nationwide with offices in Birmingham, AL, Tallahassee, FL and Albany, GA. Call us today at (205) 208-9588 for a free initial consultation and review of your case. Let us fight for you – call now!