Blog
& News

Home > Blog/News

When a Billing Dispute Becomes a Federal Fraud Case

Every federal healthcare fraud case turns on proving that a defendant knowingly submitted false or misleading claims — but what happens when the fraud allegation hinges on billing rules that reasonable people could interpret differently? Most fraud prosecutions involve conduct everyone recognizes as deceptive: fake invoices, fictitious companies, forged documents, or money taken for services that were never provided. United States v. Elfenbein, 144 F.4th 551 (4th Cir. 2025), presented a harder version of a federal healthcare fraud case — one built entirely on the meaning of complex medical billing rules.

federal healthcare fraud case

Background: A COVID-19 Testing Clinic Under Scrutiny

The Fourth Circuit addressed that question in the prosecution of Dr. Ron Elfenbein, a Maryland physician who operated an urgent-care business. When COVID-19 arrived in 2020, his clinics shifted much of their work to drive-through testing. Patients could receive a nasal swab and, in many instances, have a short virtual visit with a medical provider. 

The clinics processed enormous numbers of patients. On particularly busy days, nearly 1,500 people came through. Elfenbein himself wrote that the clinics were not there to solve complex medical problems and wanted patients “in and out of the tent in under 5 minutes total.” 

The government eventually charged him with five counts of healthcare fraud based on how his clinic billed five patient visits.

The Billing Codes at the Center of the Case

The dispute centered on medical billing codes. Evaluation and management visits are assigned codes corresponding to different levels of complexity. Level one represents relatively simple care. Level five represents the most complex. Elfenbein’s clinic billed the five visits at level four.

That mattered financially. According to the Fourth Circuit, the clinic charged $354.22 for a level-four visit involving a new patient and $231.50 for the level-four code used for an established patient. 

The government contended that the care provided did not justify those codes. The patients received COVID tests, short consultations and generally little treatment beyond recommendations such as rest, hydration and over-the-counter medication. The government also alleged that some medical records documented examinations or conversations that patients said never occurred.

The Verdict and Post-Trial Motions

A jury convicted Elfenbein on all five counts.

After trial, however, Elfenbein asked the district court for both a judgment of acquittal under Rule 29 and, alternatively, a new trial under Rule 33. The district court granted both motions. The Fourth Circuit reversed the judgment of acquittal but upheld the order granting a new trial.

Understanding the Difference Between Rule 29 and Rule 33

At first glance, those rulings may seem inconsistent. They are not, because Rules 29 and 33 ask different questions. 

Under Rule 29, a court asks whether the evidence was legally sufficient to permit a conviction. After a guilty verdict, the court views the evidence in the light most favorable to the government and asks whether any rational juror could have found the defendant guilty. The judge does not decide which witnesses were more persuasive or whether the judge personally would have voted to convict. As the Fourth Circuit explained, while a jury must acquit if it has a reasonable doubt, a judge may not order an acquittal if the jury could reasonably have convicted. 

Rule 33 gives the district judge more latitude. It permits a new trial “if the interest of justice so requires.” That power must be used sparingly and only when the evidence weighs so heavily against the verdict that allowing it to stand would be unjust. But unlike Rule 29, the judge is not confined to asking whether a rational jury could have convicted. 

That distinction explains the result in Elfenbein.

How the Fourth Circuit Applied Rule 29

On the Rule 29 question, the Fourth Circuit concluded that the jury had enough evidence to convict. Elfenbein argued in part that the medical coding rules were ambiguous and that his interpretation of them was reasonable. The Court of Appeals rejected the idea that ordinary ambiguity automatically prevents a fraud prosecution. 

The court distinguished between language that permits reasonable disagreement and language that is so fundamentally ambiguous that it cannot meaningfully be characterized as true or false. Only the latter necessarily prevents a false-statement theory. When language has an ascertainable meaning but permits competing interpretations, the jury generally decides which interpretation is better. 

There was evidence from which the jury could do that. Elfenbein himself testified that COVID presented a very low or minimal risk for the vast majority of his clinic’s patients. His own expert explained that minor problems treated with measures such as rest and over-the-counter medications ordinarily corresponded with lower-level billing. Employees had expressed concerns about the clinic’s use of level-four codes, and an insurer’s audit concluded that the clinic had improperly coded COVID testing visits at that level. 

The jury also heard evidence about the medical records submitted with the claims. Patients testified that their records reflected vital-sign checks, examinations or follow-up conversations that they said never happened. 

Viewed in the light most favorable to the government, the Fourth Circuit held, that was enough. A rational jury could find that the claims were false or misleading.

Why the Fourth Circuit Upheld a New Trial Under Rule 33

Rule 33 was different. The Fourth Circuit emphasized that much of the evidence that ultimately made the convictions sustainable did not come from the government’s case. At the close of the government’s evidence, the jury had received relatively little explanation of what level-four billing required, how the relevant coding terms should be understood, or how Elfenbein’s treatments fit within those standards.

Much of that evidence came later, through Elfenbein’s own expert and through Elfenbein himself when he testified in his defense.

That did not make the convictions legally insufficient. But it mattered under Rule 33. The district judge concluded that the evidence weighed sufficiently against the verdict to warrant another trial. Although the Fourth Circuit said it might have viewed the evidence differently, its role was only to decide whether the district court abused its discretion. It held that the trial court had not.

Key Takeaways

Elfenbein therefore illustrates an important distinction in federal criminal practice. Rule 29 asks whether a conviction is legally sustainable at all. Rule 33 recognizes that there can also be cases in which sufficient evidence technically supports a verdict, but the weight of the evidence nevertheless makes a new trial appropriate in the interest of justice. 

The case also matters beyond healthcare billing. Modern federal fraud prosecutions often involve complicated regulatory schemes, industry standards and specialized terminology. Elfenbein makes clear that some ambiguity does not necessarily turn a criminal case into a mere regulatory disagreement. If the language has an ascertainable meaning in context, a jury may decide whether a defendant’s interpretation was legitimate or knowingly false. 

At the same time, the case is a reminder that surviving a sufficiency challenge is not always the end of the inquiry. A verdict may be legally possible under Rule 29 and still leave the trial judge convinced, under Rule 33, that justice requires another trial.

Frequently Asked Questions

What was Dr. Elfenbein accused of doing?

The government accused Dr. Ron Elfenbein of healthcare fraud based on how his urgent-care clinics billed five COVID-19 testing visits. Prosecutors argued that the clinics used billing codes that overstated the complexity of the care provided and, in some instances, submitted medical records describing services that patients said never occurred.

Why did the billing codes matter?

The level assigned to an evaluation and management visit affects how much an insurer pays. Elfenbein’s clinics billed the visits at level four. The government argued that the short COVID-testing visits involved relatively simple care and did not justify that level of reimbursement.

Can a person be convicted of fraud if the underlying billing rules are ambiguous?

Potentially, yes. The Fourth Circuit held that ordinary ambiguity does not automatically prevent a fraud prosecution. If the language has a reasonably ascertainable meaning, the jury may decide which of competing interpretations is the better one. Only language that is so fundamentally ambiguous that it cannot meaningfully be called true or false necessarily prevents a false-statement theory.

What is the difference between a Rule 29 motion and a Rule 33 motion?

A Rule 29 motion asks whether the evidence is legally sufficient for any rational jury to convict. A Rule 33 motion asks a broader question: whether the interests of justice require a new trial. A district judge has more latitude under Rule 33 to evaluate the weight of the evidence, although that authority must be used sparingly.

Why did the Fourth Circuit reverse the acquittal but still allow a new trial?

The Fourth Circuit concluded that there was enough evidence for a rational jury to convict, so the judgment of acquittal under Rule 29 could not stand. But it also held that the district court acted within its discretion under Rule 33 in ordering a new trial because the evidence weighed sufficiently against the verdict.

Why is Elfenbein important outside healthcare fraud cases?

The case illustrates how federal fraud prosecutions can arise from complicated regulatory or industry standards rather than obviously false statements. It also shows that a verdict may be supported by legally sufficient evidence while still being subject to a new trial if the district court concludes that the weight of the evidence makes that necessary in the interest of justice.

Read the Full Decision

Disclaimer: This article was prepared with the assistance of artificial intelligence. The author reviewed, revised, and approved the final content and is responsible for its accuracy and conclusions. To discuss your case, please contact Dan Leonardi through his email.

 

<< BACK TO ALL POSTS

LATEST POSTS

VIEW ALL POSTS