A provision buried in Ohio's cybersecurity bill significantly raises criminal penalties for Medicaid billing errors—and most salon owners don't know it exists.
When Ohio passed SB315 (the Enhanced Cybersecurity for SNAP Act) in 2024, most salon and personal care business owners focused on cybersecurity requirements. But the bill contains a provision that fundamentally changes the legal risk for any salon enrolled as a Medicaid provider: Medicaid fraud penalties have been upgraded to mandatory felonies with mandatory fines.
Here's what changed and why it matters to your business.
Under the new provision (Section 2913.40(E), Page 9 of SB315), any small business acting as a Medicaid provider that submits a false claim or billing irregularity now faces a mandatory felony conviction—not a misdemeanor, not a civil penalty, but a criminal felony charge.
The penalties escalate based on the amount involved:
Fifth-degree felony: Claims under $1,000, with a mandatory minimum fine of $1,000.
Fourth-degree felony: Claims between $1,000 and $7,500, with escalating mandatory fines.
Third-degree felony: Claims between $7,500 and $150,000.
Second-degree felony: Claims between $150,000 and $750,000.
First-degree felony: Claims over $750,000, with a mandatory minimum fine of $150,000.
The law applies to violations occurring on or after the effective date of enactment.
If your salon or personal care business is enrolled as a Medicaid provider—whether you bill directly or through a third party—this applies to you. It covers not just intentional fraud, but also billing irregularities and false claims, which can include:
• Billing for services not rendered
• Incorrect service codes or dates
• Duplicate billing
• Upcoding (billing for a more expensive service than provided)
• Billing errors in client eligibility or coverage details
Even unintentional mistakes can trigger felony charges under this language.
A felony conviction carries consequences beyond fines. It can result in:
• Mandatory jail time (depending on the degree)
• Permanent criminal record
• Loss of professional licenses or certifications
• Exclusion from future Medicaid participation
• Difficulty obtaining business loans or insurance
• Damage to business reputation and client trust
For small business owners, even a fifth-degree felony—the lowest tier—creates serious exposure. The mandatory $1,000 fine is the floor, not the ceiling.
If you're a Medicaid provider, review your billing practices and documentation systems immediately. Ensure your staff understands eligibility verification, accurate service coding, and proper claim submission. Consider consulting with an accountant or attorney familiar with Medicaid compliance in Ohio to audit your current processes.
If you're considering becoming a Medicaid provider, understand that this law significantly raises the stakes for billing accuracy and compliance.
The effective date is upon enactment of SB315. The provision is codified in Section 2913.40(E) of the Ohio Revised Code.
This explainer is provided for informational purposes. For business-specific guidance on Medicaid compliance under SB315, consult with a qualified Ohio business attorney or accountant.