Kathleen Duncan submitted hundreds of faked taxi receipts for up to £160 a time to NHS Fife "almost daily" for a period of 13 months.
She even forged the signatures of NHS staff needed to confirm her attendance at hospital.
Duncan, 44, was then handed cash by NHS staff - with her crime only coming to light when the amount of money needed to be held in the hospital cash room had to be increased.
Kirkcaldy Sheriff Court heard two of her three children, Cody and McKayla suffer from the rare genetic condition Hurler's Syndrome.
The syndrome leaves sufferers physically and mentally disabled.
The court heard the children both required regular hospital treatment - both as inpatients and out patients.
Fiscal depute Dev Kapadia said Duncan was granted permission by NHS Fife to travel by taxi when bringing the children to, or visiting them at, Victoria Hospital or Forth Park Hospital in Kirkcaldy from her home in Dunfermline.
Duncan, of Moubray Grove, South Queensferry, pled guilty to defrauding NHS Fife of £38,019 between August 1 2010 and August 29 2011.
She had originally been charged with defrauding the health board of £60,019.
Sheriff Maxwell Hendry deferred sentence until next month for social work background reports.