Medical and Healthcare Fraud

This white-collar crime is perpetrated through the filing of false or fraudulent reports, submission of deceitful billing charges and other intentionally deceptive acts for the purposes of unlawfully profiting and obtaining greater reimbursement from any healthcare benefit program.

  • As an exceedingly lucrative field, the healthcare industry is ripe for picking, making this industry a prime target for fraud. U.S. healthcare expenditures represent nearly 18 per cent of our nation’s Gross Domestic Product, and it is projected to continue growing through 2021 at an annual rate of slightly over 6 percent.

Medical and healthcare fraud is a serious and expensive criminal offense that costs the government and taxpayers billions of dollars each year, which then results in higher healthcare costs and potentially more expensive coverage. These actions also lead to physical harm and even death. In extreme cases, when death results, penalties for this crime can result in a lifetime prison sentence.

Fraudsters who perpetrate these crimes include a number of different parties both within and outside of the healthcare industry. These individuals include pharmacists, employers, patients, vendors and suppliers, payers and providers. Computer hackers and organized crime rings also play a large role in the perpetuation of wide scale medical and healthcare fraud. There are numerous methods employed by these individuals to defraud the payers of medical benefits.

Examples of Medical Fraud

  • Deceptive billing for services never provided using valid patient information through either the fabrication of claims or padding claims with services and procedures that did not occur;
  • Submitting billing for non-covered services as covered services by fraudulently claiming the medically unnecessary treatments were entirely different medically indicated services;
  • Performing medically unnecessary treatments for the sole purpose of producing insurance charges;
  • Falsifying dates and locations of service;
  • Misrepresenting the service provider;
  • Submitting duplicate claims for a single service;
  • Waiving co-payments and/or deductibles and over-billing the benefit plan or insurance company;
  • Erroneous recording of procedures or diagnoses to justify surgeries, tests and other treatment that isn’t medically required;
  • Unbundling – falsifying patient treatment records in order to charge for a single multi-step procedure as separate procedures;
  • Service overutilization, known as upcoding – charging for procedures or services that are costlier than those that were actually rendered;
  • Kickbacks for patient referrals;
  • Bribery; and
  • Pharmaceutical fraud [insert link?] via unnecessary or fraudulent prescribing of pharmaceuticals.

Healthcare Fraud Statute

The federal Healthcare Fraud statute may impose fines or imprisonment of up to 10 years for the conviction of this white-collar crime, when bodily injury does not occur. In the instances when bodily injury does result, the penalties escalate to imprisonment of up to 20 years or the imposition of fines. In the far more serious cases where death occurs, the imprisonment may be for life. The presence of intent to commit this crime is not a prerequisite for a guilty finding.

Whistleblower Protections and Claims for Medical and Healthcare Fraud

According to the FBI, healthcare fraud carries an $80 billion dollar price tag. But, there is a bit of good news. In Fiscal Year 2012, the government recovered over $4 billion dollars of this money, an increase over the prior year, through its efforts in healthcare enforcement and fraud prevention. False Claims Act qui tam lawsuits were responsible for more than $3 billion of this recovery in judgments and settlements.

Healthcare fraud whistleblowers are instrumental in combating this criminal activity and helping the government recover billions of dollars every year. By the authority of the False Claims Act, these individuals bring lawsuits on behalf of the government, and are eligible for a monetary award from the recovered funds of no more that 25 percent and typically no less than 15 percent.

The Patient Protection and Affordable Care Act now adds to the existent whistleblower protections. It protects employees from retaliation for reporting specific violations, for receiving a cost sharing reduction for qualified health plan enrollment and for receiving a premium tax credit. Prohibited retaliatory actions include discharge; decreasing hours or pay; demotion; blacklisting; denial of promotion, overtime or benefits; failing to hire or rehire the employee; intimidation; threats; and reassignments that adversely affect the employee’s chances at promotion. Medicaid and Medicare Fraud and patient abuse is not covered by the ACA’s whistleblower protections.

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