The Healthcare System
Over the years, there have been many reports of fraud within the healthcare system. While the fraud forms may vary, the result is the same; insurance companies are billed for medical services that do not qualify for payment. These payments draw down the amount of money that is available for proper medical services, and thus affects the solvency of the insurance funds. This paper will look at three different types of frauds that are perpetrated within the healthcare realm.
Hospital Contract Fraud
The first instance of fraud is that of an individual gaining the trust of a hospital, and then defrauding it through a fraudulent contractual agreement. An excellent example of this is the case of Patricia Cleary Syling. Ms. Syling was the administrator in the Business Office and Billing Collections at Queen's Medical Center (QMC) in Honolulu. Ms. Syling was authorized to "negotiate vendor and service contracts to collect money from private health insurers and government programs like Medicare and Medicaid" (Dooley, 2007). She used her position to justify the hiring of two outside companies, Healthcare Financial & Compliance Management and Healthcare Financial Group, to perform collections activities for QMC and to review the work she was doing as the Compliance/Billing official. Both of these companies were sham corporations, which Ms. Syling had created herself. She used her position of trust to established contractual agreements with "consultant" companies to review the billing of Medicare, and changed the Hospital for it. Ms. Syling charged QMC almost six hundred thousand dollars over three years under the fraudulent contracts. In February 2009, she pled guilty to eight counts of mail fraud (for claims submitted electronically to the Medicare program through both QMC and her companies), and could face 20 years in prison for each charge. Although Ms. Syling pled guilty to the charges, she is appealing the decision of the judge. Her case is pending before the Ninth Circuit Court of Appeals (Federal Bureau of Investigations Honolulu, 2009).
Ms. Syling is considered a "Professor" in fraud types because she used her position to hire herself as a consultant, who then engaged in inappropriate billing for services (Insurer's 'most wanted' list of fraud types, 1993).
Hospital Billing Fraud - Anti-Kickback and False Claims
The second and third types of frauds are where a hospital knowingly bills for services that were medically unnecessary or not performed, and pays for referrals in order to bill the Medicare system. The perfect example for these frauds is the case of City of Angels Medical Center. This hospital, through direction of its CEO/owner, paid recruiters at local homeless shelters to get homeless people to agree to have unnecessary medical procedures completed, or offered them a place to stay for the night (in a hospital room) in exchange for the hospital registering them as patients. Once inside the hospital a Medicare or Medi-Cal bill was created for services that were not rendered (US Department of Justice, 2010). James L. Garcia, director of the Employee Benefits Health Insurance Tracking Unit at Aetna Life Insurance Company, has categorized these types of frauds as the following:
- "Dr. Max The Knife"- these are services where physicians perform unnecessary services or surgeries on patients.
- "Imelda Shoes Hightower" - this is where an insured sells use of his/her own insurance plan (Insurer's 'most wanted' list of fraud types, 1993).
The CEO/owners of City of Angels Medical Center, Robert Bourseau and Rudra Sabaratnam, agreed to a consent judgment entered against themselves for $10 million dollars. The judgment was for violation of the False Claim act (submission of claims for payment for services not rendered), as well as Anti-Kickback violations (paying recruiters to send patients to a hospital) which would garner payment from the Medicare/Medicaid funds. The hospital, through the recruitment program, preyed on the homeless to gain access to their Medicare information and had them sell it to the hospital for a warm meal or place to stay overnight.
Prosecution of Fraud
The federal government is increasing its' prosecutions of Medicare or Medicaid fraud. The False Claim Act is becoming one of the biggest tools in the federal government's arsenal in combating healthcare waste and abuse. It has been so successful that it is being mimicked in state government actions as well. The Office of the Inspector General (OIG) for the Health and Human Services Department is charged with finding and combating health care fraud. They use automated data mining programs to look for suspect claims submitted for payment. Once identified, the claims are reviewed for appropriateness, and if they are still suspect, an investigation is initiated, usually in conjunction with the Department of Justice. In 2009 the OIG reported that it returned 20.9 Billion dollars to the Medicare fund through the investigative efforts of the Health Care Fraud and Enforcement Action Team, commonly known as "HEAT" (Office of the Inspector General, 2009).
The OIG also used it authority to exclude 2,556 individuals and companies from participating in the federal health care programs either based on convictions or settled agreements to avoid prosecutions for alleged criminal conduct (Office of the Inspector General, 2009). As stated earlier, criminal convictions can also result in imprisonment for up to 20 year per violation.
Healthcare is a target for those individuals who seek to defraud the government. The government is taking great strides to combat fraud when it is detected. Fraud can come from those in positions of trust, or from those in charge of healthcare programs/entities. The OIG uses all of its authority to seek out and combat fraud, and with the DOJ, prosecutes those who wish to steal from these programs.
Dooley, J. (2007, October 17). Fraud at Hawaii hospital alleged. Retrieved May 29, 2010, from HonoluluAdvisor.com: http://the.honoluluadvertiser.com/article/2007/Oct/17/ln/hawaii710170417.html
Federal Bureau of Investigations Honolulu. (2009, February 6). Former Hospital Administrator Pleads Guilty to Defrauding Hospital. Retrieved May 29, 2010, from Department of Justice Press Release: http://honolulu.fbi.gov/dojpressrel/pressrel09/hn020609.htm
Insurer's 'most wanted' list of fraud types. (1993, January). Employee Benefit Plan Review , 47 (7), pp. 45. Retrieved May 29, 2010, from ABI/INFORM Global. (Document ID: 352859).
Office of the Inspector General. (2009, December 3). News Room - OIG Reports $20.97 Billion in Savings and Recoveries in FY 2009. Retrieved May 30, 2010, from U.S. Department of Health and Human Services : http://oig.hhs.gov/publications/docs/press/2009/SemiannualFall2009PressRelease.pdf
US Department of Justice. (2010, May 28). Intercare Health Systems (Ex-Owner of City of Angels Medical Center) Agrees to $10 Million Consent Judgment for Medicare and Medi-Cal Fraud Scheme in Los Angeles. M2 Presswire , pp. Coventry: Retrieved May 29, 2010, from ProQuest Newsstand. (Document ID: 2044278141).