Florida Doctor Jailed On Insurance Fraud Charge: Two Observations

Fake medical bills

Another fraudster in South Florida is not a big surprise. But there are two interesting things of note with this situation:

  1. He is arrested! As noted in prior posts, it is often the case the fraud goes unprosecuted, but that is not the case here.
  2. He probably could have been caught much earlier if software were running that was looking for repetitive behavior. Look at this aspect of what happened.

One paragraph was cut and pasted into 122 “progress notes” submitted to Blue Cross by Citrin, according to police. Here is that paragraph:

“Chief Complaints, New/Follow-up Patient Consult: “Patient c/o runny nose, fatigue. Suffered with allergy symptoms for over six months, episodes worsen during the middle of the year. During the episodes the patient has not used anything to improve. Patient has a history of smoking no pets at current residence was living in a group home and suspects black mold, takes OTC meds during episodes which usually are minimally effective, is not currently having an episode. Patient has relevant medical health condition of polysubstance dependence which causes symptoms which at times of substance withdrawal (runny nose) are overlaid on his allergy symptoms.”

With work this sloppy, there probably were all kinds of other repetitive things in the CPT codes that would have been easily flagged for review by good software.

For example, we have algorithms that read all medical bill lines, and aggregate them up by provider, claim, etc. Our algorithms are searching for all types of repetitive and/or erratic behavior.

Most insurance execs think they have something like this already installed, but when they question their technicians they realize that their software is 1) “repricing” the bills, so that they comply with a fee schedule, 2) alerting the bill coders to any single bill that has characteristics they want to review. Most software is NOT looking for suspicious behavior across bills, doctors, claims, etc.

As this article shows, if a fraudulent clinic realizes that a particular bill makes it through the system on a fast track basis, it is not unusual for the fraudster to produce the same bill over and over again, and it is not unusual for the claims system to pay it over and over again.

Here is the article.

We keep track of medical articles like that here, and PIP articles that, typically are similar, here.

State Police don’t have the workforce to prosecute all insurance fraud. Here’s what to do…

This morning I came across an interesting article.

The article, shares testimony given by the fraud unit of the Louisiana state police. The testimony said:

The insurance department referred 1,402 cases of possible fraud last year to [Louisiana] State Police, most involving auto insurance, according to Tuesday’s presentation. State Police pursued 316 of them.

Let that sink in. The INSURANCE DEPARTMENT referred them. How many cases were referred by insurance companies to the insurance department and did not make it through their screening? The insurance department would not have referred them unless they were decent candidates of fraud.

Why did the state police choose not to assign these cases to their investigators?

Referrals are chosen based on whether police have enough information and people to fully investigate a claim in a reasonable amount of time, Lt. Michael Wilkerson said. He said 25 LSP investigators handle about 12 to 16 cases per year.

So let me make sure I got the order of operations correct.

  1. Someone within the insurance company’s claim department becomes suspicious and refers the claim to the insurance company’s SIU department
  2. The SIU department conducts a thorough examination and concludes there is fraud
  3. The SIU department hands the information over to the department of insurance
  4. The department of insurance analyzes the information and concludes there is likely fraud so they hand it over to the state police
  5. The state police receive it, and, due to limitations in resources, only pursue about one out of four.

How do they decide which to pursue?

“We do not have the manpower to feasibly work on all of these investigations,” he said, explaining they prioritize cases that are relatively easy to prove over the ones that would take more time and effort.

So what does this mean?

It means that there are thousands of fraud cases flowing through the system that go unchallenged because they are not easy to prove or not worth the effort.

Sometimes, even when it is a slam-dunk, a state will not pursue a case. At my previous company we actually had a signed confession and a state (the state was not Louisiana, it was Florida) still refused to prosecute. This crime, a staged accident with $20K in PIP bills, was apparently too small for that state to commit the resources to bring the perpetrators to justice.

What should insurance companies do?

I concluded that the only reasonable thing to do is to have software combing through incoming claims data that identify fraud rings prior to the claims team making some of their payments. These fraud rings are very sophisticated, and make their crimes hard to prove, but with statistics you can see when a ring is attacking an insurance company.

When you identify the entire ring and withhold payment on incoming claims until an investigation has occurred, you change the story. You put the fraudsters on defensive. When they realize that you are investigating multiple of their claims, they often simply stop pursuing their remaining claims and look for an easier target. These people are sophisticated and do not want to be caught. When they see you are not a soft target, they move on.

Here is the article on the Louisiana testimony.

You can visit us on the web at fraudspotters.com

Fraud rings, possibly involving Scott Peterson, are accumulating more than $10 billion in cash, and they are about to focus their efforts at your P&C carrier.

For the last six months, we’ve been warning about the massive unemployment fraud epidemic.

The amount of money that is being pulled in by international fraudsters is very likely north of $10 billion dollars.

Because these fraudsters have been focused on unemployment insurance, they may have provided breathing room for P&C insurance companies as they have focused elsewhere.

But, make no mistake, when the unemployment insurance fraud dries up, they will focus their attention on traditional insurance companies. And, if you study how this unemployment fraud occurs, you see that although they may be headquartered outside the USA, they operate inside the USA with an army of foot soldiers.

Here is the very bad news. They have pulled in so much money, that they now have the cash to fund very sophisticated fraud rings against P&C carriers.

A lot of of P&C executives are unaware of these very large and powerful international fraud rings and their efforts to extract money from the carriers. They rely on their claims teams to flag potential fraud claims based on gut feelings and then use SIU to tackle those claims. Typically SIU teams do a great job, but without leads to the fraud rings, entire schemes can go undetected.

Here are some articles about the magnitude of the cash these fraud rings are accumulating.

California: $11 billion to $30 billion. $400 million went to prison gangs operating in the US. Even Scott Peterson is alleged to have been involved! Another study pegs the value at $10 billion.

Colorado: At least $10 million with no prosecutions.

Washington: At least $300 million.

Other: $242 million in Massachusetts, $200 million in Michigan, $18 million in Rhode Island, $8 million in Arizona and $6 million in Wisconsin. Nationwide estimate, $36 billion.

I was the president of a P&C carrier that was targeted by fraud. I learned the hard way how important leads are. If you would like to try our services, please visit us at fraudspotters.com