RCPA - Rehabilitation and Community Providers Association


PPA Offers Health Care Fraud Information

416 Forster Street Harrisburg, Pennsylvania 17102-1714

TO: PPA Ethics Committee
FROM: Samuel Knapp
RE: Health Care Fraud


Although this presentation was primarily for health care boards, I was permitted to attend. Kirk Widemer is a prosecutor for the Attorney General's Office. Insurance fraud is the number 2 priority of The Attorney General, only second to violent crime. The presentation was surprisingly balanced and Mr. Widemer stated up front that the vast majority of practitioners are honest (there are relatively few bad apples) and that the Attorney General's Office has no interest in getting involved in fee disputes or billing disagreements between professionals and insurers.

Fraud is a deliberate pattern of misrepresentation. Honest mistakes and occasional billing errors, etc. are not the concern of the Attorney General's office. There has to be a "clear bright line" that is crossed before there can be allegations of fraud. Mr. Widemer said that although fraud occurs in auto, life, and home insurance, it also occurs in health care insurance. Some estimate that up to 10% of health care costs are due to fraud. Organized crime has moved into the health care market in some cases.

Health care fraud is harder to detect because patients do not always come forth, there is a huge amount of documentation that has to go through and it usually involves many transactions of a small amount as opposed to a few large transactions. Although they are hard to gather evidence on, the Attorney General's Office will follow through on prosecutions to send a message to health care providers.

Of particular concern is home health care, transportation services, and "specialty clinics" such as personal injury mills, weight loss clinics, or impotence clinics. The Attorney General's Office is especially concerned about some clinics in the Philadelphia area.

Special problems with behavioral sciences include: few objective tests or procedures; lack of physical manifestation of the problem; treatment is harder to measure; no physical evidence that treatment actually took place; and patients are not always credible witnesses. [My interpretation of these comments are that it makes it easier to commit fraud with psychological services; and that it points out the importance of ensuring adequate documentation of the necessity of services, especially with long-term patients].

There were two positive notes on the presentation. First, the Attorney General's Office will not get involved in procedure code or billing disputes between providers and insurers. Health care insurance is very complicated and there is legitimate confusion about health care billing, definitions of procedure codes, etc. Second, the handbook specifically noted the possibility of insurance fraud by managed care companies.

Solutions according to Mr. Widener include: public education (notice all of the billboards around), activity by professional associations, prosecution of bad apples.

10330 South Roberts Road
Palos Hills, Illinois 60465


Although most claims are legitimate, many are inflated or fraudulent and the adjuster should review all claims for possible fraud. These indicators, or fraud possibility factors, should help isolate those claims meriting closer scrutiny. No one indicator by itself is necessarily suspicious. Even the presence of several indicators, while suggestive of possible fraud, does not mean that a fraud has definitely been committed. Indicators are "red flags" only, not actual evidence.

The Claimant, Prior Claim History and Current Work Status
* Injured worker is disgruntled, soon-to-retire, or facing imminent firing or layoff.
* Injured worker is involved in seasonal work that is about to end.
* Injured worker took unexplained or excessive time off prior to claimed injury.
* Injured worker takes more time off than the claimed injury seems to warrant.
* Injured worker is nomadic and has a history of short-term employment.
* Injured worker is new on the job.
* Injured worker is experiencing financial difficulties.
* Injured worker recently purchased private disability policies.
* Injured worker changes physician when a release for work has been issued.
* Injured worker has a history of reporting subjective injuries.
* Review of a rehab report describes the claimant as being muscular, well tanned, with callused hands and grease under the fingernails.

Circumstances of the Accident
* Accident occurs late Friday afternoon or shortly after the employee reports to work on Monday.
* Accident is not witnessed.
* Claimant has leg/arm injuries at odd time, i.e. at lunch hour.
* Fellow workers hear rumors circulating that accident was not legitimate.
* Accident occurs in an area where injured employee would not normally be.
* Accident is not the type that the employee should be involved in, i.e. an office worker who is lifting heavy objects on a loading dock.
* Accident occurs just prior to a strike, or near end of probationary period.
* Employer's first report of claim contrasts with description of accident set forth in medical history.
* Details of accident are vague.
* Incident is not promptly reported by employee to supervisor.
* Surveillance or "tip" reveals the totally disabled worker is currently employed elsewhere.
* After injury', injured worker is never home or spouse/relative answering phone states the injured worker "just stepped out."
* Return calls to residence have strange or unexpected background noises.

Medical Treatment
* Diagnosis is inconsistent with treatment.
* Physician is known for handling suspect claims.
* Treatment for extensive injuries is protracted though the accident was minor.
* "Boilerplate" medical reports are identical to other reports from same doctor.
* Workers' compensation insurer and health carrier are billed simultaneously; payment is accepted from both.
* Injured worker protests about returning to work and never seems to improve.
* Summary medical bills submitted without dates or descriptions of office visits.
* Medical bills submitted are photocopies of originals.
* Extensive or unnecessary treatment for minor, subjective injuries.
* Treatment directed to a separate facility in which the referring physician has a financial interest (especially if this is not disclosed in advance).
* Referral for treatment/testing to facility close to referring facility.
* Injuries are all subjective, i.e. pain, headaches, nausea, inability to sleep.
* Injured worker cancels or fails to keep appointment, or refuses a diagnostic procedure to confirm an injury.
* Treatment dates appear on holidays or other days that facilities would not normally be open.
* Injured worker is immediately referred for a wide variety of psychiatric tests, when the original claim involved trauma only. These claims usually present with vague complaints of "stress."

The Claimant's Attorney
* Attorney is known for handling suspicious claims.
* Attorney lien or representation letter dated the day of the reported incident.
* Same doctor/lawyer pair previously observed to handle this kind of injury.
* Claimant complains to carrier's CEO at home office to press for payment.
* Claimant initially wants to settle with insurer, but later retains an attorney with increased subjective complaints.
* Pattern of occupational type claims for "dying" industries, i.e. black lung, asbestosis; wholesale claim handling by law firms and multiple class action suits.
* Attorney threatens further legal action unless a quick settlement is made.
* High incidence of applications from a specific firm.
* Attorney inquires about a settlement or buyout early in the life of the claim.

Copyright 1992 National Insurance Crime Bureau. All rights reserved.
Reprinted with permission of NICB.

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