Gloria Vheremu
ACC 444 Honors Contract Fraud in the healthcare system
EXECUTIVE SUMMARY
The purpose of this research is to learn about fraud cases that have been happening in the healthcare system for the past few years, and how those fraudulent acts were pioneered and executed. The main focus will be on three of the many pillars that make fraud a reality fraud – committing, concealing and detecting; that is; how the fraudulent was committed, how the perpetrator concealed it and how it was detected by the relevant authorities. Focusing on these three areas gives us the opportunity to take an in-depth look into the loopholes that are making it easy for perpetrators of fraud to be able to commit and conceal fraud and how their actions were detected. The paper will focus on only three of the many cases that made the topic of fraud in the healthcare a force to reckon from 2013 to 2015. These cases include a psychiatrist from Chicago, Lloyd Torrez who was found guilty of defrauding insurance companies; Empowerment Non-Emergency Medical Transportation, Inc. an enrolled Medicaid provider being led by its owner, Ms. Shorter, which was defrauding the Indiana Medicaid; and Paula Cluding, owner of Prairie View Hospice in Oklahoma who provided millions of dollars’ worth of fraudulent claims to the federal Medical Care program.
INTRODUCTION
Fraud is deliberate deception to gain unfair and unlawful gain from an act. It is both civil and criminally wrong, and the people who commit fraud usually do it to gain monetary gain or material benefits, but the ones who commit fraud to gain monetary gains are the most common. The elements of fraud as a crime similarly vary. The requisite elements of perhaps most general form of criminal fraud, theft by false pretense, are the intentional deception of a victim by false representation or pretense with the intent of persuading the victim to part with property and with the victim parting with property in reliance on the representation or pretense and with the perpetrator intending to keep the property from the victim.
Fraud can take many forms, but the 21st century has come with a rise in fraud in the healthcare industry. Although healthcare fraud constitute only a small fraction, the claims carry a very high price tag .Given that healthcare is a tempting target for thieves, the federal prosecutors had almost 2000 health care related probes open in 2014 - even the punishments have grown tougher over the past few years. Whilst the advancement in technology has made life easier in every aspect of our everyday lives, it goes without saying that the advancement in technology has also somehow made the opportunity to commit fraud easier in this age of exponential technological advancement. The availability of technology has made it easy to commit and conceal fraud, which makes today’s fraud crimes more sophisticated than ever.
DISCUSSION
One of the most common forms of health care fraud involves false patient diagnosis, treatment and medical histories, usually in an attempt to defraud medical insurers. The stealing of patient’s identities is lucrative since medical records contain information that can be used to defraud insurance companies into paying for medical fees for services not rendered. In July 2013, a psychiatrist from Chicago, Lloyd Torrez was found guilty of defrauding insurance companies. Lloyd, who has a background in computer engineering even though he is a physiatrist, hacked into the customer databases of an insurance company and took customer information which he used to claim money for these insurance companies for services he said to have rendered. In order to back up his fraudulent acts, Torrez went as far as creating fictitious longhand session notes to ensure phony backup for his fraudulent claims in the event that he was caught. In fabricating the claims, the psychiatrist also fabricated diagnoses for his so-called patients – many of them being adolescents. The phony conditions he assigned to the patients included depressive psychosis, suicidal ideation, sexually identity problems and behavioral problems in schools, among other diagnoses. Analyzing this fraudulent act, these diagnosis seems to be a good a backup as those are the most common diagnoses in adolescents of today. Given that, it took a long time for the insurance company to realize the claims for insurance fraud. Most of the victims of this fraudulent act by Torrez were individuals on private health insurance with lifetime caps or other limits on their benefits on their policies, so every time a claim was paid in patient’s name, the dollar amount counted towards the patient’s lifetime benefits. Which affected most clients when they had legitimate needs, they may have already been exhausted their lifetime insurance. In this case the psychiatrist Torrez, found the opportunity to commit fraud by finding a weakness in the database security of the insurance, made use of the opportunity and concealed the fraudulent act by creating fake patient records and fake diagnoses. (NHCAA, 2015)
Empowerment Non-Emergency Medical Transportation, Inc. is an enrolled Medicaid provider. The provider agreement for Empowerment showed that it was a commercial ambulatory service provider and that its business address was in Elkhart, Indiana. Ms. Shorter - the sole owner of Empowerment Non-Emergency Medical Transportation, Inc. Indiana Medicaid reimburses enrolled health care providers, including commercial ambulatory service providers, for covered services that are provided to patients who are Medicaid eligible on the date of the provided service. Providers enrolled in the Indiana Medicaid program agree to submit claims for only medically and reasonably necessary services that are covered under the program that are actually provided and to only seek compensation to which the provider is legally entitled. Under the Indiana Medicaid Provider Agreement the State of Indiana entered into with all Medicaid providers, Medicaid providers are prohibited from submitting claims for services that are not medically necessary or are not actually provided or for which the provider is otherwise not legally entitled to receive payment. However, from 2011 to 2014, Ms. Shorter knowingly engaged in a scheme to defraud Indiana Medicaid and knowingly misused the means of identification of Medicaid clients. As part of the fraud scheme, the defendant caused billings and claims for reimbursement to be sent to Indiana Medicaid for transportation services that were never in fact provided. Ms. Shorter caused billings and claims for reimbursement to be sent to Indiana Medicaid as well for the payment of inflated mileage claims and for medical transportation trips that had been cancelled and never occurred. Further, the she caused billings to be sent to Medicaid that were up-coded, that is, the she caused billings to be sent that were submitted for higher reimbursement amounts than were justified based on the actual transportation services provided. The loss caused by the fraud here was in excess of $1 million dollars. (Justice Dept., 2015)
Even though the majority of the people who get into the medical profession get into it because they want to help people, but after seeing opportunities for making money after putting little or no effort at all, most of these people end up getting involved in fraudulent acts. This is what happened to Paula Cluding, owner of Prairie View Hospice in Oklahoma. Paula provided millions of dollars’ worth of fraudulent claims to the federal Medical Care program. Prairie View Hospice was ostensibly in the business of providing general hospice care which includes healthcare, medication, certain medical equipment and other goods and services provided to terminally ill patients. Prairie View advertised its services for patients in nursing care facilities and at home. And as a Medicare-approved provider of hospice care, Prairie View agreed that it would comply with all Medicare-related laws and regulations, including those that required submissions of truthful and accurate claims for reimbursement. However, from July 2010 until July 2013, Paula Cluding did not comply with those laws and regulations in her dealings with Medicare. In fact, she conspired—with her general manager and two nurses—to conceal the true medical conditions of hospice patients and the true quality and quantity of their care in order to continue receiving payments from Medicare. Even though hospice care is usually offered to patients who have a life expectancy of six months, however an investigation into Prairie View showed that some patients received care for five, six, even to seven years. In order to hide her fraudulent acts, she directed certain medical reports to be changed to be written in a way that make them appear as if nurses have visited patients or conducted assessments at regular intervals required by Medicare, when in fact no such services were performed. She also directed the medical reports to be falsified so that they appear as if the patients were in worse conditions than they actually were in. She even went far by even falsifying the documents to the Medicare subcontractor performing the audit when asked for records of patient files and Medicare. Cluding hid the lump sum she received from all the fraudulent acts using Prairie View Hospice’s account as well as two other medical business accounts as her personal checkbook. A review of her banking records showed that she moved money between her business accounts and personal account whenever she needed additional money to fund the lavish lifestyle she led.(FBI: Medicare, 2014)
CONCLUSION
According to the above three cases, it goes without saying that patients and their medical insurance information can be exploited and that can result in increased costs and decreased confidence in the healthcare system. Even though health spending in US is $2.3 trillion, it’s unclear how much of that amount actually go to healthcare ever since the escalation of fraud in the healthcare system. For many Americans, the increased expense due to fraud could mean the difference between making health insurance a reality or not because whether one has employer-sponsored health insurance or purchased, health care fraud translates into higher premiums and out of pocket expenses, as well as reduced benefits. Although consumers are encouraged to protect themselves from fraud, it is really hard in this world of technological advancement, there is need for organizations to ensure that customer information is secure and by putting more security measures that makes it hard for perpetrators to commit fraud.

This research was also beneficial to me individually as I not only learnt how Medicaid and insurance companies are being manipulated by fraudsters, but also how I as an individual can prevent being defrauded. I have learnt that I can be careful by keeping my identity safe as identity theft can has devastating effects on my financial health. I also leant that identity theft may also lead to an unexpected failure of physical exam for employment because of diseases that one might not even have suffered or even diagnosed with but unknowingly documented into their health records by fraudsters. I also have to ask the doctor to explain the reason for services so that I don’t get treated for services that are not necessary and also to review my statements to verify accuracy, and also to report any discrepancies to my insurer. Above all, I have learnt that I have to report fraud in the event that I suspect that healthcare funds are big charged as result of false or misleading misinformation.

Works Cited http://www.bcbs.com/report-healthcare-fraud/?referrer=https://www.google.com/ https://www.fbi.gov/about-us/investigate/white_collar/health-care-fraud http://www.justice.gov/opa/pr/national-medicare-fraud-takedown-results-charges-against-243-individuals-approximately-712 http://www.nhcaa.org/resources/health-care-anti-fraud-resources/the-challenge-of-health-care-fraud.aspx