Health care fraud flourishes in New York 

Marcus Pickett

The New York Insurance Frauds Bureau recently released its annual report, providing a snapshot of its investigations of health care fraud. The report shows that 2010 was a busy year for scammers -- fake health insurance plans, elder fraud and crooks masquerading as doctors drained millions of dollars from the health care system.

The Frauds Bureau received more than 14,000 reports of suspected fraud in 2010 and made 159 arrests, according to the report. But health care fraud is not limited to New York. According to the U.S. Department of Health and Human Services, Americans spent $2.34 trillion on health care in 2008 -- and fraud accounted for anywhere from 3 percent to 10 percent of that amount (between $70 billion and $234 billion).

Types of health care fraud

In the spring of 2010, weeks after the federal health care reform law was passed, the New York State Insurance Department issued a warning to consumers to be aware of bogus health insurance plans. Scammers were taking advantage of the confusion surrounding health care reform by selling (sometimes door-to-door) health insurance plans that would supposedly help their victims comply with the new law.

Other types of health care fraud include:

  • No-fault insurance fraud. A crossover from auto insurance fraud, this type of fraud takes advantage of New York's no-fault auto insurance laws. A perpetrator stages a "no-fault" car accident. A conspiring health care provider then orders thousands of dollars worth of tests and treatments that are then billed to the auto insurance company. No-fault insurance fraud accounted for more than half of all fraud cases in 2010 in New York, according to the Frauds Bureau.
  • Subpar care. Fraudulent doctors cut corners and provide shoddy care but still bill New York health insurance companies. According to the Coalition Against Insurance Fraud, one eye doctor shined pen lights into patients' eyes and billed insurance companies for cataract surgery. Other doctors have used broken pacemakers and catheters.
  • Elder fraud. In 2010, many seniors enrolled in Medicare Part D (prescription drug coverage) received $250 rebate checks. The Frauds Bureau received reports that scammers claiming to be Medicare representatives were calling seniors and telling them they needed personal information in order to send them their checks.
  • Slip-and-fall fraud. Scammers deliberately injure themselves at stores and restaurants to get an insurance pay-out for medical bills and lost wages. According to the Frauds Bureau, one suspect even poured soda on the floor at a store and pretended to slip on it.
  • Identity theft. In October 2010, the federal Medicare Fraud Strike Force (in which the Frauds Bureau participates) caught a group of Armenian-American gangsters who managed to collect more than $35 million from Medicare by stealing doctors' and patients' identities and setting up 118 bogus medical clinics.

The fight against fraud

The New York Insurance Frauds Bureau allows insurance companies to report suspected fraud electronically. It also participates in several national task forces that target specific types of fraud. In addition, the state is targeting health care fraud through legislation; according to the Coalition Against Insurance Fraud, New York has 21 fraud-related bills pending, many of which address health care fraud:

  • S 257 and A1538 address the amount of time an insurer has to get back the money it paid to a health care provider. Both include fraud exceptions, allowing more time for an insurer to look into cases if it suspects fraud.
  • S 1685 and S 2004 target staged accidents. The former makes it a crime to stage a crash, while the latter makes it a crime to hire someone to solicit passengers for staged crashes.
  • S 1950 creates a statewide special prosecutor for health care fraud cases.
  • A 5200 would require managed care facilities to go through a certification process if they want to treat auto crash victims. This would, ideally, prevent fraudulent health care providers from milking the no-fault system.
  • S 2816 is a comprehensive no-fault fraud bill that contains increased penalties for fraud and gives insurers more time to investigate suspicious claims.