Last week, I presented a general overview of the meaning of the word “fraud.”  This week, I explore a certain type of fraud commonly known as “healthcare fraud.”

In general, healthcare fraud involves the filing of false claims by medical practitioners, with private or government payers, for the purpose of obtaining money. Private payers are health insurance companies.  Government payers include Medicare, Medicaid and other government health insurance programs. 

Healthcare fraud comes in many forms.  For example, medical practitioners may bill for services that they never actually rendered.  They may also bill for a non-covered service as a covered service. They may pay kickbacks and other improper referral fees for their patients.  They may also render services and perform tests that are not medically necessary.

One of the driving forces behind healthcare fraud is the business model of the healthcare industry itself.  The healthcare industry is unique in that it depends upon “third party payers” to foot the bill for services rendered to the consumer.  That is, the insurance companies and the government neither provide the services nor receive them.  They only pay the bills.  The patient has an incentive to get as many services as possible since they are not paying the bill (and most people would “rather be safe than sorry”).  The medical practitioners have incentives to perform as many services as possible since there are very deep pockets who will ultimately pay the bills.  The potential for abuse is therefore great.  

Thankfully, most medical practitioners are upstanding citizens who would not even consider committing fraud.  Nonetheless, recent estimates show that 10% of healthcare costs are incurred due to fraud.  In real dollars, the generally accepted estimate is that healthcare fraud costs the system roughly $100 billion annually.  Ultimately, this cost is passed down to consumers in the form of higher health insurance premiums and higher taxes.

In the past decade, the federal government has begun to crack down on health care fraud.  In the past five years alone, the Eastern District of Michigan has seen over 300 individuals indicted on criminal healthcare fraud charges.  Most of these individuals end up being convicted or pleading guilty. In the most egregious cases, the defendants purchased the Medicare identification information of unsuspecting citizens and billed Medicare for fictional medical services.  Obviously, this behavior is a far cry from what most people envision when they think of doctors. 

— Kassem Dakhlallah is a senior partner with At Law Group, PLLC.  His practice focuses on complex litigation, including class actions, representative actions, commercial litigation, civil forfeiture and personal injury. He can be reached at (313) 406-7606 and kd@atlawgroup.com.