Health Insurance Fraud is a crime. It occurs when a healthcare provider or consumer intentionally provides false or misleading information to a healthcare insurance company in an effort to obtain unauthorized payment or benefits. Although the exact amount of theft through insurance fraud is hard to measure, it is estimated tens of billions of dollars annually are misappropriated through scams and schemes by healthcare providers and consumers. This not only impacts the insurance companies, it impacts everyone. The more revenue lost due to fraud, the higher insurance premiums rise to compensate for that loss. You can help prevent Health Insurance Fraud simply by educating yourself, making sure it doesn’t happen to you and reporting it when you suspect it has.

The National Health Care Anti-Fraud Association conservatively estimates healthcare insurance fraud costs the nation 68 billion dollars annually. This results in higher premiums and higher costs for those of us who follow the rules. Even more disheartening is the reality that oftentimes the perpetrators are the people we trust the most.

Examples of Provider Fraud

• Billing for services not actually performed.
• Duplicate claims: submitting a second, slightly different claim, in an attempt to be paid twice for the same service.
• Falsifying a patient’s diagnosis to justify tests, surgeries or other procedures that aren’t medically necessary.
• Misrepresenting procedures performed to obtain payment for non-covered services, such as cosmetic surgery or massage therapy.
• Upcoding: billing for a more costly service than the one actually performed.
• Unbundling: billing each stage of a procedure as if it were a separate procedure.
• Accepting kickbacks for patient referrals or for providing a service, test or product.
• Waiving patient co-pays or deductibles and over-billing the insurance carrier or benefit plan.
• Billing a patient more than the co-pay amount for services that were prepaid or paid in full by the benefit plan under the terms of a managed care contract.
• Capping: the illegal referral of clients to legal and medical offices for a fee.
• Balance billing: the practice of billing a patient for the difference between what the patient’s insurance covers and what the provider charges for a service.
• Prescription Fraud.
• Durable Medical Equipment Fraud.

Examples of Consumer or Patient Fraud

• Providing false information on an insurance application.
• Filing claims for services or medications not received.
• Forging or altering bills or receipts.
• Using anther persons identifying information to obtain or pay for healthcare insurance benefits.
• Lending insurance cards.
• False dependents.
• Forged or fictitious prescriptions.
• Utilizing more than one doctor to receive the same or other controlled or addictive medication for which there is no medical need.

Fortunately, this type of crime is a felony, and is punishable in California by up to five years in prison and/or significant fines. Healthcare fraud can also be prosecuted on a federal level and can carry a sentence up to ten years; twenty years if the fraud results in serious bodily injury, and a potential life sentence when the fraud results in someone’s death.

If you suspect or have reason to believe Disability and/or Healthcare Insurance Fraud is occurring in Kern County, please call the District Attorney’s Office Fraud Hotline at
1-800-619-3039 or email KCDAFraudTips@kernda.org.

Fighting Insurance Fraud

What can you do? Help prevent Health Insurance Fraud and Abuse!

Ask questions about the services you receive, such as:

• Why are they needed? What do they cost? Will my insurance cover it?
• Question advertisements or promotions that offer free tests, treatment or services – especially when the provider requests your insurance information or a copy of your insurance ID card.
• Be careful about disclosing your insurance information. Protect your insurance ID card as if it were a credit card. It represents your benefits.
• Question charges you’re asked to pay by a provider that exceed the copayment amount you are required to pay.
• Be leery of health care providers who offer free services or waive your copay. They may charge the insurance company more for other services to make up the difference, or add services you didn’t receive.
• Review your Explanation of Benefits (EOB) and/or your medical bills. Are the dates of service correct? Were the services actually performed? Were you billed for the same procedure twice?
• Keep accurate records of all health care appointments.
• Research your providers with Medical Board of California.
• Report suspected fraud and abuse as soon as possible.

Workers’ Compensation insurance is designed to help employees who suffer work related injuries or illnesses by covering medical costs and wages. However, when an employee makes an intentional misrepresentation to gain a workers’ compensation benefit or an employer deceives their insurance company by misreporting number or classification of employees, this is considered workers’ compensation insurance fraud. At the other end of the spectrum, white-collar criminals, including doctors and lawyers, entice, pay, and conspire with others to defraud the system by creating false or exaggerated claims, over treating, and over prescribing harmful and addictive drugs.  Kern County is not immune from this type of criminal behavior.

Workers’ Compensation fraud results in

• Criminal prosecution
• Fines and restitution
• Higher insurance premiums for those who follow the rules

Types of Workers’ Compensation Insurance Fraud

Claimant/Applicant Fraud

Claimant fraud involves false claims reported by employees to receive insurance benefits they may not be entitled to.  Examples of claimant fraud can include:

• Making a claim for an injury that happened outside of work.
• Faking or exaggerating an injury or medical condition.
• Knowingly making false statements.
• Filing multiple claims using different identities.
• Working elsewhere while collecting workers’ compensation benefits.

Premium Fraud

Premium fraud refers to an employer’s attempt to lower their insurance premium by misrepresenting the number or type of employees working for them.  Examples of premium fraud can include:

• Under reporting the number of employees and/or amount of payroll.
• Misclassifying the type of employee, such as reporting an employee who works as a roofer as clerical staff.
• Misclassifying an employee as an independent contractor.
• Under reporting the number of prior claims by employees or failing to report employee injuries to insurance company.

Employer Fraud

Employers that wrongfully deny an injured worker their entitled benefits or discourage them from pursuing a claim.

Attorney Fraud

Commonly abused schemes include:

• Facilitating claimant, employer, or insurer fraud.
• Engaging in client solicitation.
• Receiving a fee for referring clients to a medical provider.

Provider Fraud

Commonly abused schemes include:

• Charging for services or supplies that are not medically necessary.
• Billing insurance carrier payors for services that were never performed.
• Costly interpreting and copy service bills.
• Overuse of diagnostic testing.
• Compound prescription drugs.
• Upcoding - misuse of billing codes to obtain a higher reimbursement by exaggerating or falsely representing the medical conditions and services provided.
• Unbundling- billing multiple codes when a single code encompasses the entire procedure.

Professional Rings

Unscrupulous marketers, doctors, lawyers, and medical service providers conspiring to buy and sell patients for insurance and workers’ compensation purposes, subjecting patients to unnecessary medical procedures for financial gain. The typical arrangement is that the attorneys utilize marketers, or “Cappers” to solicit workers to pursue workers’ compensation claims. The lawyer, in turn, refers the worker to medical providers, who then refer patients for diagnostic imaging, durable medical equipment (DME), pharma, laboratories, interpreters etc. While doctors and lawyers financially gain from the illegitimate claims the workers generally receive small settlements.

Cappers also use international call centers and “sign up” companies to capture clients and direct them into a network of providers that they have a financial interest to profit multiple times from each instance of capping.

If you suspect or have reason to believe Workers’ Compensation Insurance Fraud is occurring in Kern County, please call the District Attorney’s Office Fraud Hotline at
1-800-619-3039 or email KCDAFraudTips@kernda.org.

Providing a false statement or failing to disclose information with the intent to defraud an insurance company is a felony offense.  Insurance companies will often spot a false claim immediately. There are common investigative techniques in auto fraud investigations which very often disprove the information provided in a fraudulent claim. Insurance companies routinely refer their fraud investigations to the California Department of Insurance and the District Attorney’s Office with jurisdiction of the crime. Auto Fraud is routinely prosecuted by the Kern County District Attorneys’ Office.

Types of auto insurance fraud:

• Premium Fraud - Failing to disclose all material information when obtaining an insurance policy.
• Pre-existing damage - Adding prior vehicle damage to a new/legitimate claim.
• Inflated claims - Insured reports property taken in a vehicle burglary to be of higher value than it is; upgraded stereo components, custom wheels, etc.
• Excluded driver - Insurance companies will often exclude other family members from a policy. The excluded driver is involved in a collision and the policy owner lies about who the driver was.
• Crash and Buy - Persons who have no insurance are involved in a collision, who then apply for insurance coverage, and lie about when the collision occurred.
• Hit while parked claims - Insured person is involved in a collision then claims the vehicle was parked and the damage was the result of a hit and run.
• Paper Crash - Person reports a collision that did not occur to have pre-existing damage repaired.
• Staged thefts - Owner reports to the insurance company that the vehicle was stolen, when it was actually stripped, burned, dumped, sold on the black market, taken to Mexico, or VIN switched and sold to another person.
• Staged collisions - A planned collision for the purpose of filing an insurance claim, often involving an unsuspecting motorist wherein the goal is to make the collision look like it is that person’s fault.Sometimes there is no innocent second or third party and all involved in the collision are in it for financial gain.
• Body shop fraud - Estimate calls for original equipment manufacturer parts, but less expensive parts are used, the estimates are exaggerated, or the insurance company is billed for unnecessary work.
• Chop shops/VIN switches - Stolen vehicles are often dismantled for usable parts and/or the vehicle identification number is switched with a vehicle that has a clear title.
• Fraud rings - Organized rings stage accidents, report theft, make false claims, refer injured persons to unscrupulous lawyers, medical providers etc. all for insurance payouts and kick back fees.

Auto Insurance fraud not only impacts the insurance companies and the innocent victims of staged collisions; it impacts anyone who has auto insurance.  The more the fraud occurs, the higher the cost of YOUR insurance premium rises. If you suspect or have reason to believe Auto Insurance Fraud is occurring in Kern County, please call the District Attorney’s Office Fraud Hotline at 1-800-619-3039 or email KCDAFraudTips@kernda.org.