Health Care Fraud Costs Billions

June 12, 2009

Health care fraud is broken down and discussed in terms of statistics, protective strategies, and activities related to these investigations and crimes.

Audio Transcript

Mr. Schiff: Hello I’m Neal Schiff and welcome to Inside the FBI, a weekly podcast about news, cases, and operations. Health care fraud. It’s costing billions. Best thing for you to do is check every line on every bill you receive.

Mr. Montemorra: “If you take a look at your credit card statements when they come in, make sure that somebody isn’t using your credit card without your knowledge, the exact same thing you should be doing with your insurance statements, your Explanation of Benefits.”

Mr. Schiff: FBI Special Agent Rob Montemorra. He’s in the Criminal Investigative Division and is Chief of the FBI’s Health Care Fraud Unit.

Mr. Montemorra: “Health care fraud is the defrauding of the health care system, either public or private, here in the United States, and it is fraudulently obtaining funds through either up-coding, which is in fraudulent billing, or billing for services not rendered, or any number of criminal acts.”

Mr. Schiff: Now what are the various types of health care fraud crimes that we’ve seen over the years?

Mr. Montemorra: “Well we’ve seen pretty much everything. The criminal mind really amazes me. We’ve seen everything from staged auto accident to up-coding of services, unbundling of services, durable medical equipment, home health services, elder abuse, to violations of the federal Health Privacy Act as well.”

Mr. Schiff: What is up-coding?

Mr. Montemorra: “What is up-coding? Up-coding would be when you go to your doctor and have a splinter in your finger and you need to have it removed, and they take a pair of tweezers and pull it out. There’s probably a code for the removal of that splinter. But they decide to bill your insurance company for major surgery. So that would be taking a code, because there are codes that they bill, and looking for one that would pay them a larger sum of money.”

Mr. Schiff: Can you explain about staged accidents?

Mr. Montemorra: “Sure. Your auto insurance, the auto insurance that you have for your car, has medical; if you were involved in an accident and you broke an arm or a leg, or if you hit somebody and they broke an arm or a leg, that your insurance would pay for that. Well, we have some very enterprising criminals have found a way to stage, pretend, an accident had taken place, conspire with doctors and lawyers, as well, to stage these accidents and submit bills to insurance companies. And insurance companies would pay the bills for accidents that never took place or may have taken place, but never to the severity to what was alleged to the insurance companies.”

Mr. Schiff: Of course then we have the infamous billing for services not rendered.

Mr. Montemorra: “Absolutely. Billing for services not rendered is something that happens more regularly than we would like to see. And it is for medical services billed for something that never took place.”

Mr. Schiff: What’s an example of what the FBI may consider the most serious health care fraud activity going on?

Mr. Montemorra: “We have many concerns right now. Internet pharmacy fraud, durable medical equipment, infusion therapy fraud are amongst some of our highest concerns right now.”

Mr. Schiff: What is infusion therapy fraud?

Mr. Montemorra: “It’s a combination of billing for services not rendered combined with billing for a specific type of service. In this instance there are people—a cancer patient, patients who have HIV and other serious diseases—that require drugs to be administered directly into them over a period of time and they infuse those into your system. Well, there are clinics, rightfully so, that need to do this and there are patients who need these services. Well, they are very expensive services. Enterprising criminals have found ways to bill the public and private insurance companies for these infusion therapies that never took place. And very, very serious concerns because in many instances we’re concerned that there are patients who are not getting services that they need because of these fraudulent activities that are taking place.”

Mr. Schiff: What about statistics? What kind of numbers are we seeing with health care fraud going up or down in the United States?

Mr. Montemorra: “We’re very busy. We’re a very busy program. In 1992 you would have said we had probably 5, less than 600, pending health care fraud investigations. And at the end of fiscal 2008, at the end of last year, we had over 2,400 pending health care fraud investigations across the country. Now these have great results for us. In fiscal year 2008 we had 696 convictions of criminals, and there were 836 indictments filed in the federal court system against criminals perpetrating health care fraud. Now, the dollar volume; how much money is out there? I have to read a few statistics for you because they are so important and get us a good picture of what we face as a law enforcement agency and what we face as a country. The Centers for Medicare and Medicaid Services, which is the insurance end of the federal government of Medicare, report that total health care expenditures in the United States will surpass $4 trillion by 2015, which is a 139 percent increase, or more than double the $1.67 trillion expended in 2003. There are very conservative estimates, or there are estimates, that the losses due to fraudulent activity approached 10 percent of the amount of money that we expend in health care.”

Mr. Schiff: I asked Special Agent Montemorra how many victims of health care fraud are out there?

Mr. Montemorra: “We’re all victims of this crime. Every person in the United States who pays taxes, and our tax dollars go significantly to many of these systems, the Medicare system and the Medicaid system in the states, and those of us who pay health insurance, regular health insurance, or have our health insurance through our employers or have it privately, are all victims of this crime. It is, it is massive, or has potential to become incredibly large because the trickle-down effect of this is that if the cost, if there are fraudulent bills, the insurance companies need to make their, be able to pay the bills and that causes premiums to go up and when premiums go up that comes out of your employers’ pocket, that comes out of your pocket, and so we’re all victims.”

Mr. Schiff: Protect yourself. Read your invoices, bills, statements, very carefully. Every line. This is very important. If you are billed for something you didn’t receive, report it. If you think your health care bills aren’t accurate, report it. If you think there’s fraud going on, call the nearest FBI office. Learn more about health care fraud on the Internet at That concludes our show. Thanks for listening. I’m Neal Schiff of the FBI’s Office of Public Affairs.

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