What a Great Country!

How Insurance Fraud Can Succeed

"This blog post is a fictionalized True Crime Story of Insurance Fraud from an Expert who explains why Insurance Fraud is a “Heads I Win, Tails You Lose” situation for Insurers. The story is posted to help to Understand How Insurance Fraud in America is Costing Everyone who Buys Insurance Thousands of Dollars Every year and Why Insurance Fraud is Safer and More Profitable for the ­­­Perpetrators than any Other Crime."

Wo Ping Chen was trained as a physician in Hong Kong. Until Hong Kong was returned by the United Kingdom to the Peoples Republic of China, he was the best known Orthopedist in the Crown Colony. Fearing problems with the new government he emigrated to Vancouver, British Columbia, Canada as a citizen of the commonwealth.

He worked as an employee of the National Health Service for a year and then obtained a work visa to the U.S. and crossed the border into the U.S. only to find he could not work as a physician without a license from a U.S. state and attended a U.S. based medical school. After one year of medical school, one year of internship in a Seattle hospital and one year as a resident Chen was able to restart his life.

His first effort upon receiving a license was to apply to the U.S. Government’s Medicare and Medicaid systems for a medical provider number which would give the government the ability to deposit funds electronically into his bank account without having to wait for a check to be received and collected.

Dr. Wo was a very good doctor and his practice grew rapidly. He found most of his patients were poor and could only pay through one of the government programs. He was not, as in Canada, an employee. He had to live on the small amounts that Medicare or Medicaid considered proper for the work he did.  Each of his invoices was scrutinized and he was never paid what he billed even though he knew, from meetings with other physicians in Seattle, he was billing reasonable and proper amounts for the services rendered.

Frustrated and earning less every year than the year before, although he was working harder and longer hours, he told his tale of woe to a colleague over a hospital lunch.

“Wo, my friend” the colleague responded “don’t be upset and frustrated – it is time you used the system to your benefit.”

“How?”

“You know the people that review your billing are not physicians, they are key punch operators. If what you bill fits within the requirements of their computer software money goes into your account in the amounts required by their computer.”

“Yes,” Wo replied, “when I speak with them to challenge their decisions they speak like complete idiots.”

“Use their stupidity to your benefit.”

“How?”

“The CPT codes.”

“They just describe services.”

“Yes, so if you do something for a patient that is listed as a point two raise it to a point three.”

“But that would be dishonest.”

“No, because they base their payment on the code and the payments are not realistic so raising the code up one level will get you paid the correct amount for the services actually rendered.”

Wo took the conversation to heart and found payments deposited into his bank increased to amounts reasonable for the services he was actually rendering even if it was not as described. His billings were never questioned. The information went from Chen’s office computer to a government agency computer that automatically sent money to his account.

His youngest daughter had found a husband and he was facing an expense of over $100,000 to pay for a traditional Chinese wedding and reception. He did not have the cash. He did, however, have a large list of Medicare and Medicaid patients in his data base.

He knew, from experience, that no one in the US Government or their agents would check his billing. He had served the public at low rates for many years. He decided to obtain the cost of his daughter’s wedding by using his computer.

He created invoices for 300 of his male Medicare patients for an office visit and complete blood test at $250 each. He dated the service carefully so he showed only ten of the 300 each day for 30 days. He did the same for 300 female patients for an office visit, a pelvic exam, and an x-ray to check for a potential broken hip, each for only $250. By the end of the month $150,000 was deposited into his account without question. He had the money for his daughter’s wedding and did not have to work for it.

"This is a great country," Wo thought, they send me money when I need it without requiring that I work for it.

Dr. Wo knew that the practice of Medicine is hard work. The earnings of physicians were continuously being reduced by insurers and government agencies. He was getting old. He attended two medical schools and was still borrowing money to pay off loans he took to finish school. It was time he considered funding his retirement.

As part of his practice, he spent half his time at the local hospital.  He had problems with his office computers and hired the Information Technology person at the hospital to fix his system on a weekend. They had become friends.

The IT man finished his work at the office and sat down for some coffee with Wo.

“So, how is the practice treating you, Dr. Wo?”

“Not bad, but the insurance companies and government keep cutting what I receive.”

“It is tough. I wish I could help you.”

“You can.” Chen replied. “I will pay you $100,000 more than your fee if you give me a CD ROM with the identification information of 100,000 hospital patients who are Medicare or Medicaid recipients.”

“I’m not sure I can do that Dr. Wo. I could lose my job.”

“Okay, I’ll give you $150,000.”

The IT man delivered the disk the next day and received $15,000 in cash from Dr. Wo as a down payment. He used the disk to submit billing for each of the 100,000 patients for the same office examination, x-rays, and a complete blood count. Two weeks later $25,000,000 appeared in his account, Dr. Wo Ping Chen paid the IT man $135,000 to complete the fee, transferred the remaining money to his bank in Hong Kong, closed his office and moved back to Hong Kong where he retired a very wealthy man.

No one questioned his billing. No investigator checked on how one doctor could treat 100,000 patients in one month. It seemed no one cared.

Dr. Wo did not consider himself a criminal nor did the United States Government. He just played the system knowing that it was operated by people who did not care as long as the correct boxes in the computer were checked.

His crime succeeded because he was not greedy. He only did the major crime once. The computer operators at the Medicare payment offices never noticed that he did a cervical exam on an eighty-three-year-old man named Louis Jones.

Insurance fraud is often successful, as it was for Dr. Wo, because the governmental entities have little incentive to even look for fraud, investigate criminal conduct, or even try to do the job for which the government employees were charged. Dr. Wo was correct, this is a great country, and it gives away other people's money to anyone with the gumption to ask. That includes my money and yours and Dr. Wo's success offends me and should offend you.

(c) 2023 Barry Zalma & ClaimSchool, Inc.

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