Private Health Insurance Fraud — Billions And Billions

by Michael Volkov

sagansWhen it comes to health insurance fraud, Carl Sagan’s obsession with the words – billions and billions — are particularly accurate.

As the government’s role in health care increases, it is inevitable that fraud against the government will increase as well.  The False Claims Act is the primary weapon the government uses to chase fraudsters.  While the government has aggressively ramped up its anti-fraud fight, it is hard to determine whether or not there has been a real dent in the fraud problem in the healthcare industry.

Private health insurance companies are starting to play a bigger role in attacking this problem – it is a no-brainer as they say. Fraudsters are just as likely to commit fraud against a private health insurance company as they are against Medicare and Medicaid.

The government and the private insurance companies have started to coordinate and share information about the people who are reimbursed – that is a very welcome development. For years, private insurance information was not shared with government insurance programs.  Last year, the public-private information sharing initiative was announced and significant steps have been taken to increase sharing of information.

Private health insurance companies need to take a more proactive approach to solving the problem.  The fight against fraud suffers from a significant reactive problem – it is difficult to chase fraudulent payments after the fact, or after a suspicious pattern turns into a confirmed fraud.  This is called the pay-and-chase model.  On average, law enforcement recovers only 20 cents on every dollar fraudulently obtained.sagans3

A proactive model for private insurance companies requires the following steps:

  1. Hiring of additional SIU resources – former prosecutors or law enforcement investigators
  2. Proactive policies for conducting due diligence on new providers so that bogus or suspicious providers are identified
  3. Data analysis of payment patterns for high-risk services and products (e.g. DME, long-term care, nursing facilities, laboratory services)
  4. Outreach and ongoing communications and coordination with local law enforcement agencies (HEAT, FBI, state investigators, etc).
  5. Integration of fraud intelligence and lessons learned into payment policies and analytics

Private health insurance fraud can be prosecuted using a variety of legal tools, including wire fraud, mail fraud and the healthcare fraud statute.  The penalties are tough and the legal requirements are easily satisfied in any fraud scheme against private health insurance companies.

sagans2Private health insurance companies recognize that they need to play a more active role in the fight against fraud.  They have welcomed collaboration with the government.  At the same time, private health insurance companies need to adopt proactive best practices and other strategies which leverage their own resources.

The first and most significant place is in the SIU offices – every dollar spent on SIU resources earns an average return of 10 times the amount invested.  That is a much better rate of return that 20 cents on every dollar paid to a fraudster.


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Michael Volkov, The Volkov Law Group | Attorney Advertising

Written by:

Michael Volkov

The Volkov Law Group on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.


JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at:

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.