Corporate Compliance

BCBS, FBI team up to bring down alleged $1 billion fraud ring

Compliance Monitor, March 16, 2005

A collaboration involving 12 Blue Cross and Blue Shield (BCBS) plans and the Federal Bureau of Investigation (FBI) broke up a scheme under which physicians allegedly filed more than $1 billion in fraudulent claims, The New York Times reported March 12.

Daniel M. Martino, acting chief of the FBI's health fraud unit, told the Times that the scheme involved recruiters drawing patients from 47 states to clinics in southern California, resulting in fraudulent bills totaling more than $1.3 billion and losses to employers and insurers of more than $350 million. Clinics allegedly paid recruiters $2,000 to $4,000 for each patient who received a medical procedure. Patients also allegedly received inducements in the form of cash or discounts on cosmetic surgery.

As a result of the collaboration's findings, the BCBS plans involved filed a civil suit that names nine surgery clinics, 21 physicians, and 13 clinic owners, employees, and administrators, the Times reported. In addition, the U.S. Department of Justice and the Orange County, CA, district attorney's office filed criminal charges.

According to the Times, a few red flags alerted insurers to the alleged fraud, Martino said, including when "50 people from Boston arrived in Southern California in a three-week period and filed claims for colonoscopies performed every other day." The BCBS plans in their lawsuit echoed Martino's sentiment saying they were surprised to see "clusters of employees from the same workplace" going to California for the same treatments.

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