Needles in a paystack

Dr. Susan Shamrock wanted to give a non-approved, experimental allergy treatment to her suffering patients. Unfortunately, she overcharged for the drug to the tune of about a half a million dollars. Here's how fraud examiners found the incriminating evidence. 

This article is excerpted from the "Insurance Fraud Casebook: Paying a Premium for Crime," edited by Laura Hymes, CFE, and Dr. Joseph T. Wells, CFE, CPA, published by John Wiley & Sons Inc. ©2013 Used with permission. Names in this case have been changed.

Susan Shamrock became a doctor because she wanted to provide people with relief from their allergy suffering. Although sticking needles in patients wasn't her favorite thing to do, Susan knew she was helping them get back to their normal lives. She enjoyed being a physician and helping people.

On the home front, Susan was happily married. She and her husband had two daughters who enjoyed a lifestyle most kids would envy. The girls attended private schools, had the latest electronic gadgets and even received expensive professional golf lessons. The family lived in a big house, and Susan and her spouse drove fancy cars. Dr. Shamrock was highly respected in her community and she gave generously to various local charities.

As the years passed, both Susan and her husband took to gambling at local casinos for entertainment. Eventually, Mr. Shamrock quit his job to pursue professional gambling; by doing so, he could even write off gambling losses on their tax returns. Predictably, Susan's husband lost a lot of their money gambling. But their marriage was good, their kids were happy, and Susan's practice was profitable.

A GROWING COMPANY

After Susan opened her own allergy clinic, she grew increasingly gratified that she was able to help so many patients; plus the money was good. Business was slow in the beginning, but it didn't take long before patients under her care started coming back for regular treatments. Newer patients followed, and the practice kept growing. Business was so good that she hired employees to schedule appointments, handle accounts payable and receivable and file claim forms with insurance companies and federal and state health care programs. She also hired medical assistants and an office manager.

Sometimes Susan became frustrated because a few of her patients didn't respond to treatment regimens. In those instances, her patients not only continued to suffer from their allergies but they or their insurance companies continued paying for treatment that wasn't working.

As part of her continuing education, Susan attended various seminars where she learned from other experts in the field. At one training event, the speaker discussed a new allergy treatment that was considered experimental by the Food and Drug Administration (FDA). Susan was intrigued and inspired by the presentation and immediately began offering the treatment as an alternative to her patients who hadn't responded to previous therapy. She even listed the experimental treatment on her website. Several of Susan's patients were willing to try it out of frustration because nothing else worked for them, and they had no financial qualms because their insurance paid for it.

ANOTHER NEW CASE ON MY DESK

I was a federal agent with experience investigating complex fraud schemes (including health care provider fraud) when I received a referral in the mail at my office. The note indicated that Dr. Susan Shamrock had possibly miscoded billings for allergy treatments when submitting claims for several of her patients.

The allegation said she provided patients with non-approved, experimental allergy treatment but listed it on insurance claims as a different, approved treatment. (Allergy treatments not approved by the FDA aren't reimbursable by insurance companies or federal health care programs.) The referral also mentioned Dr. Shamrock's website description of experimental treatment. Based on her website, there was no denying that Susan was promoting the use of the experimental treatment.

The referral also reported that during a federal audit of a random sampling of billed treatments, Dr. Shamrock was asked to provide supportive documentation for several of the insurance claims she submitted and that the government already had processed and paid. However, Dr. Shamrock ignored or failed to respond to the requests.

ROLLING UP OUR SLEEVES

From experience, I knew that health care fraud often affects many insurance carriers and federal health care programs — if one program was defrauded by a provider or facility, in all probability other programs and companies were also defrauded. Based on that knowledge, I immediately contacted health care fraud investigators I previously met or worked with and notified them of the referral. Some of those investigators worked for agencies that had their own health care programs. I asked the investigators to determine if their agencies received and paid insurance claims from Dr. Susan Shamrock. Only one investigator, Agent Andrew Badge, responded positively.

Badge and I'd successfully worked together in the past and, like me, he was a street cop before becoming a federal agent. Badge and I quickly met at his office and developed an investigative plan for this case.

Using administrative subpoenas, we separately requested and later obtained copies of numerous patient files and billing records from the doctor's office. Dr. Shamrock took about a month to comply fully with the subpoenas. Waiting this long isn't unusual in white-collar investigations and, in fairness, she had a small office staff and years of records to copy. Plus, they had to do most of the copying after normal business hours when the clinic was closed.

Patient files are often thick and might include: patient contact information (name, address, Social Security number, date of birth, etc.), insurance policy coverage information, claims submitted for payment, records of payment, explanation of benefit forms, dates of treatment, physician notes, lab test results, appointments and so on.

Badge and I worked in different buildings about 10 miles from each other so we periodically met for lunch and talked about this case and others. When we finally received the subpoenaed records, we reviewed them at our own offices. We searched for indicators that patients received the experimental treatment, which may have been miscoded and billed as an FDA-approved treatment.