Steps to Prevent and Defend Against Claims of Insurance Fraud

By Stuart E. Hoffman, DC, FICA

The world of private insurance, especially health insurance, has been the subject of one shocking expose of exploitation and corruption after another. The abuse of the insurance industry hits providers and beneficiaries equally hard, leaving both communities feeling helpless and with a sense of little or no recourse. The massively deep pockets of the insurance industry and the very limited government oversight that regulates their behavior means that most of the time they get their way. It is when intimidation and allegations of fraud surface in a debate over provider payments that things really get ugly.

It is a very common device for claims adjusters to allege “fraud” as a means to drive a minimal financial settlement with a provider. The claim by some insurance company employee that “overutilization” has taken place and that somehow, based on self-serving and unreal “guidelines” they are exploring legal action against the provider is, indeed, sobering and probably as intimidating as it is intended to be. As absurd and unethical as this behavior is, it is frequent and it is effective in driving low-dollar settlements by providers even for the most legitimate of claims.

Alert, responsible practitioners need not fear such tactics if records are in order, clinical decisions are fully documented and you have the confidence of coverage by an established, proactive malpractice carrier.  As in all cases where any questions are asked about care provided, the doctor’s records are the foundation of a sound defense.  This is especially true where fraud allegations are being raised because fraud, as a legal concept is based on intent and material misrepresentation.

Claims reviewers tend to look for shortcomings in the clinical records where there is no documented basis for a claim made by the doctor.  If a claim for a service is submitted to an insurance company that is not indicated in the record, you have opened yourself up to exposure regardless of whether you provided the service or not.  If you did not document it at the time of delivery in appropriate detail, it becomes very difficult to document after the fact and almost impossible to document after you have submitted a patient file for insurance review.  If you do not have a comprehensive patient records policy that provides for full documentation of all clinical activities at the time of service delivery, this is a step you need to take today to place your practice in the strongest defensive position.  Records, especially where fraud and abuse are alleged or implied, are everything.

While the exact language in the law regarding fraud may vary from state to state, the common elements necessary to prove fraud might be summarized as follows:

Fraud must be proved by showing that the defendant’s actions involved five separate elements:

1. A false statement of a material fact,
2. Knowledge on the part of the defendant that the statement is untrue,
3. Intent on the part of the defendant to deceive the alleged victim,
4. Justifiable reliance by the alleged victim on the statement, and
5. Injury to the alleged victim as a result. Source:  Farlex Internet Free Dictionary

Another add-on that insurance carriers are utilizing is “abuse” which is not so easily defined but is equally employed to intimidate providers.  Abuse can loosely be defined as taking improper advantage of a clinical care situation in order to increase the payment, improperly exploit the situation to the provider’s inappropriate benefit.  We are seeing this allegation appearing before state chiropractic regulatory boards with increasing frequency.

In any circumstance in which any person or party is making allegations, no matter how vague or general, that you or any member of your practice has engaged in fraudulent or otherwise legally actionable behavior, you must immediately obtain help and advice from a knowledgeable, experienced source.  Your malpractice carrier should be your first stop because of the unique body of expertise and experience our industry has accumulated in the specific chiropractic context.  Too many DCs hesitate to contact their malpractice company and instead seek the advice of their local general practice attorney.  Regrettably, most such attorneys have only a general understanding of the forces in play and can delay or in the worst case scenario provide poor guidance which too often encourages quick settlement at the doctor’s expense.

Malpractice companies should provide you with the legal resources, knowledge and objective insights that will first and above all, determine if you have any genuine exposure.  If such exposure is identified, your options will, of course, be limited but you will be able to be proactive in resolving such issues, rather than be at the mercy of the process in which you have not been properly represented. Secondly, your malpractice carrier should examine the exact allegations and assist you in building a defense that draws on all available resources including legal and clinical expertise as well as documentation and expert testimony on practice guidelines and the prevailing norms of practice.  Once again, your malpractice carrier should have established experts, procedures and strategies and the means to swiftly intervene with any party make allegations, either express or implied.  It is the arrival on the scene of knowledgeable representation on the doctor’s behalf that tends to shake out the bluff and bring the dialogue with the insurance carrier’s representatives back to the real facts of the case.

Your malpractice carrier can be most effective when they are engaged as early in the dispute ort allegations process as possible so never hesitate to make that first call to your malpractice company.  Your ideal malpractice carrier is on call, on watch and proactive on every critical level and above all, you need to know who you should call, where and when they can be reached.  You should always expect rapid, direct answers.  If you cannot get in touch with your carrier’s representative at a moment’s notice, especially when some sound advice might defuse an otherwise dangerous situation, they might as well not be there at all.

Finally, it makes good sense to regularly review the exact details of your malpractice coverage, assuming nothing and taking nothing for granted.  Do you have state board and insurance claim dispute coverage and what are its limits?  Ask the detailed questions, get answers and explanations and above all, shop around.  It is in your best interest to know also that price is only half of what you should be concerned about because like everything else in the marketplace, you get what you pay for and pay for what you get. It would be a shame to have to find out that you did not get something you thought you had and desperately need, after it is too late.