Malpractice Medical Fraud – What, How and Prevalence

By Linda Nwoke

While most doctors and healthcare providers have their patient’s best interests in mind, healthcare fraudsters in the medical industry and patients suffer. A Chicago Tribune report reports that over $50 billion of the $800 billion paid to Medicare and Medicaid for medical services is attributed to Medicare and Medicaid fraud each year.

Often, health care fraud, exhibited as redundant surgeries, unsupervised treatments, and misdiagnoses, puts the patient’s health and lives at risk. Unethical doctors and enablers should be liable for medical malpractice and fraud. 

Other forms of medical malpractice fraud include manipulating medical services and bills, such as double billing, phantom billing, and unbundling. Notably, medical fraud and unnecessary surgeries are not limited to specific hospitals. Relatively recent data shows that there are an estimated 7.5 million unnecessary surgical procedures performed each year, especially in the area of internal medicine, conducting prostate surgery, coronary bypass, hysterectomy, and cesarean section. Terry Rondberg wrote in his book “Under the Influence of Modern Medicine” that more than half of all surgeries performed are medically unnecessary.

Interestingly, healthcare fraud isn’t limited to unnecessary treatment and procedures; it also extends to unsupervised or unconducted medical services by a doctor as required by law. For instance, the United States Department of Justice reported that some radiation oncology providers in Florida would pay over $3 million for fraudulently billing Medicare and Medicaid for related services that were not delivered according to the stipulations of Medicare and Medicaid laws, such as supervision by a physician. Instead, the defendant’s doctors were on vacation or working elsewhere and not running the radiation oncology services. 

Navigating the Depths of Malpractice Fraud

The act of “malpractice fraud” resonates in various industries beyond healthcare to education, finance to law, takes different forms across sectors, and often leaves a trail of consequences for unsuspecting individuals and organizations.

It is a secretive art deeply woven into the fabric of the citizens’ daily lives, as evidenced in a study by the Association of Certified Fraud Examiners (ACFE). They discovered the median loss per fraud case in 2021 was $180,000. The study also found that the most common type of fraud was asset misappropriation (80%), followed by corruption (20%).

In 2022, the U.S. Department of Justice (DOJ) reported that the federal government recovered $3.4 billion from healthcare fraud cases within the year. The report also found that the most common type of healthcare fraud was false billing (70%), followed by inducements or kickbacks (20%).

The year after, 2023, the Ponemon Institute discovered that the average data breach cost was $4.35 million, while the most prevalent data breach is by a malicious insider (52%), followed by a phishing attack (25%).

Types of Malpractice Fraud:

Several types of malpractice fraud are associated with different industries; for example, Medical Malpractice Fraud is predominantly in the healthcare sector. It is an industry built on trust, yet it has not escaped the clutches of malpractice fraud.

Data from Medicare claims in 2018, as reported by the National Center for Health Statistics (NCHS), indicates that approximately 1.4% of all Medicare claims submitted in 2016 were suspected of fraud and cost an average of $12.4 billion.

The American Medical Association Journal reports that the prevalence of malpractice fraud, as described in its 2019 report from the Medicare Fraud Strike Force, is that up to 10% of medical malpractice claims involve fraudulent activities.

Medical malpractice cases can involve three components:

• Fraudulent activities.
• Ranges from unnecessary procedures to falsifying patient records.
• Compromising patient safety and adding additional strain on the healthcare system.

Other forms of malpractice fraud involve the legal system, where malpractice fraud manifests in the form of dishonest billing practices and conflicts of interest. Notable cases include the 1993 Noble v. Dreisbach, where the California Court of Appeal held an attorney guilty of committing malpractice by failing to notify his client of the potential consequences of settling a personal injury claim without obtaining a medical release. Another example is the Utah 1999 Noble v. American Arbitration Association case, where the United States District Court for the District of Utah held that an arbitration panel committed malpractice by failing to disclose a conflict of interest.

Financial malpractice fraud is another prominent type, with fraudulent activities such as embezzlement and Ponzi schemes eroding public trust in the financial sector.

Delving into real-life instances, in 2019, Purdue Pharma accepted being guilty of three criminal charges related to the marketing of OxyContin. The painkiller contributed to the opioid crisis, and the company had to pay $8.3 billion in fines and penalties.

In 2021, Volkswagen was fined $2.8 billion by the U.S. government for installing programs that enabled them to cheat on emissions tests in its diesel vehicles.

All these cases highlight the significant financial and reputational damage that malpractice fraud can cause. It affects companies, organizations, and individuals, who must protect themselves from this fraud. It is a cautionary tale, revealing the ripple effect on victims, stakeholders, and public trust.

Prevalence of Medical Malpractice Fraud in the United States

Healthcare fraud is a severe issue that compromises the integrity of the healthcare system and can have devastating consequences for patients. While the exact number is difficult to determine, it is a widespread problem that annually costs the healthcare system billions of dollars.

The most common type of medical malpractice fraud includes upcoding, where billed services are more expensive than they cost and provided. Secondly, there is Unbundling, where services are charged separately instead of bundled. Lastly, phantom billing describes charging for unprovided services.

These fraudulent activities often lead to increased costs for patients, insurance companies, and unnecessary medical procedures.

Factors Contributing to Healthcare Malpractice Fraud

Observers have noted that some factors contributing to malpractice fraud are often a combination of faulty systems and limited supervision. They said that challenges in combating malpractice fraud persist as fraudsters adapt and evolve. Gaps in regulatory frameworks and the constant evolution of deceptive tactics necessitate an ongoing, collaborative effort among industries, regulators, and law enforcement.

For instance, the fee-for-service payment system in the U.S. healthcare system creates financial incentives for providers to overbill or provide unnecessary services to maximize their profits. Moreover, the complex and ever-changing nature of medical billing codes can make it easier for providers to commit fraud without detection, and the lack of oversight over healthcare providers makes it easier for providers to engage in fraudulent activities.

Despite the challenges, some ways to combat medical malpractice fraud will require a combination of technology, enforcement, and awareness. Recently, the government has increased enforcement efforts against healthcare fraud by creating specialized task forces and increasing offender penalties. Just as the use of technology, specifically data analytics and artificial intelligence, to observe trends, anomalies, and fraudulent patterns is becoming increasingly sophisticated. Finally, the role of education and training of healthcare providers remains pertinent to prevent and detect fraud.

The problem will require ongoing attention and resources, such as continuous technological advancements, to fight against malpractice fraud. Regulatory bodies must continue to rise to the occasion and impose stricter measures to deter potential fraudsters.

Beyond the numbers and data, malpractice fraud has legal and ethical implications. Individuals involved face legal consequences and a tarnished reputation that may be irreparable. The story of Theranos CEO Elizabeth Holmes (2015), who was found guilty of fraud for misleading investors about the company’s blood-testing technology and sentenced to 11 years in prison, is a typical case among others.

Call to Action

Persons who think they or their loved ones are victims of medical malpractice or medical fraud, such as receiving an unnecessary medical procedure or medical treatment that a doctor did not supervise. The person can file a case of medical malpractice against the physician and other defendants in that case. Alternatively, suppose the consent to surgery was not properly given or obtained under pretenses; depending on the case or circumstances, you might have a claim for medical malpractice and battery. The complainant might be able to recover financial compensation for lost wages, medical bills, post-operative expenses, emotional distress, possible punitive damages, pain and suffering,

Hence, seek the services of skilled and qualified medical malpractice lawyers dedicated to protecting the victims of medical malpractice, whether due to medical negligence or fraud.

Guidance

Contact the Personal Injury Law Firm of Figeroux & Associates. Once you make that choice, one of our attorneys will carefully evaluate your situation to determine whether or not you have a case. If it’s determined that you do have a case, we will guide you throughout the entire process to recover any money that you might be entitled to. The Personal Injury Law Firm of Figeroux & Associates will go after the maximum settlement for you. No Settlement – No Fee! The Lawyer you hire does make a difference! Contact us today. Call 855-768-8845 or visit www.askthelawyer.us to schedule an appointment.