The Pennsylvania Insurance Fraud law makes it a crime when healthcare providers engage in prohibited acts, defined in the law. Violators are subject to civil penalties and criminal prosecution by the county district attorney or the Attorney General, if the conduct involves more than one county. If a person is convicted under the Insurance Fraud Statute, then he or she may be subject to civil penalties of $5,000.00 for the first violation, $10,000.00 for the second violation, and $15,000.00 for each subsequent violation. The court may also award court costs and reasonable attorney’s to be paid to the prosecuting authority. If criminal proceedings are commenced, then the provider could be subject to significant punishment that may include probation or incarceration. In addition to these penalties, a conviction could lead to loss or suspension of his or her professional license. And finally, these matters are often made public which can ruin the healthcare provider’s reputation within the community. The statute also allows the insurance company to institute civil proceedings against the defendant to recover damages, such as overpayments to the provider.
There are many enumerated provisions in the act that constitute an offense. For example, the act states that a person commits insurance fraud when he or she “knowingly and with the intent to defraud any insurer or self-insured, presents or causes to be presented to any insurer or self-insured any statement forming a part of, or in support of, a claim that contains any false, incomplete or misleading information concerning any fact or thing material to the claim.” Suppose that a chiropractor hires an unlicensed assistant to perform Myofascial Release Technique (MFR) on a patient. MFR requires the skills and expertise of a licensed provider acting under his or her scope. This chiropractor then submits a claim form to the insurance company for payment of Manual Therapy, CPT 97140, which is a code used to describe MFR. When he reports the code, the chiropractor inserts his NPI number on the claim form, which tells the insurance payer that the chiropractor performed the service. The chiropractor did this on each date of service for the patient, totaling 10 dates of service. The chiropractor submitted 10 claims using CPT 97140, which were actually performed by the unlicensed assistant and not the chiropractor.
The insurance payer calls the patient to perform a routine follow-up. The patient tells the insurance company that he is very happy with the services, especially the services from the unlicensed assistant. The insurance payer then conducts an investigation and the evidence causes them to believe that the assistant provided the services to the patient and not the chiropractor, despite what the chiropractor reported on the claim form. The insurance payer contacts the local district attorney and the attorney general then gets a warrant to enter the chiropractic office. The agents seize hard drives, patient records, and interview the assistant who admits that she performed the MFR.
In this all too common scenario, the chiropractor could face a number of problems. First, the insurance company will take action against the chiropractor to recover the payments that are now deemed improper, since unlicensed personnel are not reimbursed for CPT 97140. Second, the district attorney can bring criminal charges under the Insurance Fraud Act, alleging that the chiropractor “knowingly and with intent to defraud” presented the claim forms to the insurance company that contained “false information”. In this case, the false information is the NPI of the chiropractor on the claim form that misrepresented who actually provided the service. Third, the State Board of Chiropractic may pursue its own disciplinary proceedings against the chiropractor, including suspending his license.
Under the Insurance Fraud Act, the district attorney will pursue civil penalties for each of the 10 claims that were submitted for CPT 97140. The first claim = $5,000.00, the second claim = $10,000.00 and then the next 8 claims (multiplied by $15,000.00 for third claim and subsequent claims) = $120,000.00 for a total of $135,000.00. In addition, the chiropractor may have to pay the costs and attorney’s fees for the Commonwealth. This same chiropractor may end up with a criminal record, jail time, and probation.
The Insurance Fraud Act protects insurance companies and the consumers from the unlawful acts of the healthcare providers. Healthcare providers are required to know, understand and comply with laws, regulations and policies with regards to billing, coding and documenting claims. Healthcare providers should protect themselves and avoid submitting improper claims by consulting with a healthcare attorney who can implement a compliance program for the provider and provide advice and guidance for claims submissions to insurance payers.