Health Insurance Industry Battles High Cost of Fraud

Article excerpt

Journal Record Staff Reporter

Health insurance fraud, by some estimates, has become a $50 billion a year industry. Some say it accounts for as much as 10 percent of the spiraling cost of health care.

In recent years, insurance carriers and prosecutors have begun taking action to combat it.

Thomas W. McLain, manager of the fraud unit for Blue Cross Blue Shield of Oklahoma, believes that figure is an accurate reflection of the problem, though he was skeptical back in 1985 when he joined the company to begin the unit.

"I never anticipated the problems from the good ol' boys," which he said make up the majority of fraudulent claims. He also did not expect the scope of doctor-initiated fraud.

He said an accurate portrait of offenders would look like the famous painting, American Gothic, with the husband and wife farmers. Culprits are found in just about every link of the health care chain _ insured individuals, providers, employees and vendors to insurance companies.

"It surprises me the number of doctors who are in on the fraud. Lauren White, president of the California Medical Association, said 5 percent of all doctors are crooks and another 30 percent are overcharging."

Good ol' boys also present a tremendous problem.

"My own father is in that category."

He explained about a time when his son had a lightning damage claim to his television. The repairman offered to pad the repair cost by the amount of the insurance deductible. McLain's father encouraged his son to go ahead and do it and not tell McLain.

"People say that's no big deal, but it adds up."

The cost of that adding is passed along to those who pay the premiums.

McLain, who is based in Tulsa, was in Oklahoma City Tuesday speaking about claim fraud to the Life Insurance Company Office Management Association. He joined Blue Cross after being required to retire at age 55 from the Federal Bureau of Investigation, where he had worked for 30 years and specialized in the prosecution of white collar crime.

He said during his time at the FBI he only was involved in one insurance fraud case. It involved a person claiming boats were stolen when they had not been. Most of the cases he worked on involved oil field and bank fraud. Health insurance fraud was not a big issue, but he said it has become one of special priority for FBI agents as they have become more aware of the problem.

Those who pad their health insurance claims by even just a couple of bucks find that it is easier to do the next time. Their confidence then builds up until they move from the "good ol' boy" category to "cheats" and then "crooks."

During his eight years with Blue Cross, McLain has seen professors, teachers and even the elderly committing insurance fraud.

He described the case of one 71-year-old woman, whom he called "Ma Barker" because of the extent of her fraudulent activity. …